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HomeMy WebLinkAboutLimited Tax General Obligiations Bonds - Escrow Agent & Agreement - 2010CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 - $6,170,000 Bonds Dated: May 1 1,201 0 Opinion Dated: May 1 1, 20 10 K&L GATES LLP CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 - $6,170,000 RECORD OF PROCEEDINGS Organizational Documents 1. Certificate for Transcript 2. Certificate of the Director of King County Department of Elections stating the names and terms of office of the present Mayor and members of the City Council 3. Certificate of the Mayor stating the names of the Finance and Information Services Administrator and City Clerk 4. Certified copy of proceedings of the City Council last fixing the time, date and place of regular meetings of the City Council 5. Certificate of the City Clerk stating the official newspaper of the City 6. Certificate stating the assessed valuation of all of the taxable property within the City as fixed in the fall of 2009 for the purposes of 2010 taxation 7. Certificate of the Finance and Information Services Administrator as to the outstanding indebtedness of the City, including any lease-purchase or conditional sale contracts and any general obligation debt 8. Bond Counsel's Calculation of Debt Limit Authorization of Bonds 9. Certified copy of Ordinance No. 5534 passed on April 5,2010 (the "Bond Ordinance") 10. Certified copy of the minutes of the meeting of the City Council held on March 22,2010, showing the first reading of the Bond Ordinance 11. Certified copy of the minutes of the meeting of the City Council held on April 5, 2010, showing the second reading and passage of the Bond Ordinance 12. Affidavit of publishing a summary of the Bond Ordinance 13. Bond Purchase Contract 14. Preliminary Official Statement 15. Official Statement 16. Rule 15~2-12 Certificate of the Finance & Information Services Administrator 17. Rating letter Refunding Documents 18. Escrow Deposit Agreement 19. Certificate of Escrow Agent 20. Subscription for Acquired Obligations 2 1. Escrow Verifi cation report from Grant Thornton LLP Closing Documents 22. Certificates of Manual Signature with Certificate of Mailing 23. Signature Identification Certificate 24. Certificate of City pursuant to Section 8 of the Bond Purchase Agreement 25. The Depository Trust Company Blanket Issuer Letter of Representations 26. Federal Tax Certificate, Certificate of the Undenvriter, Certificate of the Financial Advisor, and Financing Schedules 27. Copy of IRS Form 8038-G with affidavit of mailing 28. Certificate of Authorization of Authorized Signer for The Bank ofNew York Mellon 29. Certificate Regarding Authentication, Registration and Delivery of the Bonds 30. Receipt for Bond Proceeds 3 1. Receipt for Bonds 32. Memorandum of Bond Closing 33. BondForm101 34. Specimen Bond Opinions 35. Defeasance opinion of K&L Gates LLP 36. Final approving legal opinion of K&L Gates LLP CERTIFICATE FOR TRANSCRIPT I, Bonnie I. Walton, City Clerk of the City of Renton, Washington (the "City"), do hereby certify that the within and attached documents are in each case true and correct copies of the originals of such documents and that none of the resolutions, ordinances, proceedings, statements or certificates contained herein have been repealed, rescinded or canceled and all of the officers last certified as holding City offices have continued to hold their respective offices from such date to and including the date of this certificate. Dated as of this 1 lth day of May, 2010. &m.LuLd 13- Bonnie I. Walton, City Clerk City of Renton, washingon King County Department of Elections RNT-EL-0100 919 SW Gmdy Way Renton, WA 98057-2906 206-296-VOTE (8683) lTY Relay: 711 www.kingcounty.gov/elections STATE OF WASHINGTON 1 )SS. COUNTY OF KING 1 This is to certify that I, Shenil Huff, am the Director of King County Elections, King County, Washington; and That the following .officials serve as Mayor hd Council Members for the City of Renton King County, Washington, as determined from the official election records of King County, their - terms bf office included, as now on file in the Elections Department. Ofiice Incumbent Term of Office Mayor Council Member Position No. 1 Council Member Position No. 2 Council Member PositionNo. 3 Council Member Position No. 4 Council Member Position No. 5 Council Member Position No. 6 Council Member Position No. 7 Denis Law Randy Corman Rich Zwicker Marcia Palmer Greg Taylor King Parker Terri Briere Don Persson December 3 1,201 1 December 3 1,20 13 December 31,2013 December 3 1,20 1 1 December 3 1,201 1 December 3 1,201 1 December 3 1,20 13 December 3 1,20 1 1 Dated at Seattle, King County, Washington this 9th day of March 2010. CERTIFICATE I, Denis W. Law, the duly elected Mayor of the City of Renton, Washington (the "City"), do hereby certify that Iwen Wang and Bonnie I. Walton are the duly appointed Finance and Information Services Administrator and City Clerk, respectively, of the City. Dated as of this 11 th day of May, 2010. Denis W. Law. Mavor City of Renton, ~ash;.ngton CERTIFICATE I, Bonnie 1. Walton, City Clerk of the City of Renton, do hereby certify that the attached is a true and correct copy of the proceedings of the City Council setting the date, time and place for regular meetings of the City Council. Dated as of this 11 th day of May, 2010. Ld drm Bonnie I. Walton, City Clerk City of Renton, Washington 1.0 PURPOSE: (9 ,+ d? POLICY & PROCEDURE To establish the time and location of the various City Council meetings. Subject: MEETINGS OF THE CITY COUNCIL 2.0 ORGANIZATIONS AFFECTED: City Council 3.0 REFERENCES: RCW 42.30 (Open Public Meetings act); RCW 35A.12.100; RCW 35A.12.110 Index: LEGISLATIVE Number: 800-02 4.0 POLICY: 4.1 Regular business meetings of the City Council shall be held the first four Mondays of each month commencing at 7:00 pm in the Council Chambers of City Hall, or at another location determined by the City Council. The City Council will not meet when a regular meeting falls on a holiday acknowledged as such by official Council action; all pending business and agenda items will be carried forward to the next regularly scheduled meeting. Effective Date 8/13/2007 4.2 There shall be regular Council meetings held the first four Mondays of each month except where a City holiday falls on a Monday. Committee of the Whole . meetings (Council work sessions) may be held prior to weekly Council meetings. No final disposition shall be taken at any Council work session; rather, recommendations shall be offered for final action at a succeeding regular business meeting of the Council. 4.3 At all meetings of the City Council, a majority of the Councilmembers shall constitute a quorum for the transaction of business, but a less number may adjourn from time to time and may compel the attendance of absent members as prescribed by ordinance. Supersedes 112711992 4.4 Except as provided for in law, all regular and special meetings of the City Council shall be open to the public as set forth in'RCW 42.30.010. 4.5 The Mayor shall be the presiding officer at all meetings of the City Council except Council work sessions. The Council President shall preside in the mayor's absence and shall be notified when the mayor leaves the state. In the absence of both the Mayor and the Council President, the Council President Pro Tern shall preside. Page I of3 Staff Contact Jay Covin~ton Approved By /&% 800-02 Page 2 4.511 The Mayor shall have a vote only in the case of a ti& in the votes of the councilmembers with respect to matters other than the passage of any ordinance, grant, revocation of a franchise or license, or any resolution for the payment of any money. 4.5.2 The Mayor or other presiding oficer may require any person addressing the City Council to be sworn as a witness and to testify under oath; the presiding officer shall so require, if directed to do so by a majority vote of the City Council. 4.6 The Council President shall preside at all Council work sessions of the City Council. The President Pro Tem of the Council shall preside in the absence of the Council President. 5.0 DEFINITIONS: NIA 6.0 PROCEDURES: 6.1 Special meetings may be called by the Mayor or any four members of the City Council. to discuss issues or business items provided that written notice is delivered to each member of the Council at least 24 hours before the time specified for the proposed meeting. 6.1.1 ~hd notice shall specify the time and place of the special meeting and the business to be transacted. 6.1.2 In addition, the city clerk shall give notice of such special meeting as further provided for in RCW 42.30.080. 6.1.3 No final disposition shall be taken on any other matter at such special meeting by the governing body. 6.1.3.1 Written notice may be dispensed with for any Councilmember who,. at or prior to the time the meeting convenes, files a written waiver of such notice with the city clerk. 6.1.3.2 Written notice may also be dispensed with for any member who is actually present at the meeting at the time it convenes. 6.1.3.3 Notice may be dispensed with in the event that a special meeting is called to deal with an emergency involving injury or damage to persons or property or the likelihood of such injury or damage when, time requirements would make notice impractical and increase the likelihood of such injury or damage. 6.2 The President or majority of the members of the City Council may hold executive sessions during a regular or special meeting to consider: a. matters affecting national security; b. the selection of a site or the acquisition of real estate by lease or purchase when public knowledge regarding such consideration could cause a likelihood of an increased price to the city; 800-02 Page 3 c. the appointment, employment or dismissal of a public officer or employee; d. complaints or charges brought against a public officer or employee by another public officer, employee or member of the public; e, any proceeding concerned with the formal issuance of an order granting, suspending, revoking or denying a license, permit or certificate to engage in any business, occupation or profession, or to any disciplinary proceedings involving a member of such business, occupation or profession; f. that portion of a meeting when the Council sits as a quasi-judicial body which relates to a quasi-judicial matter behveen named parties as distinguished from a matter having a general effect on the public or on a class or group; g, planning or adopting the strategy or position to be taken during the course of any collective bargaining, professional negotiations, grievance or mediation proceedings, or the review of proposals made in such negotiations or proceedings; h. input from the city attorney concerning settlements, avoidance or contemplated litigation, settlement offers and like matters which are subject to the statutory attomey-client privilege. 6.2.1 No official action shall be taken at any executive session; however, nothing shall prevent the Council, when permitted by law, from taking an informal vote on any matter under discussion. 6.2.2 No member of the City Council, employee of the city or any person present during an executive session shall disclose to any other person the content or substance of discussion or action which took place during the session, unless a majority of the Council authorizes such disclosure. 6.2.3 Executive sessions, to the extent permitted by law, shall be limited to the Mayor and the members of the City Council unless the presence of non- members is requested by a majority of the City Councilmembers. RENTON CITY COUNCIL Regular Meeting August 13,2007 Monday, 7 p.m. MINUTES Council Chambers Renton City Hail CALL TO ORDER Mayor Kathy Keolker called the meeting of the Renton City Council to order and led the Pledge of Allegiance to the flag. ROLL CALL OF TONI NELSON, Council President; RANDY CORMAN; DON PERSSON; COUNCILMEMBERS MARCIE PALMER; TERN BRIERE; DENIS LAW; DAN CLAWSON. CITY STAFF IN KATHY KEOLKER, Mayor; JAY COVMGTON, Chief Administrative ATTENDANCE Officer; LAWRENCE J. WARREN, City Attorney; MICHELE NEUMANN, Deputy City Clerk; PETER HAW, Deputy Planning/Building/Public Works Administrator - Transportation; ALEX PIETSCH, Economic Development Administrator; SUZANNE DALE ESTEY, Economic Development Director; MICHAEL BAILEY. Finance and Information Services Administrator: DEPUTY CHIEF CHUCK DUFFY and FIRE MARSHALLIBATTALION CHIEF STAN ENGLER, Flre Depanment; COMMANDERS FLOYD ELDRIDGE and KATIE MCCLINCY, Police Department SPECIAL PRESENTATION Mike Bailey, Finance and lnfomation Services Administrator, announced that Finance: Distinguished Bud~et the City of Renton had once again received the Distinguished Budget - Presentation ward ~reseniation Award from the Government Finance officers ~ssockion (GFOA), for the fiscal year beginning 11112007. He noted that the City has a long tradition of earning the award. Mr. Bailey presented a plaque from the GFOA, congratulated staff members who worked on the budget, and thanked the Mayor and Council for their support. ADMINISTRATIVE Mayor Keolker announced that Rainier Ave. S., which was closed for BNSF REPORT Railway Company's railroad bridge replacement project, reopened ahead of . Streets: Rainier Ave S & schedule. She invited Peter Hahn, Deputy PlanninglBuilding/Pubiic Works Shanuck Ave S & Hardie Ave Administrator - Transportation, to speak on the matter. Mr. Hahn presented SW Closures for RR Bridge photos illustrating the progress of work that occurred at various railroad bridge Replacements construction sites. He noted that local residents and businesses did provide some positive feedback about the varjous disruptions. Concluding, Mr. Hahn thanked City officials, staff, and the contractor for their hard work on the project. Councilmember Palmer also extended her thanks to City staff for their hard work. Continuing, Chief Administrative Officer Covington reviewed a written administrative report summarizing the City's recent progress towards goals and work programs adopted as part of its business plan for 2007 and beyond. Items noted included: a Maplewood Golf Course hosted the 55th GSWPGA State Tournament last week. Eighty women competed in this very successful three-day event, with a member from Maplewood winning the championship. rit The Downtown Wayfinding Project will unveil preliminary designs for signage, gateways, and kiosks for downtown Renton. Citizens are invited to provide input on the wayfinding elements at two public meetings on August 16. August 13,2007 AUDIENCE COMMENT Citizen Comment: Russell - Index PI NE, A&D Quality Construction Company, VAC- 07-001 Citizen Comment: McOmber - lndex PI NE, A&D Quality Construction Company, VAC- 07-00 1 Citizen Comment: Ellifrits - T- Mobile Monopole Placement, SE 3rd PI. CU-07-065 CONSENT AGENDA Appointment: Airport Advisory Committee Renton City Council Minutes Page 279 Kevie Russell, 2906 NE 7th St., Renton, 98056, spoke on the topic of the vacation of a portion of Index PI. NE. He objected to the City's retainage of a 15-foot-wide strip, which is to be used for a walkway, out of the east portion of the right-of-way that is to be vacated. He noted the existence of a pedestrian right-of-way one building lot away from his house, saying that hvo parallel walkways are not necessary. Pointing out that the vacation will make an unattractive, junk-car and litter-attracting area, a productive area, Mr. Russell requested that the Council equally divide the right-of-way. Howard McOmber, 425 Olympia Ave. NE, Renton, 98056, displayed photographs of the portion of Index PI. NE under consideration for vacation. Mr. McOmber asked Council to vacate the entire area and to accelerate the process. He stated that Index PI. NE is not an asset for the Highlands neighborhood and objected to the current proposal to retain a 15-foot-wide easement for a pedestrian right-of-way when another pedestrian walkway already exists near the vacation area. (See page 281 and 283 for further discussion on this matfer.) Newton Ellifrits, 4218 SE 3rd PI., Renton, 98059, expressed his opposition to T-Mobile's proposal to locate a cell phone tower in his neighborhood. Mr. Ellifrits also asked if there were any ordinances restricting the placement of cell phone towers in residential neighborhoods. City Attorney Warren commented that the Environmental Review Committee is currently reviewing the application for the cell phone tower. He indicated that a decision from the Development Services Director should be available within the next couple of weeks. Chief Administrative Officer Covington stated that an ordinance does not exist that specifically prohibits monopoles from residential neighborhoods, but noted that staffreviews each application for potential impacts to neighborhoods. Councilmember Coiman reflected on the past and present efforts of Council and staff to enforce rules regarding cell phone towers as allowed by Federal regulations. He stated his assumption that companies applying for these types of permits would know that placement of monopoles in commercial areas was preferred over rwidenrial areas. Items on the consent agenda are adopted by one motion which follows the listing. As requested by Councilmember Persson, item 6.e. was removed for separate consideration. Mayor Keolker reappointed the following individuals to the Airport Advisory Committee for three year terms expiring on 5/7/2010: Highlands neighborhood representative Michael O'Halloran, 4420 SE 4th St., Renton, 98059, primary; North Renton neighborhood representative Richard Zwicker, 446 Pelly Ave. N., Renton, 98057, primary; Renton HillMonterey Terrace neighborhood representatives Michael Schultz, 150 Monterey Dr. NE, Renton, 98056, primary, and Dina Davis, 433 Cedar Ave. S., Renton, 98057, alternate; Airport Leaseholders representatives Michael O'Leary, 22823 NE 54th St., Redmond, 98053, primary, and Frank Marshall, 3521 SW 327th St., Federal Way, 98023, alternate; and Airport-at-Large representative Diane Paholke, 325 Edmonds Ave. SE, Renton, 98056, primary. Council concur. August 13,2007 Appointment: Planning Commission Development Services: Hunny Short Plat, ROW Dedication, Thomas Ave SW. SHP-06- 154 Annexation: Anthone', Talbot Rd S & S 55th St Police: Red Light School Zone Photo Enforcement, American Traffic Solutions Transportation: 2007 Walkway lmprovement Project, Pacific Engineering Design Airport: Noise Study Cost Sharing, Mercer Island Airport: Noise Study, Harris Miller Miller & Hanson Utility: Benson Rd S Water Line Relocation, WSDOT Added ltem 6.k. CAG: 07-140, Benson Rd S Water Line Relocation, Ceccanti Separate Consideration ltem 6.e. Transportation: Roads & Transit Ballot Measure, Nox8ember 2007 Renton City Council Minutes Page 280 Mayor Keolker appointed the following individuals to the Planning Commission: Casey Bui, I150 Sunset Blvd. NE, #216, Renton, 98056 (tenn expires 6/30/2010); Yong Lee, 2103 Kennewick PI. NE, Renton, 98056 (to fill the unexpired term, 113 112008, of Joshua Shearer who resigned); and Brad Miller, 1807 NE 26th PI., Renton, 98056 (term expires 6/30/2010). Refer to Communitv Services Committee. Development Services Division recommended acceptance of a deed of dedication for additional right-of-way at the southeast comer of Thomas Ave SW and SW 3rd PI, to fulfill a requirement ofthe Hunny Short Plat (SHP-06- 154). Council concur. Economic Development, Neighborhoods and Strategic Planning Department recommended setting a public hearing on 911012007 to consider the proposed Anthone' Annexation and R-4 zoning of the 4.85-acre site located south of S. 55th St. and Talbot Rd. S. Council concur. Police Department recommended approval of a contract in the antount of $306,000 (full year) with American Traftic Solutions, lnc. for red light school zone photo enforcement services. Council concur. Transportation Systems Division requested approval of a contract in the amount of $152,056.63 with Pacific Engineering Design, LLC, for the 2007 Walkway lmprovement Project. Refer to Trans~ortation (Aviation) Committee. Transportation Systems Division recommendrd approval of an agreement with the City of Mercer Island regarding cost sharing for an airport noise study. Council concur. (See page 282 for resolution.) Transportation Systems Division requested approval to transfer $149,000 from the Airport 608 Hangar Expansion and Airport 622 Hangar Rehabilitation projects to the Airport Layout Plan project for a noise study, and approval of a contract in the amount of$131,050 with Hams Miller Miller & Hanson, Inc, to conduct the airport noise study. Council concur. Utilities Systems Division recommended approval of an agreement with Washington State Department of Transportation regarding the construction of the relocation of the water line at Benson Rd. S. and 1-405. City's estimated share of the construction cost is $580,000. Refer to Utilities Committee. City Clerk reported bid opening on 8/9/2007 for CAG-07-140, Water Line Relocation for Realignment of Benson Rd. S. and 1-405 Overpass Project; six bids; engineer's estimate $958,918.95; and submitted staff recommendation to award the contract to the low bidder, Ceccanti, Inc., in the amount of $869,42 1.66. Refer to Utilities Committee. MOVED,BY NELSON, SECONDED BY CORMAN, COUNCIL APPROVE THE CONSENT AGENDA AS AMENDED TO ADD ITEM 6.k. AND REMOVE ITEM 6.e. FOR SEPARATE CONSIDERATION. CARRIED. Economic Development, Neighborhoods and Strategic Planning Department recommended a public meeting be set on 812012007 to consider supporting the regional Roads and Transit ballot measure.' In response to Councilmember Pcrsson's inquiry, City Attomey Warren stated that parties representing both sides of the issue would be present at the public meeting. August 13,2007 Renton City Council Minutes Page 281 UNFINISHED BUSINESS Committee of the Whole Council: Policies Finance Committee Finance: Vouchers Finance: Water Shut Off Charge Adjustments for Special Circumstances Finance: Capital Expenditure Reimbursement from Utility Bond Revenue Court Case: Scoccolo Construction, CRT-98-008 Plannine & Development Committee Vacation:'lndex PINE, A&D Quality Construction Company, VAC-07-00 1 *MOVED BY PERSSON, SECONDED BY NELSON, COUNCIL APPROVE ITEM 6.e. AS PRESENTED. CARRIED. Council President Nelson presented a Committee of the Whole report regarding the Council policies. The Committee recommended that Council adopt the revisions to city of Renton Policies and Procedures 800-01, 800-02,800-03, and 800-04. MOVED BY NELSON, SECONDED BY PERSSON, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Finance Committee Cham Persson presented a repon recommend~ng approval of Claim Vouchers 262337-262809 ad four wire uansfers tolaling S4,378,309.53; and a~~roval of 315 Payroll Vouchers. two wire transfers, and 733 direct depo;i;s totaling $3,368,501.48. MOVED BY PERSSON, SECONDED BY LAW, COUNCIL CONCUR IN THE COMMIITEE REPORT. CARRIED. Finance Committee Chair Penson presented a report recommending concurrence with the staff recommendation that the Finance and Information Services Administrator, or hisher'designee, be given authority to adjust $60 water shut off charges on utility accounts, under special circumstances. The committee further recommended that the ordinance regarding this maner be presented for first reading. MOVED BY PERSSON, SECONDED BY LAW, COUNCIL CONCUR IN THE COMMlTTEE REPORT. CARRIED. (See page 282 for ordinance.) Finance Committee Chair Persson presented a report recommending concurrence in the staff recommendation to declare the City's intent that certain capital expenditures be made for water, wastewater and surface water utility projects, and that reimbursement be made from utility revenue bonds to be issued in the Fall of 2007. The projects are as follows: Utilitv Proiect Budeet Timing Water Highlands 565 $3,280,000 2007/2008 Wastewater Central Plateau $2,225,000 2007/2008 Surface Water SW 34th $1,335,000 2007/2008 Renton Village $I,] 15,000 2007/2008 The Committee further recommended that the resolution regarding this matter be presented for reading and adoption. 'MOVED BY PERSSON, SECONDED BY LAW, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. (See page 282 for resolution.) Finance Committee Chair Persson presented a report regarding the Scoccolo lawsuit costs. The Committee was briefed on 8/13/2007 and recommended closure of the referral. MOVED BY PERSSON, SECONDED BY LAW, COUNCIL CONCUR IN THE COMMI'ITEE REPORT. CARRIED. Noting that the report concerning the vacation of Index PI. NE is being held in Committee, Councilmember Briere commented on the location of the 15-foot walkway easement, the agreement between the two affected property owners, the existence of other walkways in the area, and the Trails and Bicycle Master Plan study. She indicated that within approximately one year, the City should know the results of the trail study, and at that point affected property owner Kevie Russell could petition for a vacation of the easement-affected property if it was found that the City did not need the easement. August 13,2007 Renton City Council Minutes Page 282 RESOLUTIONS AND ORDINANCES Resolution #3899 Airport: Noise Study Cost Sharing, Mercer Island Resolution #3900 Finance: Capital Expenditure Reimbursement from Utility Bond Revenue Finance: Water Shut Off Charge Adjustments for Special Circumstances Ordinance #5298 ' Human Services: Summer Lunch & Housing Repair Assistance Programs, Budget Amend Ordinance #5299 Utility: Upper Springbrook Creek Restoration, King Conservation District Number 9, Budget Amend . NEW BUSINESS Community Services: Maplewood Golf Course, RiverRock Restaurant Noise Responding to Councilmember Corman's questions, Ms. Briere confirmed that by upholding Council's approval of the vacation petition, which includes retention of an easement for a walkway, one property owner can move forward with his project and the other must wait. Ms. Briere noted that she wants the Committee report to reflect that the filing fees for Mr. Russell's future vacation petition will be waived. Councilmember Clawson noted that neither party would benefit if the property were vacated down the middle. (See page 283 for further discussion on this matter.) The following resolutions were presented for reading and adoption: A resolution was read authorizing the Mayor and Citv Clerk lo enter into an interlocal agreement between the cities of Renton and Mercer Island regarding an Aviation Noise Study. MOVED BY PALMER, SECONDED BY LAW, COUNCIL ADOPT THE RESOLUTION AS READ. CARRIED. A resolution was'read approving certain expenditures for reimbursement from the' proceeds of debt to be issued in the future. MOVED BY PERSSON, SECONDED BY CLAWSON, COUNCIL ADOPT THE RESOLUTION AS READ. CARRIED. The following ordinance was presented for first reading and referred to the Council meeting of 812012007 for second and final reading: An ordinance was read amending Section 8-4-34 of City Code by adding Subsection C. providing for discretion in administration of the fees provided for therein. MOVED BY PERSSON, SECONDED BY CLAWSON, COUNCIL REFER THE ORDINANCE FOR SECOND AND FINAL READING ON 812012007. CARRIED. The following ordinances were presented for second and final reading and adoption: An ordinance was read amending the 2007 General Fund Budget to appropriate $37,734 for the 2007 Summer Lunch and Housing Repair Assistance Programs, which are funded by grant revenues. MOVED BY PERSSON, SECONDED BY CLAWSON, COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED. An ordinance was read amending the 2007 Budget by increasing the amount of funds in the Surface Water revenue account and expenditure account by 550,000 pursuant to (he Upper Spnngbrook Creek Restoration project agreement with the King Conservation District Number 9. MOVED BY CLAWSON, SECONDED BY BRIERE, COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED. Councilmember Persson inquired about the status of the complaint of noise emanating from the RiverRock Restaurant at Maplewood GolfCourse. Chief Administrative Officer Covington stated that numerous attempts to measure the noise level from the complainant's property have been unsuccessful due to the complainant not allowing City employees on his property. Mayor Keolker reported that City employees had been sent to the area at 1:00 a.m. on a night when music was playing and they could not hear the music. City Attorney Warren stated that a sound barrier was being installed to further reduce noise emissions from ihe band area. August 13,2007 Renton City Council Minutes Page 283 Public Works: Graffiti on Private Property Development Services: Driveway Widths AUDIENCE COMMENT Citizen Comment: Demps - Index PI NE, A&D Quality Construction Company, VAC- 07-00 1 ADJOURNMENT In response to Councilmember Persson's inquiry, City Attorney Warren stated that there is no specific ordinance regulating the removal of grafiti from private property. Mayor Keolker pointed out that the City does have a policy regarding removal of graffiti from public property. MOVED BY LAW, SECONDED BY PERSSON, COUNCIL REFER THE TOPIC OF GRAFFITI ON PRIVATE PROPERTY TO THE PUBLIC SAFETY COMMITTEE. CARRIED. Councilmember Law voiced concerns over the width of allowed driveways, and access in and out of the driveways. MOVED BY LAW, SECONDED BY PALMER, COUNCIL REFER THE TOPIC OF THE WIDTH OF DRIVEWAYS TO THE PLAM'JMG & DEVELOPMENT COMMITTEE.* Councilmember Persson noted the safety issues related to accessing the driveways. 'MOTION CARRIED. Keith Demps, 2308 NE 24th St., Renton, 98056, spoke on the issue of his request to vacate a portion of Index PI. NE. Indicating that.he has already gone through the vacation process, Mr. Demps asked Council to consider vacating the entire area, rather than retaining a portion for a walkway, as it is holding up his development project. He also noted the existence of another trail that is approximately 150 feet away from the vacation area. Discussion ensued regarding the appropriateness of vacating the entire area while the Trails and Bicycle Master Plan study is pending, the need for two walkways in the area, concern about short-circuiting the study, providing for input from the Highlands neighborhood, accelerating the walkway study, the benefits of the potential development projects, the possibility of allowing a variance due to the lot sizes, the underlying ownership ofthe property, and the need for the City to clean up and maintain the property. Chief Administrative Officer Covington stated that the Trails and Bicycle Master Plan study is to be discussed at the Comminee of the Whole meeting on August 20, and staff will be prepared to discuss this specific area. MOVED BY PERSSON, SECONDED BY NELSON, COUNCIL ADJOURN. CARFED. Time: 8:03 p.m. , , Michele Neumann, Deputy City Clerk Recorder: Jason Seth August 13,2007 RENTON CITY COUNCIL COMMITTEE MEETING CALENDAR Office of the City Clerk COUNCIL COMMITTEE MEETINGS SCHEDULED AT CITY COUNCIL MEETING August 13,2007 I COMhlITTEElCHAIRMAN DATERIME AGENDA I COMMITTEE OF THE WHOLE MON., 8/20 Public Defense Contract & Standards; (Nelson) 5:30 p.m. Bike Path & Trails Master Plan Update; Valley Communications status Report COMMUNITY SERVICES MON., 8/20 Library Master Plan Process (briefing (Coman) 4:30 p.m. only); Planning Commission Appointments FINANCE (Persson) MON., 8/20 3:00 p.m. Vouchers; IKEA Performing Arts Center Funding; City's Official Newspaper Designation; Fund Balance Reserves and Annual Capital improvement Plan PLANNING & DEVELOPMENT THURS., 8/16 Vacation Petition for Portion of (Briere) 1 :30 p.m. Whitworth Ave. S. (VAC-07-002); 2007 Comprehensive Plan Amendments PUBLIC SAFETY (Law) MON., 8/20 Pipelines in Renton (briefing only) 4:00 p.m. TRANSPORTATlON (AVIATION) WED., 8/I 5 Six Year Transportation Improvement (Palmer) 4:00 p.m. Plan; 2007 Walkway Improvement Contract with Pacific Engineering Design; Local & Regional Transportation Issues Update UTILITIES (Clawson) THURS., 8/16 Relocation of Benson Hill Water Line 3:00 p.m. Cost Sharing Agreement with WSDOT Benson Hill Water Line Project Bid Award NOTE: Cornmince of the Whole mesings are hcld in the Council Cbarnbcn uJlleu. All oth~co~nce rncaingr are hcld in lhc Council Canfcmcc Roam unless olhnwirc noltd. CERTIFICATE I, Bonnie I. Walton, City Clerk of the City of Renton, Washington (the "City"), do hereby certify that the Renton Reporter is the official newspaper of the City. Dated as of this 1 l th day of May, 2010. $!3&wwd. Ida Bonnie I. Walton, City Clerk City of Renton, Washington RENTON CITY COUNCIL Regular Meeting January 8.2007 Monday, 7 p.m. CALL TO ORDER ROLL CALL OF COUNCILMEMBERS CITY STAFF IN ATTENDANCE PROCLAMATION National Mentoring Month - January 2007 SPECIAL PRESENTATIONS King County: Update, Councilmember Reagan Dunn ESA: Black River Watershed MINUTES Council Chambers Renton City Hall Mayor Kathy Keolker called the meeting of the Renton City Council to order and led the Pledge of Allegiance to the flag. TONI NELSON, Council President; DAN CLAWSON; DENIS LAW; TERRI BRIERE; MARC1 PALMER; DON PERSSON; RANDY CORMAN. KATHY KEOLKER. Mayor; JAY COVINGTON. Chief Administrative Officer; LAWRENCE J. WARREN, City ~ttorney; BONNIE WALTON, City Clerk; GREGG ZIMMERMAN, Planning/Building/Fublic Works Administrator; TERRY HIGASHIYAMA, comm;nity Services Administrator; ALEX PIETSCH, Economic Development Administrator; CHIEF I. DAVLD DANIELS, Fire Department; MARTY WINE, Assistant CAO; PREETI SHRIDHAR, Communications Director; COMMANDER KENT CURRY and COMMANDER KATIE MCCLINCY, Police Department. A proclamation by Mayor Keolker was read declaring the month of January 2007 to be "National Mentoring Month" in the City of Renton in tribute to the many dedicated individuals who volunteer their time, compassion, and talents to mentor young people, and encouraging all citizens to join in this special observance and to consider giving back to the community as mentors. MOVED BY CLAWSON, SECONDED BY NELSON, COUNCIL CONCUR IN THE PROCLAMATION. CARRIED. Erin Iverson, Mentor Program Manager for Communities in Schools of Renton, accepted the proclamation. She encouraged everyone to become a volunteer and make a difference in the life of child. King County Councilmember Reagan Dunn, District 9, gave an update on the King County Council. He pointed out the Council's work on identity theft legislation, rural home occupations, a proposed elected auditor to be voted on in 2009, and the "Meth Watch program (methamphetamine). Mr. Dunn noted his chairmanships of the Transportation Committee and the Regional Transit Committee, and his appointment to the Executive Board of the Regional Transportation Investment District. Councilmember Dunn reviewed his legislative priorities, which include increasing roadway capacity, improving 1-405 and SR-167, and providing additional bus service. In regard to land use, he stated that King County is working on increasing the efficiency and speed of the permitting process using Renton's process as a model. Mr. Dunn assured that he will continue to work on 1-405 and SR-167 improvements, which is his transportation priority in this portion of the district, and on matters related to annexation of the East Renton Plateau and the Cascade area. In conclusion, he stated that Renton is a contender for the siting of a new King County records and elections facility. Mayor Keolker pointed out that King County is providing private security at the Renton Transit Center on a trial basis, and that funding and other concerns regarding potential annexations to Renton merit further discussion with King County. Planning/Building/Public Works Administrator Zimmerman introduced Doris ADMINISTRATIVE REPORT January 8.2007 Renton City Council Minutes Page 5 Alliance Restoration Projects Yepez, treasurer and founder of the Black River Watershed Alliance (BRWA). who reported on the progress of the Black River restoration projects. She noted that project funding included grants from King County matched by the City of Renton with King Conservation District funds. The projects include: Black River Channel native plant restoration, Black River buffer planting, Black River Riparian Forest wildlife monitoring, free class and group presentations, free school and group field trips through the forest, booths at open houses and events, and participation in the King County Clean Stream Car Wash Program. Ms. Yepez described the tasks accomplished during the two phases of the Black River Channel Native Plant Restoration Project, which took place on the downstream and upstream sides of the Black River Pump Station in the vicinity of Monster Rd. SW. She praised the efforts of all the volunteers who assisted with the restoration project, and listed BRWA's plans for the future: continue restoration work and monitoring of wildlife at the Black River, continue participation in the Clean Stream Program, continue classroom education and community outreach, and expand the school field trip program. Chief Administrative Officer Covington reviewed a written administrative report summarizing the City's recent progress towards goals and work programs adopted as part of its business plan for 2007 and beyond. Items noted included: * Missoula Children's Theatre is bringing Rumplestiltskin to Carco Theatre. Rehearsals will be January 9 through 12, with performances on January 13. ($ The City will host a workshop on January 17 for those interested in learning more about the 2007 Neighborhood Grant Program. il( An informational workshop and community open house on the Renton Airport Master Plan Update is scheduled for January 16. Fire: Wind Storm (12/14/2006) Fire Chief Daniels reported on the City's response to the wind storm that occurred on 12/14/2006, which produced wind gusts of 60 mph and sustained winds of 40 mph. He stated that approximately 265 calls for service were received on December 14 and 15, which is five times more than normal. Chief Daniels reported that the Emergency Operations Center was activated at 6 p.m. on December 14. He further reported that the City sustained damage in the estimated amount of $240,000, and one fatality occurred due to carbon monoxide poisoning (as a result of the related power outage). Chief Daniels stated that the shelter at the Highlands Neighborhood Center opened on December 16 and remained in place for eight days. He noted that the shelter operation was handled primary by the City, and at its peak, the shelter accommodated 74 people. Pointing out that a review will be conducted of the City's response to the storm, he emphasized that the City did a good job. Councilmember Palmer commended City staffs handling of the wind storm response. AUDIENCE COMMENT Inez Petersen, PO Box 1295, Renton, 98057, expressed concern on behalf of Citizen Comment: Petersen - Jeff Colee (330 Park Ave. N.), who must remove an over-height fence he Colee Fence Height Variance erected to keep cats out of his backyard so his wheelchair does not come into contact their feces. Stating that Mr. Colee's unique situation distinguishes him from others, she pointed out that the ADA (Americans with Disabilities Act) requires cities to modify their zoning to accommodate the disabled. Responding to Councilmember Clawson's comment regarding the appeal January 8,2007 Citizen Comment: DeMastus Shelter at Highlands Neighborhood Center, Wind Storm Caused Power Outage Citizen Comment: Allen - East Renton Plateau PAA Prezoning Citizen Comment: High - East Renton Plateau PAA Prezoning Citizen Comment: McOmber Wind Storm Response, East Renton Plateau PAA Prezoning Citizen Comment: Jarman - East Renton Plateau PAA Prezoning Citizen Comment: Mega - Sunset Bluff Development, Black River Riparian Forest Heron Colony Citizen Comment: Krom - Sunset Bluff Development, Black River Riparian Forest Heron Colony Renton City Council Minutes Page 6 process, Ms. Petersen indicated that the variance appeal period has expired as well as the ADA grievance time window. Mayor Keolker indicated that the matter will be reviewed. Sandel DeMastus, PO Box 2041, Renton, 98056, stated that the Highlands Community Association's Christmas party at the Highlands Neighborhood Center occurred the same night the center began operating as a shelter. She thanked Fire Department staff for attending the party, and praised those who staffed the shelter. Cynthia Allen, I31 10 164th Ave. SE, Renton, 98059, stated that she lives next to the wetland area proposed for R-I zoning in the northern portion of the East Renton Plateau Potential Annexation Area (PAA). She favored the proposal, saying R-1 zoning will help protect the wetland and the wildlife it attracts. Gwendolyn High, 13405 158th Ave. SE, Renton, 98059, expressed support for the proposed prezoning map for the East Renton Plateau PAA. Noting the drainage and flooding problems, she stated that R-4 zoning is not appropriate for the entire area. Additionally, she submitted a petition signed by 14 people supporting the proposed map. Howard McOmber, 475 Olympia Ave. NE, Renton, 98056, praised the efforts of the Fire Department for extracting a resident from a house on which a tree fell as a result of the wind storm on 12/14/2006. On another topic, Mr. McOmber voiced support for the proposed prezoning map for the East Renton Plateau PAA, noting that individual parcel zoning can be reviewed in the future. Additionally, he encouraged annexation to Renton. Jason Jarman, 13709 175th Ave. SE, Renton, 98059, indicated that his property, located in the East Renton Plateau PAA, is proposed for R-l zoning. He explained that he purchased the property because of its current zoning, and expressed concern regarding the proposed zoning change. Noting that his property is contiguous to R-4 zoning on two sides, Mr. Jarman asked that the City be open-minded in addressing future zoning situations with individual property owners. Matt Mega, Seattle Audubon Society Director of Urban Habitat, 8050 35th Ave. NE, Seattle, 981 15, submitted a letter expressing the Seattle Audubon Society's appreciation for Council's continued involvement and concern about the Sunset Bluff development located near the Black River Riparian Forest which contains a heron colony. Suzanne Krom, President of Herons Forever, PO Box 16155, Seattle, 981 16, voiced appreciation for the conditions placed on the Sunset Bluff development located near the Black River Riparian Forest in efforts to protect the heron colony. She described an erosion failure and associated water runoff that occurred in the vicinity a year ago. MOVED BY CLAWSON, SECONDED BY PERSSON, COUNCLL ALLOW THE SPEAKER ANOTHER MNUTE. CARRIED. Ms. Krom pointed out that the runoff kills life forms that the herons depend on for sustenance. She indicated that she will forward an informational packet to Council. MOVED BY PERSSON, SECONDED BY BRLERE, COUNCIL EXTEND THE AUDIENCE COMMENT PERIOD UNTIL ALL SIGNED-UP SPEAKERS HAVE SPOKEN. CARRIED. January 8,2007 Citizen Comment: Carpenter - East Renton Plateau PAA Prezoning Citizen Comment: Rider - 2006 Comprehensive Plan Amendments, Kennydale Blueberry Farm Citizen Comment: Natelson - 2006 Comprehensive Plan Amendments. Kennydale Renton City Council Minutes Page 7 Tom Carpenter, East Renton Plateau Citizen Task Force Member, 15006 SE 139th PI., Renton. 98059, expressed support for the proposed prezoning map for the East Renton Plateau PAA. He pointed out the following in regards to the prezoning process: R-1 is an appropriate urban zone; it is illegal for government agencies to make zoning decisions based on impact to property values; prezoning is not property or parcel specific - those issues are handled during the permitting process; and the critical areas ordinance is not a substitute for appropriate zoning designations. Mr. Carpenter explained that the purpose of prezoning is for the City to establish what the intended land use will be based upon the characteristics of the land. He indicated that the City should halt all development in the area, upon annexation, until the Renton Comprehensive Plan is updated. Responding to Councilmember Corman's inquiry regarding inverse condemnation claims related to downzoning of property, City Attorney Warren explained that the purpose of an inverse condemnation action is to receive compensation for the elimination of all development potential on a parcel. He stated that as long as the process is followed and Council uses its discretion to establish area-wide zoning, there is no liability upon the Council. Economic Development Administrator Pietsch reviewed the East Renton Plateau PAA prezoning process. He explained that the Comprehensive Plan's Residential Low Density designation allows three zones for this area, and noted that the R-l zone boundary line was drawn where environmental constraints exist. Mr. Pietsch pointed out that upon annexation, propeny owners can apply for rezones, which will be considered on a parcel by parcel basis. Noting that a majority and minority report will be issued by the Planning and Development Committee, Mr. Pietsch described the difference between the two reports. He stated staffs position that zoning the area R-1, where there is limited development potential, better aligns with what the critical areas ordinance should protect. (See page 10 for Planning and Development Committee reports.) Discussion ensued regarding the area's current King County zoning, how the critical areas ordinance applies in relation to the zoning ordinance, the deduction of environmental constraints from buildable property, the potential availability of bonuses, and the intent to continue work on the development regulations for the R-l and R-4 zones. Susan Rider, 1835 NE 20th St., Renton, 98056, stated that the Kennydale Critical Areas Alliance withdrew its SEPA appeal of the Kennydale Blueberry Farm Comprehensive Plan amendment. She explained that with the downzoning of the surrounding area, many residents have been asked to forego maximum profit in developing their own properties in order to protect the peat bog in Kennydale Creek headwaters. Ms. Rider expressed concern regarding the City's efforts to upzone the farm wherein the actual peat wetland and headwaters lie, which will increase the value of the property. She quoted passages from Renton land use policy documents, and described how they apply to the blueberry farm's environmental characteristics. Ms. Rider concluded that the applicant for the amendment has not shown that the rezone is appropriate and timely. Debbie Natelson, 801 Renton Ave. S., Renton, 98057, spoke on the topic of the Kennydale Blueberry Farm rezone, voicing concern regarding the City helping the owner to potentially make a large profit on the property. Ms. Natelson said January 8,2007 Blueberry Farm Citizen Comment: Eberle - East Renton Plateau PAA Prezoning Citizen Comment: O'Connor 2006 Comprehensive Plan Amendments, Kennydale Blueberry Farm Citizen Comment: Bryant - East Renton Plateau PAA Prezoning Citizen Comment: Cave - 2006 Comprehensive Plan Amendments, Kennydale Blueberry Farm Citizen Comment: Hicks - 2006 Comprehensive Plan Amendments. Kennydale Blueberry Farm CONSENT AGENDA Renton City Council Minutes Page 8 this peat bog property is an incredible resource, and she stressed the importance of wetland protection and stormwater management. She pointed out that what happens with the property affects not only the local neighborhood, but the entire region. In conclusion, she stated that even if the peat bog has been degraded by past construction, a degraded peat bog is better than a housing development in regards to the ecological value. Pete Eberle, 18225 SE 147th St., Renton, 98059, speaking on the East Renton Plateau PAA prezoning, expressed support for annexation to Renton, and for R- I and R-4 zoning as outlined by the majority report of the East Renton Plateau Citizen Task Force. William O'Connor, 10402 15 1st Ave. SE, Renton, 98059, urged Council to reject any rezone of the Kennydale Blueberry Farm, saying that the property is correctly zoned as Resource Conservation. Ronda Bryant, East Renton Plateau Citizen Task Force Member, 6220 SE 2nd PI., Renton. 98059, noted the desire of some people for larger lots for large homes in the Renton area. She indicated Renton has more than enough buildable land right now to meet Growth Management Act mandated population. Ms. Bryant stated that R-I zoning is warranted in the East Renton Plateau PAA due to the topography and hydrology of the area. She stressed that the task force spent many hours discussing where to draw the boundary line for the R-I zoning. Encouraging approval of the prezoning proposal, Ms. Bryant pointed out that individual property zoning can be reviewed in the future. Robert Cave, 1813 NE 24th St., Renton, 98056, pointed out that the reason the owner of the Kennydale Blueberry Farm is requesting a rezone is to increase the value of the orooertv. Mr. Cave indicated that a rezone of the orooertv will .. , .. . lend to the appearance that it can be developed resulting in more meetings and community members opposing development. Mr. Cave asked that Council reject the rezone Responding to Councilmember Corman's inquiry regarding the status of the Kennydale Blueberry Farm rezone, Economic Development Administrator Pietsch reported that the matter was appealed prior to the issuance of the Planning and Development Committee's recommendation. Now that the appeal has been withdrawn, he indicated that the matter will be rescheduled in Committee. Mr. Pietsch noted that the property owner originally requested R-8 zoning, and after working with the owner, staff and the Planning Commission recommended R-4 zoning. Barbara Hicks, 10402 151st Ave. SE, Renton, 98059, spoke against the rezone of the Kennydale Blueberry Farm. She stated that the property should remain zoned Resource Conservation, which will protect the wetland. Ms. Hicks indicated that an upzone will detrimentally affect the well-being of this natural resource. Items on the consent agenda are adopted by one motion which follows the listing. At the request of Councilmember Persson, item 7.d. was removed fo~ separate consideration. January 8. 2007 Council Meeting Minutes of 1211 112006 Appointment: Civil Service Commission Appointment: Advisory Commission on Diversity Plat: Amberwood 11, NE 4th St. FP-06-059 EDNSP: Multi-Family Housing Property Tax Exemption, The Sanctuary EDNSP: Multi-Family Housing Property Tax Exemption, The Reserve Latecomer Agreement: Lakeridge Development, Liberty Grove, LA-05-002 CAG: 06-023. Airport #790 Building Construction. Lincoln Construction Utility: Garden Ave N & Park Ave N Retail Building, Lowe's HIW Inc Utilities Easement Amendment Separate Consideration Item 7.d. City Clerk: Interim Official Newspaper. Renton Reporter Renton City Council Minutes Page 9 Approval of Council meeting minutes of 1211 112006. Council concur. Mayor Keolker appointed Richard Fischer, 833 SW Sunset Blvd., Unit D19, Renton, 98057, to the Civil Service Commission for a six-year term expiring 1213 112012. Council concur. Mayor Keolker appointed the following individuals to the Advisory Commission on Diversity: Antonio Cube, Sr., 1771 1 160th Ave. SE, Renton, 98058 (term expires 1213112008); Sandel DeMastus, 1137 Harrington Ave. NE, Renton, 98056 (12/31/2007); Vem Nichols, 194 Monterey PI. NE, Renlon, 98056 (1213112008); Charles Thomas, 4408 NE 1 Ith St.. Renton, 98059 (1213112007); and Lari White, 1315 S. Puget Dr., C-21. Renton. 98055 (1213 112008). Council concur. Development Services Division recommended approval, with conditions, of the Amberwood I1 Final Plat; 17 single-family lots on 4.2 acres located at 6135 NE 4th St. Council concur. (See page 12 for resolution.) Economic Development, Neighborhoods and Strategic Planning Department recommended approval of the multi-family housing property tax exemption agreement for The Sanctuary project; near intersection of N. loth St. and Park Ave. N. Refer to Plannine and Development Committee. Economic Development, Neighborhoods and Strategic Planning Department recommended approval of the multi-family housing property tax exemption agreement for The Reserve project; near intersection of Park Ave. N. and Logan Ave. N. Refer to Plannine and Development Committee. Technical Services Division requested final approval of the 15-year Liberty Grove latecomer agreement submitted by Lakeridge Development, Inc. for sewer main extension at 160th Ave. SE and SE 136th St., and requested authorization for staff to finalize the agreement per City Code. Council concur. Transportation Systems Division submitted CAG-06-023, Airport Quonset Hut Building #790 Construction; and requested approval of the project, authorization for final pay estimate in the amount of $3,862.40, commencement of 60-day lien period, and release of retained amount of $7,033.40 to Lincoln Construction, Inc., contractor, if all required releases are obtained. Council concur. Utility Systems Division recommended approval of a utilities easement amendment granted by Lowe's HIW Inc. which modifies the existing City storm drainage easement for Lowe's proposed retail building in the vicinity of Garden Ave. N. and Park Ave N. Council concur. MOVED BY NELSON. SECONDED BY LAW, COUNCIL APPROVE THE CONSENT AGENDA AS AMENDED TO REMOVE ITEM 7.d. FOR SEPARATE CONSIDERATION. CARRIED. City Clerk requested approval to designate the Renton Reporter as the City's interim official newspaper, as the King County Journal is ceasing publication. Councilmember Persson expressed concern regarding the delivery performance and publishing schedule of the Renton Reporter. Reporting that the City is going out for bid to determine the official newspaper, Mayor Keolker assured that the matter will be brought back to Council if there are problems with the Renton Reporter in the interim. Renton City Council Minutes Page 10 Added CORRESPONDENCE Citizen Comment: Oliphant - East Renton Plateau PAA Prezoning UNFINISHED BUSINESS Committee of the Whole AJLS: East Renton Plateau PAA, King County Planning & Development Committee Planning: East Renton Plateau PAA Prezoning MOVED BY NELSON, SECONDED BY BRIERE, COUNCIL APPROVE ITEM 7.d. AS PRESENTED. CARRIED. (See page 12 for resolution.) A letter was read from Anita and Richard Oliohant. 16519 SE 145th St.. Renton, 98059, acknowledging the workable solution of the East Renton Plateau Citizen Task Force and City staff regarding prezoninp, for the East . -. - Renton Plateau Potential Annexation Area. They expressed concern regarding high-density development, and recommended that Council approve the proposed prezoning. Council President Nelson presented a Committee of the Whole report regarding the East Renton Plateau annexation interlocal agreement with King County. The Committee recommended concurrence in the staff recommendation to approve an interlocal agreement with King County which will: transfer properties related to the annexation of the East Renton Plateau area; set an effective date of annexation; and transfer King County Annexation Initiative funding to the City upon an affirmative annexation vote in February 2007. The Committee accepted the technical amendments proposed by the Metropolitan King County Council in its ratification of the same agreement on 12/4/2006, and incorporated those changes in the City's approved version of the agreement. The Committee further recommended that the resolution authorizing the Mayor and City Clerk to sign the interlocal agreement be presented for reading and adoption. MOVED BY NELSON. SECONDED BY BRIERE, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRLED. (See page 12 for resolution.) Majority Report: Planning and Development Committee Chair Briere presented a majority report regarding the prezoning for the East Renton Plateau Potential Annexation Area (PAA). The Committee majority recommended concurrence in the Planning Commission recommendation to approve the prezoning map as shown on the East Renton Plateau Planning Commission preliminary recommendation map dated 12/14/2006. The Committee further recommended that the ordinances establishing RC (Resource Conservation), R- 1 (Residential - one dwelling unit per net acre), R-4 (Residential - four dwelling units per net acre), and R-8 (Residential - eight dwelling units per net acre) zoning be presented for first and advanced to second reading.* Minority Report: Planning and Development Committee Member Palmer presented a minority report regarding the prezoning for the East Renton Plateau PAA. The Committee minority recommended the prezoning map and ordinance for the East Renton Plateau PAA be modified to change the proposed R-1 zoned properties to R-4, hut to retain the proposed Resource Conservation zoned properties as drafted. A further recommendation is to retain in Committee the subject of critical areas regulations for discussion of whether the critical ordinance regulations and implementation comply with City Council desired policy direction. *MOVED BY BRIERE, SECONDED BY LAW, COUNCIL CONCUR IN THE MAJORITY COMMITTEE REPORT.* Councilmember Corman expressed appreciation for the efforts of the East Renton Plateau Citizen Task Force and the Planning Commission on this matter. Councilmember Briere stated that she was impressed with the work of the task force and Planning Commission, pointing out that the prezoning map was very well thought out. Regarding the public comment, she indicated that January 8,2007 Renton City Council Minutes Page I I the majority of people favor the proposal. Councilmember Palmer indicated that although she has a different opinion, she appreciates the efforts of the task force and Planning Commission. She noted that the proposed R-1 zoned areas are scattered throughout the PAA area, and that most of the people who spoke for the R-l zone were on the task force or part of the annexation effort. Ms. Palmer pointed out that bonuses in the R-l zone may not help very many people. She further pointed out that the environmental features in the area will take care of themselves, which is why she is recommending another look at the critical areas ordinance. Ms. Palmer stated that at the Planning and Development Committee meeting she heard some skepticism in staffs presentation as to whether the critical areas ordinance is doing what it is supposed to do. For consistency, she recommended R-4 zoning for the area, emphasizing that the environmental features will dictate whether the property is buildable or not. Ms. Palmer concluded that R-4 zoning is more consistent with Council's past decisions. Councilmember Briere said the areas proposed for R-l zoning are the most environmentally constrained and should be protected. Councilmember Clawson stated that the R-1 designated areas do contain more environmental features than the rest of the area. In regard to density, he noted that more houses will create more water runoff. Mr. Clawson further noted that the proposed zoning more closely relates to the expectations of future property buyers, and that owners can request rezones without a Comprehensive Plan amendment. Responding to Councilmember Corman's question, Economic Development Administrator Pietsch explained that all eligible zones within a Comprehensive Plan designation can be considered for a rezone by the Hearing Examiner. Councilmember Persson commented that R- l zoning raises expectations of future property buyers, and people need to understand that an R-l zoned parcel could potentially be rezoned to R-4. City Attorney Warren pointed out that the final decision regarding a rezone is made by Council via an ordinance. *MOTION TO ADOPT THE MAJORITY COMMITTEE REPORT CARRIED. (See page 12 for ordinances.) Following discussion, Mayor Keolker confirmed that Council will receive an overview of the critical areas ordinance. Finance Committee Chair Persson presented a report recommending approval of Claim Vouchers 255234 - 255738 and three wire transfers totaling $3,959,581.57; and approval of Payroll Vouchers 66895 - 67186, two wire transfers, and 1,261 direct deposits totaling $4,045,752.88. MOVED BY PERSSON, SECONDED BY LAW, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. EDNSP: 2007 Lodging Tax Finance Committee Chair Persson presented a report recommending Collections Allocation, concurrence in the Renton Lbdging Tax Advisory Committee's Lodging Tax Advisory recommendation to allocate lodging tax funding for 2007 tourism-related Committee activities as follows: $85,000 to the Renton Community Marketing Campaign; Finance Committee Finance: Vouchers January 8.2007 Renton City Council Minutes Page 12 Committee on Committees Council: 2007 Committee Meeting Time Revisions RESOLUTIONS AND ORDINANCES Resolution #3849 City Clerk: Interim Official Newspaper, Renton Reporter Resolution #3850 Plat: Amberwood U, NE 4th St, FP-06-059 Resolution #3851 AILS: East Renton Plateau PAA, King County Planning: East Renton Plateau PAA, Prezone to R-I (425.11 Acres) Ordinance #5252 $125,000 to Renton Visitor's Connection; and A one-time allocation of $5,000 to the City of Renton Community Services Department to collaborate with other cities and the SeattleIKing County Health Department in the production of a South King County "Healthy Lifestyles" map, featuring a listing of trails, recreational, and exercise opportunities throughout the region. The Renton IKEA Performing Arts Center is encouraged to work closely with Renton Visitor's Connection to explore the possibility of future lodging tax funding allocations either directly, or through the organization's annual work plan. MOVED BY PERSSON, SECONDED BY LAW, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Council President Nelson presented a Committee on Committees report recommending the following changes to the Council committee meeting days and times for 2007: Utilities Committee will meet on the first and third Thursdays at 3 p.m Planning and Development Committee will meet on the first and third Thursdays at 2 p.m. Transportation (Aviation) Committee will meet on the first and third Wednesdays at 4 p.m. MOVED BY NELSON, SECONDED BY LAW, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRLED. The following resolutions were presented for reading and adoption: A resolution was read designating the Renton Reporter as the City's interim official newspaper. MOVED BY BRIERE, SECONDED BY LAW, COUNCIL ADOPT THE RESOLUTION AS READ. CARRIED. A resolution was read approving the Amberwood U Final Plat; approximately 4.2 acres located at 6135 NE 4th St. MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADOPT THE RESOLUTION AS READ. CARRIED. A resolution was read authorizing the Mavor and Citv Clerk to enter into an interlocal agreement between the City of Renton and King County relating to the annexation of a subarea of the East Renton Plateau Potential Annexation Area. MOVED BY NELSON, SECONDED BY BRIERE, COUNCIL ADOPT THE RESOLUTION AS READ. CARRIED. Councilmember Persson stated that he voted no on the resolution because the citizens of Renton will not get the same full service from the Police Department that they need during the interim basis. The following ordinances were presented for first reading and advanced for second and final reading: An ordinance was read establishing the zoning classification of certain property consisting of 425.1 1 acres located within the City of Renton's East Renton Plateau Potential Annexation Area from R-4 (Urban Residential - four dwelling units per acre, King County zoning) to R-1 (Residential - one dwelling unit per acre, Renton zoning); East Renton Plateau Prezone; LUA-06-152. MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADVANCE THE ORDINANCE FOR SECOND AND FINAL READING. CARRIED. Following second and final reading of the above-referenced ordinance, it was January 8,2007 Planning: East Renton Plateau PAA, Prezone to R- 1 (425.1 1 Acres) Planning: East Renton Plateau PAA. Prezone to R-l (20.54 Acres) Ordinance #5253 Planning: East Renton Plateau PAA, Prezone to R-1 (20.54 Acres) Planning: East Renton Plateau PAA. Prezone to R-4 (1,350.41 Acres) Ordinance #5254 Planning: East Renton Plateau PAA. Prezone to R-4 (1,350.41 Acres) Planning: East Renton Plateau PAA, Prezone to RC (42.93 Acres) Ordinance #5255 Planning: East Renton Plateau PAA, Prezone to RC (42.93 Acres) Planning: East Renton Plateau PAA, Prezone to RC (92.60 Acres) Ordinance #5256 Renton City Council Minutes Page 13 MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADOPT THE ORDLNANCE AS READ. ROLL CALL: FIVE AYES: NELSON, CLAWSON, LAW, BRIERE, CORMAN; TWO NAYS: PALMER, PERSSON. CARRIED. An ordinance was read establishing the zoning classification of certain property consisting of 20.54 acres located within the City of Renton's East Renton Plateau Potential Annexation Area from R-4 (Urban Residential - four dwelling units per acre, King County zoning) to R-1 (Residential - one dwelling unit per acre, Renton zoning); East Renton Plateau Prezone; LUA-06-152. MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADVANCE THE ORDINANCE FOR SECOND AND FINAL READING. CARRIED. Following second and final reading of the afore-referenced ordinance, it was MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: FIVE AYES: NELSON, CLAWSON, LAW, BRIERE, CORMAN; TWO NAYS: PALMER, PERSSON. CARRIED. An ordinance was read establishing the zoning classification of certain property consisting of 1,350.41 acres located within the City of Renton's East Renton Plateau Potential Annexation Area from R-4 (Urban Residential - four dwelling units per acre, King County zoning) to R-4 (Residential - four dwelling units per acre, Renton zoning); East Renton Plateau Prezone; LUA-06-152. MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADVANCE THE ORDINANCE FOR SECOND ANDFINAL READING. CARRIED. Following second and final reading of the above-referenced ordinance, it was MOVED BY BRERE, SECONDED BY CLAWSON, COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: FIVE AYES: NELSON, CLAWSON. LAW, BRIERE, CORMAN; TWO NAYS: PALMER, PERSSON. CARRIED. An ordinance was read establishing the zoning classification of certain property consisting of 42.93 acres located within the City of Renton's East Renton Plateau Potential Annexation Area from R-4 (Urban Residential - four dwelling units per acre. King County zoning) to RC (Resource Conservation, Residential - one dwelling unit per ten acres. Renton zoning); East Renton Plateau Prezone; LUA-06-152. MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCLL ADVANCE THE ORDINANCE FOR SECOND AND FINAL READING. CARRIED. Following second and final reading of the above-referenced ordinance, it was MOVED BY BRERE, SECONDED BY CLAWSON, COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRLED. An ordinance was read establishing the zoning classification of certain property consisting of 92.60 acres located within the City of Renton's East Renton Plateau Potential Annexation Area from R-4 (Urban Residential - four dwelling units per acre, King County zoning) to RC (Resource Conservation, Residential - one dwelling unit per ten acres, Renton zoning); East Renton Plateau Prezone; LUA-06-152. MOVED BY BRLERE, SECONDED BY CLAWSON, COUNCIL ADVANCE THE ORDINANCE FOR SECOND AND FINAL READING. CARRLED. Following second and final reading of the above-referenced ordinance, it was lanuary 8.2007 Renton City Council Minutes Page 14 Planning: East Renton Plateau MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADOPT PAA, Prezone to RC (92.60 THE ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED. Acres) Planning: East Renton Plateau An ordinance was read establishing the zoning classification of certain property PAA, Prezone to R-8 (7.34 consisting of 7.34 acres located within the City of Renton's East Renton Plateau Acres) Potential Annexation Area from R-4 (Urban Residential - four dwelling units per acre, King County zoning) to R-8 (Residential - eight dwelling units per acre, Renton zoning); East Renton Plateau Prezone; LUA-06-152. MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADVANCE THE ORDINANCE FOR SECOND AND FINAL READING. CARRIED. Ordinance #5257 Following second and final reading of the afore-referenced ordinance, it was Planning: East Renton Plateau MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADOPT PAA, Prezone to R-8 (7.34 Acres) NEW BUSINESS Airport: Financial & Property Management Options Planning: Highlands Task Force Planning: Sonics Arena in North Renton AUDIENCE COMMENT Citizen Comment: Osbom - East Renton Plateau PAA Prezoning Citizen Comment: Petersen - Various EXECUTIVE SESSION AND ADJOURNMENT THE ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED MOVED BY PALMER, SECONDED BY PERSSON, COUNCIL REFER THE AIRPORT FINANCIAL AND PROPERTY MANAGEMENT OPTIONS TO THE TRANSPORTATION (AVIATION) COMMITTEE. CARRIED. Responding to Councilmember Persson's inquiry. Councilmember Briere indicated that the topic of the Highlands Task Force membership and tasks is in the Planning and Development Committee. Councilmember Persson voiced concern regarding potential transportation problems if an arena is sited in North Renton for the Seattle Sonics professional basketball team and other events. Mayor Keolker stated the City has been in contact with North Renton neighborhood representatives who are developing a list of concerns in case this happens. She assured that nothing has been decided, and stressed that Council will be kept apprised of any developments. Nancy Osborn, Planning Commission Member, 4635 Morris Ave. S., Renton, 98055, questioned why Councilmember Palmer voted against the ordinance that rezoned a 1,350.41 acre parcel from R-4 to R-4. Councilmember Palmer replied it was an oversight due to the large number of similar ordinances. Inez Petersen, PO Box 1295, Renton, 98057, expressed her hope that the City will grandfather in Jeff Colee's over-height fence under the ADA (Americans with Disabilities Act) requirements for zoning. Additionally, Ms. Petersen objected to the granting of multi-family housing property tax exemptions to developers and the return of lodging tax funding to businesses while sidewalk repairs and other infrastructure improvements in Renton are needed. Councilmember Persson explained that State law requires that tax collected from the rental of hotel rooms only be used for promotional purposes to encourage people to come to Renton. He noted that some members of the Renton Lodging Tax Advisory Committee are business representatives required to collect taxes. MOVED BY NELSON, SECONDED BY CORMAN, COUNCIL RECESS INTO EXECUTIVE SESSION FOR APPROXIMATELY 20 MINUTES TO DISCUSS LITIGATION WITH NO OFFICIAL ACTION TO BE TAKEN AND THAT THE COUNCIL MEETING BE ADJOURNED WHEN THE EXECUTIVE SESSION IS ADJOURNED. CARRIED. ~ime: 952 p.m. January 8,2007 Renton City Council Minutes Page 15, Executive session was conducted. There was no action taken. The executive session and the Council meeting adjourned at 10: 12 p.m. Bonnie I. Walton, CMC, City Clerk Recorder: Michele Neumann January 8,2007 King County Department of Assessments Accounting Division 500 Fourth Avenue, ADM-AS-0725 Seattle, WA 98104-2384 Lloyd Hara Assessor (206) 2965145 FAX (206) 2964106 Email: as~nor.info@ingcounly.gov hn~://www.kinerouotv.e~v/~ssessor/ I, Lloyd Hara, King County Assessor, pursuant to the duty imposed upon me by RCW 84.48.130, certify that the assessed valuation of all the property subject to taxation situated within the King County boundaries of the City of Renton, as equalized and fixed by the County Board of Equalization and the State Board of Tax Appeals, as of January 22, 2010 (for taxes payable in 2010) is $1 1,884,728,440 (Grand Total) and $1 1,735,002,949 (Excess Total which excludes all exempt senior citizens). The TAV (timber assessed value) is $0. WITNESS my hand this gth day of March, '2010. ~ing County Assessor CERTIFICATE REGARDING OUTSTANDING DEBT I, Iwen Wang, Finance and Information Services Administrator of the City of Renton, Washington (the "City"), do hereby certify that the following are all of the City's currently outstanding general obligation bonds and long-term leases and financing contracts as of May 11, 2010 (excluding the City's Limited Tax General Obligation Refunding Bonds, 2010 issued on the date hereof): Voted General Obligation Bonds: Designation Outstanding Balance $ Nonvoted General Obligation Bonds: Designation Outstanding Balance 2000 Valley Com Bonds (I) $ 184,000 200 1 LTGO & Refunding (2) 18,700,000 2002 LTGO 2,860,000 2006 LTGO 16,920,000 2009 SCORE Bonds (3) 3 1,044,600 2010 Valley Com Bonds (I) 1,065,000 (I' Valley Communications Center Development Authority issued special obligation bonds on September 15, 2000 (the "Valley Com Bonds") in the total aggregate principal amount of $12,758,000 of which the callable 201 1 through 201 5 maturities were refunded on April 5, 2010. The City is responsible for 20 percent of the debt service on the Valley Com Bonds. "' Includes the bonds to be refunded. "' The South Correctional Entity Facility Public Development Authority issued bonds on November 4, 2009 (the "SCORE Bonds"). The par amount of the SCORE Bonds was $86,235,000 and the City is obligated to pay 36 percent of the debt service on the SCORE Bonds. Long-term leases and conditional sale contracts (including COPS) and other debt: Designation Outstanding Balance Dated as of this 1 lth day of May, 2010. City of Renton, Washington BOND COUNSEL'S CALCULATION OF DEBT LIMIT Value of Taxable Property within the City of Renton, King County, as set in 2009 for purposes of 2010 regular and excess levies, per certificate of the King County Assessor: $ 11,884,728,440 Nonvoted Limited Indebtedness: Nonvoted Debt Ceiling per RCW 39.36.020: 1 .50% of value of taxable property $ 178,270,927 Less: Nonvoted debt outstanding per Certificate of City Finance and Information Services Administrator $ (70,773,600) LeasesISale Contracts 0 Limited Tax General Obligation Refunding Bonds, 2010 (6,170,000) Plus: Outstanding Limited Tax General Obligation Bonds, 2001 refunded by the Proposed Limited Tax General Obligation Bonds, 2010 6.000.000 Total Nonvoted Debt $ (76,943,600) Remaining Nonvoted Debt Capacity $ 107.327.327 Total Debt Ceiling for General Municipal Pumoses, Voted and Nonvoted: 2.50% value of taxable property (RCW 39.36.020) $ 297,118,211 &: Voted Debt Outstanding per Certificate of City Finance and Information Services Administrator $ 0 Nonvoted debt from above $ (76,943.600) Total Debt $ (76,943,600) Remaining Debt Capacity Unused: $ 220.174.61 1 Based upon the certificate of assessed valuation of the King County Assessor and the certificate of general obligation debt outstanding as of May 11, 2010 of the City, the issuance of the Limited Tax General Obligation Refunding Bonds, 2010 by the City of Renton, Washington, will be within the constitutional and statutory limits for nonvoted, voted and total indebtedness. Dated as of this 1 Ith day of May, 2010 BY Deanna Gregory CERTIFICATE REGARDING ORDNANCE I, Bonnie I. Walton, City Clerk of the City of Renton, Washington (the "City"), do hereby certify: 1. That the attached Ordinance No. 5534 (the "Ordinance") is a true and correct copy of an ordinance of the City Council, as finally adopted at a regular meeting of the City Council held on April 5, 2010, and duly recorded in my office, and that such Ordinance has not been amended or superseded. 2. That the meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of the meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the City Council voted in the proper manner for the adoption of the Ordinance; that all other requirements and proceedings incident to the proper adoption of the Ordinance have been duly fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. Dated this 1 l th day of May, 2010. !$&&,wLJ d& Bonnie I. Walton, City Clerk City of Renton, washington ClTV OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 ORDINANCE NO. 5534 AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, providing for the issuance and sale of limited tax general obligation refunding bonds of the City in the aggregate principal amount of not to exceed $6,800,000 to provide funds for the purpose of refunding certain limited tax general obligation bonds of the City; authorizing the appointment of an escrow agent and execution of an escrow agreement; and delegating certain authority to approve the final terms of the bonds. PASSED: April 5, 2010 PREPARED BY: K&L Gates LLP Seattle,,Washington ., .. . . o,,;.u;'..;+;:.-...,.. .' I 8%. . ,. ,.' G: NFn, ".r . - ..,A. ". . . ,: ,*- 3,. , .c ,< ...' 3' - '.. .' j . i- CEln'lFICATE , 'L : . . .!- .; ,l?$he undersigned City Clerk of the \ \ j iC$y of Renton, Washington, certify . . ,- > L, - 8% : . :. . -. ! . . .i d . ...::. . Zt:thbt this is a true and correct copy of vC\;- , 5~3q . Subscribed *; ..:., ; ,,,,.... . . '%., ",~1.. - ., r~'',. b.. "(I.. . . ... ' ..( ORDINANCE NO. 5534 Section 1. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section 10. Section 11. Section 12. Section 13. Section 14. Section 15. Section 16. Section 17. TABLE OF CONTENTS* Page . . Defin~t~ons ................................................................................................................ 2 . . Authorlzat~on of Bonds ............................................................................................ 7 . . Descr~pt~on of Bonds ................................................................................................ 7 Registration, Transfer and Payment of Bonds ......................................................... 8 Redemption and Purchase of Bonds ...................................................................... 13 Form of the Bonds ................................................................................................. 17 Execution of the Bonds .......................................................................................... 19 Refunding Procedures ............................................................................................ 20 Tax Covenants ........................................................................................................ 23 Bond Fund; Provision for Payment ........................................................................ 25 Defeasance ............................................................................................................. 26 Sale of the Bonds ................................................................................................... 27 Bond Insurance ...................................................................................................... 30 Continuing Disclosure Undertaking ....................................................................... 30 Lost, Stolen or Destroyed Bonds ............................................................................ 34 . . Severab~l~ty ............................................................................................................. 34 Effective Date of Ordinance ................................................................................... 35 EXHIBIT A Form of Escrow Deposit Agreement 7 F 3 X' -&..,& -, ->z. ..?q >:. a . _ _- : .+.?a % \ n- 4 ., ' . 'J -7: . - , 7 :>. i: Ily- - ?5 - r- - " - 5 . - ' This Table of Contents is only and is not a part of this ordinance. CITY OF RENTON, WASHINGTON ORDINANCE NO. 5534 AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, providing for the issuance and sale of limited tax general obligation refunding bonds of the City in the aggregate principal amount of not to exceed $6,800,000 to provide funds for the purpose of 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. WHEREAS, pursuant to Ordinance No. 4922 (the "2001 Bond Ordinance"), passed on October 22, 2001, the City of Renton, Washington (the "City") issued its Limited Tax General Obligation and Refunding Bonds, 2001, dated November 1,2001 (the "2001 Bonds"), currently outstanding in the aggregate principal amount of $18,700,000, and maturing in remaining principal amounts and bearing interest as follows: ; and Maturity Principal Interest (December 1) Amount Rate 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 ORDINANCE NO. 5534 WHEREAS, the 2001 Bonds maturing on and after December 1, 2012 are callable for redemption on or after December 1, 2011, in whole at any time or in part on any interest payment date, at a price of par plus accrued interest to the date of redemption; and WHEREAS, as a result of changed market conditions, it appears that a debt service savings may be obtained by refunding a portion of the callable 2001 Bonds through the issuance of limited tax general obligation refunding bonds of the City in the aggregate principal amount of not to exceed $6,800,000 (the "Bonds"); NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DOES ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: Acquired Obligations means the Government Obligations acquired by the City under the terms of this ordinance and the Escrow Agreement to effect the defeasance and refunding of the Refunded Bonds. Beneficial Owner means any person that has or shares the power, directly or indirectly to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). Bond Fund means the City of Renton Limited Tax General Obligation Bond Debt Service Fund described in Section 10 of this ordinance. Bond Insurance Policy means the municipal bond insurance policy, if any, issued by the Insurer insuring the payment when due of the principal of and interest on all or a portion of the Bonds as provided therein. ORDINANCE NO. 5534 Bond Purchose Agreement means the contract for the purchase of the Bonds between the Underwriter and City, executed pursuant to Section 12 of this ordinance. Bond Register means the registration books showing the name, address and tax identification number of each Registered Owner of the Bonds, maintained pursuant to Section 149(a) of the Code. Bond Registrar means, initially, the fiscal agency of the State of Washington, for the purposes of registering and authenticating the Bonds, maintaining the Bond Register, effecting transfer of ownership of the Bonds and paying interest on and principal of the Bonds. Bond Year means each one-year period that ends on the date 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 of the Bonds or the date that is five years after the date of issuance of the Bonds, Bond Years end on each anniversary of the date of issue and on the final maturity date of the Bonds. Bonds mean the City of Renton, Washington, Limited Tax General Obligation Refunding Bonds, 2010, if any, issued pursuant to this ordinance. City means the City of Renton, Washington, a municipal corporation of the State of Washington. Code means the Internal Revenue Code of 1986, as amended, and shall include all applicable regulations and rulings relating thereto. Commission means the Securities and Exchange Commission. Council means the City Council as the general legislative authority of the City, as the same shall be duly and regularly constituted from time to time. ORDINANCE NO. 5534 Designated City Representative means the Mayor, the Chief Administrative Officer, or the Finance Director of the City and any successor to the functions of such offices. DTC means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, as depository for the Bonds pursuant to Section 4 hereof, Escrow Agreement means the Escrow Deposit Agreement between the City and the Escrow Agent to be dated as of the date of closing and delivery of the Bonds, substantially in the form attached hereto as Exhibit A. Escrow Agent means the financial institution selected by the Designated City Representative as provided in Section 8 of this ordinance. Finonce Director shall mean the City's Finance and Information Services Administrator or the successor to such officer. Government Obligations mean those obligations now or hereafter defined as such in chapter 39.53 RCW. Insurer means the municipal bond insurance company, if any, selected and designated by the Designated City Representative, pursuant to Section 13 of this ordinance, or any successor thereto or assignee thereof, as issuer of a Bond Insurance Policy for all or a portion of the Bonds. Letter of Representations mean the blanket issuer letter of representations from the City to DTC. MSRB means the Municipal Securities Rulemaking Board or any successor to its functions. ORDINANCE NO. 5534 Net Proceeds, when used with reference to the Bonds, means the principal amount of the Bonds, plus accrued interest and original issue premium, if any, and less original issue discount, if any. Privote Person means any natural person engaged in a trade or business or any trust, estate, partnership, association, company or corporation. Private Person Use means the use of property in a trade or business by a Private Person if such use is other than as a member of the general public. Private Person Use includes ownership of the property by the Private Person as well as other arrangements that transfer to the Private Person the actual or beneficial use of the property (such as a lease, management or incentive payment contract or other special arrangement) in such a manner as to set the Private Person apart from the general public. Use of property as a member of the general public includes attendance by the Private Person at municipal meetings or business rental of property to the Private Person on a day-to-day basis if the rental paid by such Private Person is the same as the rental paid by any Private Person who desires to rent the property. Use of property by nonprofit community groups or community recreational groups is not treated as Private Person Use if such use is incidental to the governmental uses of property, the property is made available for such use by all such community groups on an equal basis and such community groups are charged only a de minimis fee to cover custodial expenses. RCW means the Revised Code of Washington. Refunded Bonds mean all or a portion of the callable 2001 Bonds selected as Refunded Bonds by the Designated City Representative pursuant to Section 8. ORDINANCE NO. 5534 Registered Owner means the person named as the registered owner of a Bond in the Bond Register. For so long as the Bonds are held in book-entry only form, DTC shall be deemed to be the sole Registered Owner. Rule means the Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Savings Target means a dollar amount equal to at least four percent (4%) of the outstanding principal of the Refunded Bonds. 2001 Bond Ordinance means Ordinance No. 4922 passed by the City Council on October 22,2001, authorizing the issuance of the 2001 Bonds. 2001 Bonds mean the outstanding "City of Renton, Limited Tax General Obligation and Refunding Bonds, 2001" issued pursuant to the 2001 Bond Ordinance. Underwriter means Seattle-Northwest Securities Corporation, Seattle, Washington. Interpretation. In this ordinance, unless the context otherwise requires: (a) The terms "hereby," "hereof," "hereto," "herein, "hereunder" and any similar terms, as used in this ordinance, refer to this ordinance as a whole and not to any particular article, section, subdivision or clause hereof, and the term "hereafter" shall mean after, and the term "heretofore" shall mean before, the date of this ordinance; (b) Words of the masculine gender shall mean and include correlative words of the feminine and neuter genders and words importing the singular number shall mean and include the plural number and vice versa; ORDINANCE NO. 5534 (c) Words importing persons shall include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public bodies, as well as natural persons; (d) Any headings preceding the text of the several articles and sections of this ordinance, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this ordinance, nor shall they affect its meaning, construction or effect; and (e) All references herein to "articles," "sections" and other subdivisions or clauses are'to the corresponding articles, sections, subdivisions or clauses hereof. Section 2. Authorization of Bonds. The Council hereby authorizes the issuance of limited tax general obligation refunding bonds (the "Bonds") in an aggregate principal amount of not to exceed $6,800,000 for the purpose of providing the funds necessary to refund the Refunded Bonds and pay all or a portion of the costs incidental to the foregoing and to the issuance of the Bonds. Section 3. Description of Bonds. The Bonds shall be general obligations of the City; shall be designated the "City of Renton, Washington, Limited Tax General Obligation Refunding Bonds, 2010," with any additional series designation, if necessary; shall be dated as of their initial date of delivery; shall be fully registered as to both principal and interest; shall be in the denomination of $5,000 each, or any integral multiple thereof within a maturity, provided that no Bond shall represent more than one maturity; shall be numbered separately in such manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification; shall bear interest from their date, payable semiannually on the interest payment ORDINANCE NO. 5534 dates set forth in the Bond Purchase Agreement; and shall mature on December 1 in the years and principal amounts set forth and approved in the Bond Purchase Agreement executed by the Designated City Representative pursuant to Section 12 of this ordinance. Section 4. Registration, Transfer and Payment of Bonds. (a) Bond Registrar/Bond Register. The City hereby specifies and adopts the system of registration approved by the Washington State Finance Committee from time to time through the appointment of state fiscal agencies. The City shall cause a bond register to be maintained by the Bond Registrar. So long as any Bonds remain outstanding, the Bond Registrar shall make all necessary provisions to permit the exchange or registration or transfer of Bonds at its principal corporate trust office. The Bond Registrar may be removed at any time at the option of the Finance Director upon prior notice to the Bond Registrar and a successor Bond Registrar appointed by the Finance Director. No resignation or removal of the Bond Registrar shall be effective until a successor shall have been appointed and until the successor Bond Registrar shall have accepted the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of such Bonds and this ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication of the Bonds. (b) Registered Ownership. The City and the Bond Registrar, each in its discretion, may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all purposes (except as provided in Section 14 of this ordinance), and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be ORDINANCE NO. 5534 made only as described in Section 4(h) hereof, but such Bond may be transferred as herein provided. All such payments made as described in Section 4(h) 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. (c) DTCAcceptance/Letters of Representations. The Bonds initially shall be held in fully immobilized form by DTC acting as depository. To induce DTC to accept the Bonds as eligible for deposit at DTC, the City has executed and delivered to DTC a Blanket Issuer Letter of Representations. Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the persons for whom they act as nominees (or any successor depository) with respect to the Bonds in respect of the accuracy of any records maintained by DTC (or any successor depository) or any DTC participant, the payment by DTC (or any successor depository) or any DTC participant of any amount in respect of the principal of or interest on Bonds, any notice which is permitted or required to be given to Registered Owners under this ordinance (except such notices as shall be required to be given by the City to the Bond Registrar or to DTC (or any successor depository)), or any consent given or other action taken by DTC (or any successor depository) as the Registered Owner. For so long as any Bonds are held in fully-immobilized form hereunder, DTC or its successor depository shall be deemed to be the Registered Owner for all purposes hereunder, and all references herein to the Registered Owners shall mean DTC (or any successor depository) or its nominee and shall not mean the owners of any beneficial interest in such Bonds. ORDINANCE NO. 5534 If any Bond shall be duly presented for payment and funds have not been duly provided by the City on such applicable date, then interest shall continue to accrue thereafter on the unpaid principal thereof at the rate stated on such Bond until it is paid. (d) Use of Depository. (1) The Bonds shall be registered initially in the name of "Cede & Co.", as nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such immobilized Bonds, or any portions thereof, may not thereafter be transferred except (A) to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (B) to any substitute depository appointed by the Finance Director pursuant to subsection (2) below or such substitute depository's successor; or (C) to any person as provided in subsection (4) below. (2) Upon the resignation of DTC or its successor (or any substitute depository or its successor) from its functions as depository or a determination by the Finance Director to discontinue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the Finance Director may hereafter appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (3) In the case of any transfer pursuant to clause (A) or (B) of subsection (1) above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a written request on behalf of the Finance Director, issue a single new Bond for each maturity then ORDINANCE NO. 5534 outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such written request of the Finance Director. (4) In the event that (A) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository, and no substitute depositon/ can be obtained, or (B) the Finance Director determines that it is in the best interest of the beneficial owners of the Bonds that such owners be able to obtain such bonds in the form of Bond certificates, the ownership of such Bonds may then be transferred to any person or entity as herein provided, and shall no longer be held in fully-immobilized form. The Finance Director shall deliver a written request to the Bond Registrar, together with a supply of definitive Bonds, to issue Bonds as herein provided in any authorized denomination. Upon receipt by the Bond Registrar of all then outstanding Bonds together with a written request on behalf of the Finance Director to the Bond Registrar, new Bonds shall be issued in the appropriate denominations and registered in the names of such persons as are requested in such written request. (e) Registration of Transfer of Ownership or Exchange; Change in Denominations. The transfer of any Bond may be registered and Bonds may be exchanged, but no transfer of any such Bond shall be valid unless it is surrendered to the Bond Registrar with the assignment form appearing on such Bond duly executed by the Registered Owner or such Registered Owner's duly authorized agent in a manner satisfactory to the Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the new Registered Owner) of the same date, maturity and interest rate and for the same aggregate principal amount in any authorized denomination, naming as Registered ORDINANCE NO. 5534 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. Any Bond may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same date, maturity and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer or to exchange any Bond during the 15 days preceding any interest payment or principal payment date any such Bond is to be redeemed. (f) Bond Registrar's Ownership of Bonds. The Bond Registrar may become the Registered Owner of any Bond with the same rights it would have if it were not the Bond Registrar, and to the extent permitted by law, may act as depositon/ for and permit any of its officers or directors to act as member of, or in any other capacity with respect to, any committee formed to protect the right of the Registered Owners of Bonds. (g) Registration Covenant. The City covenants that, until all Bonds have been surrendered and canceled, it will maintain a system for recording the ownership of each Bond that complies with the provisions of Section 149 of the Code. (h) Place and Medium of Payment. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be calculated on the basis of a year of 360 days and twelve 30-day months. For so long as all Bonds are in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Letter of Representations. In the event that the Bonds are no longer in fully immobilized form, interest on the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses ORDINANCE NO. 5534 for such Registered Owners appearing on the Bond Register on the fifteenth day of the month preceding the interest payment date, or upon the written request of a Registered Owner of more than $1,000,000 of Bonds (received by the Bond Registrar at least 15 days prior to the applicable payment date), such payment shall be made by the Bond Registrar by wire transfer to the account within the continental United States designated by the Registered Owner. Principal of the Bonds shall be payable upon presentation and surrender of such Bonds by the Registered Owners at the principal office of the Bond Registrar. Section 5. Redemption and Purchase of Bonds. (a) Mondotory Redemption of Term Bonds ond Optional Redemption, if ony. The Bonds may be called for redemption prior to scheduled maturity under terms approved by the Designated City Representative in the Bond Purchase Agreement pursuant to Section 12 of this ordinance. (b) Purchose of Bonds. The City reserves the right to purchase any of the Bonds offered to it at any time at a price deemed reasonable by the City. Bonds purchased by the City shall be cancelled. (c) Selection of Bonds for Redemption. Except to the extent that another method is prescribed in the Bond Purchase Agreement, for as long as the Bonds are held in book-entry only form, the selection of particular Bonds within a maturity to be redeemed shall be made in accordance with the operational arrangements then in effect at DTC. If the Bonds are no longer held in uncertificated form, the selection of such Bonds to be redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the following provisions of this subsection (c). If the City redeems at any one time fewer than all of the Bonds having the same ORDINANCE NO. 5534 maturity date, the particular Bonds or portions of Bonds of such maturity to be redeemed shall be selected by lot (or in such manner determined by the Registrar) in increments of $5,000. In the case of a Bond of a denomination greater than $5,000, the City and the Bond Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of such Bond by $5,000. In the event that only a portion of the principal sum of a Bond is redeemed, upon surrender of such Bond at the principal office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the principal sum thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate in any of the denominations herein authorized. (d) Notice of Redemption. (1) Official Notice. For so long as the Bonds are held in uncertificated form, notice of redemption (which notice may be conditional) shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar will provide any notice of redemption to any Beneficial Owners. Thereafter (if the Bonds are no longer held in uncertificated form), notice of redemption shall be given in the manner hereinafter provided. Unless waived by any owner of Bonds to be redeemed, official notice of any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered ORDINANCE NO. 5534 Owner of the Bond or Bonds to be redeemed at the address shown on the Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. In the case of an optional redemption, the notice of redemption may state that the City retains the right to rescind that notice on or prior to the scheduled redemption date, and that notice and optional redemption shall be of no effect to the extent that the City gives notice to the affected Registered Owners at any time on or prior to the scheduled redemption date that the City is rescinding the redemption notice in whole or in part. Any Bonds subject to a rescinded notice of redemption are to remain outstanding, and the rescission will not constitute a default hereunder. All official notices of redemption shall be dated and shall state: (A) the redemption date, (B) the redemption price, (C) if fewer than all outstanding Bonds are to be redeemed, the identification by maturity (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed, (D) that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date, and (E) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal office of the Bond Registrar. ORDINANCE NO. 5534 On or prior to any redemption date, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. (2) Effect of Notice; Bonds Due. If an unconditional notice of redemption has been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Bonds which have been redeemed shall be canceled and destroyed by the Bond Registrar and shall not be reissued. (3) Additional Notice. In addition to the foregoing notice, further notice shall be given by the City as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (A) the CUSlP numbers of all Bonds being redeemed; (6) the date of issue of the Bonds as originally issued; (C) the rate of interest borne by each Bond being redeemed; (D) the maturity date of each Bond being redeemed; and (E) any other descriptive information needed to identify accurately the Bonds being redeemed. Each further notice of redemption may be sent at least 35 days before the redemption date to each party entitled to receive ORDINANCE NO. 5534 notice pursuant to Section 14, the Insurer, if any, and to the Underwriter and with such additional information as the City shall deem appropriate, but such mailings shall not be a condition precedent to the redemption of such Bonds. (4) Amendment of Notice Provisions. The foregoing notice provisions of this Section 5, including but not limited to the information to be included in redemption notices and the persons designated to receive notices, may be amended by additions, deletions and changes in order to maintain compliance with duly promulgated regulations and recommendations regarding notices of redemption of municipal securities. Section 6. Form of the Bonds. The Bonds shall be in substantially the following form: NO. [DTC LANGUAGE] [STATEMENT OF INSURANCE] UNITED STATES OF AMERICA S STATE OF WASHINGTON CITY OF RENTON LIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 2010 INTEREST RATE: % MATURIlY DATE: CUSlP NO.: REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: The City of Renton, Washington (the "City"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified above, the Principal Amount indicated above and to pay interest thereon from , 2010, or the most recent date to which interest has been paid or duly provided for until payment of this bond at the Interest Rate set forth above, payable on , 20, and semiannually thereafter on the first days of each succeeding June and December. Both principal of and interest on this bond are payable in lawful money of the United States of America. The fiscal agency of the State of Washington has been appointed by the City as the authenticating agent, paying agent and registrar for the bonds of this issue (the "Bond Registrar"). For so long as the bonds of this issue are held in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the ORDINANCE NO. 5534 operational arrangements of The Depository Trust Company ("DTC") referred to in the Blanket Issuer Letter of Representations (the "Letter of Representations") from the City to DTC. The bonds of this issue are issued under and in accordance with the provisions of the Constitution and applicable statutes of the State of Washington and Ordinance No. 5534 duly passed by the City Council on April 5, 2010 (the "Bond Ordinance"). Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. This bond is one of an authorized issue of bonds of like date, tenor, rate of interest and date of maturity, except as to number and amount in the aggregate principal amount of $ and is issued pursuant to the Bond Ordinance to refund certain outstanding limited tax general obligation bonds of the City and to pay costs of issuance. The bonds of this issue are subject to redemption prior to their scheduled maturities as provided in the Bond Ordinance and in the Bond Purchase Agreement. The City hereby irrevocably covenants and agrees with the owner of this bond that it will include in its annual budget and levy taxes annually, within and as a part of the tax levy permitted to the City without a vote of the electorate, upon all the property subject to taxation in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond as the same shall become due. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. The bonds of this issue have been designated as "qualified tax-exempt obligations" for purposes of Section 265(b) of the Internal Revenue Code of 1986. The bonds of this issue are not private activity bonds. The pledge of tax levies for payment of principal of and interest on the bonds may be discharged prior to maturity of the bonds by making provision for the payment thereof on the terms and conditions set forth in the Bond Ordinance. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, 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 and the bonds of this issue does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. ORDINANCE NO. 5534 IN WITNESS WHEREOF, the City of Renton, Washington has caused this bond to be executed by the manual or facsimile signatures of the Mayor and City Clerk and the seal of the City imprinted, impressed or otherwise reproduced hereon as of this - day of 2010. [SEAL] CITY OF RENTON, WASHINGTON BY IS/ manual or facsimile Mayor Is/ manual or facsimile City Clerk The Bond Registrar's Certificate of Authentication on the Bonds shall be in substantially the following form: CERTIFICATE OF AUTHENTICATION This bond is one of the bonds described in the within mentioned Bond Ordinance and is one of the Limited Tax General Obligation Refunding Bonds, 2010 of the City of Renton, Washington, dated ,2010. WASHINGTON STATE FISCAL AGENCY, as Bond Registrar By Section 7. Execution of the Bonds. The Bonds shall be executed on behalf of the City with the manual or facsimile signatures of the Mayor and Clerk of the City, and the seal of the City shall be impressed, imprinted or otherwise reproduced thereon. Only such Bonds as shall bear thereon a Certificate of Authentication in the form hereinbefore recited, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication ORDINANCE NO. 5534 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. In case either of the officers who shall have executed the Bonds shall cease to be an officer or officers of the City before the Bonds so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bonds may nevertheless be authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be as binding upon the City as though those who signed the same had continued to be such officers of the City. Any Bond may be signed and attested on behalf of the City by such persons who at the date of the actual execution of such Bond, are the proper officers of the City, although at the original date of such Bond any such person shall not have been such officer of the City. Section 8. refund in^ Procedures. (a) Designation of Refunded Bonds. All or some of the 2001 Bonds maturing on and after December 1, 2012 as outlined in the recitals to this ordinance may be refunded and refinanced with the proceeds of the Bonds authorized by this ordinance. Pursuant to the terms described in Section 12, the Designated City Representative may select some or all of the callable 2001 Bonds and designate those bonds as the "Refunded Bonds" at or prior to the time of sale of the Bonds. (b) Creation of Refunding Account. A special account is hereby authorized to be created by the Finance Director, which account is to be drawn for the sole purpose of paying (or purchasing Government Obligations, which obligations so purchased, are herein called "Acquired Obligations") maturing in such amounts and at such times as to pay) the principal of ORDINANCE NO. 5534 and premium, if any, and interest on the Refunded Bonds. The special account shall be held as a trust fund for the benefit of the owners of the Refunded Bonds, wholly segregated from all other funds and securities on deposit with the Finance Director. The Finance Director shall not allow the assets or amounts on deposit for the benefit of the Refunded Bonds to be commingled with any other funds or securities of the City. The Finance Director shall cause the assets and amounts on deposit in such special account to be held and disposed of only as set forth in this section. (c) Application of Bond Proceeds. A portion of the Net Proceeds of the Bonds (exclusive of any amounts designated by the Designated City Representative to be used to pay costs of issuance of the Bonds), together with other available funds of the City in the amount specified by the Designated City Representative, if any, shall be applied at the direction of the Designated City Representative to purchase the Acquired Obligations to be used to redeem the Refunded Bonds on their redemption date. (d) Defeasance of Refunded Bonds. The Net Proceeds of the Bonds so deposited shall be utilized immediately upon receipt thereof to redeem Refunded Bonds or to purchase the Government Obligations specified by the Designated City Representative and to maintain such necessary beginning cash balance to defease the Refunded Bonds and to discharge the other obligations of the City relating thereto under the 2001 Bond Ordinance, by providing for the payment of the interest on the Refunded Bonds to the date fixed for redemption and the redemption price on the redemption date for the Refunded Bonds. When the final transfers have been made for the payment of such redemption price and interest on the Refunded ORDINANCE NO. 5534 Bonds, any balance then remaining shall be used for the purposes specified by the Designated City Representative. (e) Redemption of Refunded Bonds. The Council authorizes the Designated City Representative to call the Refunded Bonds that are callable for redemption on the redemption date specified by the Designated City Representative in accordance with the 2001 Bond Ordinance. Said defeasance and call for redemption of the Refunded Bonds shall be irrevocable after the deposit of the proceeds of the Bonds as described in Section 8(c). The Designated City Representative is hereby authorized and directed to provide for the giving of irrevocable notice of the redemption of the callable Refunded Bonds in accordance with the terms of the 2001 Bond Ordinance. The Finance Director is authorized and directed to provide whatever assistance is necessary to accomplish such redemption and the giving of notice therefor. (f) Escrow Agent and Escrow Agreement. The Designated City Representative is hereby authorized and directed to solicit proposals from and select a financial institution to serve as the Escrow Agent for the Refunded Bonds (the "Escrow Agent"). A beginning cash balance, if any, and Acquired Obligations shall be deposited irrevocably with the Escrow Agent in an amount sufficient to defease the Refunded Bonds. The proceeds of the Bonds remaining in the Refunding Account after acquisition of the Acquired Obligations and provision for the necessary beginning cash balance shall be utilized to pay expenses of the acquisition and safekeeping of the Acquired Obligations and expenses of the issuance of the Bonds. The Designated City Representative is authorized to execute and deliver to the Escrow Agent an ORDINANCE NO. 5534 Escrow Agreement substantially in the form attached hereto as Exhibit A, with such changes or modifications as the Designated City Representative, with the advice of bond counsel to the City, consider necessary or advisable. The City hereby irrevocably sets aside for and pledges to the payment of the Refunded Bonds the moneys and obligations to be deposited with the Escrow Agent pursuant to the Escrow Agreement to accomplish the plan of refunding and defeasance of the Refunded Bonds set forth herein and in the Escrow Agreement. When all of the Refunded Bonds shall have been redeemed and retired, the Designated City Representative may cause any remaining money to be transferred to the Bond Fund for the purposes set forth below. Section 9. Tax Covenants. The City covenants that it will not take or permit to be taken on its behalf any action that would adversely affect the exemption from federal income taxation of the interest on the Bonds and will take or require to be taken such acts as may reasonably be within its ability and as may from time to time be required under applicable law to continue the exemption from federal income taxation of the interest on the Bonds. (a) Arbitrage Covenant. Without limiting the generality of the foregoing, the City covenants that it will not take any action or fail to take any action with respect to the proceeds of sale of the Bonds or any other funds of the City which may be deemed to be proceeds of the Bonds pursuant to Section 148 of the Code and the regulations promulgated thereunder which, if such use had been reasonably expected on the dates of delivery of the Bonds to the initial purchasers thereof, would have caused the Bonds to be treated as "arbitrage bonds" within the meaning of such term as used in Section 148 of the Code. ORDINANCE NO. 5534 The City will comply with the requirements of Section 148 of the Code and the applicable regulations thereunder throughout the term of the Bonds. (b) Private Person Use Limitation for Bonds. The City covenants that for as long as the Bonds are outstanding, it will not permit: (i) more than 10% of the Net Proceeds of the Bonds to be allocated to any Private Person Use; and (ii) more than 10% of the principal or interest payments on the Bonds in a Bond Year to be directly or indirectly secured by any interest in property used or to be used for any Private Person Use or secured by payments in respect of property used or to be used for any Private Person Use, or derived from payments (whether or not made to the City) in respect of property, or borrowed money, used or to be used for any Private Person Use. The City further covenants that, if: (i) more than five percent of the Net Proceeds of the Bonds are allocable to any Private Person Use; and (ii) more than five percent of the principal or interest payments on the Bonds in a Bond Year are (under the terms of this ordinance or any underlying arrangement) directly or indirectly secured by any interest in property used or to be used for any Private Person Use or secured by payments in respect of property used or to be used for any Private Person Use, or derived from payments (whether or not made to the City) in respect of property, or borrowed money, used or to be used for any Private Person Use, then, any Private Person Use of the projects refinanced by the proceeds of the Bonds or Private Person Use payments that is in excess of the five percent limitations described above will be for a Private Person Use that is related to the state or local governmental use of the projects refinanced by the proceeds of the Bonds, and any Private Person Use will not exceed the amount of Net Proceeds of the Bonds allocable to the state or local governmental use portion ORDINANCE NO. 5534 of the project(s) to which the Private Person Use of such portion of the projects refinanced by the proceeds of the Bonds relate. The City further covenants that it will comply with any limitations on the use of the projects refinanced by the proceeds of the Bonds by other than state and local governmental users that are necessary, in the opinion of its bond counsel, to preserve the tax exemption of the interest on the Bonds. (c) Modification of Tax Covenants. The covenants of this section are specified solely to assure the continued exemption from regular income taxation of the interest on the Bonds. To that end, the provisions of this section may be modified or eliminated without any requirement for formal amendment thereof upon receipt of an opinion of the City's bond counsel that such modification or elimination will not adversely affect the tax exemption of interest on any Bonds. (d) Designation under Section 265(b). The City hereby designates the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code. The City does not anticipate issuing more than $30,000,000 of tax-exempt obligations during 2010 (excluding obligations permitted by the Code to be excluded for purposes of the City's qualification as a qualified small issuer). Section 10. Bond Fund; Provision for Payment. The City is hereby authorized to establish or maintain a fund to be used for the payment of debt service the Bonds, designated as the "City of Renton Limited Tax General Obligation Bond Debt Service Fund" (the "Bond Fund"). No later than the date each payment of principal of and/or interest on the Bonds matures or becomes due and payable, the City shall transmit sufficient funds, from the Bond Fund or from other legally available sources to the Bond Registrar for the payment of such ORDINANCE NO. 5534 principal and/or interest. Money in the Bond Fund not needed to pay the interest or principal next coming due may temporarily be deposited in legal investments for City funds. The City hereby irrevocably covenants and agrees for as long as any of the Bonds are outstanding and unpaid that each year it will include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an amount that will be sufficient, together with all other revenues and money of the City legally available for such purposes, to pay the principal of and interest on the Bonds as the same shall become due. The City hereby irrevocably pledges that the annual tax provided for herein to be levied for the payment of such principal and interest shall be within and as a part of the tax levy permitted to cities without a vote of the people, and that a sufficient portion of each annual levy to be levied and collected by the City prior to the full payment of the principal of and interest on the Bonds will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the principal of and interest on the Bonds. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of said taxes and for the prompt payment of the principal of and interest on the Bonds as the same shall become due. Section 11. Defeasance. In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in the Bond Fund or in another special account, cash or noncallable Government Obligations, or any combination of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its terms and to pay when due the interest and redemption premium, if any, ORDINANCE NO. 5534 thereon, and such cash and/or noncallable Government Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Bond Fund for the payment of the principal of and interest on such Bond. The owner of a Bond so provided for shall cease to be entitled to any lien, benefit or security of this ordinance except the right to receive payment of principal, premium, if any, and interest from the Bond Fund or such special account, and such Bond shall be deemed to be not outstanding under this ordinance. The City shall give written notice of defeasance to the owners of all Bonds so provided for within 30 days of the defeasance and to each party entitled to receive notice in accordance with Section 14 of this ordinance. Section 12. Sale of the Bonds. The Bonds shall be sold by negotiated sale to the Underwriter pursuant to the terms of the Bond Purchase Agreement. The Designated City Representative is hereby authorized to negotiate terms for the purchase of the Bonds and execute the Bond Purchase Agreement, with such terms as are approved the Designated City Representative pursuant to this section and consistent with this ordinance. The Underwriter has advised the Council that market conditions are fluctuating and, as a result, the most favorable market conditions may occur on a day other than a regular meeting date of the Council. The Council has determined that it would be in the best interest of the City to delegate to the Designated City Representative for a limited time the authority to determine whether to proceed with the refunding of the Refunded Bonds, to designate which of the callable ZOO1 Bonds shall be the Refunded Bonds, and to approve the final interest rates, maturity dates, aggregate principal amount, redemption rights and principal amounts of each maturity of the Bonds. The Designated City Representative is hereby authorized to determine whether to ORDINANCE NO. 5534 proceed with the refunding of the Refunded Bonds if and to the extent that the aggregate savings to be realized as a result of the refunding of the Refunded Bonds (i.e., the present value of (i) the aggregate debt service on the Refunded Bonds minus (ii) the aggregate debt service on the Refunding Bonds, after payment of all costs of issuance' of the Bonds), exceed the Savings Target. The Designated City Representative is further authorized to approve the final interest rates, maturity dates, aggregate principal amount, and principal amounts of each maturity of the Bonds in the manner provided hereafter so long as (i) the aggregate principal amount of all Bonds does not exceed $6,800,000; and (ii) the true interest cost for the Bonds does not exceed 4%. In determining whether or not to proceed with bond insurance and determining the final interest rates, aggregate principal amounts, principal maturities and redemption rights, the Designated City Representative shall take into account those factors that, in such individual's judgment, will result in the lowest true interest cost on the Bonds to their maturity, including, but not limited to current financial market conditions and current interest rates for obligations comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in this section, the Designated City Representative is hereby authorized to execute the final form of the Bond Purchase Agreement, upon the Designated City Representative's designation of the Refunded Bonds and approval of the final interest rates, aggregate principal amount, principal maturities and redemption rights set forth therein. Following the execution of the Bond Purchase Agreement, the Designated City Representative shall provide a report to the Council, describing the final terms of the Bonds approved pursuant to the authority delegated in this section. The authority granted to the ORDINANCE NO. 5534 Designated City Representative by this section shall expire 120 days after the date of approval of this ordinance. If a Bond Purchase Agreement for the Bonds has not been executed within 120 days after the date of final approval of this ordinance, the authorization for the issuance of the Bonds shall be rescinded, and the Bonds shall not be issued nor their sale approved unless such Bonds shall have been re-authorized by ordinance of the Council. The ordinance re- authorizing the issuance and sale of such Bonds may be in the form of a new ordinance repealing this ordinance in whole or in part or may be in the form of an amendatory ordinance approving a bond purchase agreement or establishing terms and conditions for the authority delegated under this ordinance. Upon the passage and approval of this ordinance, the proper officials of the City including the Designated City Representative, are authorized and directed to undertake all actions necessary for the prompt execution and delivery of the Bonds to the Underwriter thereof and further to execute all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the Bond Purchase Agreement. The Finance Director is authorized to ratify and to approve for purposes of the Rule, on behalf of the City, the preliminary Official Statement and Official Statement (as defined in the Bond Purchase Agreement) relating to the issuance and sale of the Bonds and the distribution of the preliminary Official Statement and Official Statement pursuant thereto with such changes, if any, as may be deemed by him to be appropriate. The preliminary Official Statement for the Bonds is hereby deemed final for the purposes of the Rule. ORDINANCE NO. 5534 Section 13. Bond Insurance. The Finance Director is hereby further authorized to solicit proposals from municipal bond insurance companies for the issuance of a Bond Insurance Policy. In the event that the Finance Director receives multiple proposals in response to a solicitation, the Finance Director may select the proposal having the lowest cost and resulting in an overall lower interest cost with respect to the Bonds to be insured. The Finance Director may execute a commitment received from the lnsurer selected by the Finance Director. The Council further authorizes all proper officers, agents, attorneys and employees of the City to cooperate with the lnsurer in preparing such additional agreements, certificates, and other documentation on behalf of the City as shall be necessary or advisable in providing for the Bond lnsurance Policy. Section 14. Continuing Disclosure Undertaking. (a) Contract/Undertaking. This section constitutes the City's written undertaking for the benefit of the owners of the Bonds as required by Section (b)(5) of the Rule. (b) Financial Staternents/Operating Data. The City agrees to provide or cause to be provided to the Municipal Securities Rulemaking Board ("MSRB"), the following annual financial information and operating data for the prior fiscal year (commencing in 2011 for the fiscal year ended December 31,2010): 1. Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute); 2. The assessed valuation of taxable property in the City; ORDINANCE NO. 5534 3. Ad valorem taxes due and percentage of taxes collected; 4. Property tax levy rate per $1,000 of assessed valuation; and 5. Outstanding general obligation debt of the City. Items 2-5 shall be required only to the extent that such information is not included in the annual financial statements. The information and data described above shall be provided on or before nine months after the end of the City's fiscal year. The City's current fiscal year ends December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such annual financial information and operating data, the City may cross-reference to other documents available to the public on the MSRB's internet website. If not provided as part of the annual financial information discussed above, the City shall provide the City's audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or anysuccessor statute) when and if available to the MSRB. (c) Moteriol Events. The City agrees to provide or cause to be provided, in a timely manner to the MSRB notice of the occurrence of any of the following events with respect to the Bonds, if material: Principal and interest payment delinquencies; Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; Unscheduled draws on credit enhancements reflecting financial difficulties; Substitution of credit or liquidity providers, or their failure to perform; ORDINANCE NO. 5534 Adverse tax opinions or events affecting the tax-exempt status of the Bonds; Modifications to the rights of Bond owners; Bond calls (optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34-23856); Defeasances; Release, substitution or sale of property securing repayment of the Bonds; and Rating changes. Solely for purposes of disclosure, and not intending to modify this undertaking, the City advises that no debt service reserves or property secures payment of the Bonds. (d) Notification Upon Failure to Provide Financial Data. The City agrees to provide or cause to be provided, in a timely manner, to the MSRB notice of its failure to provide the annual financial information described in subsection (b) above on or prior to the date set forth in subsection (b) above. (e) Emma; Format for Filings with the MSRB. Until otherwise designated by the MSRB or the Commission, any information or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org. All notices, financial information and operating data required by this undertaking to be provided to the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to this undertaking must be accompanied by identifying information as prescribed by the MSRB. ORDINANCE NO. 5534 (f) Terminotion/Modificotion. The City's obligations to provide annual financial information and notices of material events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. Any provision of this section shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds and (2) notifies the MSRB of such opinion and the cancellation of this section. The City may amend this section with an opinion of nationally recognized bond counsel in accordance with the Rule. In the event of any amendment of this section, the City shall describe such amendment in the next annual report, and shall include a narrative explanation of the reason for the amendment and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a material event under subsection (c) and (ii) the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. (g) Bond Owner's Remedies Under This Section. The right of any bondowner or beneficial owner of Bonds to enforce the provisions of this section shall be limited to a right to obtain specific enforcement of the City's obligations under this section, and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with ORDINANCE NO. 5534 respect to the Bonds. For purposes of this section, "beneficial owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories. Section 15. Lost, Stolen or Destroyed Bonds. In case any Bond or Bonds shall be lost, stolen or destroyed, the Bond Registrar may execute and deliver a new Bond or Bonds of like date, number and tenor to the Registered Owner thereof upon the Registered Owner's paying the expenses and charges of the City and the Bond Registrar in connection therewith and upon his/her filing with the City evidence satisfactory to the City that such Bond was actually lost, stolen or destroyed and of hislher ownership thereof, and upon furnishing the City and/or the Bond Registrar with indemnity satisfactory to the City and the Bond Registrar. Section 16. Severability. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bonds. ORDINANCE NO. 5534 Section 17. Effective Date of Ordinance. This ordinance shall be effective upon its passage, approval, and thirty (30) days after publication. PASSED BY THE CITY COUNCIL this 5th day of April, 2010. 4. Lcl- Bonnie I. Walton, City Clerk APPROVED BY THE MAYOR this 5th day of April, 2010. -~ Denis Law, Mayor I Approved as to form: K&L Gates LLP Bond Counsel Dateof Publication: 4/9/7nl n (snmmilry) r,i'..l-.-.;.. . i.;.. ..,-.-.. >; * ,,::d ;,a+; ,, ... ' L: ,, , . .. . , , ,; .,,, \: . - .. A' :~. . .., .,,$!. :; :: 6,;;. ; . . , . . . "'::-- . ,, ... : *: .: *.' ;."., . .. <T ; ::" ; :;. ; *; ., . c. ;. 13:. I . t;. +, . , - -. .3 : ..... , . . . .. '...,C;'C/~ ; . . .,:" " . . .!";::a < : '.. . (, :* ...,. ;;:.;.;ci- <.t '=&. * #. r,;., ' ..' , - ' , ..' .:,_ ORDINANCE NO. - 5534 EXHIBIT A ESCROW DEPOSIT AGREEMENT CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 THIS ESCROW AGREEMENT, dated as of , 2010 (herein, together with any amendments or supplements hereto, called the "Agreement") is entered into by and between the City of Renton, Washington (herein called the "City") and , as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent"). The notice addresses of the City and the' Escrow Agent are shown on Exhibit A attached hereto and made a part hereof. WITNESSETH: WHEREAS, the City heretofore has issued and there presently remain outstanding the obligations described in Exhibit B attached hereto (the "Refunded Bonds"); and WHEREAS, pursuant to Ordinance No. - passed on April 5, 2010 (the "Bond Ordinance"), the City has determined to issue its Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"); and WHEREAS, a portion of the proceeds of the Bonds are being used for the purpose of providing funds to pay the costs of refunding the Refunded Bonds; and WHEREAS, , certified public accountants, has prepared a verification report which is dated , 2010 (the "Verification Report") relating to the source and use of funds available to accomplish the refunding of the Refunded Bonds, the investment of such funds and the adequacy of such funds and investments to provide for the payment of the debt service due on the Refunded Bonds; and WHEREAS, pursuant to the Bond Ordinance, the Refunded Bonds have been designated for redemption prior to their scheduled maturity dates and, after provision is made for such redemption, the Refunded Bonds will come due in such years, bear interest at such rates, and be payable at such times and in such amounts as are set forth in Exhibit C attached hereto and made a part hereof; and WHEREAS, when Escrowed Securities have been deposited with the Escrow Agent for the payment of all principal and interest of the Refunded Bonds when due, then the Refunded Bonds shall no longer be regarded as outstanding except for the purpose of receiving payment from the funds provided for such purpose; and ORDINANCE NO. 5534 - WHEREAS, the issuance, sale, and delivery of the Refunding Bonds have been duly authorized to be issued, sold, and delivered for the purpose of obtaining the funds required to provide for the payment of the principal of, interest on and redemption premium (if any) on the Refunded Bonds when due as shown on Exhibit C attached hereto; NOW, THEREFORE, in consideration of the mutual undertakings, promises and agreements herein contained, the sufficiency of which hereby are acknowledged, and to secure the full and timely payment of principal of and the interest on the Refunded Bonds, the City and the Escrow Agent mutually undertake, promise and agree for themselves and their respective representatives and successors, as follows: Article 1. Definitions Section 1.1. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Agreement: Escrow Fund means the fund created by this Agreement to be established, held and administered by the Escrow Agent pursuant to the provisions of this Agreement. Escrowed Securities means the noncallable Government Obligations described in Exhibit D attached to this Agreement, or cash or other noncallable obligations substituted therefor pursuant to Section 4.2 of this Agreement. Government Obligotions means direct, noncallable (a) United States Treasury Obligations, (b) United States Treasury Obligations - State and Local Government Series, (c) non-prepayable obligations which are unconditionally guaranteed as to full and timely payment of principal and interest by the United States of America or (d) REFCORP debt obligations unconditionally guaranteed by the United States. Paying Agent means the fiscal agency of the State of Washington, as the paying agent for the Refunded Bonds. Refunding Bonds means that portion of the Bonds authorized under the Bond Ordinance for the purpose of refunding the Refunded Bonds. Section 1.2. Other Definitions. The terms "Agreement," "City," "Escrow Agent," "Bond Ordinance," "Verification Report," "Refunded Bonds,'' and "Bonds" when they are used in this Agreement, shall have the meanings assigned to them in the preamble to this Agreement. ORDINANCE NO. 5534 - Section 1.3. Interpretations. The titles and headings of the articles and sections of this Agreement have been inserted for convenience and reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Agreement and all of the terms and provisions hereof shall be liberally construed, to effectuate the purposes set forth herein and to achieve the intended purpose of providing for the refunding of the Refunded Bonds in accordance with applicable law. Article 2. Deposit of Funds and Escrowed Securities Section 2.1. Deposits in the Escrow Fund. Concurrently with the sale and delivery of the Refunding Bonds the City shall deposit, or cause to be deposited, with the Escrow Agent, for deposit in the Escrow Fund, the funds (from the proceeds of the Refunding Bonds and a cash contribution by the City) sufficient to purchase the Escrowed Securities and pay costs of issuance described in Exhibit D, and the Escrow Agent shall, upon the receipt thereof, acknowledge such receipt to the City in writing. Article 3. Creation and Operation of Escrow Fund Section 3.1. Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as the Refunding Account (the "Escrow Fund"). The Escrow Agent hereby agrees that upon receipt thereof it will deposit to the credit of the Escrow Fund the funds and the Escrowed Securities described in Exhibit D attached hereto. Such deposit, all proceeds therefrom, and all cash balances from time to time on deposit therein (a) shall be the property of the Escrow Fund, (b) shall be applied only in strict conformity with the terms and conditions of this Agreement, and (c) are hereby irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds, which payment shall be made by timely transfers of such amounts at such times as are provided for in Section 3.2 hereof. When the final transfers have been made for the payment of such principal of and interest on the Refunded Bonds, any balance then remaining in the Escrow Fund shall be transferred to the City, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section 3.2. Payment of Principal and Interest. The Escrow Agent is hereby irrevocably instructed to transfer to the Paying Agent from the cash balances from time to time on deposit in the Escrow Fund, the amounts required to pay the principal of the Refunded Bonds at their respective redemption dates and interest thereon to such redemption dates in the amounts and at the times shown in Exhibit C attached hereto. ORDINANCE NO. 5534 - Section 3.3. Sufficiency of Escrow Fund. The City represents that, based upon the information provided in the Verification Report, the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balance on deposit from time to time in the Escrow Fund will be at all times sufficient to provide moneys for transfer to the Paying Agent at the times and in the amounts required to pay the interest on the Refunded Bonds as such interest comes due and the principal of the Refunded Bonds as the Refunded Bonds are paid on an optional redemption date prior to maturity, all as more fully set forth in Exhibit E attached hereto. If, for any reason, at any time, the cash balances on deposit or scheduled to be on deposit in the Escrow Fund shall be insufficient to transfer the amounts required by the Paying Agent to make the payments set forth in Section 3.2. hereof, the City shall timely deposit in the Escrow Fund, from any funds that are lawfully available therefor, additional funds in the amounts required to make such payments. Notice of any such insufficiency shall be given promptly as hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the City's failure to make additional deposits thereto. Section 3.4. Trust Fund. The Escrow Agent or its affiliate, shall hold at all times the Escrow Fund, the Escrowed Securities and all other assets of the Escrow Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow Agent as trust funds for the benefit of the owners of the Refunded Bonds; and a special account thereof shall at all times be maintained on the books of the Escrow Agent. The owners of the Refunded Bonds shall be entitled to the same preferred claim and first lien upon the Escrowed Securities, the proceeds thereof, and all other assets of the Escrow Fund to which they are entitled as owners of the Refunded Bonds. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the City, and the Escrow Agent shall have no right to title with respect thereto except as a trustee and Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject towarrants, drafts or checks drawn by the City or, except to the extent expressly herein provided, b; the Paying Agent. Article 4. Limitation on Investments Section 4.1. Investments. Except for the initial investment in the Escrowed Securities, and except as provided in Section 4.2 hereof, the Escrow Agent shall not have any power or duty to invest or reinvest any ORDINANCE NO. 5534 - money held hereunder, or to make substitutions of the Escrowed Securities, or to sell, transfer, or otherwise dispose of the Escrowed Securities. Section 4.2. Substitution of Securities. At the written request of the City, and upon compliance with the conditions hereinafter stated, the Escrow Agent shall utilize cash balances in the Escrow Fund, or sell, transfer, otherwise dispose of or request the redemption of the Escrowed Securities and apply the proceeds therefrom to purchase Refunded Bonds or Government Obligations which do not permit the redemption thereof at the option of the obligor. Any such transaction may be effected by the Escrow Agent only if (a) the Escrow Agent shall have received a written opinion from a firm of certified public accountants that such transaction will not cause the amount of money and securities in the Escrow Fund to be reduced below an amount sufficient to provide for the full and timely payment of principal of and interest on all of the remaining Refunded Bonds as they become due, taking into account any optional redemption thereof exercised by the City in connection with such transaction; and (b) the Escrow Agent shall have received the unqualified written legal opinion of its bond counsel or tax counsel to the effect that such transaction will not cause any of the Refunding Bonds or Refunded Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. Article 5. Application of Cash Balances Section 5.1. In General. Except as provided in Section 2.1, 3.2 and 4.2 hereof, no withdrawals, transfers or reinvestment shall be made of cash balances in the Escrow Fund. Cash balances shall be held by the Escrow Agent in United States currency as cash balances as shown on the books and records of the Escrow Agent and, except as provided herein, shall not be reinvested by the Escrow Agent; provided, however, a conversion to currency shall not be required (i) for so long as the Escrow Agent's internal rate of return does not exceed 20%, or (ii) if the Escrow Agent's internal rate of return exceeds 20%, the Escrow Agent receives a letter of instructions, accompanied by the opinion of nationally recognized bond counsel, approving the assumed reinvestment of such proceeds at such higher yield. Article 6. Redemption of Refunded Bonds Section 6.1. Call for Redemption. The City hereby irrevocably calls the Refunded Bonds for redemption on their earliest redemption dates, as shown in the Verification Report and on Appendix A attached hereto. ORDINANCE NO. 5534 - Section 6.2. Notice of RedemptionJNotice of Defeasance. The Escrow Agent agrees to give a notice of defeasance and a notice of the redemption of the Refunded Bonds pursuant to the terms of the Refunded Bonds and in substantially the forms attached hereto as Appendices A and B attached hereto and as described on said Appendices A and B to the Paying Agent for distribution as described therein. The notice of defeasance shall be given immediately following the execution of this Agreement, and the notice of redemption shall be given in accordance with the ordinance authorizing the Refunded Bonds. The Escrow Agent hereby certifies that provision satisfactory and acceptable to the Escrow Agent has been made for the giving of notice of redemption of the Refunded Bonds. Article 7. Records and Reports Section 7.1. Records. The Escrow Agent will keep books of record and account in which complete and accurate entries shall be made of all transactions relating to the receipts, disbursements, allocations and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such books shall be available for inspection during business hours and after reasonable notice. Section 7.2. Reports. While this Agreement remains in effect, the Escrow Agent quarterly shall prepare and send to the City a written report summarizing all transactions relating to the Escrow Fund during the preceding financial quarter, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities and transfers from ~ ~ the Escrow Fund for payments on the Refunded Bonds or otherwise, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of suchperiod. Article 8. Concerning the Paying Agents and Escrow Agent Section 8.1. Representations. The Escrow Agent hereby represents that it has all necessary power and authority to enter into this Agreement and undertake the obligations and responsibilities imposed upon it herein, and that it will carry out all of its obligations hereunder. Section 8.2. Limitation on Liability. The liability of the Escrow Agent to transfer funds for the payment of the principal of and interest on the Refunded Bonds shall be limited to the proceeds of the Escrowed Securities ORDINANCE NO. 5534 - and the cash balances from time to time on deposit in the Escrow Fund. Notwithstanding any provision contained herein to the contrary, the Escrow Agent shall have no liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund or any failure of the obligors of the Escrowed Securities to make timely payment thereon, except for the obligation to notify the City promptly of any such occurrence. The recitals herein and in the proceedings authorizing the Refunding Bonds shall be taken as the statements of the City and shall not be considered as made by, or imposing any obligation or liability upon, the Escrow Agent. The Escrow Agent is not a party to the proceedings authorizing the Refunding Bonds or the Refunded Bonds and is not responsible for nor bound by any of the provisions thereof (except to the extent that the Escrow Agent may be a place of payment and paying agent and/or a paying agentlregistrar therefor). In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms and provisions of this Agreement. The Escrow Agent makes no representations as to the value, conditions or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the City thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to any of such matters. It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable except for its own neglect or willful misconduct, nor for any loss unless the same shall have been through its negligence or bad faith. Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the City with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund, to dispose of and deliver the same in accordance with this Agreement. If, however, the Escrow Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determination the Escrow Agent shall be liable only for its own willful misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the City or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such ORDINANCE NO. 5534 - event or contingency, and in this connection may make inquiries of, and consult with, among others, the City at any time. Section 8.3. Compensation. The City shall pay to the Escrow Agent fees for performing the services hereunder and for the expenses incurred or to be incurred by the Escrow Agent in the administration of this Agreement pursuant to the terms of the Fee Schedule attached hereto as Appendix C. The Escrow Agent hereby agrees that in no event shall it ever assert any claim or lien against the Escrow Fund for any fees for its services, whether regular or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its expenses as Escrow Agent or in any other capacity. Section 8.4. Successor Escrow Agents. Any corporation, association or other entity into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or otherwise transfer all or substantially all of its corporate trust assets and business or any corporation, association or other entity resulting from any such conversion, sale, merger, consolidation or other transfer to which it is a party, ipso facto, shall be and become successor escrow agent hereunder, vested with all other matters as was its predecessor, without the execution or filing of any instrument or any further act on the part of the parties hereto, notwithstanding anything herein to the contrary. If at any time the Escrow Agent or its legal successor or successors should become unable, through operation or law or otherwise, to act as escrow agent hereunder, or if its property and affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith exist in the office of Escrow Agent hereunder. In such event the City, by appropriate action, promptly shall appoint an Escrow Agent to fill such vacancy. If no successor Escrow Agent shall have been appointed by the City within 60 days, a successor may be appointed by the owners of a majority in principal amount of the Refunded Bonds then outstanding by an instrument or instruments in writing filed with the City, signed by such owners or by their duly authorized attorneys-in-fact. If, in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred, the owner of any Refunded Bond may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent. Any successor Escrow Agent shall be a corporation organized and doing business under the laws of the United States or the State of Washington, authorized under such laws to exercise corporate trust powers, having its principal office and place of business in the State of ORDINANCE NO. 5534 - Washington, having a combined capital and surplus of at least $100,000,000 and subject to the supervision or examination by federal or state authority. Any successor Escrow Agent shall execute, acknowledge and deliver to the City and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to the terms of this Agreement, all the rights, powers and trusts of the Escrow Agent hereunder. Upon the request of any such successor Escrow Agent, the City shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights, powers and duties. The obligations assumed by the Escrow Agent pursuant to this Agreement may be transferred by the Escrow Agent to a successor Escrow Agent if (a) the requirements of this Section 8.4 are satisfied; (b) the successor Escrow Agent has assumed all the obligations of the Escrow Agent under this Agreement; and (c) all of the Escrowed Securities and money held by the Escrow Agent pursuant to this Agreement have been duly transferred to such successor Escrow Agent. Article 9. Miscellaneous Section 9.1. Notice. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid addressed to the City or the Escrow Agent at the address shown on Exhibit A attached hereto. The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten days prior notice thereof. Section 9.2. Termination of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow Agent shall have no further obligations or responsibilities hereunder to the City, the owners of the Refunded Bonds or to any other person or persons in connection with this Agreement. Section 9.3. Binding Agreement. This Agreement shall be binding upon the City and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the owners of the Refunded Bonds, the City, the Escrow Agent and their respective successors and legal representatives. ORDINANCE NO. 5534 - Section 9.4. Severability. In case any one or more of the provisions contained in this 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 Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 9.5. Washington Law Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Washington. Section 9.6. Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Agreement. Section 9.7. Notice to S&P and Fitch. In the event that this Agreement or any provision thereof is severed, amended or revoked, the City shall provide written notice of such severance, amendment or revocation to Standard & Poor's Ratings Services, 55 Water Street, New York, New York 10041, Attention: Refunded Bonds Municipal Bond Department, and to Fitch Ratings, One State Street Plaza, New York, New York, 10004, Attention: Public Finance Rating OeskJRefunded Bonds. Section 9.8. Amendments. This Agreement shall not be amended except to cure any ambiguity or formal defect or omission in this Agreement. No amendment shall be effective unless the same shall be in writing and signed by the parties thereto. No such amendment shall adversely affect the rights of the holders of the Refunded Bonds. No such amendment shall be made without first receiving written confirmation from the rating agencies (if any) which have rated the Refunded Bonds that such administrative changes will not result in a withdrawal or reduction of its rating then assigned to the Refunded Bonds. If this Agreement is amended, prior written notice and copies of the proposed changes shall be given to the rating agencies which have rated the Refunded Bonds. ORDINANCE NO. 5534 - EXECUTED as of the date first written above. CITY OF RENTON, WASHINGTON Exhibit A - Exhibit B - Exhibit C - Exhibit D - Exhibit E - AppendixA - Appendix B - Appendix C - Designated City Representative [ESCROW AGENT] Authorized Signer Addresses of the City and the Escrow Agent Description of the Refunded Bonds Schedule of Debt Service on Refunded Bonds Description of Beginning Cash Deposit (if any) and Escrowed Securities Escrow Fund Cash Flow Notice of Redemption for the 2001 Bonds Notice of Defeasance for the ZOO1 Bonds Fee Schedule City: ORDINANCE NO. - 5534 EXHIBIT A Addresses of the City and Escrow Agent City of Renton 1055 S. Grady Way Renton, Washington 98057 Attention: Finance and Information Services Administrator Escrow Agent: [to come] ORDINANCE NO. 5534 - EXHIBIT B Description of the Refunded Bonds City of Renton, Washington Limited Tax General Obligation and Refunding Bonds, 2001 Maturity Years (December 1) Principal Amounts Interest Rates $ % ORDINANCE NO. - 5534 EXHIBIT C Schedule of Debt Service on the Refunded Bonds Principal/ Date Interest Redemption Price Total ORDINANCE NO. 5534 - EXHIBIT D Escrow Deposit I. Cash: S II. Other Obligations: Principal Description Maturity Date Amount Interest Rate Total Cost s % $ Ill. Costs of Issuance: Escrow Agent Fee ( 1 Bond Counsel Fee (K&L Gates) Escrow Verification Fee ( ) Preliminary Official Statement Posting Official Statement PrintingIMailing Rating Agencies (S&P/Fitch) Contingency proceeds TOTAL: ORDINANCE NO. 5534 - EXHIBIT E Escrow Fund Cash Flow Escrow Excess Cash Date Requirement Net Escrow Receipts Receipts Balance ORDINANCE NO. 5534 - APPENDIX A NOTICE OF REDEMPTION* City of Renton, Washington Limited Tax General Obligation and Refunding Bonds, ZOO1 NOTICE IS HEREBY GIVEN that the City of Renton, Washington has called for redemption on December 1, 2011 a portion of its outstanding Limited Tax General Obligation and Refunding Bonds, 2001 (the "Bonds"). The Bonds will be redeemed at a price of one hundred percent (100%) of their principal amount, plus interest accrued to December 1, 2011. The redemption price of the Bonds is payable on presentation and surrender of the Bonds at the office of: The Bank of New York Mellon Wells Fargo Bank National Worldwide Series Processing Association 2001 Bryan Street, gth Floor -or- Corporate Trust Department Dallas, Texas 75021 14th Floor - MIS 257 999 Third Avenue Seattle, Washington 98104 Interest on all Bonds or portions thereof which are redeemed shall cease to accrue on December 1,2011. The following Bonds are being redeemed: Maturity Years (December 1) Principal Amounts Interest Rates CUSlP Nos. S % This notice shall be given not more than 60 nor less than 30 days prior to December 1, 2011 by first class mail to each registered owner of the Refunded Bonds. In addition notice shall be mailed to Piper Jaffray & Co.; The Depositow Trust Company of New York, New York; Assured Guaranty Corporation (formerly Financial Security Assurance Inc.); Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, New York, New York; Fitch, Inc., New York, New York; and to the Municipal Securities Rulemaking Board. Page 1-Appendix A P:WO358_DGUO355_OMY ~mvlo ORDINANCE NO. 5534 - By Order of the City of Renton, Washington The Bank of New York Mellon, as Paying Agent Dated: Withholding of 28% of gross redemption proceeds of any payment made within the United States may be required by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act") unless the Paying Agent has the correct taxpayer identification number (social security or employer identification number) or exemption certificate of the payee. Please furnish a properly completed Form W-9 or exemption certificate or equivalent when presenting your Bonds. Page 2-Appendix A ORDINANCE NO. - 5534 APPENDIX B Notice of Defeasance* City of Renton, Washington Limited Tax General Obligation and Refunding Bonds, 2001 NOTICE IS HEREBY GIVEN to the owners of that portion of the above-captioned bonds with respect to which, pursuant to an Escrow Deposit Agreement dated , 2010, by and between City of Renton, Washington (the "City") and (the "Escrow Agent"), the City has deposited into an escrow account, held by the Escrow Agent, cash and non-callable direct obligations of the United States of America, the principal of and interest on which, when due, will provide money sufficient to pay each year, to and including the respective maturity or redemption dates of such bonds so provided for, the principal thereof and interest thereon (the "Defeased Bonds"). The Defeased Bonds will be called on December 1,2011 at a price of 100% plus accrued interest. Such Defeased Bonds are therefore deemed to be no longer outstanding pursuant to the provisions of Ordinance No. 4922 of the City, authorizing the issuance of the Defeased Bonds, but will be paid by application of the assets of such escrow account. The Defeased Bonds are described as follows: Limited Tax General Obligation and Refunding Bonds, 2001 (Dated November 1,2001) Maturity Years Principal Call Date (December 1) Amounts Interest Rates CUSlP Nos. (at 100%) Information for Individual Registered Owner The addressee of this notice is the registered owner of Bond Certificate No. - of the Defeased Bonds described above, which certificate is in the principal amount of $ All of which has been defeased as described above. * This notice shall be given immediately by first class mail to each registered owner of the Defeased Bonds. In addition notice shall be mailed to Piper Jaffray & Co.; Assured Guaranty Corporation (formerly Financial Security Assurance Inc.); The Depositon/ Trust Company of New York, New York; The Bank of New York Mellon, as Paying Agent; Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, New York, New York; Fitch, Inc., New York, New York; and to the Municipal Securities Rulemaking Board. Appendix B P-U0358_DGW-OhM MDY10 ORDINANCE NO. 5534 APPENDIX C Fee Schedule Appendix C ORDINANCE NO. - 5534 CERTIFICATION I, the undersigned, City Clerk of the City of Renton, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance No. 5534 (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on April 5, 2010, as that ordinance appears on the minute book of the City; and the Ordinance will be in full force and effect after publication in the City's official newspaper as provided by law; and 2. A quorum of the members of the City Council was present throughout the meeting and a majority of those members present voted in the proper manner for the passage of the Ordinance. IN WITNESS WHEREOF, I have hereunto set my hand this - day of April, 2010. CITY OF RENTON, WASHINGTON Bonnie Walton, City Clerk CERTIFICATE I, Bonnie I. Walton, City Clerk of the City of Renton, Washington (the "City"), do hereby certify that the attached is a true and correct copy of the minutes of the March 22, 201 0 regular meeting of the City Council which reflects the first reading of Ordinance No. 5534. Dated as of this 1 lth day of May, 2010. &,,&,& 4. LL4- Bonnie I. Walton, City Clerk City of Renton, Washington March 22,2010 Monday, 7 p.m. CAU TO ORDER ROLL CAU OF COUNCILMEMBERS CIN STAFF IN ATENDANCE SPECIAL PRESENTATIONS WSDOT: Night Closures on Benson Rd S Fire: Renton Heart Month wrap-up CERTi FICATE I. the wdersigned City Clerk of the City of Renton, Washington, certify that this is a true and correct copy of rsuac/l M,itdcs 3hh. Subscribed and seaied thisgday of .W.?,Y':'. ,20/0 J. d.- F.,. .. .- * .. RENTON CITY COUNCIL City Clerk i '. : i; ' . '..* s: .:. .... . . : , . '., .' :. ... Regular Meeting .. .:I -? , ". ' .> >:, ~.. . < - .- g '. . Council ~ha$birs . .- . MINUTES Renton CityHall ~-. - ; .& ; 3 * 3 . . " . . .; .i . . i Mayor Law called the meeting of the Renton City Council to order and led ihe' Pledge of Allegiance to the flag. ... DON PERSSON, Council President; KING PARKER; TERM BRIERE; RICH ZWICKER; GREG TAYLOR; MARCIE PALMER. MOVED BY ZWICKER, SECONDED BY BRIERE, COUNCIL EXCUSE ABSENT COUNCILMEMBER RANDY CORMAN. CARRIED. DENIS LAW, Mayor; JAY COVINGTON, Chief Administrative Officer; LAWRENCE J. WARREN, City Attorney; BONNIE WALTON, City Clerk; GREGG ZIMMERMAN, Public Works Administrator; IWEN WANG, Finance and Information Services Administrator; SUZANNE DALE Em, Economic Development Director; CHIP VINCENT, Planning Director; PREETI SHRIOHAR, Communications Director; JENNIFER HENNING, Current Planning Manager; FIRE AND EMERGENCY SERVICESADMINISTRATOR MARK PETERSON and EMERGENCY MANAGEMENT DIRECTOR DEBORAH NEEDHAM, Fire and Emergency Services Department; CHIEF KEVIN MILOSEVICH, DEPUTY CHIEFTIM TROXELand COMMANDER DAVE LEIBMAN, Police Department. Stacy Tmssler, with the Washington State Department of Transportation, stated that the Renton Stage 2 (1405, SR 167 to SR 169) & SR 515 Interchange project is ahead of schedule and under budget. She also remarked that the Renton Stage 1 project (1-405,l-5 to SR 167) is nearly complete. She introduced Lisa Hodgson, manager for the Renton Stage 2 & SR 515 Interchange project. Ms. Hodgson reported thatTalbot Rd. S. is being widened to accommodate new on and off ramps, and 1405 is being widened by one lane in each direction from SR 167 to SR 169. She remarked that two noise walls have been constructed, and only three noise inquiries have been received since last October. Ms. Hodgson displayed various images of the project, and a time- lapsed video ofthe new bridge girders being set in place. She announced that Benson Rd. S. will be closed from 8 p.m. 3/26/2010 to S a.m. 3/30/201D. Concluding, Ms. Hodgson stated that southbound 1-405 will be closed the weekend of 7/9/2010, and northbound 1-405 will be closed the weekend of 7/16/2010, in order to remove the existing Benson Rd. S. bridge. Fire and Emergency Services Administrator Mark Peterson reported that this is thefounh year of the Renton Heart Month campaign. He explained that the purpose of the program is to raise heart health, blood sugar, and stroke awareness with City residents. He noted that that Cardiopulmonary Resuscitation (CPR) and Automated External Defibrillator (AED) training was also offered to citizens. Chief Peterson stated that extensive advertising was conducted to ensure residents were aware of the campaign. He reported that over 4,000 screenings were conducted that identified 520 people with high blood pressure, and 92 people with high blood sugar. He stated that 134 people were trained in CPR and AED use. Concluding, Chief Peterson thanked program sponsors and Ci officials and staff for their support. . . 3 March 22,2010 PUBLIC HEARING CED: Declaring a Moratorium, Adult Entertainment Business Permitting Renton City Council Minutes Page 88 This being the date set and proper notices having been posted and published in accordance with local and State laws, Mayor Law opened the public hearing to consider the moratorium on the.permitting of adult businesses for a period of six months and to assess whether change or measured action is necessary to the existing ordinance. Mayor Law emphasized that the intent of the hearing is to consider public input regarding the moratorium. MOVED BY PERSSON, SECONDED BY BRIERE, COUNCIL ALLOW EACH SPEAKER THREE MINUTES TO TESTIFY ON THIS TOPIC. CARRIED. Current Planning ManagerJennifer Henning reported that Council passed Resolution #4037 on 3/1/2010 that declared a six-month moratorium on the permitting of adult entertainment businesses in the City. She stated that the moratorium will expire on 9/1/2010 unless extended by Council. Ms. Henning further reported that the existing adult entertainment regulations originated over 25 years ago and currently allow adult entertainment businesses in the Employment Area Valley designation of the City's Comprehensive Plan. She explained that the area is bordered by 1-405 to the north, SR 167 to the east, SW 43rd St. on the south, and the border with the City of Tukwila on the west. Ms. Henning stated that over the past 25 years the Employment Area Valley has changed substantially and therefore it is appropriate and timely to revisit the regulations. She remarked that public testimony is being requested and any potential negative secondary effects from adult entertainment will be evaluated. Ms. Henning stated that an appropriate legislative response will be developed to mitigate or diminish any impacts. Council President Persson clarified that 25 years ago legislation was passed that removed these types of businesses from the City's downtown core. He remarked that the City was sued and the case was eventually seen by the United States Supreme Court. Mr. Persson noted that although the City won the case, it could not ban adult entertainment businesses outright, and therefore used zoning as way to relocate them to the valley area. He commented that the new club has met all the proper requirements and has been issued a business license. City Attorney Warren remarked that the City's case isthe leading case in the United States on the zoning of adult entertainment. He stated that the Supreme Court determined that nude dancing is an expression that is protected by the first amendment, and the City is reviewing zoning regulations that will ultimately limit or mitigate any potential negative secondary effects from these types of businesses. Public comment was invited. Becky Roberts (King County) expressed support for the moratorium and opposition to any further permitting of adult businesses within the City. David McAlister (Renton) acknowledged that the strip club can legally operate under current ordinances, but urged Council to stop permitting similar businesses. Pastor McAlister expressed support for the moratorium and recited several crime statistics as reasons for opposing adult entertainment. Tandi McAlister (Renton) expressed support for the moratorium and opposition to adult entertainment businesses within the City. . . '. March 22.2010 Renton City Council Minutes Page 89 Leroy Roberts (King County) remarked that he is proud to live in a community where family values are encouraged. He expressed support for the moratorium and opposition to adult entertainment businesses. John A. Hansen (Renton) expressed support for the moratorium and opposition to the permitting of adult businesses within the City. He remarked that residents should do everything they can to improve Renton's reputation. Ricki Jones (Bothell) expressed support for the moratorium and opposition to adult entertainment businesses. She remarked that although 18-year-olds are allowed to enter the establishment, she would not want any of her young adult children to attend the strip club. Laurie Palmer (King County) expressed support for the moratorium and requested that it be extended. She opined that 18-year-olds are not mature enough to understand the significance of attending these types of businesses and urged Council to prevent any similar businesses from opening in the community. Katie Hood (Kent) expressed support for the moratorium and opposition to any further permitting of adult businesses within City limits. Chris Palmer (King County) expressed support for the moratorium. He questioned how the use of alcohol could be prohibited in the name of morality yet adult entertainment could not. He requested that zoning and other restrictions be put in place to discourage adult businesses from locating in Renton. MarK Jones (Bothell) expressed appreciation for the City's previous work on this issue and support for the moratorium. He also expressed opposition to any further permitting of adult entertainment businesses and opined that crime will increase in the area because of the new strip club. Jim Palmer (King County) expressed appreciation for the City's past work on this issue. He stated that he is mostly concerned about the safety of the City's adult children. Joseph McLean (Renton) opined that the new club is not in an industrial area and he does not believe the City needs taxes from this type of business. He expressed appreciation for the moratorium and stated that if the business is found to be unprofitable, other similar businesses will not move to Renton. Steven Brady (King County) expressed support for the moratorium and explained that a proliferation of adult businesses in Renton would negatively influence his decision to buy a home in the area. Greg Larsen (Renton) urged Council to exercise as much authority as possible to discourage adult entertainment businesses from locating in Renton. He acknowledged that some responsibility lies with City residents, and remarked that the club should be empty when it opens for business. Darlene Larsen (Renton) expressed opposition to adult entertainment and the exploitation of women. She remarked that 55 sex offenders live within a two- mile radius of the new club and questioned whether or not their access to the club would be restricted. Ms. Larsen remarked that members of Celebration Church actively serve the community and expressed support for the moratorium. . . - i March 22.2010 Renton City Council Minutes Page 90 Roxanne Conklin (Kent) expressed support for the moratorium and opposition to any adult businesses in the Renton area. Marcie Maki (Seattle) requested that Council extend the moratorium in order to conduct extensive studies to determine what effects adult businesses have on the community. She shared her experience as a director of early learning programs and remarked that no parent or teacher has ever asked her to provide resources that would enable children to grow up to be in the adult entertainment business. April Wood (Renton) expressed support for the moratorium and opposition to any further permitting of adult businesses within City limits. Lori Madson (Renton) commented that she works in the vicinity of the new adult business and pointed out that it is also near a daycare facility. She remarked that the Federal Aviation Administration is looking to relocate and opined that this type of business may dissuade them from staying in Renton. Ms. Madson expressed support for the moratorium and opposition to adult entertainment businesses within City limits. Brigitta Jones (Renton) expressed support for the moratorium and opposition to any further permitting of adult businesses within City limits. Phyllis Gulseth (King County) expressed support for the moratorium and opposition to adult entertainment businesses within Renton. She also remarked that she would like to see Renton remain a community that respects the dignity and safety of women and children. Trish Aguayo (Renton) expressed support for the moratorium and opposition to all current and future adult entertainment businesses within City Limits. Stuart Cook (Renton) shared the reasons why he chose to live in Renton and remarked that he is now questioning what effects adult entertainment businesses will have on the City. He urged Council to maintain the moratorium to determine any long-term effects they may have on the City. Lisa Hood (Renton) remarked that the regulations are 25 years old and this is an opportunity for Council to make a positive change for Renton. She emphasized that the community does not agree with the outdated regulations and encouraged City officials and staff to take this into consideration when crafting new legislation. Dan Palmer (Renton) opined that adult entertainment businesses will lead to increased crime rates. He expressed concern regarding the fact that small children can see the club's sign advertising nude showgirls. Mr. Palmer urged Council to use all appropriate legal measures to clamp down on illegal activity to dissuade similar businesses from locating in Renton. Kristy Chang (Renton) shared her experience as a Renton School District teacher and remarked that children need their parents to be home instilling morals and values and not spending time away from their families. She expressed support for the moratorium. Valeria A. Dreas (Renton) shared her experience as a commercial real estate appraiser and remarked that this type of business can have negative effects on property values. Ms. Dreas also expressed opposition to any kind of business that degrades and objectifies women. March 22,2010 ADMINISTRATIVE REPORT CONSENT AGENDA Council Meeting Minutes of 3/15/2010 Plat: Benson Trails a.k.a. Sandhu Plat, 120th Av & SE 184th St, FP-09-111 CED: Supporting The Boeing Company's Pursuit of the US Tanker Program Renton City Council Minutes Page 91 Vanessa Chodykin (unknown) remarked that she is concerned for the future of the City's children because of this adult business and other business such as Hooters and bikini baristas that have located in Renton. She urged Council to ban any future adult businessesfrom locating within City limits. Ralph Cady (King County) expressed appreciation for the City's willingness to limit the proliferation of adult businesses in the community. He remarked that these types of businesses will only add to the barrage of temptation young people face in their lives. There being no further public comment, it was MOVED BY ZWICKER, SECONDED BY BRIERE, COUNCIL CLOSE THE PUBLIC HEARING. CARRIED. Council expressed appreciation for the speaker's comments. Discussion ensued regarding Club SinRock's business taxes, the promotion of family values, and the desire to eliminate any potential negative secondary effects adult entertainment establishments may have on the community. City Attorney Warren further clarified that the hearing was for Council to consider whether or not to continue the moratorium. He remarked that no action is required, and that the moratorium will continue for the specified period of time unless Council determines that there has not been adequate time to do studies necessary to pass appropriate legislation. Mr. Warren stated that the moratorium can be extended, but emphasized that it cannot be continued indefinitely. Chief Administrative Officer Covington reviewed a written administrative report summarizing the City's recent progress towards goals and work programs adopted as part of its business plan for 2010 and beyond. Item noted included: d Renton's Public Works Maintenance Shops use three street sweepers to provide year-round sweeping of all City streets. It takes between six weeks and two months to sweep all 550 lane miles of City streets. One night sweeper covers the downtown core and the central business district as well as City parking lots between 9 p.m. and 4 a.m. The City provides heavy sweeping in the fall to remove fallen leaves and prevent them from clogging drains, and also to remove sand that is applied for traction during winter storms. In newer annexation areas, the City has found that many areas require repeated sweepings to remove accumulated dirt and grass on the street edge and shoulders. Items listed on the consent agenda are adopted by one motion which follows the listing. Approval of Council meeting minutes of 3/15/2010. Council concur. Community and Economic Development Department recommended approval, with conditions, of the Benson Trails a.k.a. Sandhu Plat Final Plat, 16 single- family lots on 6.27 acres located in the vicinity of 120th Ave. SE and SE 184th St (FP-09-111). Council concur. (See page 93 for resolution.) Community and Economic Development Department recommended adoption of a resolution supporting The Boeing Company's pursuit of the United States Tanker Program. Council concur. (See page 93 for resolution.) Renton City Council Minutes Page 92 - I March 22,2010 CED: Membership Agreement, Cascade Agenda Cities Program UNFINISHED BUSINESS Finance Committee Policy: Purchasing (Bidding and Contracting) Policy Revisions Finance: Vouchers Finance: Bond Refinancing, 2001 LTGO Bonds Finance: Bankruptcy Claim, Smurfit-Stone Container Corporation Finance: 2010 Fee Schedule Amendments Utilities Committee Utility: Senior/Disabled Utility Discount Rates RESOLUTIONS AND ORDINANCES Community and Economic Development Department recommended adoption of a resolution authorizing membership to the Cascade Agenda Cities 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. Finance Committee Chair Parker presented a report recommending concurrence in the staff recommendation to authorize the proposed purchasing policy and thresholds, incorporate various related policies and procedures into one updated policy, including the repeal of Council Policy and Procedure #800- 12, Contracting Authority. MOVED BY PARKER, SECONDED BY TAYLOR, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. 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 COMMllTEE REPORT. CARRIED. Finance Committee Chair Parker presented a report recommending concurrence in the staff recommendation to approve issuance of new bonds in the a~~roximate amount of 56.15 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 ZOO1 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 PARKER, SECONDED BY TAYLOR, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. (See page 93 for ordinance.) Finance Committee Chair Parker presented a report recommending concurrence in the staff recommendation to approve the reduction of the 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 Committee Chair Parker presented a report recommending 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 COMMllTEE REPORT. CARRIED. Utilities Committee Chair Zwicker presented a report recommending concurrence in the staff recommendation to not revise the current eligibility 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, COUNCILCONCUR IN THE COMMITTEE REPORT. CARRIED. The following resolutions were presented for reading and adoption: 1 . . .. - March 22.2010 RESOLUTION #4039 Plat: Benson Trails a.k.a. Sandhu Plat, 120th Av & SE 184th St, FP-09-111 RESOLUTION #4040 CED: Supporting The Boeing Company's Pursuit of the US Tanker Program Finance: Bond Refinancing, 2001 LTGO Bonds NEW BUSINESS Community Event: Lindbergh Pool Financing AUDIENCE COMMENT Citizen Comment: Meis - Adult Entertainment Moratorium ADJOURNMENT Renton City Council Minutes Page 93 A resolution was read approving the Benson Trails a.k.a. Sandhu Plat Final Plat, approximately 6.27 acres located at the northeast corner of 120th Ave SE and SE 184th St. MOVED BY BRIERE, SECONDED BY PARKER, COUNCIL ADOPTTHE RESOLUTION AS READ. CARRIED. A resolution was read supporting The Boeing Company's pursuit of the United StatesTanker Program. MOVED BY PARKER, SECONDED BY TAYLOR, COUNCIL ADOPT THE RESOLUTION AS READ. CARRIED. The following ordinance was presented for first reading and referred to the 4/5/2010 Council meeting for second and final reading: An ordinance was read ~rovidina for the issuance and sale of limited tax - general obligation refunding bonds of the City in the aggregate principal amount of not to exceed $6.8 million to provide funds for the purpose of 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. Mayor Law remarked that the future of the Lindbergh Pool is in jeopardy and explained that there is a $180,000 financial gap that is keeping the pool from 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 EFFORTTO 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. Anne Meis (King County) expressed support for the adult entertainment moratorium and remarked that statistically Portland and Seattle are ranked 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. MOVED BY PERSSON, SECONDED BY ZWICKER, COUNCIL ADJOURN. CARRIED. Time: 8:26 p.m. fbn4WL.d. /A- Bonnie I. Walton, CMC, City Clerk Jason Seth, Recorder March 22.2010 RENTON CIN COUNCIL COMMIlTEE MEETING CALENDAR Office of the City Clerk COUNCIL COMMIITEE MEETINGS SCHEDULED AT CITY COUNCIL MEETING March 22,2010 COMMIlTEE/CHAIRMAN DATE/TIME AGENDA COMMliTEE OFTHE WHOLE M 0 N ., 3/29 No Meetings (5th Monday) (Persson) MON., 415 Next Steps Library Facility Planning with King 5 p.m. County Library System COMMUNITY SERVICES (Palmer) FINANCE (Parker) PLANNING & DEVELOPMENT (Briere) PUBLIC SAFETY (Taylor) MON., 415 Vouchers; 4 p.m. GIs Positions Class Specifications & Salary Grades THURS., 3/25 CANCELED MON., 415 CANCELED TRANSPORTATION (AVIATION) THURS., 3/25 Traffic Signals on NE 4th St; (Corman) 3 p.m. Status of the SW 27th St./Strander Blvd Extension Project UTILITIES (Zwicker) THURS., 3/25 2010 Committee Work Plan (briefing only) 2 p.m. NOTE: Committee of the Whole meetings are held in the Council Chambers unless otherwise noted. All other committee meetings are held in the Council Conference Room unless otherwise noted. CERTIFICATE I, Bonnie I. Walton, City Clerk of the City of Renton, Washington (the "City"), do hereby certify that the attached is a true and correct copy of the minutes of the April 5, 2010 regular meeting of the City Council which reflects the second reading and passage of Ordinance No. 5534. Dated as of this 11 th day of May, 2010. d L4h&.u Bonnie I. Walton, City Clerk City of Renton, Washington April 5, 2010 Monday, 7 p.m. CALL TO ORDER CITY STAFF IN ATTENDANCE PROUAMATION Volunteer Month -April 2010 SPECIAL PRESENTATION Fire: Promotion of Mark Peterson to Fire Chief and Emergency Services Administrator CERTIFICATE 1. the rmdersigned City Clerk of the City of Renton, Washington, certify ti at itthis is a true and correct copy of ?loltnn'/ Minufc~ Y/~//D . Subscribed and sealed thiscdai of May ,20& .4. RENTON CITY COUNCIL City Clerk ,..."b?, ..?.' + L.. . . Regular Meeting .5 4 ,: .. . , :J: . .. ... MINUTES ,, - .. council ~ham6eki .. 3 ' C Renton City H~I , , . - . ., - .z . . '.. : . ,.'..Z .: . . . . . . . . . . Mayor Law called the meeting of the Renton City Council to order and led the : : ,. % L ...-.. '.. Pledge of Allegiance to the flag. ...I_. .......:- DON PERSSON, Council President; MARCIE PALMER; RANDY CORMAN; GREG TAYLOR; RICH ZWICKER; TERRl BRIERE; KING PARKER. CARRIED. DENIS LAW, Mayor; JAY COVINGTON, Chief Administrative Officer; ANN NIELSEN, Assistant City Attorney; BONNIE WALTON, City Clerk; TERRY HIGASHIYAMA, Community Services Administrator; GREGG ZIMMERMAN, Public Works Administrator; IWEN WANG, Finance and Information Services Administrator; SUZANNE DALE ESTEY, Economic Development Director; PETER RENNER, Facilities Director; BONNIE RERECICH, Community Services Resource & Funding Manager; FIRE AND EMERGENCYSERVICES ADMINISRATOR MARK PETERSON, DEPUTY CHIEF BILL FLORA and EMERGENCY MANAGEMENT DIRECTOR DEBORAH NEEDHAM, Fire and Emergenrq Services Department; DEPUTY CHIEF TIM TROXELand COMMANDER KATIE MCCLINCY, Police Department. A proclamation by Mayor Law was read declaring the month of April 2010 to be "Volunteer Month" in the City of Renton and encouraging all rnembers of the community to commit a portion of their time to volunteer service. MOVED BY BRIERE, SECONDED BY ANICKER, COUNCILCONCUR IN THE PROCLAMATION. CARRIED. Community Services Administrator Terry Higashiiama accepted the proclamation with appreciation. She thanked Community Services Resource and Funding Manager Bonnie Rerecich for coordinating the City's volunteer efforts. Ms. Higashiyama stated that 4,119 volunteers provided 60,229 hours of service in 2009 and equated the value of their time to approximateiy $1,219,000. She noted that there are numerous events and activities planned this month to celebrate and recognize City volunteers. Mayor Law announced that with Council's approval he appointed Mark Peterson as the new Fire Chief and Emergency Services Administrator on 3/23/2010. He stated that Chief Peterson joined the Renton Fire Department in 1980and rose through the ranks to Deputy Chief. Mayor Law recognized veterans of the Fire Department that were in attendance including former Deputy Chiefs Bob Van Horne, Chuck Duffy, and Larry Rude, and former Fire Chief Lee Wheeler. He also recognized Fire Commissioners Craig Violante and Ray Barilleaux, and thanked everyone for attending the event. Mayor Law administered an oath of office and presented a Certificate of Appointment to Mark Peterson, Fire Chief and Emergency Services Administrator. Chief Peterson thanked City officials, the administration, and current and former members of the Fire Department for their support. He introduced rnembers of his family who were in attendance and stated that he is looking forward to serving the community, in his new position. AUDIENCE COMMENT Citizen Comment: Jensen - I Municipal League Representation CONSENT AGENDA Council Meeting Minutes of 3/22/2010 CED: City Center Community Plan CED: 2010-2011 Title IV (Development Regulations) Docket Community Services: Courtroom #1 Name Request, Roger I. Lewis Courtroom Board/Commission: Create Library Advisory Board CAG: 09-020, Garden Av N Widening, KPG lnc CAG: 07-161, Maple Valley Hwy (SR 169) lmprovements Phase 2, Rodarte Construction CAG: 08-205, Local Hazardous Waste Management Program, SeattleIKing County Public Health Renton City Council Minutes Page 99 MOVED BY PERSSON, SECONDED BY ZWICKER, COUNCIL SUSPEND THE RULES AND ADVANCE TO AUDIENCE COMMENT. CARRIED. John Jensen (Newcastle), Chair of the South Committee, Municipal League of King County, requested Council's support for stronger representation on his committee. Mr. Jensen stated that the committee needs more geographical diversity, as not all issues are Seattle-centric. He invited Council to an outreach event and requested that Mayor Law be the committee's 2010 mock candidate. MOVED BY PERSSON, SECONDED BY PARKER, COUNCIL RECESS FOR 15 MINUTES. CARRIED. Time: 7:14 p.m. The meeting reconvened at 7:27 p.m.; roll was called; all Councilmembers present. Items listed on the consent agenda are adopted by one motion which follows the listing. Approval of Council meeting minutes of 3/22/2010. Council concur. Community and Economic Development Department recommended adoption of the final City Center Community Plan following review of the initiative and additional public outreach. Refer to Planning and Development Committee. Community and Economic Development Department submitted the proposed 2010-2011 Title IV Docket and Comprehensive Plan amendment table for the annual review processes. Refer to Planning and Development Committee and Planning Commission. Community Services Department requested authorization to name Courtroom #I (on 3rd floor of City Hall) the "Roger I. Lewis Courtroom," and waiver of the required six-month waiting period. Refer to Community Services Committee. Executive Department recommended approval to amend RMC 2-13 to create a Library Advisory Board for issues related to services provided to Renton residents by the King County Library System. Refer to Community Services Committee. Transportation Systems Division recommended approval of Supplemental Agreement #I to CAG-09-020, with KPG, Inc., in the amount of $207,815.30 for additional design services related to the Garden Ave. N. Widening project. Council concur. Transportation Systems Division submitted CAG-07-161, Maple Valley Hwy. (SR 169) lmprovements Phase 2; and requested approval of the project, commencement of a 60-day lien period, and release of retainage in the amount of $243,286.68 to Rodarte Construction, Inc., contractor, if all required releases are obtained. Council concur. Utility Systems Division recommended approval of Amendment #2 to CAG-08- 205, with SeattlelKing County Department of Public Health, accepting $34,741.88 for Renton's 2010 Local Hazardous Waste Management Program. Council concur. MOVED BY PERSSON, SECONDED BY CORMAN, COUNCIL APPROVE THE CONSENT AGENDA AS PRESENTED. CARRIED. April 5, 2010 Renton Citv Council Minutes Paee 100 UNFINISHED BUSINESS Transportation (Aviation1 Committee Transportation: NE 4th St/ Bremerton Av NE & Whitman Av NE, Signal Improvements Finance Committee Finance: Vouchers Human Resources: GIs Analyst &Coordinator, Salary Grades & Class Specifications RESOLUTIONS AND ORDINANCES ORDINANCE #5534 Finance: Bond Refinancing, 2001 LTGO Bonds AUDIENCE COMMENT Citizen Comment: Johnson - Council Interaction Transportation (Aviation] Committee Chair Corman presented a report recommending concurrence in the staff recommendation to approve the expenditure of funds from the Intersection Safety and Mobility Program for design of traffic signals at NE 4th St. and Bremerton Ave. NE and NE 4th St. and Whitman Ave. NE, and construction of the signal at NE 4th St. and Whitman Ave. NE in 2011. The Committee further recommended that Council direct staff to present to the Committee the results of the associated traffic study prior to construction of the subject traffic signal(s). MOVED BY CORMAN, SECONDED BY PALMER, COUNCILCONCUR IN THE COMMITTEE REPORT. CARRIED. Finance Committee Chair Parker presented a report recommending approval of Claim Vouchers 291542 - 291864 and two wire transfers totaling $3,201,670.26; and approval of one Payroll Voucher totaling $(2,977.40). MOVED BY PARKER, SECONDED BY TAYLOR, COUNCIL CONCUR IN THE COMMllTEE REPORT. CARRIED. Finance Committee Chair Parker presented a report recommending concurrence in the staff recommendation to approve classification and salary grades of the GIS Analyst series and the GIs Coordinator position approved as part of the 2010 Budget. At the time the 2010 Budget was approved, these GIs classifications had not been assigned a salary grade. Based on salary data and internal equity, it is recommended that the GIs positions be classified as follows effective January 1, 2010: GIs Analyst I (AFSCME, grade a21) GlS Analyst II (AFSCME, grade a23) GIs Coordinator (Non-represented, grade m26) MOVED BY PARKER, SECONDED BY TAYLOR, COUNCIL CONCUR IN THE COMMllTEE REPORT. CARRIED. The following ordinance was presented for second and final reading and adoption: An ordinance was read providing for the issuance and sale of limited tax general obligation refunding bonds of the City in the aggregate principal amount of not to exceed $6.8 million to provide funds for the purpose of 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 ADOPTTHE ORDINANCE AS READ. ROLL CALL. ALL AYES. CARRIED. Ben Johnson (Renton) requested that Council ask each other more probing questions on various topics and issues that are presented at Council meetings He opined that the current set up of the Council Chambers does not allow for the easy exchange of ideas. Mr. Johnson used the recent Parks Expulsion ordinance as an example and remarked that it was not debated in Council Chambers. April 5, 2010 Renton City Council Minutes Page 101 Councilmember Corman remarked that although some meetings are held off- camera, every Committee meeting is announced and open to the public. He stated that Council was briefed on the Parks Expulsion ordinance and debated the issue during the Committee of the Whole meeting (on 3/1/2010). Mr. Corman recalled questioning various parts of the ordinance including whether someone could be expelled for bringing a bottle of wine into a park and the hearing process for individuals who are expelled from City parks. Councilmember Parker pointed out that the City has working committees where nearly every issue that is brought before the Council is deliberated on prior to being approved or disapproved by the Council as a whole. He emphasized that a great deal of attention, including spirited debate at times, has been conducted on issues presented to the whole Council. He acknowledged that it may appear that there is not much explanation for certain issues, including consent agenda items, but emphasized that each Councilmember is given ample time to review every item prior to a Council meeting. ADJOURNMENT MOVED BY PERSSON, SECONDED BY TAYLOR, COUNCIL ADJOURN. CARRIED. Time: 7:44 p.m. Bonnie I. Walton, CMC, City Clerk Jason Seth, Recorder April 5, 2010 . .. i RENTON CITY COUNCIL COMMllTEE MEETING CALENDAR Oftice of the City Clerk COUNCIL COMMllTEE MEETINGS SCHEDULED AT CITY COUNCIL MEETING April 5,2010 POMMI~TEEICHAIRMAN DATEITIME AGENDA I COMMITEE OF THE WHOLE MON., 4/12 Shoreline Master Program Update (Person) 6 p.m. COMMUNITY SERVICES (Palmer) FINANCE (Parker) PLANNING & DEVELOPMENT (Briere) I PUBLIC SAFETY (Taylor) TRANSPORTATION (AVIATION) (Corman) UTILITIES (Zwicker) MON., 4/12 Municipal Arts (briefing only); 4:30 p.m. Renaming of Courtroom #I; Library Advisory Board MON., 4/12 Fire Department Overtime and Vacation 5:30 p.m. Payout (briefing only) THURS., 4/8 Cascade Agenda Cities Program Membership; 3 p.m. City Center Community Plan; 2010-2011 Title IV (Development Regulations) Docket THURS., 4/8 CANCELED THURS., 4/8 CANCELED NOTE: Committee of the Whole meetings are held in the Council Chambers unless otherwise noted. All other committee meetings are held in the Council Conference Room unless otherwise noted. STATE OF WASHINGTON, COUNTY OF KING ) AFFIDAVIT OF PUBLICATION PUBLIC NOTICE Linda M Mills, being first duly sworn on oath that she is the Legal Advertising Representative of the Renton Reporter a weekly newspaper, which newspaper is a legal newspaper of general circulation and is now and has been for more than six months prior to the date of publication hereinafter referred to, published in the English language continuously as a weekly newspaper in King County, Washington. The Renton Reporter has been approved as a Legal Newspaper by order of the Superior Court of the State of Washington for King County. The notice in the exact form annexed was published in regular issues of the Renton Reporter (and not in supplement form) which was regularly distributed to its subscribers during the below stated period. The annexed notice, a: Public Notice was published on April 9,2010. Tbe full amount of the fee charged for said foregoing publication is the sum of $80.50. . ~ - Khtliy Dal&g,hotary pub@ for the State of Washington. Residing Rcnlon. Wmhinpn. pmviding far the iksuancc and sale of liited tax mml oblrnarion refudne -..~ .... --~-~ ~ M ofme City in UE asp& principal Mlaunt of no1 to exceed S6.800.W to pmvide funds for the plrpose of rrbding cmain limiud ur ~c-1 obligation bonds of the Cily: authorizing the qpointmnt of an mow agent ad ucevtion Of m acmw agrezmes: and delegating wain aulhoriry ro -ve the final lcm of the bonds Efiective: 51912010 Complete text of this ordinance is availrble at Ratm City Hall. I055 South Grady Way: and pmted at rhe Renw Rblic Librarirr. 100 Mill Avenue Soulh and nd2 NE 12th Smel. Upon quew to the Cily Clak'r office. (425) 43-6510, copies will also be mailed for a fee Published in the Renlon Rcponu an April 9.2010. UM9425. in ~dvindo:, Washihgton - April 8, 2010 Ms. Iwen Wang Finance and Information Services Administrator City of Renton 1055 South Grady Way Renton, Washington 98055 Re: City of Renton, Washington $6,170,000 Limited Tax General Obligation Refunding Bonds, 2010 Dear Ms. Wang: Seattle-Northwest Securities Corporation (the "Underwriter") offers to enter into this purchase agreement (the "Purchase Agreement") with the City of Renton, Washington (the "Issuer"). Each of the Underwriter and the Issuer may be referred to herein as a "Party" or collectively as the "Parties." This offer is contingent upon acceptance by the Issuer by execution and delivery of this Purchase Agreement to the Underwriter at or prior to 11:59 p.m. Pacific Time on the date hereof, by means of hand delivery, facsimile or other secure electronic transmission, such as a PDF file. Upon execution of this Purchase Agreement by the Parties, this Purchase Agreement will constitute a binding agreement between the Issuer and the Underwriter. Capitalized terms in this Purchase Agreement that are not otherwise defined herein shall have the meanings given to such terms in the Ordinance as defined below: 1. Authorization and Documents The issuance, sale and delivery of the Bonds (as defined below) shall be authorized by Ordinance No. 5534 (the "Ordinance"), adopted by the Mayor and City Council of the Issuer on April 5, 2010. The transaction at which the Bonds are delivered by the Issuer to the Underwriter and paid for by the Underwriter is referred to herein as the "Closing" and the date of such transaction, the "Closing Date." The Ordinance includes an undertaking to the Muniapal Securities Rulemaking Board or any successors to its functions (the "MSRB). Until otherwise designated by the MSRB or the Securities and Exchange Commission ("SEC"), any information or notices submitted to the MSRB in compliance with Rule 15~2-12 of the Securities Exchange Act of 1934, as amended (the "Rule") are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org. The Ordinance and this Purchase Agreement are collectively referred to herein as the "Documents." City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 April 8,2010 Page 2 2. Purchase and Sale Subject to the terms and conditions of this Purchase Agreement, the Underwriter hereby agrees to purchase from the Issuer for offering to the public and the Issuer hereby agrees to sell to the Underwriter all, but not less than all of the $6,170,000 aggregate principal amount of Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"). The Bonds shall be dated, shall mature, shall bear interest, shall be payable, and shall have redemption provisions, all as set forth in Exhibit C attached hereto. The Underwriter's purchase price for the Bonds also is set forth in Exhibit C. 3. Fiscal Agent The fiscal agent of the state of Washington shall be the fiscal agent for the Bonds, sewing as registrar, authenticating agent and paying agent (the "Bond Registrar"). The Bonds shall be payable and shall be secured as provided in the Ordinance and as described in the document entitled Preliminary Official Statement, which is dated March 31, 2010 and which describes the Issuer and the Bonds (the "POS"). 4. Offering The Underwriter agrees to make a bonafide public offering of all the Bonds, at prices not in excess of the initial public offering prices or at yields not lower than the initial yields as set forth in Exhibit C attached hereto. 5. Official Statement a) Pursuant to the terms of the Ordinance, the Issuer has ratified and "deemed final" the POS for purposes of the Rule. The Issuer approves and ratifies the use and distribution by the Underwriter of the POS in connection with the public offering for sale of the Bonds by the Underwriter. b) The final official statement shall be substantially in the form of the POS with only such changes permitted by the Rule as shall have been reviewed by the Underwriter (such final official statement, incorporating such changes, if any, shall be referred to herein as the "Final Official Statement"). The Issuer shall cooperate with the Underwriter in the preparation of the Final Official Statement for delivery within seven (7) business days after the date hereof and, in any event, for delivery in sufficient time to accompany any order confirmation from the Underwriter to its customer, and in sufficient time to permit the Underwriter to comply with the provisions of the Rule and with all applicable rules of the MSRB. C) The Issuer will not amend or supplement the Final Official Statement without the consent of the Underwriter. The Issuer agrees to notify the Underwriter promptly if, on or prior to the 25th day after the End of the Underwriting Period (as defined below), any event shall occur, or information come to the attention of the Issuer, that would cause the Final Official Statement (whether or not previously supplemented or amended), as of its date, City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 April 8, 2010 Page 3 to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If, in the opinion of the Issuer, such event requires the preparation and distribution of a supplement or amendment to the Final Official Statement, the Issuer at its expense and with Underwriter's assistance, shall amend or supplement the Final Official Statement in a form and manner approved by the Underwriter and will provide such number of copies of the supplement or amendment to the Final Official Statement, as the Underwriter may reasonably request. For purposes of this Purchase Agreement, the "End of the Underwriting Period shall occur on the Closing Date. 6. Representations, Warranties and Covenants The Issuer represents, warrants and covenants to the Underwriter that as of the date hereof and as of the Closing Date: a) The Issuer is a municipal corporation duly organized and validly existing under the laws and Constitution of the State of Washington; b) The Issuer has duly adopted the Ordinance and it is a valid, legal and binding ordinance of the Issuer; c) The Issuer is duly authorized and has full legal right, power, and authority to issue, sell and deliver the Bonds and perform its obligations under the Documents; d) The Ordinance is in full force and effect and has not been superseded, resanded or amended; e) The Issuer has full legal right, power and authority to and will apply or cause to be applied the proceeds of the Bonds as described in the Ordinance; f) The execution of and performance by the Issuer of its obligations under the Documents will not cause the Issuer to be (i) in violation of any constitutional provision, law, court decree, administrative regulation or judgment or (ii) in material default under any loan agreement, indenture, bond, note, resolution or other material agreement or instrument to which the Issuer is a party or to which the Issuer or any of its properties or assets is otherwise subject; g) All governmental approvals or authorizations required to be obtained by the Issuer prior to the Closing in connection with the issuance and delivery of the Bonds or the performance by the Issuer of its obligations under the Documents have been or will be obtained prior to Closing; h) No filing or registration of the Ordinance or other instrument or financing statement is required to be made to create, protect or preserve the pledge of taxing power under the Ordinance or is required for the validity and enforceability of the Ordinance; City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 April 8, 2010 Page 4 i) As of the Closing, the Bonds will be legal, valid and binding obligations of the Issuer, and, subject only to the laws of bankruptcy and insolvency, will be enforceable in accordance with their terms and will be in full force and effect; 1) Except as described in the Final Official Statement there is no action, suit, proceeding, inquiry or investigation before or by any court, governmental agency, public board or body pending or, to the knowledge of the Issuer, threatened against the Issuer, (i) in any way questioning the legal existence of the Issuer or the titles of the officers of the Issuer to their respective offices; (ii) in any way affecting or contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of the Bonds; (iii) wherein an unfavorable decision, ruling, or finding would have a material adverse effect on the collection and application of taxes that may be levied for the benefit of the Issuer for the payment of the Bonds, the financial condition of the Issuer, or would have an adverse effect on the validity or enforceability of the Bonds or the Ordinance, or which would in any way adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes; (iv) contesting the completeness or accuracy of the POS or the Final Official Statement; or (v) to the actual knowledge of the Issuer, there is no reasonable basis for any action, proceeding, inquiry or investigation of the nature described in the foregoing clauses (i) through (iv); k) The financial statements of the Issuer contained in the Final Official Statement fairly present the financial position of the Issuer as of the dates and for the periods therein set forth in accordance with the accounting standards applicable to the Issuer, and since the date thereof, there has been no material adverse change in the financial position of the Issuer; 1) In connection with the financing process, the Underwriter may have provided the format for and certain of the content for inclusion in the POS and may have assumed principal drafting responsibility for the preparation of the POS and may coordinate the preparation and dissemination of the Final Official Statement. The Issuer understands and acknowledges, however, that the ultimate responsibility for the POS and the Final Official Statement with respect to content, accuracy and completeness is the responsibility of the Issuer as an issuer of municipal securities. The Issuer hereby represents and warrants to the Underwriter that the POS did not, as of its date, and the Final Official Statement will not, as of its date and at the Closing Date, contain any untrue statement of material fact nor omit any statement or information which is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made with respect to information within the POS or the Final Official Statement relating to DTC, the book entry system, the Issuer's Financial Advisor or the Underwriter; and m) The Issuer has not failed to comply with any prior undertaking under the Rule in the past five years. City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 April 8, 2010 Page 5 7. Termination The Underwriter may terminate its obligation under this Purchase Agreement, without liability therefor, by notifying the Issuer of its election to do so in writing if, after the execution of this Purchase Agreement and prior to the Closing, any one or more of the following events shall have occurred such event, in the reasonable opinion of the Underwriter (i) would materially and adversely affect the marketability of the Bonds or the prices or yields of the Bonds as set forth in Exhibit C, or (ii) would materially and adversely affect the Underwriter's ability to enforce contracts for the sale of the Bonds: a) A material disruption in commercial banking or securities settlement or clearance services; or b) The United States shall have become engaged in hostilities or existing hostilities shall have escalated or a national emergency or other national or international calamity, including but not limited to terrorist attack(s) or other event; or c) A general suspension of trading or other material restrictions not in force as of the date of this Purchase Agreement on the New York Stock Exchange or other national securities exchange; or d) Declaration of a general banking moratorium by the United States, New York State or Washington State authorities; or e) Legislation with respect to eliminating or reducing the exemption from federal or state taxation for interest income received on obligations of the general character of the Bonds shall be introduced or enacted by the legislature of the State of Washington or by Congress of the United States or adopted by either the United States House of Representatives or the United States Senate or shall have been recommended to the Congress or otherwise endorsed for passage by the Treasury Department of the United States, the Internal Revenue Service or by the chairman of the Senate Finance Committee or a decision or an order or ruling with respect to eliminating or reducing such exemption, shall have been issued by a court of the United States, including the United States Tax Court, or by or on behalf of the Treasury Department of the United States or the Internal Revenue Service; or f) Legislation shall hereafter be enacted, or actively considered for enactment, or a decision by a court of the United States shall hereafter be rendered, or a ruling, stop order or regulation by the SEC or other governmental agency having jurisdiction of the subject matter shall hereafter be made, the effect of which is or would be that the offering and sale of the Bonds would be illegal or that: i) The Bonds are not exempt from the registration, qualification or similar requirements of the Securities Act of 1933, as amended and as then in effect (the "33 Act") or distribution of the Bonds, as contemplated herein or in the Final' Official Statement, is in violation of or not exempt from the registration, City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 April 8, 2010 Page 6 qualification or other requirements of the 33 Act, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and then in effect or the Investment Company Act of 1940, as amended and then in effect (the "Investment Company Act") or, in each case, the rules or regulations promulgated thereunder as then in effect; or ii) The Ordinance is not exempt from the registration, qualification or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; or iii) This Purchase Agreement is subject to the Investment Company Act or requires any registration under the Investment Company Act; or g) Any litigation, except as described in the Final Official Statement, shall be instituted or pending at Closing to restrain or enjoin the authorization, issuance, execution, sale or delivery of the Bonds or the execution and delivery of any of the Documents, or in any way contesting or affecting any authority for or the validity or enforceability of the Bonds, the Ordinance or any of the other Documents, any moneys or securities provided for the payment of the Bonds or the existence or powers of the Issuer; or h) Any legislation, ordinance, mle or regulation shall be introduced in or enacted by any governmental body, board, department or agency of Washington State or of the United States, or a decision by any court of competent jurisdiction within Washington State or any court of the United States shall be rendered materially affecting the Issuer or the Bonds; or i) There shall have been established any new restrictions on transactions in securities materially affecting the free market for securities or the extension of credit by, or the charge to the net capital requirements of the Underwriter, including without limitation, the fixing of minimum or maximum prices for trading or maximum ranges of prices, by any exchange, the SEC, any other federal or state agency or the Congress of the United States, or by Executive Order; or j) Except for such changes to the Final Official Statement as provided in Section 5(c) of this Purchase Agreement, there shall have been a material adverse change in the affairs of the Issuer or there shall exist any event or fact or set of facts that either (a) makes untrue or incorrect in any material respect any statement or information contained in the Final Official Statement or (b) is not reflected in the Final Official Statement but should be reflected therein to make the statements and information contained therein under the circumstances in which made not misleading in any material respect; or k) The withdrawal or downgrading of any rating of the Bonds by a national rating agency from those shown in (c)(i) of Exhibit B. City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 April 8,2010 Page 7 8. Closing; Conditions of Closing The Closing shall occur on such date and at such time and place as is set forth in Exhibit C or otherwise agreed between the Issuer and the Underwriter, and subject to the satisfaction of the terms and conditions of this Purchase Agreement. At Closing, the following shall occur: the Issuer will deliver the duly executed Bonds or cause to be delivered to the fiscal agent for re- delivery through Fast Automated Transfer System to DTC and will deliver or cause to be delivered to the Underwriter the Ordinance; the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Exhibit C hereof in same day funds. The Issuer shall cause the applicable CUSIP identification numbers to be printed on the Bonds of each - - maturity, but neither the failure to print such number on any such Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Underwriter to accept delivery of and to pay for the Bonds. The Bonds shall be prepared and delivered to the Bond Registrar at or prior to the Closing Date. In addition to the other requirements of this Purchase Agreement, Underwriter's obligations hereunder are subject to and conditioned upon the Issuer, at or prior to the Closing Date, delivering or making available to Underwriter copies of the Documents and such items as are listed in Exhibit B attached hereto and incorporated herein. 9. Fees and Expenses The Issuer will pay the cost of preparing, printing and executing the Bonds; the fees and disbursements of Bond Counsel and Financial Advisor; bond registration and rating fees and expenses; the escrow agent fee; escrow verification fee; the cost of printing and distributing the POS and Final Official Statement; travel and lodging expenses of the Issuer's employees and representatives; and other expenses of the Issuer. The Underwriter will pay fees and disbursements of its counsel, if any, the cost of preparation and filing of blue sky and legal investment surveys where necessary, the Underwriter's travel expenses, and other expenses of the Underwriter. As a convenience to the Issuer, the Underwriter may from time to time, but only upon the prior written direction from the Issuer, make arrangements for certain items for which Issuer is responsible hereunder, such as printing of the POS and the Final Official Statement and travel or lodging arrangements for the Issuer's representatives. The Underwriter also may advance for the Issuer's account when appropriate and when directed in advance in writing by the Issuer, the cost of the items for which the Issuer is responsible by making payments to third-party vendors. In such cases, the Issuer shall pay such costs or expenses directly, upon submission of appropriate invoices by the Underwriter, or promptly reimburse the Underwriter in the event the Underwriter has advanced such costs or expenses for the Issuer's account. It is understood that the Issuer shall be primarily responsible for payment of all such items and that the Underwriter may agree to advance the cost of such items from time to time solely as an accommodation to the Issuer and on the condition that it shall be reimbursed in full by the Issuer. City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 April 8, 2010 Page 8 10. Miscellaneous a) All matters relating to the Purchase Agreement shall be governed by the laws of the state of Washington. b) This Purchase Agreement is intended to benefit only the parties hereto. Unless it can be shown that the untruth of any representation or warranty of the Issuer or the violation of any agreement of the Issuer hereunder actually was or should have been discovered by the Underwriter through its review of the information in the Final Official Statement in accordance with and as a part of its responsibilities under federal securities laws as applied to the facts and circumstances of this transaction, all representations and warranties and agreements of the Issuer in this Purchase Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of the Underwriter, (ii) delivery of and payment for the Bonds hereunder, or (iii) any termination of this Purchase Agreement. If the Issuer fails to satisfy any of the foregoing conditions or covenants, or if the Underwriter's obligations are terminated for any reason permitted under this Purchase Agreement, then neither the Underwriter nor - the Issuer shall have any further obligations under this Purchase Agreement, except that any expenses incurred shall be borne in accordance with the Fees and Expenses Section hereof. C) Any notice or other communication to be given to the Issuer by the Underwriter under this Purchase Agreement may be given by delivering the same in writing to the Finance and Information Services Administrator or other authorized offiaal of the Issuer at 1055 South Grady Way, Renton, Washington 98055; and any notice or other communication to be given to the Underwriter by the Issuer under this Purchase Agreement may be given by delivering the same in writing to the attention of the officer of the Underwriter executing this Purchase Agreement at Seattle-Northwest Securities Corporation, 1420 Fifth Avenue, Suite 4300, Seattle, Washington 98101. Written communications may be delivered by electronic means. d) This Purchase Agreement may be executed in any number of counterparts, all of which shall be one and the same instrument, and either Party hereto may execute this Purchase Agreement by signing any such counterpart. e) This Purchase Agreement, including all documents incorporated herein by reference, constitutes the entire agreement between and among the Parties, supersedes any other representations, understandings or communications between the Parties or their representatives, and may be amended only in a writing signed by both Parties. This Purchase Agreement is intended solely for the benefit of the Parties (including any successors and assigns thereof but not any holder of any Bonds). No other person shall acquire or have any rights hereunder or by virtue hereof. City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 April 8,2010 Page 9 Respectfully submitted, SEATILE-NORTHWEST SECURITIES CORPORATION By: Lindsay A. Sovde, Senior Vice President Accepted April 8,2010 By: Administrator Time Signed EXHIBIT A FINAL PRICING NUMBERS BOND DEBT SERVICE Cily of Renton Gted Try Gmrrd Obligadon Relmbg Bods. 2010 (Ref 01 New I porkon) FIKAL WMBERS Pcn'd Alrnuvl Enmnp Pnncipll Co- 1lerc.f Detl Sm?ec Debt Service 7. .. 'a- 0' ';. SOURCESAND USESOF FUNDS City of Renton Li~tedTwhal ObltgvlionRcTmding Bd.2010 (Rct 01 Ncw I podon) FINAL NUMBERS mfed Date 0511112010 DcLvczy Date 05111/2010 Bmd Pmeedr: PU Amom1 Net Prmium 6,613,48370 us: &&?A$ Esnow Depodb: Cash Depost SLGS ~~~ Delivery Dare Expcnur: Crat of lssnance Undermitefs I)lromt Other Uses of Funds Admtional Proceeds Apr 8,2010 9:34am Prepared by Seanle-Natmvst SecuritierCorp. @:\ U(ENT0N:RENTON-ROILTNEW,ROIL~Ew) bge3 BOND PRICING City of Renton Lindted Tw GBleral Obligation Refinding Bmdo. 2010 (Ref. 01 New $ pardon) FINAL NUMBERS ~pr8,2010 9:34am Prepred by 2aNe-Nmhwest Sccuntier Corp. $:\ .. \RENTON:REWON-RO~LTNEWROILTNE~) Page 4 EXHIBIT B CLOSING DOCUMENTS Issuer's Closine. Documents At Closing, Issuer shall provide the following: a) Copies of the Ordinance and the Blanket Issuer Letter of Representation; b) The approving opinion of Bond Counsel dated as of the Closing Date and addressed to the Issuer, substantially in the form set forth in Appendix A to the Final Official Statement and a letter addressed to the Underwriter to the effect that the Underwriter may rely upon such opinion as if it were addressed to the Undenvritec C) Evidence of each of the following: i) That Standard & Poor's ("S&F") has assigned its underlying rating of "AA to the Bonds and that such rating is in full force and effect on and as of the date of Closing; and ii) Designation of the Bonds as "qualified tax-exempt obligations" for banks, thrift institutions and other financial institutions, as defined in Section 265@)(3) of the Internal Revenue Code of 1986, as amended. d) A copy of completed Form 8038-G; e) The following certifications, which may be combined, executed by an authorized officer of the Issuer and dated as of the Closing Date, to the effect that: i) The representations, warranties and covenants of the Issuer contained herein and in the Ordinance are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; ii) No litigation or other proceedings are pending or, to the knowledge of the Issuer, threatened in any court in any way (a) affecting the position or title of the authorized officers of the Issuer, or @)seeking to restrain or to enjoin the authorization, issuance, sale or delivery of, or security for, any of the Bonds, or (c) contesting or affecting the validity or enforceability of the Bonds, the Ordinance, this Purchase Agreement, or (d) contesting the completeness or accuracy of the POS or the Final Official Statement, or (e) contesting the powers of the Issuer or its authority with respect to the Bonds, the Ordinance or this Purchase Agreement, or (f) materially affecting the finances of the Issuer. For the purpose of this subparagraph, the Issuer may rely upon a certificate of the Issuer's legal counsel with respect to the legal matters set forth therein; and iii) No event affecting the Issuer has occurred since the date of the Final Official Statement which should be disclosed in the Final Official Statement for the purpose for which it is to be used or which is necessary to disclose therein in order to make the statements therein not misleading, and the Final Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made with respect to information within the Final Official Statement relating to DTC, the book entry system, the Issuer's Financial Advisor or the Underwriter. f) Such additional certificates, instruments or opinions or other evidence as the Underwriter or Bond Counsel may deem reasonably necessary or desirable to evidence the due authorization, issuance, execution, authentication and delivery of the Bonds, the truth and accuracy as of the time of the Closing of the representations and warranties contained in this Purchase Agreement, and the conformity of the Bonds and Ordinance with the terms thereof as summarized in the POS and the Final Official Statement, and to cover such other matters as the Underwriter or Bond Counsel reasonably requests. Underwriter's Closinp Documents At Closing, Underwriter shall deliver or cause to be delivered to the Issuer or Bond Counsel a receipt for the Bonds including therein a representation that all closing conditions set forth in this Purchase Agreement have been provided to the satisfaction of the Underwriter or waived by it. EXHIBIT C DESCRIPTION OF THE BONDS (a) Principal Amount: (b) Purchase Price: (c) Denominations: (d) Form: (e) Interest Payment Dates: (f) Maturity and Interest Rates: $6,170,000 $6,578,684.90 ($106.623742 per $loo), representing a net original issue premium of $443,483.70 and an underwriter's discount of $34,798.80. $5,000, or integral multiples thereof. Registered; Book-entry only. June 1 and December 1, commencing December 1,2010. The Bonds shall mature on December 1 of each year and bear interest as follows: Priced to the call date of June 1,2020. CUSIP Due Interest Dec. 1 Amounts Rates Yields 760133 -- 2010 $ 140,000 3.00% 0.60% RH3 2011 5,000 3.00 1.00 RJ9 2012 5,000 3.00 1.56 RK6 2013 5,000 3.00 1.87 RL4 2014 5,000 3.00 2.22 RM2 2015 10,000 3.00 2.57 RNO (g) Optional Redemption: The Bonds maturing on December 1 in years 2010 through 2019, inclusive, are not subject to redemption prior to maturity. The Bonds maturing on or after December I, 2020 are subject to redemption at the option of the Issuer, in whole or in part on any date on or after June 1, 2020 at a price of par plus accrued interest, if any, to the date of redemption. . ~ Due r Interest . . .. CUSlP :~..: Dec. 1 ~ : Amounts ' Rates -Yields .. 760133 2016 $ 10,000 3.00% 3.00% RP5 2017 10,000 3.25 3.26 RQ3 2018 1,395,000 4.50 3.36 RRl 2019 1,460,000 4.50 3.53 RS9 20208 1,530,000 4.50 3.65 RE' 2021' 1,595,000 4.50 3.74 RU4 (h) Dated Date: (i) Offer Expires: (j) Bond Counsel: (k) Closing: (I) Delivery: Date of Delivery, expected to be May 11,2010. 11:59 p.m. Pacific Time, April 8,2010. K&L Gates LLP Via conference call initiated by Bond Counsel on May 11,2010, at 9:00 a.m. Pacific Time. To the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer. S&P has assigned its underlying rating of "AA to the Bonds. PRELIMINARY OFFICIAL STATEMENT DATED MARCH 31, 2010 This prospeis a Preliminary Official Statement, subject to correction and change.  The City has authorized the distribution of the Preliminary Official Statement to ctive purchasers and others.  Upon the sale of the Bonds, the City will complete and deliver an Official Statement substantially in this form. This is a Preliminary Official Statement, subject to correction and change.  The City has authorized the distribution of the Preliminary Official Statement to prospective purchasers and others.  Upon the sale of the Bonds, the City will complete and deliver an Official Statement substantially in this form. $6,150,000*  City of Renton, Washington  Limited Tax General Obligation Refunding Bonds, 2010    DATED: Date of Delivery DUE: December 1, as shown below  STANDARD & POOR’S RATING—Applied for.  See “Rating” herein.  BANK QUALIFIED—The City of Renton, Washington (the “City”), has designated the Limited Tax General Obligation  Refunding Bonds, 2010 (the “Bonds”) as “qualified tax‐exempt obligations” for purposes of Section 265(b)(3)(B) of the  Internal Revenue Code of 1986, as amended (the “Code”).  BOOK‐ENTRY ONLY—The Bonds will be issued as fully registered bonds in denominations of $5,000, or integral multiples  thereof within a single maturity, and will be registered in the name of Cede & Co., as bond owner and nominee for The  Depository Trust Company (“DTC”).  DTC will act as securities depository for the Bonds.  Purchasers will not receive  certificates representing their interest in the Bonds purchased.    PRINCIPAL AND INTEREST PAYMENTS—Interest on the Bonds will be payable on December 1, 2010 and semiannually  thereafter on June 1 and December 1 of each year to their maturity.  Principal of and interest on the Bonds will be  payable by the fiscal agency of the State of Washington in New York, New York, currently The Bank of New York  Mellon (the “Bond Registrar”), as further described herein.  For so long as the Bonds remain in a “book‐entry only”  transfer system, the Bond Registrar will make such payments only to DTC, which in turn is obligated to remit such  principal and interest to its Participants for subsequent disbursement to Beneficial Owners of the Bonds as described in  Appendix B ‐ “Book‐Entry Transfer System.”   MATURITY SCHEDULE—   Due  Interest Prices or  Due  Interest Prices or   Dec. 1 Amounts* Rates Yields CUSIP Dec. 1 Amounts* Rates Yields CUSIP   2010 $ 145,000 % %  2016 $  10,000 % %   2011 5,000      2017 10,000      2012 10,000      2018 1,395,000      2013 10,000      2019 1,450,000      2014 10,000      2020 1,515,000      2015 10,000      2021 1,580,000     OPTIONAL REDEMPTION—The Bonds are subject to optional redemption prior to their stated maturities as further  described herein.  See “Description of the Bonds – Redemption Provisions.”  PURPOSE—The proceeds from the sale of the Bonds will be used to refund a portion of the City’s outstanding Limited Tax  General Obligation and Refunding Bonds, 2001 to obtain the benefit of savings in annual and total debt service  requirements and to pay costs of issuance for the Bonds.  SECURITY—The Bonds are limited tax general obligations of the City.  The City has covenanted and agreed irrevocably that  it will include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an  amount that will be sufficient, together with all other revenues and money of the City legally available for such  purposes, to pay the principal of and interest on the Bonds as the same become due.  The City has irrevocably pledged  that such tax will be within and as a part of the tax permitted to cities without a vote of the people.  The full faith, credit and  resources of the City have been pledged irrevocably for the annual levy and collection of such taxes and for the prompt  payment of such principal and interest.  The City’s ability to raise taxes is subject to certain limitations as described  herein.  The Bonds do not constitute a debt or indebtedness of the State of Washington, or any political subdivision  thereof other than the City.  TAX EXEMPTION—In the opinion of K&L Gates LLP of Seattle, Washington (“Bond Counsel”), assuming compliance with certain  covenants of the City, interest on the Bonds is excludable from gross income for federal income tax purposes under existing law.   Interest on the Bonds is not an item of tax preference for purposes of either individual or corporate alternative minimum tax.   Interest on the Bonds may be indirectly subject to corporate alternative minimum tax and certain other taxes imposed on certain  corporations.  See “Tax Matters” herein for a discussion of the opinion of Bond Counsel.  DELIVERY—The Bonds are offered for sale to the original purchaser subject to the final approving legal opinion of Bond  Counsel.  It is expected that the Bonds will be available for delivery to the Bond Registrar on behalf of DTC by Fast  Automated Securities Transfer, on or about May 11, 2010.  * Preliminary, subject to change.  This cover page contains certain information for quick reference only. It is not a summary of the issue.  Investors must read the entire  Official Statement to obtain information essential to the making of an informed investment decision.                                                    This page left blank intentionally      City of Renton, Washington  1055 South Grady Way  Renton, Washington 98055  Phone:  (425) 430‐6400  Fax:  (425) 430‐6516  www.rentonwa.gov*    Mayor and City Council   Denis W. Law Mayor   Don Persson President   Terri Briere President Pro Tem   Randy Corman Councilmember   Marcie Palmer Councilmember   King Parker Councilmember   Greg Taylor Councilmember   Rich Zwicker Councilmember    City Officials   Jay Covington Chief Administrative Officer   Iwen Wang Finance and Information Services Administrator   Gina Jarvis Fiscal Services Director   Bonnie Walton City Clerk    Bond Counsel  K&L Gates LLP  Seattle, Washington    Financial Advisor  Piper Jaffray & Co.  Seattle, Washington    Paying Agent  The Bank of New York Mellon  New York, New York  1‐800‐438‐5473   *   The City’s website is not part of this Official Statement, and investors should not rely on information presented in  the City’s website in determining whether to purchase the Bonds.  This inactive textual reference to the City’s  website is not a hyperlink and does not incorporate the City’s website by reference.  This Official Statement does not constitute an offer to sell or a solicitation of an offer to purchase the Bonds in any jurisdiction in  which or to a person to whom it is unlawful to make such an offer or solicitation.  No dealer, salesperson or other person has been  authorized by the City, the Financial Advisor or the Underwriter to give any information or to make any representations, other  than those contained herein, in connection with the offering of the Bonds and, if given or made, such information or  representations must not be relied upon.  The information and expressions of opinion herein are subject to change without notice,  and neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create an  implication that there has been no change in the affairs of the City since the date hereof.  The Underwriter has provided the following sentence for inclusion in this Official Statement.  The Underwriter has reviewed the  information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal  securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy  or completeness of such information.  For the sole purpose of the Underwriter’s compliance with Securities and Exchange Commission (“SEC”) Rule 15c2‐12(b)(1),  the City will “deem final” this Preliminary Official Statement as of its date, except for the omission of information as to offering  prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, maturity dates, delivery  dates, and other terms of the Bonds dependent on such matters.  In connection with this offering, the Underwriter may over‐allot or effect transactions that stabilize or maintain the market price  of the Bonds at levels above those which might otherwise prevail in the open market.  Such stabilizing, if commenced, may be  discontinued at any time.    The CUSIP numbers are included on the cover of this Official Statement for convenience of the holders and potential holders of  the Bonds.  No assurance can be given that the CUSIP numbers for the Bonds will remain the same after the date of issuance and  delivery of the Bonds.                                                  This page left blank intentionally    Table of Contents   Page  Description of the Bonds ............................................................................................................................................................... 1  Authorization for Issuance .................................................................................................................................................. 1  Principal Amount, Date, Interest Rates and Maturities ................................................................................................... 1  Bond Registrar and Registration Features ......................................................................................................................... 1  Redemption Provisions ........................................................................................................................................................ 1  Purchase ................................................................................................................................................................................. 2  Book‐Entry Bonds ................................................................................................................................................................. 2  Purpose and Use of Proceeds ....................................................................................................................................................... 3  Purpose ................................................................................................................................................................................... 3  Plan of Refunding ................................................................................................................................................................. 3  Verification of Mathematical Calculations ........................................................................................................................ 3  Estimated Sources and Uses of Funds ................................................................................................................................ 4  Security for the Bonds ................................................................................................................................................................... 4  General ................................................................................................................................................................................... 4  Defeasance ............................................................................................................................................................................. 4  No Acceleration ..................................................................................................................................................................... 5  Bonded Indebtedness .................................................................................................................................................................... 5  Summary of Limited Tax General Obligation Bonds Debt Service Requirements ....................................................... 7  Net Direct and Overlapping Debt ....................................................................................................................................... 8  Debt Payment Record ........................................................................................................................................................... 8  Future Financings ................................................................................................................................................................. 8  Taxing Authority ........................................................................................................................................................................... 9  Authorized Property Tax Levies ......................................................................................................................................... 9  The City’s Property Tax Levies ........................................................................................................................................... 9  Overlapping Taxing Districts ............................................................................................................................................ 10  General Property Taxes ...................................................................................................................................................... 10  Regular Property Tax Limitations .................................................................................................................................... 11  Assessed Value .................................................................................................................................................................... 12  Tax Collection Procedure ................................................................................................................................................... 12  Tax Collection Record ......................................................................................................................................................... 13  Major Property Taxpayers ................................................................................................................................................. 13  Collection of Other Taxes ................................................................................................................................................... 13  Authorized Investments ............................................................................................................................................................. 16  Local Government Investment Pool ................................................................................................................................. 16  Authorized Investments for Bond Proceeds .................................................................................................................... 16  The City ......................................................................................................................................................................................... 19  City Staff ............................................................................................................................................................................... 19  Labor Relations .................................................................................................................................................................... 19  Pension Funding ................................................................................................................................................................. 20  Other Post‐Employment Benefits...................................................................................................................................... 21  Budgetary Policies .............................................................................................................................................................. 21  Risk Management ............................................................................................................................................................... 22  Auditing of City Finances .................................................................................................................................................. 22  Demographic Information .......................................................................................................................................................... 23  Initiative and Referendum .......................................................................................................................................................... 26  Tax Matters ................................................................................................................................................................................... 27  Qualified Tax‐Exempt Obligations ................................................................................................................................... 27  Rating ............................................................................................................................................................................................ 28  Continuing Disclosure................................................................................................................................................................. 28  Legal and Underwriting.............................................................................................................................................................. 29  Approval of Counsel .......................................................................................................................................................... 29  Litigation .............................................................................................................................................................................. 29  Limitations on Remedies .................................................................................................................................................... 30  Potential Conflicts ............................................................................................................................................................... 30  Official Statement ................................................................................................................................................................ 30  Underwriting ....................................................................................................................................................................... 30  Financial Advisor ................................................................................................................................................................ 30  Concluding Statement ........................................................................................................................................................ 30  Form of Opinion of Bond Counsel ............................................................................................................................ Appendix A  Book‐Entry Transfer System ...................................................................................................................................... Appendix B  2008 Audited Financial Statements .......................................................................................................................... Appendix C                                                  This page left blank intentionally      OFFICIAL STATEMENT    City of Renton, Washington  $6,150,000 *  Limited Tax General Obligation Refunding Bonds, 2010      The City of Renton, Washington (the “City”), a municipal corporation duly organized and existing under and  by virtue of the laws of the State of Washington (the “State”), furnishes this Official Statement in connection  with the offering of $6,150,000* aggregate principal amount of its Limited Tax General Obligation Refunding  Bonds, 2010 (the “Bonds”).  This Official Statement provides information concerning the City and the Bonds.        Description of the Bonds  Authorization for Issuance  The Bonds are issued pursuant to Ordinance No. ___ (the “Ordinance”), adopted by the City Council (the  “Council”) on ___________, 2010 under the terms of the Renton Municipal Code.  The Bonds are also issued  pursuant to the authority of chapters 35.37, 39.36, 39.46 and 39.53 of the Revised Code of Washington  (“RCW”).  The Bonds do not require voter approval.    Principal Amount, Date, Interest Rates and Maturities  The Bonds will be issued in the aggregate principal amount of $6,150,000* and will be dated and bear interest  from the date of their delivery to the Underwriter.  The Bonds will mature on the dates and in the principal  amounts and will bear interest (payable semiannually on each June 1 and December 1, commencing  December 1, 2010) until the maturity of the Bonds at the rates set forth on the cover of this Official Statement.   Interest on the Bonds will be computed on the basis of a 360‐day year consisting of twelve 30‐day months.      Bond Registrar and Registration Features  The Bonds will be issued in fully registered form and, when issued, will be registered in the name of CEDE &  Co., as registered owner and nominee of The Depository Trust Company (“DTC”).  DTC will act as securities  depository for the Bonds.  Individual purchases will initially be made in book‐entry form only in minimum  denominations of $5,000 within a maturity and integral multiples thereof.  Purchasers (“Beneficial Owners”)  will not receive certificates representing their beneficial ownership interest in the Bonds so purchased.    Under the Ordinance, the City adopted the system of registration for the Bonds approved by the State Finance  Committee of the State of Washington (the “Committee”).  Pursuant to chapter 43.80 RCW, the Committee  designates one or more fiscal agencies (the “Fiscal Agency”) for bonds issued within the State of Washington.   The Committee currently is under contract with The Bank of New York Mellon, New York, New York.  The  Fiscal Agency will act as bond registrar (the “Bond Registrar”) under the terms of the Ordinance.    In order to meet payment requirements for interest on and principal of the Bonds as the same becomes due  and payable, the City will remit money from the City of Renton Limited Tax General Obligation Bond Debt  Service Fund (the “Bond Fund”) to the Bond Registrar.  The Bond Registrar will remit payment to DTC in  accordance with the terms of the DTC procedures as then in effect.  Principal of the Bonds will be paid to  registered owners upon presentation and surrender of the Bonds at maturity or upon earlier redemption to the  office of the Bond Registrar in New York, New York.  See “Book‐Entry Bonds” and Appendix B.    Redemption Provisions  Optional Redemption. The Bonds maturing on or prior to __________, ____ are not subject to redemption prior  to maturity.  The Bonds maturing on or after __________, ____ may be redeemed at the option of the City on or  after June 1, 2020, at par plus accrued interest to the date of redemption.  * Preliminary, subject to change. 2    For as long as the Bonds are in book‐entry only form, if fewer than all of the Bonds of a maturity are called for  redemption, the selection of Bonds within a maturity to be redeemed shall be made by DTC, in accordance  with its operational procedures then in effect.  See Appendix B attached hereto.  If the Bonds are no longer  held in book‐entry only form, then the Bond Registrar will select Bonds for redemption as provided in the  Ordinance.    Notice of Redemption.  For so long as the Bonds are held in uncertificated form, notice of redemption (which  notice may be conditional) shall be given in accordance with the operational arrangements of DTC as then in  effect, and neither the City nor the Bond Registrar will provide any notice of redemption to any Beneficial  Owners.  Thereafter (if the Bonds are no longer held in uncertificated form), notice of redemption shall be  given as provided in the Ordinance.  Unless waived by any owner of Bonds to be redeemed, official notice of  any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient  funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a  copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the  date fixed for redemption to the registered owner of the Bond or Bonds to be redeemed at the address shown  on the register maintained by the Bond Registrar or at such other address as is furnished in writing by such  registered owner to the Bond Registrar.     In the case of an optional redemption, the notice of redemption may state that the City retains the right to  rescind that notice on or prior to the scheduled redemption date, and that notice and optional redemption  shall be of no effect to the extent that the City gives notice to the affected registered owners at any time on or  prior to the scheduled redemption date that the City is rescinding the redemption notice in whole or in part.   Any Bonds subject to a rescinded notice of redemption are to remain outstanding, and the rescission will not  constitute a default under the Ordinance.    Purchase  The City reserves the right to purchase any of the Bonds offered to it at any time at a price deemed reasonable  by the City.  Bonds purchased by the City shall be cancelled.    Book‐Entry Bonds  The ownership of one fully registered Bond for each maturity of the Bonds, as set forth on the cover of this  Official Statement, each in the aggregate principal amount of such maturity, will be registered in the name of  Cede & Co., as nominee for DTC.  See Appendix B attached hereto for additional information concerning DTC  and the book‐entry system.      Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the  persons for whom they act as nominees (or any successor depository) with respect to the Bonds in respect of  the accuracy of any records maintained by DTC (or any successor depository) or any DTC participant, the  payment by DTC (or any successor depository) or any DTC participant of any amount in respect of the  principal of or interest on Bonds, any notice which is permitted or required to be given to registered owners  under the Ordinance (except such notices as are required to be given by the City to the Bond Registrar or to  DTC (or any successor depository)), or any consent given or other action taken by DTC (or any successor  depository) as the registered owner.  For so long as any Bonds are held in fully‐immobilized form under the  Ordinance, DTC or its successor depository will be deemed to be the registered owner for all purposes  thereunder, and all references therein to the registered owners will mean DTC (or any successor depository) or  its nominee and will not mean the owners of any beneficial interest in such Bonds.    Procedure in the Event of Discontinuation of Book‐Entry Transfer System. In the event that (i) DTC or its successor  (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository  can be obtained, or (ii) the Finance and Information Services Administrator (referred to herein as the “Finance  Director”) determines that it is in the best interest of the Beneficial Owners of the Bonds that such owners be  able to obtain such Bonds in the form of Bond certificates, the ownership of the Bonds may then be transferred  to any person or entity as provided in the Ordinance, and will no longer be held in fully‐immobilized form.  In  the event that the Bonds are no longer in fully immobilized form, interest on the Bonds will be paid by check  or draft mailed to the registered owners at the addresses for such registered owners appearing on the Bond  Register on the fifteenth day of the month preceding the interest payment date, or upon the written request of  3  a registered owner of more than $1,000,000 of Bonds (received by the Bond Registrar at least 15 days prior to  the applicable payment date), such payment shall be made by the Bond Registrar by wire transfer to the  account within the continental United States designated by the registered owner.  Principal of the Bonds will  be payable upon presentation and surrender of such Bonds by the registered owners at the principal office of  the Bond Registrar.      Purpose and Use of Proceeds  Purpose  The proceeds from the sale of the Bonds will be used to (i) refund a portion of the City’s outstanding general  obligation debt to obtain the benefit of savings in annual and total debt service requirements and (ii) pay costs  of issuance of the Bonds.    Plan of Refunding  Depending on market conditions on the day of pricing, the proceeds from the sale of the Bonds will be used to  advance refund up to $6,000,000 of the City’s Limited Tax General Obligation and Refunding Bonds, 2001  maturing on December 1 in the years 2018 and 2019 and the term bond maturing on December 1, 2021 (as  identified below, the “Refunded Bond Candidates,” and as selected on the pricing date, the “Refunded  Bonds”).  The proceeds of the Bonds will be escrowed to the redemption date for the Refunded Bonds on  December 1, 2011 at which time the Refunded Bonds will be redeemed at a price of par plus accrued interest to  the date of redemption.    From a portion of the proceeds of the Bonds, the City will purchase certain direct non‐callable United States  Government Obligations (as further defined below as “Government Obligations”), including obligations of the  State and Local Government Series (“SLGS”).  These Government Obligations will be deposited in the custody  of U.S. Bank National Association (the “Escrow Agent”).  The maturing principal of the Government  Obligations, interest earned thereon, and necessary cash balance, if any, will provide payment of:     (a) interest on the Refunded Bonds when due up to and including December 1, 2011; and   (b) on December 1, 2011, the redemption price (par) of the Refunded Bonds.    The Government Obligations, interest earned thereon, and necessary cash balance, if any, will irrevocably be  pledged to and held in trust for the benefit of the owners of the Refunded Bonds by the Escrow Agent,  pursuant to an escrow deposit agreement to be executed by the City and the Escrow Agent.      Information on the Refunded Bond Candidates is as follows:    Refunded Bond Candidates   Maturity Years  Principal Interest  CUSIP   (December 1) Amounts Rates Numbers   2018 $ 1,385,000 5.25% 760133PL6   2019 1,460,000 5.25 760133PM4   2021* 3,155,000 5.00 760133PP7  * Term Bonds.    Verification of Mathematical Calculations   Grant Thornton LLP, a firm of independent certified public accountants, will deliver on or before the delivery  date of the Bonds its verification report indicating that it has verified, in accordance with attestation standards  established by the American Institute of Certified Public Accountants, the mathematical accuracy of (a) the  mathematical computations of the adequacy of the cash and the maturing principal of and interest on the  Government Obligations, to pay, when due, the interest on and redemption price of the Refunded Bonds and  (b) the mathematical computations of yield used by Bond Counsel to support its opinion that interest on the  Bonds will be excluded from gross income for federal income tax purposes.    4  Estimated Sources and Uses of Funds  The proceeds from the Bonds will be applied as follows:     Sources of Funds   Par Amount $ 6,150,000 (1)   Net Original Issue Premium/(Discount)     Total Sources of Funds $    Uses of Funds   Escrow Requirements $    Costs of Issuance (2)     Total Uses of Funds $   (1) Preliminary, subject to change.  (2) Includes bond counsel fee, rating fees, financial advisor fees, underwriter’s discount, and other costs associated with  the issuance of the Bonds and the refunding of the Refunded Bonds.        Security for the Bonds  General  The Bonds are limited tax general obligation bonds of the City.  The City, as authorized by law and the  Ordinance, has covenanted and agreed irrevocably that it will include in its budget and levy an ad valorem tax  upon all the property within the City subject to taxation an amount that will be sufficient, together with all  other revenues and money of the City legally available for such purposes, to pay the principal of and interest  on the Bonds as the same become due.  The City has irrevocably pledged that such tax will be within and as a  part of the tax levy permitted to cities without a vote of the people. The full faith, credit and resources of the  City have been pledged irrevocably for the annual levy and collection of such taxes and for the prompt  payment of such principal and interest.     The City’s imposition of regular property taxes is subject to various limitations (see “Taxing Authority –  Regular Property Tax Limitations” herein).  The Bonds are expected to be paid from the City’s available  resources, and the City does not anticipate tax increases will be needed to pay debt service on the Bonds.    Subject to applicable laws, the City may apply other funds available to make payments with respect to the  Bonds and thereby reduce the amount of future tax levies for such purpose.      The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than  the City.      Defeasance  In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in  the Bond Fund or in another special account, cash or noncallable Government Obligations, or any combination  of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the  known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its  terms and to pay when due the interest and redemption premium, if any, thereon, and such cash and/or  noncallable Government Obligations are irrevocably set aside and pledged for such purpose, then no further  payments need be made into the Bond Fund for the payment of the principal of and interest on such Bond.   The owner of a Bond so provided for will cease to be entitled to any lien, benefit or security of the Ordinance  except the right to receive payment of principal, premium, if any, and interest from the Bond Fund or such  special account, and such Bond will be deemed to be not outstanding under the Ordinance.    “Government Obligations” is defined in the Ordinance to have the meaning specified in RCW 39.53.010, as it  may be amended from time to time, which currently means any of the following:  (a) direct obligations of, or  obligations the principal of and interest on which are unconditionally guaranteed by, the United States of  America, and bank certificates of deposit secured by such obligations; (b) bonds, debentures, notes,  participation certificates or other obligations issued by the Banks for Cooperatives, the Federal Intermediate  5  Credit Bank, the Federal Home Loan Bank system, the Export‐Import Bank of the United States, Federal Land  Banks or the Federal National Mortgage Association; (c) public housing bonds and project notes fully secured  by contracts with the United States; and (d) obligations of financial institutions insured by the Federal Deposit  Insurance Corporation or the Federal Savings and Loan Insurance Corporation, to the extent insured or to the  extent guaranteed as permitted under any other provision of State law.    No Acceleration  The Bonds are not subject to acceleration upon the occurrence of a default. The City, therefore, would be liable  only for principal and interest payments as they become due. In the event of multiple defaults in payment of  principal of or interest on the Bonds, the registered owners would be required to bring a separate action for  each such payment not made. This could give rise to a difference in interests between registered owners of  earlier and later maturing Bonds.      Bonded Indebtedness  As prescribed by State statutes, the unlimited tax general obligation indebtedness permitted for cities, subject to  a 60 percent majority vote of registered voters, is limited to 2.5 percent of assessed value for general purposes, 2.5  percent for certain utility purposes and 2.5 percent for open space, park facilities and capital facilities  associated with economic development.  Within the 2.5 percent of assessed value for general purposes, the  City may, without a vote of the electors, incur general obligation indebtedness (such as the Bonds) in an amount  not to exceed 1.5 percent of assessed value.  Additionally, within the 2.5 percent of assessed value for general  purposes, the City may, also without a vote of the electors, enter into leases if the total principal component of  the lease payments, together with the other nonvoted general obligation indebtedness of the City, does not  exceed 1.5 percent of assessed value.  The combination of unlimited tax and limited tax general obligation debt  for general purposes, including leases, cannot exceed 2.5 percent of assessed value and for all purposes cannot  exceed 7.5 percent of assessed value.      Without a vote of the electorate, the City may incur debt as follows:    (1) Pursuant to an ordinance specifying the amount and object of the expenditure of the proceeds,  the City may borrow money for corporate purposes and issue bonds and notes within the  constitutional and statutory limitations on indebtedness.    (2) The City may execute conditional sales contracts for the purchase of real or personal property.    (3) The City may execute leases with or without an option to purchase.      Computation of Debt Capacity  (As of May 19, 2010)    2010 Collection Year Assessed Value $ 11,821,131,678  Nonvoted Debt Capacity  1.5% of Assessed Value $ 177,316,975  Less: Outstanding Nonvoted Debt (1)  (69,164,955)  Less: The Bonds (2)  (6,150,000)  Remaining Nonvoted Debt Capacity $ 102,002,020  Voted and Nonvoted Debt Capacity  2.5% of Assessed Value $ 295,528,291  Less: Outstanding Nonvoted Debt (1)  (69,164,955)  Less: The Bonds (2)  (6,150,000)  Less: Outstanding Voted Debt  0  Total Remaining Voted and Nonvoted Debt Capacity $ 220,213,336  (1) Includes limited tax general obligation bonds, other obligations and a promissory note; excludes the Refunded Bond  Candidates.  (2) Preliminary; subject to change.  6    Outstanding Debt  Long Term Borrowing  (As of May 19, 2010)    Non‐Voted Debt    Date of Date of Amount Amount  Limited Tax General Obligations     Issue     Maturity  Issued  Outstanding  Valley Com. Bonds, 2000 (1) 09/15/00 12/01/10 $ 2,551,600 $ 184,000  LTGO & Refunding, 2001 11/01/01 12/01/17 (2)  19,505,000  12,700,000  LTGO, 2002 07/15/02 12/01/22  3,895,000  2,860,000  LTGO, 2006 08/08/06 12/01/28  17,980,000  16,920,000  SCORE Bonds, 2009 (3) 11/04/09 01/01/39  31,044,600  31,044,600  Valley Com. Bonds, 2010 (1) 04/05/10 12/01/15  1,065,000  1,065,000  The Bonds (this issue) 05/19/10 12/01/21  6,150,000 (4)  6,150,000 (4)  LTGO Bond Total    82,191,200  70,923,600  Promissory Note  Fire Protection District No. 40   (Purchase of Fire Station No. 13) 03/01/09 09/01/28  4,453,731  4,391,355 (5)  Non‐Voted Debt Total   $ 86,644,931 $ 75,314,955  (1) Valley Communications Center Development Authority (the “Authority”) issued special obligation bonds on  September 15, 2000 in the total aggregate principal amount of $12,758,000 of which the City is responsible for 20 percent  of the debt service.  The Authority expects to issue refunding bonds on April 5, 2010 to refund the callable 2011 through  2015 maturities.  The bonds issued in 2000 and the refunding bonds expected to be issued in 2010 are referred to herein  together as the “Valley Com. Bonds.”  (2) Excludes the Refunded Bond Candidates.  The December 1, 2010 through 2017 principal payments remain after this  refunding.  (3) The South Correctional Entity Facility Public Development Authority issued bonds on November 4, 2009 for a new  correctional facility (the “SCORE Bonds”).  The par amount of the SCORE Bonds was $86,235,000 and pursuant to an  interlocal agreement, the City is obligated to pay 36 percent of the debt service on the SCORE Bonds.    (4) Preliminary, subject to change.  (5) Outstanding as of March 1, 2010.  7    Summary of Limited Tax General Obligation Bonds Debt Service Requirements (1)    Calendar Outstanding LTGO Bonds (2)Total Debt Years Principal Interest Principal Interest Service 2010 2,290,000$       2,563,978$       145,000$         137,587$         5,136,565$          2011 2,356,000         3,412,749         5,000              255,075          6,028,824            2012 2,466,000         3,319,006         10,000            254,975          6,049,981            2013 3,264,400         3,187,544         10,000            254,775          6,716,719            2014 3,394,000         3,040,084         10,000            254,475          6,698,559            2015 3,536,400         2,877,465         10,000            254,175          6,678,040            2016 3,488,400         2,703,859         10,000            253,875          6,456,134            2017 3,642,200         2,535,349         10,000            253,475          6,441,024            2018 1,851,400         2,350,397         1,395,000       253,075          5,849,872            2019 1,931,600         2,257,772         1,450,000       197,275          5,836,647            2020 2,018,600         2,160,885         1,515,000       139,275          5,833,760            2021 2,102,400         2,059,235         1,580,000       71,100             5,812,735            2022 2,217,400         1,951,557         0                     0                      4,168,957            2023 2,006,600         1,832,536         0                     0                      3,839,136            2024 2,095,800         1,721,905         0                     0                      3,817,705            2025 2,193,600         1,602,596         0                     0                      3,796,196            2026 2,291,800         1,476,824         0                     0                      3,768,624            2027 2,401,800         1,345,472         0                     0                      3,747,272            2028 2,508,600         1,207,925         0                     0                      3,716,525            2029 1,222,200         1,064,318         0                     0                      2,286,518            2030 1,272,600         983,012           0                     0                      2,255,612            2031 1,328,400         896,971           0                     0                      2,225,371            2032 1,384,200         807,238           0                     0                      2,191,438            2033 1,443,600         713,694           0                     0                      2,157,294            2034 1,506,600         616,102           0                     0                      2,122,702            2035 1,571,400         514,282           0                     0                      2,085,682            2036 1,638,000         408,115           0                     0                      2,046,115            2037 1,708,200         297,422           0                     0                      2,005,622            2038 1,782,000         181,966           0                     0                      1,963,966            2039 1,859,400         61,509             0                     0                      1,920,909            Total 64,773,600$     50,151,767$     6,150,000$      2,579,137$      123,654,504$      The Bonds (3)   (1) Totals may not foot due to rounding.  (2) Principal and interest payments outstanding as of May 19, 2010.  Includes the City’s portion of the Valley Com Bonds  and the SCORE Bonds; excludes the Refunded Bond Candidates.  (3) Preliminary, subject to change; assumes interest rates ranging from 2.00% to 4.50%.    8  Summary of Overlapping Debt  (As of March 1, 2010)      Estimated   2010 Assessed Percent Outstanding Overlapping  Overlapping Taxing District   Value  Overlap  GO Debt   Debt   School District No. 403 $ 16,391,368,309 68.95% $ 278,205,000 $ 191,812,036  Fire Protection District No. 40  2,190,425,596 66.92  8,895,000  5,952,608  Hospital District No. 1  36,720,140,397 31.32  39,455,000  12,357,198  King County  341,971,517,465 3.48  1,051,394,000  36,539,687  Port of Seattle  341,971,517,465 3.48  357,315,000  12,417,969  School District No. 411  18,238,509,756 2.51  319,885,000  8,034,686  Rural Library District  206,956,965,411 1.51  129,925,000  1,965,402  School District No. 415  18,187,738,178 0.69  229,965,000  1,585,340  Total      $ 270,664,926  Source: King County Assessor’s and Treasurer’s Offices and individual taxing districts.    Net Direct and Overlapping Debt  The following tables present information regarding the City’s direct debt (including the Bonds) and the  estimated portion of the debt of overlapping taxing districts allocated to the City’s residents.  Regular Assessed Value (2010 Collection Year) $ 11,821,131,678  Estimated 2009 Population 83,650    Debt Information  Net Direct Debt (1) $ 75,314,955 (2)  Estimated Net Overlapping Debt (as previously detailed herein)  270,664,926  Total Net Direct and Overlapping Debt $ 345,979,881 (2)  (1) Includes the Bonds, limited tax general obligation bonds, the Valley Com. Bonds, the SCORE Bonds and a promissory  note; excludes the Refunded Bond Candidates.  (2) Preliminary, subject to change.    Bonded Debt Ratios  Net Direct Debt to Assessed Value  0.64%  Net Direct and Overlapping Debt   to Assessed Value  2.93%  Per Capita Assessed Value $ 141,317  Per Capita Net Direct Debt $ 900  Per Capita Total Net Direct and Net Overlapping Debt $ 4,136    Debt Payment Record  The City has promptly met all debt service payments on outstanding obligations.  No refunding bonds have  been issued to prevent an impending default.      Future Financings  Other than the Bonds, the City has no authorized but unissued general obligation bonds outstanding, nor does  it anticipate issuing additional long‐term debt within the next 12 months.      9  Taxing Authority  Authorized Property Tax Levies  The City is authorized to impose (1) a regular levy (up to $3.60/$1,000, less the library district levy, not to  exceed $0.50/$1,000 of assessed value) and (2) excess levies (unlimited as to rate or amount).  For the 2010  collection year, the City’s regular levy is $2.71184/$1,000.  The regular levy is imposed without a vote of the  people for general purposes, including payment of debt service on the Bonds, and is subject to limitations (see  “Regular Property Tax Limitations” herein).  Excess levies are imposed, upon voter approval, to pay debt  service on unlimited tax general obligation bonds.  An excess levy also may be imposed without a vote to  prevent the impairment of a contract (RCW 84.52.052).    The City’s Property Tax Levies  The following table shows the City’s levy rates and dollar amounts levied since 2006.  As Valorem Tax Levies  (Dollars Per $1,000 of Assessed Value)   Collection  Levy Rates   Levy Amounts    Year  General   Bond(1)   Total  General  Bond   Total    2010 $ 2.71184 $ ‐‐ $ 2.71184 $ 32,088,465 $ ‐‐ $ 32,088,465   2009(2) 2.36923 ‐‐ 2.36923 31,058,533 ‐‐  31,058,533   2008 2.57052 0.05330 2.62382 26,681,251 506,909  27,188,160   2007 2.82148 0.06252 2.88400 23,454,351 515,451  23,969,802   2006 3.04482 0.07088 3.11570 22,236,688 512,427  22,749,115  (1) Senior Housing bond final payment in February 2009.  (2) 2009 General Property Levy grew by $6.5 million primarily due to the Benson Hill annexation ($4.7 million) activities  in 2008 and new construction ($1.2 million) activities being added to the tax roll.  The remaining is from the 1% growth  and re‐levy of refunds and reductions as allocated by state law.  Sources: King County Assessor’s Office.    10  Overlapping Taxing Districts  The overlapping taxing districts within the City have the statutory power to levy regular property taxes at the  following rates subject to the limitations provided by chapter 84.55 RCW, and levy excess voter approved  property taxes.  For purposes of demonstration, representative levy rates for “levy code 2100” of King County  (the “County”), as well as the statutory levy authority of each type of potential overlapping district, are listed  below.  Levy code 2100 is wholly within the City, however it does not include all of the property within the  City; as a result, additional taxing districts, not listed below, levy taxes within the City.      Representative Levy Rates Statutory Levy Authority    Per $1,000 of Per $1,000 of    Assessed Value Assessed Value   King County $ 1.28499 $1.80 (2)   County (Road Levy) n/a  (1) 2.25   Rural Library District n/a  (1) 0.50   Port of Seattle 0.21597 0.45   Fire Protection District n/a  (1) 1.50   The City 2.71184 3.10 (3)(4)   Hospital District No. 1 0.53290 0.75   State Schools 2.22253 3.60 (5)   School District No. 403 3.74381 ‐‐  (6)   Emergency Medical Services 0.30000 0.50   King County Flood Zone 0.10514 0.50   Ferry District    0.00348 n/a  Total rate for King County levy code 2100: $ 11.12066    (1) King County levy code 2100 is included within the incorporated portion of King County and therefore does not have a  road levy; likewise, it does not contain a rural library district or a fire protection district.  (2) Pursuant to RCW 84.52.043(1), a county may increase its levy from $1.80 per $1,000 of assessed value to a rate not to  exceed $2.475 per $1,000 of assessed value for general county purposes if (i) the total levies for both the county and  any road district within the county do not exceed $4.05 per $1,000 of assessed value and (ii) no other taxing district has  its levy reduced as a result of the increased county levy.    (3) RCW 41.16.060.  $0.225 of the total $3.60 can be used for pension funding purposes, if required; otherwise this tax may  be levied and used for any other municipal purpose.    (4) The City’s levy authority of $3.60 per $1,000 of assessed value is impacted due to its annexation to the King County  Rural Library District.  The library district has the authority to levy up to $0.50 per $1,000 of assessed value thereby  reducing the City’s levy authority to $3.10 per $1,000 of assessed value.  The King County Rural Library District is not  within levy code 2100.  (5) RCW 84.52.043(1).  The levy by the State may not exceed $3.60 per $1,000 of assessed value adjusted to the State  equalized value in accordance with the indicated ratio fixed by the State Department of Revenue to be used  exclusively for the support of the common schools.  (6) Washington school districts do not have nonvoted regular levy authority.  Source: King County Assessor for Levy Code.    General Property Taxes  The following provides a general description of the City’s taxing authority and limitations thereon, the method  of determining the assessed value of real and personal property, tax collection procedures, and tax collection  information.     Authorized Property Taxes. The City is authorized to levy both “regular” property taxes and “excess” property  taxes.  (1) Regular Property Taxes. Regular property taxes are subject to constitutional and statutory limitations  as to rates and amounts and commonly are imposed by taxing districts for general municipal  purposes, including the payment of debt service on limited tax general obligation indebtedness, such  as the Bonds.  Regular property taxes do not require voter approval except as described below.  (2) Excess Property Taxes. Excess property taxes are not subject to limitation as to rates or amounts but  must be authorized by a 60 percent approving popular vote, as provided in Article VII, Section 2, of  the State Constitution and RCW 84.52.052.  To be valid, such popular vote must have a minimum  voter turnout of 40 percent of the number who voted at the last City general election, except that one‐ 11  year excess tax levies also are valid if the turnout is less than 40 percent and the measure receives a  number of affirmative votes equal to or greater than 24 percent of the number who voted at the last  City general election.  Excess levies may be imposed without a popular vote when necessary to  prevent impairment of the obligations of contracts.    Regular Property Tax Limitations  The authority of a city to levy taxes without a vote of the people for general city purposes, including the  payment of debt service on limited tax general obligation indebtedness, such as the Bonds, is subject to the  limitations described below.  Information relating to regular property tax limitations is based on existing  statutes and constitutional provisions.  Changes in such laws could alter the impact of other interrelated tax  limitations on the City.    Regular property tax levies are subject to rate limitations and amount limitations and to the uniformity  requirement of Article VII, Section 1 of the State Constitution, which specifies that a taxing district must levy  the same rate on similarly classified property throughout the district.  Aggregate property taxes vary within  the county because of its different overlapping taxing districts.  In the event that the maximum permissible  levy varies within the City, the lowest permissible rate for any part of the City would be applied to the entire  City.      Maximum Rate Limitation. Title 84 RCW authorizes the imposition of regular tax levies to various statutory  maximums (see “Overlapping Taxing Districts” herein).    The One Percent Aggregate Regular Levy Limitation. Article VII, Section 2 of the 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 value, 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 the 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 tax levy for unlimited tax general obligation bonds is a special excess levy approved by the voters, and as  such, is not subject to the limitations on regular levies described above.    The Levy Limitation. The regular property tax increase limitation (chapter 84.55 RCW) limits the total dollar  amount of regular property taxes levied by an individual local taxing district such as the City to the amount of  such taxes levied in the highest of the three most recent years multiplied by a limit factor, plus an adjustment  to account for taxes on new construction, annexations, improvements and State‐assessed property at the  previous yearʹs rate.  The limit factor is the lesser of 101 percent of the highest levy in the three previous years  (excluding new construction, improvements, and State‐assessed property) or 100 percent plus inflation, unless  a greater amount is approved by a simple majority of the voters.  With a supermajority vote of the Council, the  limit factor is a flat 101 percent.  12    RCW 84.55.092 allows the property tax levy to be set at the amount that would be allowed if the tax levy for  taxes due in each year since 1986 had been set at the full amount allowed under chapter 84.55 RCW.  This is  sometimes referred to as “banked” levy capacity.  The City has $5,724,309 in banked levy capacity.     With a majority vote of its electors, a taxing district may levy, within the rate limitations described above,  more than what otherwise would be allowed by the tax increase limitation indefinitely or for a limited period  or to satisfy a limited purpose, as allowed by RCW 84.55.050.  This is known as a “levy lid lift.”  A newly  created taxing district can initiate its levy at the maximum permitted statutory levy rate, unless that rate would  exceed any of the limitations described above.    Since the regular property tax increase limitation applies to the total dollar amount levied rather than to levy  rates, increases in the assessed value of all property in the taxing district (excluding new construction,  improvements and State‐assessed property) which exceed the rate of growth in taxes allowed by the limit  factor result in decreased regular tax levy rates, unless voters authorize a higher levy or the taxing district uses  banked levy capacity.  Decreases in the assessed value of all property in the taxing district (including new  construction, improvements and State‐assessed property) or increases in such assessed value that are less than  the rate of growth in taxes imposed, among other events, may result in increased regular tax levy rates.    The tax levy for unlimited tax general obligation bonds are special excess levies approved by a 60 percent  majority of the voters, and as such, are not subject to the rate or amount limitations on regular levies described  above.    Assessed Value  The County Assessor, or equivalent thereof (“Assessor”), determines the value of all real and personal  property throughout the County that is subject to ad valorem taxation, except certain utility properties which  are valued by the State Department of Revenue.  The Assessor is an elected official whose duties and methods  of determining value are prescribed and controlled by statute and by detailed regulations promulgated by the  State Department of Revenue.      For tax purposes, the assessed value of property is 100 percent of its market value.  Three approaches may be  used to determine real property value:  market data, replacement cost and income generating capacity.  In the  County, all property is subject to an annual property valuation and an on‐site revaluation at least once every  four years.  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 Tax Appeals.      Tax Collection Procedure  Property taxes are levied in specific amounts and the rate for all taxes levied for all taxing districts in a county  is determined, calculated and fixed by the Assessor based upon the assessed value of the property within the  various taxing districts.  The Assessor extends the taxes to be levied within each taxing district on 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, or equivalent thereof, by January 15, who creates a tax account for each taxpayer and is responsible  for the collection of taxes due to each account.  All such taxes are due and payable on April 30 of each year, but  if the amount due from a taxpayer exceeds $50, one‐half may be paid then and the balance no later than  October 31, of each year.  Delinquent taxes are subject to interest at the rate of 12 percent per year computed on  a monthly basis from the date of delinquency until paid.  In addition, a penalty of three percent will be  assessed on June 1st of the year in which the tax was due and eight percent on December 1st of the year due.   All collections of interest on delinquent taxes are to be credited to the County’s current expense fund.      The method of giving notice of payment of taxes due, the accounting for the money collected, the division of  the taxes among the various taxing districts, notices of delinquency, and collection procedures are all covered  by detailed statutes.  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 the first delinquency.  The State’s courts have not  decided whether the Homestead Law (chapter 6.13 RCW) may give the occupying homeowner a right to retain  the first $125,000 of proceeds of the forced sale of the family residence or other “homestead” property for  13  delinquent general property taxes.  (See Algona v. Sharp, 30 Wn. App. 837, 638 P.2d 627 (1982), holding the  homestead right superior to the improvement district assessments).  The United States Bankruptcy Court for  the Western District of Washington has held that the Homestead Exemption applies to the lien for property  taxes, while the State Attorney General has taken the position that it does not.      Tax Collection Record   Regular  Tax Collection     Collection Assessed Ad Valorem Year As of   Year Valuation(1) Tax Levy  of Levy   02/28/10    2010 $ 11,821,131,678 $ 32,088,465 (2) (2)   2009 (3) 13,173,773,069 31,058,533 97.4% 98.0%   2008 9,617,254,028 27,188,160 98.3 99.5   2007 8,332,572,160 23,969,802 98.4 99.8   2006 7,294,182,435 22,749,115 98.2 100.0   2005 6,673,667,278 21,619,105 98.8 100.0  (1) Assessed value is based upon 100% of estimated actual value.    (2) In process of collection.    (3) 2009 assessed value and ad valorem tax levy grew substantially primarily due to the Benson Hill annexation activities  in 2008 and new construction activities being added to the tax roll.    Source: King County Assessor and Treasurer.      Major Property Taxpayers    Percent of   2010 Collection Year City’s   Taxpayer   Type of Business  Assessed Valuation Total A.V.  Boeing Aerospace $ 816,632,281 6.91%  PACCAR Heavy manufacturing  115,630,722 0.98  Puget Sound Energy/Gas Utility  95,185,071 0.81  Transwestern Harvest Lakeshore Property management  68,455,459 0.58  Renton Properties LLC Property management  56,821,800 0.48  ECI Two WTC LLC Property management  50,835,600 0.43  Providence Health Healthcare  50,395,417 0.43  Fred Meyer Stores Inc. Retail  46,337,192 0.39  Axis Grand Holdings Apartments  41,166,000 0.35  BRE Properties Apartments  38,300,700     0.32   Subtotal – Ten Largest Taxpayers   1,379,760,242   11.67   All Other City Taxpayers   10,441,371,436   88.33   Total City Taxpayers  $ 11,821,131,678 100.00%  Sources:  King County Assessor’s Office.    Collection of Other Taxes  In addition to regular property tax levies, the City is also authorized to impose various other taxes, including  those described below.  Neither the State nor any municipal corporation of the State is authorized under the  Constitution to impose a tax on net income.    Sales and Use Tax.  The State first levied a retail sales tax and a corresponding use tax on taxable retail sales and  uses of personal property in 1935.  Sales taxes currently are imposed on the purchase by consumers (including  businesses and governmental entities) of a broad base of tangible personal property and selected services,  including construction (labor and materials), machinery and supplies, services and repair of real and personal  property and many other transactions not taxed in other states.  The use tax supplements the sales tax by  taxing the use of certain services and by taxing personal property on which a sales tax has not been paid (such  as items purchased in a state that imposes no sales tax).  The State Legislature, and the voters through the  initiative process, have changed the base of the sales and use tax on occasion.  Among the various items not  14  currently subject to sales and use taxes are most personal services, motor vehicle fuel, most food for off‐ premises consumption, trade‐ins and purchases for resale.    Sales taxes upon applicable retail sales are collected by the seller from the consumer.  Use taxes are payable by  the consumer upon applicable rendering of services or uses of personal property.  Each seller is required to  hold taxes collected in trust until remitted to the State Department of Revenue, which usually occurs on a  monthly basis.  The City’s sales and use tax is collected by the State Department of Revenue and remitted on a  monthly basis under a contract that provides for a deduction of one percent of the tax collected for  administration costs.  Distribution to the City lags approximately two months behind collection.    The State currently imposes a sales and use tax of 6.5 percent.  Cities, counties and certain other municipal  corporations are authorized to levy incremental local sales and use taxes for general governmental purposes.   The City is authorized to impose a local sales and use tax of one percent, of which 0.15 percent is required to  be remitted to the County.  The County also imposes various local sales and use taxes, including 0.1 percent to  support criminal justice purposes.  The first 10 percent of the revenues generated by the 0.1 percent criminal  justice tax is allocated to the County.  The remaining 90 percent of the criminal justice tax revenues is allocated  to the County and cities within the County based on population.  The proceeds of the 0.1 percent criminal  justice tax may not be used to replace pre‐existing funding.  Sales and use taxes currently are imposed in the  County at aggregate rates ranging from 8.6 to 9.5 percent.  The County imposes additional sales and use taxes  on car rentals and the sale of food and beverages at restaurants, taverns and bars.    Sales & Use Tax Streamlining.  In 2003, the State Legislature approved legislation authorizing the State’s  membership in the national Streamlined Sales and Use Tax Agreement (the “SSUTA”), in an effort to make  sales and use taxes in the State more uniform with other states.  Congress has required that state sales taxes be  more uniform before Congress will permit taxation of interstate catalog and internet sales.  In 2007, the State  Legislature adopted legislation fully conforming to the SSUTA.  Effective July 1, 2008, the sales tax system  changed in the State from an origin‐based system to a destination‐based system.  Under destination sourcing,  sales taxes are credited to the taxing jurisdiction where the purchaser takes delivery of the goods (which may  differ from the point of sale with respect to goods delivered to the purchaser).  The rate of the tax is now  determined by the local rate in the destination taxing jurisdiction.    The State Legislature enacted certain provisions to mitigate net losses in sales and use tax collections of local  taxing jurisdictions resulting from the change to a destination‐based system.  To qualify, the local taxing  jurisdiction must be negatively impacted by the legislation and the local sales tax must be in effect before  July 1, 2008, among other requirements.  The State legislation requires the Department of Revenue to  determine each local jurisdiction’s annual losses, and distributions are required to be made quarterly  representing one‐fourth of a jurisdiction’s annual loss less voluntary compliance revenue from the previous  quarter.  Losses in sales tax revenues are based on a business by business comparison of sales patterns in each  jurisdiction before and after the change to destination‐based sales tax.  Mitigation payments are distributed at  the end of each quarter for the net loss experienced in the second preceding quarter.  For example, the first  payments were made on December 31, 2008 for July through September (third quarter) 2008.      Money for mitigation is subject to appropriation by the State Legislature.  The City has not received mitigation  payments as a result of this legislation.  Although the City cannot predict its future sales tax receipts, if the  City is negatively impacted by the legislation in the future, it intends to seek mitigation payments to offset any  losses to long as it is eligible.    When a jurisdiction’s “voluntary compliance revenue” exceeds its loss of local sales tax revenue, the  jurisdiction will cease receiving mitigation payments.  “Voluntary compliance revenue” is the local sales tax  revenue gain to each local taxing jurisdiction reported to the Department by sellers in other states voluntarily  registered through the SSUTA.    Lodging Tax.  The City is authorized to impose a local option tax of one percent on sales of lodging.  This tax is  credited against the State’s 6.5 percent retail sales tax and results in no net increase to the taxpayer.  The uses  of lodging tax proceeds are restricted by State law for tourism promotion purposes only.    15  Real Estate Excise Tax.  The City is authorized to impose a real estate excise tax on each sale of real property at  the rate of 0.50 percent of the selling price.  (This is in addition to the real estate excise tax imposed by the State  at the rate of 1.28 percent.)      The first 0.25 percent tax (ʺREET 1ʺ) is imposed pursuant to RCW 82.46.010 and may be used solely for  financing certain “capital projects” specified in a capital facilities plan element of the City’s a comprehensive  plan.  Eligible “capital projects” for REET 1 include: streets, roads, highways, sidewalks, street and road  lighting systems, traffic signals, bridges, domestic water systems, storm and sanitary sewer systems, parks,  recreational facilities, law enforcement facilities, fire protection facilities, trails, libraries, administrative and  judicial facilities.    The second 0.25 percent tax (“REET 2”) is  imposed pursuant to RCW 82.46.035(2) and may be used solely for  the following capital projects specified in a capital facilities plan element of the City’s a comprehensive plan.   Eligible “capital projects” for REET 2 include: streets, roads, highways, sidewalks, street and road lighting  systems, traffic signals, bridges, domestic water systems, storm and sanitary sewer systems, and planning,  construction, reconstruction, repair, rehabilitation, or improvement of parks.  REET 2 excludes the use of funds  to acquire land for parks.    The City must deposit and account for real estate excise tax proceeds in a separate capital projects fund or  account.  REET 1 and REET 2 revenues must be tracked separately because the uses to which they may be put  are different. RCW 82.46.030(2) and RCW 82.46.035(4).  Real estate excise taxes are collected by the County  Treasurer of the county within which the property is located and distributed to the City periodically.   Distributions may be suspended if the City is in noncompliance under RCW 36.70A.340 (relating to growth  management planning).  The City currently believes it is in compliance with this statute.    Utility Tax.  The City is authorized to impose a utility business and occupation tax on the gross receipts of  utilities providing service within the City, including investor‐owned utilities and utilities owned by the City.   The maximum rate at which the City may levy the utility business and occupation tax without a vote of the  electorate varies by the type of utility.    The following table shows the historical General Fund revenues from these taxes.     General Fund Tax Revenues  Fiscal Year Ended December 31, 2009(1) 2008 2007 2006  2005  Regular property taxes (2) $ 30,763,479  $ 28,702,886  $ 23,628,184  $ 22,248,971  $ 21,312,912   Sales and use taxes (3) 21,778,296 23,261,824 22,506,580 20,644,656 18,703,497  Lodging taxes 200,381 252,233 243,251 224,940 207,325  Utility taxes 14,581,971 13,945,723 10,707,602 10,499,620 9,742,554  Real estate excise taxes 2,418,456 2,738,846 5,448,208 5,375,395 4,527,572  Other taxes (4)        5,043,218       3,435,280       4,592,361       3,559,112       3,786,898  Total Taxes $ 74,785,801  $ 72,336,792  $ 67,126,186  $ 62,552,695  $ 58,280,758               Taxes in General Sub‐Fund (5) $ ‐  $ ‐  $ ‐  $(16,614,567)  $  (14,155,930)  Taxes in Capital/Special  Rev/Debt Service  Funds     (4,964,915)      (5,491,796)      (6,272,699)      (6,677,589)        (5,777,997)   Net General Fund Taxes (6) $ 69,820,886  $ 66,844,997  $ 60,853,487  $ 39,260,540  $ 38,346,831      (1) Preliminary.  (2) 2008 Regular Property Taxes include transfer of levies from County Road Tax, Fire District, Library District from  Benson Hill‐Cascade area annexation.  (3) 2008 includes $789,683 annexation credit for Benson Hill‐Cascade area annexation, which is available for a period of  ten years.  (4) Other taxes include gambling tax, franchise fee and admissions tax.  (5) The City consolidated certain special revenue funds that are primarily supported by tax revenues in 2007 into General  Fund.  Prior to 2007, these funds are excluded from General Fund for reporting purposes.  (6) Totals may not foot due to rounding.  Source:  City of Renton.  16  Authorized Investments  Chapter 35.39 RCW limits the investment by a city of its inactive funds or other funds in excess of current  needs to the following authorized investments: United States bonds; United States certificates of indebtedness;  bonds or warrants of the State and any local government in the State; its own bonds or warrants of a local  improvement district which are within the protection of the local improvement guaranty fund law; and any  other investment authorized by law for any other taxing district or the State Treasurer.  Under chapter 43.84  RCW, the State Treasurer may invest in non‐negotiable certificates of deposit in designated qualified public  depositories; in obligations of the U.S. government, its agencies and wholly owned corporations; in bankers’  acceptances; in commercial paper; in the obligations of the federal home loan bank, federal national mortgage  association and other government corporations subject to statutory provisions and may enter into repurchase  agreements.  Utility revenue bonds and warrants of any city and bonds or warrants of a local improvement  district are also eligible investments (RCW 35.39.030).      Money available for investment may be invested on an individual fund basis or may, unless otherwise  restricted by law, be commingled within one common investment portfolio.  All income derived from such  investment may be either apportioned to and used by the various participating funds or for the benefit of the  general government in accordance with city ordinances or resolutions.  Funds derived from the sale of bonds  or other instruments of indebtedness will be invested or used in such manner as the authorizing ordinances,  resolutions or bond covenants may lawfully prescribe.    Local Government Investment Pool  The State Treasurer’s Office administers the Washington State Local Government Investment Pool (the  “LGIP”), a fund that invests money on behalf of more than 450 cities, counties and special taxing districts.  In  its management of LGIP, the State Treasurer is required to adhere, at all times, to the principles appropriate for  the prudent investment of public finds.  These are, in priority order, (i) the safety of principal; (ii) the assurance  of sufficient liquidity to meet cash flow demands; and (iii) to attain the highest possible yield within the  constraints of the first two goals.  Historically, the LGIP has had sufficient liquidity to meet all cash flow  demands.      The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provides its participants the  opportunity to benefit from the economies of scale inherent in pooling.  It is also intended to offer participants  increased safety of principal and the ability to achieve a higher investment yield than would otherwise be  available to them.  The LGIP is restricted to investments with maturities of one year or less, and the average  life typically is less than 90 days.  Investments permitted under the LGIP’s guidelines include U.S. government  and agency securities, bankers’ acceptances, high quality commercial paper, repurchase and reverse  repurchase agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified  Washington State depositories.    As of December 31, 2009, the City’s investments at market value totaled $74,655,350 of which 51 percent was  invested in the LGIP, 40 percent was invested in certificates of deposit and nine percent was invested in  U.S. government securities.    Authorized Investments for Bond Proceeds  In addition to the eligible investments discussed above, bond proceeds may also be invested in mutual funds  with portfolios consisting of U.S. government and guaranteed agency securities with average maturities of less  than four years; municipal securities rated in one of the four highest categories; and money market funds  consisting of the same, so long as municipal securities held in the fund(s) are in one of the two highest rating  categories of a nationally recognized rating agency.  Bond proceeds may also be invested in shares of money  market funds with portfolios of securities otherwise authorized by law for investment by local governments  (RCW 39.59.030).    17  General Fund  Comparative Statement of Revenues, Expenditures and Changes in Fund Balances  (Years Ending December 31)    Unaudited 2009 2008 2007 2006 2005 Revenues Taxes (1)69,820,886$        66,844,997$        60,853,487$        39,260,540$        38,346,842$         Licenses & permits 2,284,347          2,751,420         4,051,338         3,132,587          3,046,091           Intergovernmental 9,690,130          8,773,933         4,247,212         2,846,753          2,994,718           Charges for services 3,696,606          3,976,920         4,644,129         2,246,722          2,163,442           Fines & forfeitures 3,817,008          2,002,854         1,150,079         860,819             683,045              Interfund revenues 3,225,745          3,072,526         2,904,411         1,791,180          2,718,806           Contributions 150,406             0                       303,582            66,781               66,228                Investment earnings 466,584             587,590            1,142,279         661,481             367,469              Miscellaneous 167,214             64,359              84,822              215,804             90,604                Total Revenues 93,318,925          88,074,599          79,381,339          51,082,667          50,477,245           Expenditures General government 12,193,625          (2)16,149,143          14,332,208          10,698,791          11,541,778           Security of persons & property (3)45,812,488          45,530,208          35,583,500          31,157,303          29,031,626           Physical environment 2,843,916          3,123,883         2,764,563         2,609,452          2,190,228           Transportation 6,949,089          6,332,006         5,508,218         0                        0                         Economic environment 7,109,632          6,232,669         5,536,661         4,709,745          4,266,112           Mental & physical health 19,726               16,459              13,818              9,231                 12,700                Culture & recreation (1)14,856,318          (2)11,119,073          10,701,870          0                         43,453                 Capital outlay 1,956,266          2,017,677         2,401,021         80,343               103,115              Total Expenditures 91,741,060          90,521,118          76,841,859          49,264,865          47,189,012           Excess revenues over (under) expenditures 1,577,865          (2,446,519)        2,539,480         1,817,802          3,288,233           Other Financing Sources (Uses): Operating transfers in 277,004             0                       480,355            0                        0                         Operating transfers out (1,285,446)         (519,503)           (480,355)           (272,000)            (2,881,916)          Sale of capital assets 0                        735                   24,218              1,424                 37,047                Total Other Sources (Uses)(1,008,442)          (518,768)             24,218                (270,576)             (2,844,869)           Excess revenues over (under) expenditures (4)569,423             (2,965,287)        2,563,698         1,547,226          443,364              Beginning Fund Balance (1)(5) 13,517,097          16,482,384          13,918,686          9,197,871           8,754,507            Ending Fund Balance 14,086,520$        13,517,097$        16,482,384$        10,745,097$        9,197,871$           Ending Fund Balance as % of Expenditures 15.35%14.93%21.45%21.81%19.49% Audited   (1) In 2007 the Parks, Street, and Library Funds were combined with the General Fund, instead of reported as separate  special revenue funds.  This change increased the beginning balance of the General Fund by the previous year’s Parks,  Street, and Library Funds’ ending balances in the amount of $1,285,989, $1,698,995 and $188,605, respectively.  In  addition to the change in 2007 beginning fund balance, this consolidation also affected the amount of tax revenues  reported in the General Fund.  See the General Fund Tax Revenues table herein for the portion of taxes accounted for  in the “General Sub‐Fund” prior to 2007.  Expenses related to the Parks, Street and Library Funds were categorized  under “Culture & recreation.”  (2) Decline in “General government” from 2008 to 2009 was due certain funds being reallocated to the City’s Internal  Services Fund (outside of the General Fund).  Charges to the Internal Services Fund were allocated to “Culture &  recreation,” resulting in an increase from 2008 to 2009.  (3) The increase in 2008 “Security of persons and property” expenditures is attributable to the Benson Hill‐Cascade area  annexation that took effect in 2008.  In addition, the City entered into a service contract to provide fire and emergency  medical services to the remainder of King County Fire District 40, whose service area was reduced substantially by  this annexation.  (4) The 2008 operating deficit (and reduction in fund balance) represents primarily startup costs for new equipment  purchases and facility improvements the City incurred for the annexation of the Benson Hill‐Cascade area.  (5) In 2005 the Community Development Block Grant (CDBG) Fund was combined with the General Fund.  The  beginning balance of the General Fund was increased by the previous years CDBG Fund’s ending balance in the  amount of $42,762.  Source:  City of Renton Audited Financial Statements.  18  General Fund  Balance Sheet  (Years Ending December 31)    2008 2007 2006 2005 2004 Assets Cash & cash equivalents 3,731,827$        6,784,804$        5,333,644$        4,650,346$         4,134,322$         Investments 6,418,107          7,533,665         3,000,000         3,000,000           3,000,000          Receivables   Taxes 2,636,311          368,733            414,752            847,713              810,488               Customer accounts 3,092,363          2,773,767         1,294,924         1,197,038           983,869               Accrued interest & penalty 71,661               201,602            99,201              69,793                326,313               Due from other funds 923                    6,905                330                   4,346                  3,999                   Due from other governmental units 4,191,637          4,772,646         4,296,279         3,752,141           3,218,062          Prepayments 8,000                 8,000                8,000                8,000                  33,742               Restricted assets 0                        0                       0                       0                         75,000               Total Assets 20,150,829        22,450,122       14,447,130       13,529,377         12,585,795        Liabilities and Fund Balances Liabilities   Accounts payable 1,654,643          2,134,476         849,363            573,726              347,917               Taxes payable 16,355               23,397              10,567              11,727                15,233                 Due to other funds 184,244             0                       15,000              15,984                994                      Custodial accounts 39,438               56,207              69,707              155,037              104,753               Deposits 34,739               34,739              34,739              34,739                24,739                 Deferred revenue 1,194,583          736,152            803,681            1,021,826           1,198,435            Accrued employee wages & leave payable 3,509,730          2,982,767         1,918,976         2,518,467           2,181,979          Fund Balances   Reserved 8,000                 8,000                8,000                8,000                  108,742               Unreserved 13,509,097        16,474,384       10,737,097       9,189,871           8,603,003          Total Liabilities and Fund Balances 20,150,829$       22,450,122$       14,447,130$       13,529,377$       12,585,795$        Audited   Note:  Unaudited 2009 Balance Sheet is not available.  Source:  City of Renton Audited Financial Statements.      19  The City  The City was incorporated in 1901 and operates under State laws applicable to a non‐charter code city with a  mayor‐council form of government.  The council is comprised of seven members plus the mayor.   Councilmembers are elected to four‐year terms on a staggered schedule through citywide elections.   Councilmembers are part‐time elected officials who exercise legislative authority and determine matters of  policy for the City.        Member   Position  Term Expires   Denis W. Law Mayor December 31, 2011   Don Persson President December 31, 2011   Terri Briere President Pro Tem December 31, 2013   Randy Corman Councilmember December 31, 2013   Marcie Palmer Councilmember December 31, 2011   King Parker Councilmember December 31, 2011   Greg Taylor Councilmember December 31, 2011   Rich Zwicker Councilmember December 31, 2013    The City provides a range of municipal services authorized by State law, including police, fire, ambulance  service, streets, sanitation, health, recreation, library, public improvements, planning and zoning, water  supply treatment and distribution, and sewage collection and treatment services.    City Staff  Jay Covington, Chief Administrative Officer.  Mr. Covington joined City staff in 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.  Mr.  Covington earned a Bachelor’s degree in Business and Masters in Public Administration from Brigham Young  University.  Mr. Covington is a past President and Board Member of the Washington City/County  Management Association as well as a past Board Member of the Association of Washington Cities.  In 2005,  Mr. Covington received the Public Official of the Year Award from the Seattle Municipal League.    Iwen Wang, Finance and Information Services Administrator.  Ms. Wang was originally with the City in 1986 as its  Utility Accounting Supervisor and was promoted to the Deputy Finance Director position in 1988, where she  was responsible for budget, financial planning, and financial operation functions including accounting, cash  management, and coordination of financial audits and banking service contracts.  Ms. Wang rejoined the City  in 2008 as its Finance and Information Services Administrator, and is now responsible for overall management  of the Cityʹs financial and information technology functions.  Prior to her original position with the City, Ms.  Wang was with the City of Redmond as its enterprise fund accountant.  In 1994, Ms. Wang joined the City of  Federal Way as its Management Service Director and was appointed to Assistant City Manager in 2007 until  she left to rejoin the City.  Ms. Wang has a Bachelor of Arts degree in public finance and Master of Business  Administration (MBA) degree in Finance.  In addition, Ms. Wang is a Certified Public Accountant (CPA) and a  Certified Management Accountant (CMA).    Gina Jarvis, Fiscal Services Director.  Ms. Jarvis graduated from Drury University in Springfield, Missouri with a  Bachelor of Arts degree in Business Administration and Accounting.  Ms. Jarvis started her career as an  auditor for the Missouri State Auditor’s Office where she became a licensed CPA.  In 1997, Ms. Jarvis joined  the City as an Accountant and was later promoted to Finance Analyst Supervisor.  In 2003, she joined the City  of Puyallup as a Financial Analyst and in 2006, was promoted to Assistant Finance Director where she served  until February 2010.  In February 2010, Ms. Jarvis returned to the City as the Fiscal Services Director.    Labor Relations  The City currently has approximately 693 full‐time employees and 18 seasonal and part‐time employees.  The  City enters into written bargaining agreements with represented employees.  The agreements contain  provisions regarding salaries, vacation, sick leave, medical and dental insurance, working conditions, and  grievance procedures.  The City strives to complete agreements with all groups in a timely manner, consistent  with all applicable State law, and to promote labor relation policies mutually beneficial to management and  20  employees.  The City considers labor relations with its bargaining units to be good.  There have been no recent  strikes or major labor relations problems.     Number of    Bargaining Unit  Employees  Expiration Date    AFSCME 295 December 31, 2009*   Renton Police Officers’ Guild 112 December 31, 2009*   Renton Police Officers’ Guild Non‐Commissioned 45 December 31, 2009*   Renton Firefighters Local 864 123 December 31, 2009*   Renton Firefighters Local 864 Battalion Chiefs 7 December 31, 2009*  * Currently under negotiation.    Pension Funding  Substantially all of these employees are enrolled in the State of Washington Public Employees Retirement  System (“PERS”) or the Law Enforcement Officers and Fire Fighters Retirement System (“LEOFF”).   Contributions by both employees and employers are based on gross wages.  PERS and LEOFF participants  who joined the system by September 30, 1977 are Plan 1 members.  Those PERS participants who joined on or  after October 1, 1977 and by August 31, 2002 are Plan 2 members, unless they exercise an option to transfer to  Plan 3.  PERS participants joining on or after September 1, 2002 have the irrevocable option of choosing  membership in PERS Plan 2 or PERS Plan 3.  LEOFF participants who joined on or after October 1, 1977 are  Plan 2 members.  The City contributed $2,210,892 to PERS and $1,258,704 to LEOFF in 2009 for all of the City’s  employees that are covered under PERS and LEOFF.      The following tables outline the contribution rates of employees and employers under PERS and LEOFF.    PERS Contribution Rates as of September 1, 2009   Plan 1 Plan 2 Plan 3 Employee  6.00%3.90%Variable (1) Employer (2) 5.31%5.31%5.31% (1) Rates vary from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member.   (2) Includes a 0.16% administration fee.    LEOFF Contribution Rates as of September 1, 2009   Plan 1 Plan 2  Employee 0.00%8.46%  Employer (1) 0.16%5.24%  (1) Includes a 0.16% administration fee.    According to information provided by the Office of the State Actuary, based upon revised demographic and  economic assumptions, the total unfunded actuarial accrued liability of Plan I of the PERS System currently is  $3.99 billion, of which the State share is $1.596 billion and the local government share is $2.394 billion.  In 2005  and 2006, the State Legislature enacted and authorized the State Pension Funding Council to adopt changes in  contribution rates to PERS intended to amortize the PERS I unfunded actuarial liability by 2024.  According to  information provided by the Office of the State Actuary, Plan II and III of PERS currently have no unfunded  actuarial accrued liability.  Shown below are historical employer contribution rates for Plan I, II and III of  PERS.  The contribution rates effective July 1, 2008 and July 1, 2009, include a component of 2.70% and 1.13%,  respectively, dedicated to amortizing the local government share of the PERS I unfunded actuarial liability,  and a component of 0.16% for administrative expenses.  These rates are subject to change by future legislation  enacted by the State Legislature to address future changes in actuarial and economic assumptions.      While the City’s contributions in 2009 represent its full current liability under the systems, any unfunded  pension benefit obligations could be reflected in future years as higher contribution rates.  It is expected that  the contribution rates for employees and employers in the PERS II and III will increase.    21  Information regarding all of these plans is presented in Washington State’s Department of Retirement  Systems’ annual financial report. A copy of this report may be obtained at:  Department of Retirement Systems  Point Plaza West  1025 East Union Street  P.O. Box 48380  Olympia, WA  98504‐8380  Internet Address:  www.drs.wa.gov (which is not incorporated herein by reference)    Other Post‐Employment Benefits  The Governmental Accounting Standards Board (“GASB”) has issued a new standard concerning Accounting  and Financial Reporting by Employers for Post‐Employment Benefits Other than Pensions (GASB 45).  In  addition to pensions, many State and local governmental employers provide other post‐employment benefits  (“OPEB”) as a part of total compensation to attract and retain the services of qualified employees.  OPEB  includes post‐employment health care as well as other forms of post‐employment benefits when provided  separately from a pension plan.  The new standard provides for the measurement, recognition and display of  OPEB expenses/expenditures, related liabilities (assets), note disclosures, and, if applicable, required  supplementary information in the financial reports.    The City’s annual OPEB cost (expense) is calculated based on the annual required contribution of the employer  (“ARC”), an amount actuarially determined in accordance with the parameters of GASB 45.  The ARC  represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year  and to amortize any unfunded actuarial liabilities over a period of 30 years as of January 1, 2008.  The  following table shows the components of the City’s annual OPEB cost for 2008, the amount actually  contributed to the plan and changes in the City’s net OPEB:     Determination of Required Annual Contribution   Annual Normal Costs – Beginning of Year $ 154,545   Amortization of UAAL* – Beginning of Year  1,869,523    Annual Required Contribution (ARC) 2,024,068      Determination of Net OPEB Obligation   Annual Required Contribution (ARC)  2,024,068   Interest on net OPEB Obligation  0   Adjustment to ARC  0    Annual OPEB Cost 2,024,068   Contributions Made  (1,843,574)    Increase in net OPEB Obligation 180,494   Net OPEB Obligation – Beginning of Year  0   Net OPEB Obligation – End of Year $ 180,494  * Unfunded Actuarial Accrued Liability.    The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB  obligation for 2009 were as follows:     Fiscal  Contribution as a   Year Annual Percentage of Net OPEB   Ended OPEB Cost Annual OPEB Cost Obligation   2008 $2,024,068 91.08% $180,494    Budgetary Policies  The City budgets it funds in accordance with chapter 35A.33 RCW.  Annual appropriated budgets are adopted  for the general, special revenue, debt service, and capital projects funds on the cash basis of accounting and  include fund balances.  The City provides a reconciliation of the differences between the budgetary basis and  GAAP each year in its Comprehensive Annual Financial Report.      22  The City Council annually adopts a budget by ordinance establishing appropriations for City funds, and  during the year may authorize supplemental appropriations.  Administrative and legal budgetary control is  established at the fund level, i.e., expenditures for a fund may not exceed the total appropriation amount.  The  Mayor or Chief Administrative Officer may authorize transfers of appropriations within a fund however  interfund transfers must be approved by ordinance of the Council.    Risk Management  The City is a member of the Washington Cities Insurance Authority (WCIA).  Utilizing chapter 48.62 RCW  (self‐insurance regulation) and chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed  WCIA on January 1, 1981.  WCIA was created for the purpose of providing a pooling mechanism for jointly  purchasing insurance, jointly self‐insuring, and/or jointly contracting for risk management services.  WCIA has  a total of 129 members.    New members initially contract for a three‐year term, and thereafter automatically renew on an annual basis.   A one‐year withdrawal notice is required before membership can be terminated.  Termination does not relieve  a former member from its unresolved loss history incurred during membership.    Liability coverage is written on an occurrence basis, without deductibles.  Coverage includes general,  automobile, police, public officials’ errors or omissions, stop gap, and employee benefits liability.  Limits are  $4 million per occurrence self insured layer, and $16 million per occurrence in the re‐insured excess layer.  The  excess layer is insured by the purchase of reinsurance and insurance.  Total limits are $20 million per  occurrence subject to aggregate sublimits in the excess layers.  The WCIA Board of Directors determines the  limits and terms of coverage annually.    Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and  machinery are purchased on a group basis. Various deductibles apply by type of coverage.  Property insurance  and auto physical damage are self‐funded from the members’ deductible to $500,000, for all perils other than  flood and earthquake, and insured above that amount by the purchase of reinsurance.    In‐house services include risk management consultation, loss control field services, claims and litigation  administration, and loss analyses.  WCIA contracts for the claims investigation consultants for personnel  issues and land use problems, insurance brokerage, and lobbyist services.    WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as  determined by an outside, independent actuary.  The assessment covers loss, loss adjustment, and  administrative expenses.  As outlined in the Interlocal Cooperation Act, WCIA retains the right to additionally  assess the membership for any funding shortfall.    An investment committee, using investment brokers, produces additional revenue by investment of WCIAʹs  assets in financial instruments which comply with all State guidelines.  These revenues directly offset portions  of the membershipʹs annual assessment.    A Board of Directors governs WCIA, which is comprised of one designated representative from each member.   The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the  organization.  The WCIA Executive Director reports to the Executive Committee and is responsible for  conducting the day to day operations of WCIA.    Auditing of City Finances  Accounting systems and budgetary controls are prescribed by the Office of the State Auditor in accordance  with RCW 43.09.200 and RCW 43.09.230.  State statutes require audits for cities the size of the City to be  conducted by the Office of the State Auditor.  The City complies with the systems and controls prescribed by  the Office of the State Auditor and establishes procedures and records which reasonably assure safeguarding  of assets and the reliability of financial reporting.      The State Auditor is required to examine the affairs of cities at least once every two years, however the City  requests annual audits.  The examination must include, among other things, the financial condition and  resources of the City, whether the laws and constitution of the State are being complied with, and the methods  23  and accuracy of the accounts and reports of the City.    Reports of the auditor’s examinations are required to be  filed in the office of the State Auditor and in the finance department of the City.  The audited financial  statements of the City for the year ended December 31, 2008, attached as Appendix C, are incorporated by  reference to this Official Statement.      Demographic Information  King County Washington  The City surrounds the southern end of Lake Washington, southeast of Seattle on  Interstate 405.  The City is located approximately 20 miles southeast of the City of  Seattle and approximately 60 miles northeast of the City of Olympia, the State’s  capital.  As of the 2009 population estimates, the City ranked fifth in size among  cities in the County.  The City had a population of 83,650 as estimated in 2009 by the  State Office of Financial Management, an increase of 39 percent since 2007 when the  City annexed the Benson Hill‐Cascade area.  Historical population of the City and  the County are shown below.    Population  The following table shows the historical population for the County and the City:    Population  King County and the City of Renton  Year King County City of Renton 2009 1,909,300 83,650 2008 1,884,200 78,780 (1) 2007 1,861,300 60,290 2006 1,835,300 58,360 2005 1,808,300 56,840 (1) Significant increase in population due to the annexation of the Benson Hill‐Cascade area.  Source: Washington State Office of Financial Management, March 2010.    Flood Management  In January 2009, record rainfall in southern King County caused rivers to swell and flooding to occur even  with dams and levee systems in place in many areas.  In addition to the heavy rainfall, warmer temperatures  added snowmelt to the run‐off and tributary stream flooding.  The Howard Hanson Dam on the Green River,  which runs through southern King County, received record peak inflows and the reservoir at the dam reached  a record level.  As a result, the dam appears to have been damaged.  Engineers for the Army Corps of  Engineers (the “Corps”), which built and maintains the dam, are assessing a depression in one of the dam’s  abutments to determine the extent and cause of the damage.  Although the Corps has assured that there is no  risk of the dam failing, the Corps has announced that it will store less water behind the dam as a safety  precaution until the issue is resolved.  As a result, the Corps may release rainwater from storms into the lower  Green River earlier and more often than in the past, which could potentially overwhelm levees that protect  low‐lying parts of the southern portion of the City.  It cannot be predicted whether a flood or other natural  disaster will occur or if such event did occur, what the impact would be on the City or its operations.    King County  The County is located on Puget Sound in Washington and covers more than 2,200 square miles.  The County is  the largest metropolitan county in the State in terms of number of cities and employment and includes more  than one quarter of the State’s population.  The tables in the following section include the most recent  information available.  Similar to other municipalities nationwide, the City, the County and the State have  experienced and may continue to experience negative impacts due to current economic conditions.  Major  contributors to the area’s economy are manufacturing, technology‐based business, the Port of Seattle, services  industry, tourism, fishing and agriculture.      24  Income. Historical personal income and per capita income levels for the County and the State are shown  below:    King County and State of Washington  Total Personal and Per Capita Income   King County State of Washington Year  Total Personal   Income (in thousands)  Per Capita Income  Total Personal  Income (in thousands)  Per Capita Income  2008 N/A N/A $280,677,561 $42,857 2007 $106,805,239 $57,710 265,738,395 41,203 2006 97,750,314 53,488 245,764,517 38,639 2005 89,032,307 49,488 226,585,245 36,227 2004 88,407,884 49,670 218,431,726 35,347 2003 79,199,166 44,800 202,942,123 33,214 Source: U.S. Department of Commerce, Bureau of Economic Analysis, February 2009.    Taxable Retail Sales. Taxable retail sales reflect only those sales subject to retail sales tax.  Historical taxable  retail sales for the City and the County are shown below:     Taxable Retail Sales     King County   City of Renton    2009(1) $ 19,102,154,079 $ 957,945,674   2008 45,711,920,389 2,262,469,040   2007 47,766,338,768 2,289,518,889   2006 43,993,478,514 2,093,200,107   2005 40,463,996,808 1,951,188,125   2004 37,253,103,540 1,853,297,141  (1) Through second quarter only; through second quarter 2008 for the County was $22,761,952,403, for the City was  $1,142,865,489.  Source: Washington State Department of Revenue, February 2009.    Building Permits. The number and valuation of new single‐family and multi‐family residential building  permits in the County are listed below:    King County Residential Building Permits     New Single Family Units New Multi Family Units  Total  Year  Number  Construction Cost Number Construction Cost  Construction Cost  2009(1)   1,992  $ 535,129,117 936 $142,237,552  $ 677,366,669  2008   3,029   866,565,304 7,427 1,009,669,531   1,876,234,835  2007   5,206   1,506,180,957 10,212 1,246,804,898   2,752,985,855  2006   5,770   1,622,174,594 8,305 1,023,922,267   2,646,096,861  2005   6,331   1,741,241,527 5,703 556,297,096   2,297,538,623 (1) Through December 2009.  Source:  U.S. Bureau of the Census, February 2010.  25    Employment. State‐wide employment figures (rounded) for major employers located primarily within the  central Puget Sound region (King, Pierce and Snohomish Counties) and employment figures for the City are  shown in the following tables:    Major Employers(1)  Employer  Number of Employees  The Boeing Company 74,277(2) U.S. Army Fort Lewis 40,091 Microsoft 36,405 University of Washington 20,605 Providence Health 14,090 King County Government 12,586 City of Seattle 9,946 Group Health Cooperative 9,135 MultiCare Health System 8,552 Costco 7,475 Weyerhaeuser 6,770 Alaska Air Group, Inc.6,565 Washington Mutual Inc. (3) 6,200 Starbucks Corp.4,884 Safeway 4,673 Nordstrom Inc.4,421 Swedish Medical Center 3,860 Qwest 3,639 (1) Does not include part‐time or seasonal employment figures.  (2) From entity, as of April 30, 2009.  (3) As of September 25, 2008, Washington Mutual Bank merged with financial assistance into JPMorgan Chase Bank,  National Association.  Source:  Puget Sound Business Journal, Book of Lists, 2009.    City of Renton  2009 Major Employers           Number of   Employer   Type of Business  Employees  The Boeing Company Aerospace 13,224  Valley Medical Center Medical services 2,400  Renton School District Public education 1,376  Paccar Inc. Heavy manufacturing 1,268  Federal Aviation Administration Federal government 997  Renton Technical College Technical/trade school 835  City of Renton City government 693  ER Solutions Inc. Professional/technical 524  Young‐Columbia of Washington Wholesale trade 392  IKEA  Retail 356  Source: City of Renton.    26  Civilian Labor Force data is based on household surveys of residents.  North American Industry Classification  System (“NAICS”) data are estimates based on surveys of employers and benchmarked based on covered  employment as reported by all employers.  King County  Nonagricultural Wage & Salary Workers   and Labor Force and Employment Data   Annual Average   2009 (1) 2008 2007 2006 2005  Civilian Labor Force 1,112,490 1,088,440 1,068,490 1,047,740 1,012,940 Total Employment 1,023,040 1,041,450 1,028,850 1,005,240 965,940 Total Unemployment 89,450 47,000 39,650 42,500 47,000 Percentage of Labor Force 8.0 4.3 3.7 4.1 4.6 NAICS Industry 2009 (1) 2008 2007 2006 2005  Total Nonfarm 1,156,742 1,216,442 1,200,583 1,176,575 1,141,950 Total Private 990,050 1,050,208 1,037,408 1,014,558 980,600 Goods Producing 161,767 186,358 188,533 182,975 170,367 Natural Resources and Mining 542 583 667 675 692 Construction 57,950 73,792 74,867 69,933 63,008 Manufacturing 103,300 111,967 112,992 112,400 106,658 Services Providing 994,967 1,030,075 1,012,067 993,575 971,575 Trade, Transportation, and Utilities 211,733 224,733 224,117 224,233 222,092 Financial Activities 70,800 75,883 77,100 77,600 76,183 Professional and Business Services 177,050 194,217 190,650 182,250 172,533 Educational and Health Services 140,158 133,508 127,858 124,758 122,400 Leisure and Hospitality 107,508 113,375 111,833 108,633 105,925 Other Services 41,533 42,442 41,567 41,608 41,100 Government 166,683 166,233 163,200 162,025 161,325 Workers in Labor/Management  Disputes 0 958 0 8 850  _______________  (1) Through December 2009.  Source:  State Employment Security Department.      Initiative and Referendum  Under the State Constitution, the voters of the State have the ability to initiate legislation and require the  Legislature to refer legislation to the voters through the powers of initiative and referendum, respectively.  The  initiative power in Washington  may not be used to amend the State Constitution.  Initiatives and referenda are  submitted to the voters upon receipt of a petition signed by at least eight percent (initiative) and four percent  (referendum) of the number of voters registered and voting for the office of Governor at the preceding regular  gubernatorial election.  Any law approved in this manner by a majority of the voters may not be amended or  repealed by the Legislature within a period of two years following enactment, except by a vote of two‐thirds of  all the members elected to each house of the Legislature.  After two years, the law is subject to amendment or  repeal by the Legislature in the same manner as other laws.     Tax and fee initiative measures have been and may be filed from time to time.  It cannot be predicted whether  any such initiatives might gain sufficient signatures to qualify for submission to the Legislature and/or the  voters or, if submitted, whether they ultimately would be approved.    Under the City Municipal Code, Renton voters may initiate Municipal Code amendments and local legislation,  including modifications to existing legislation and through referendum may prevent legislation passed by the  City Council from becoming law.  27  Tax Matters  In the opinion of Bond Counsel, interest on the Bonds is excludable from gross income for federal income tax  purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on  individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted  current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations.      Federal income tax law contains a number of requirements that apply to the Bonds, including investment  restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the use of  proceeds of the Bonds and the facilities refinanced with proceeds of the Bonds and certain other matters.  The  City has covenanted to comply with all applicable requirements.    Bond Counsel’s opinion is subject to the condition that the City comply with the above‐referenced covenants  and, in addition, will rely on representations by the City and its advisors with respect to matters solely within  the knowledge of the City and its advisors, respectively, which Bond Counsel has not independently verified.   If the City fails to comply with such covenants or if the foregoing representations are determined to be  inaccurate or incomplete, interest on the Bonds could be included in gross income for federal income tax  purposes retroactively to the date of issuance of the Bonds, regardless of the date on which the event causing  taxability occurs.  In rendering its opinion, Bond Counsel will also rely on the report of Grant Thornton LLP  with respect to the accuracy of certain mathematical calculations.    Except as expressly stated above, Bond Counsel expresses no opinion regarding any other federal or state  income tax consequences of acquiring, carrying, owning or disposing of the Bonds.  Owners of the Bonds  should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the  Bonds, which may include original issue discount, original issue premium, purchase at a market discount or at  a premium, taxation upon sale, redemption or other disposition, and various withholding requirements.    Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral  federal income tax consequences to certain taxpayers, including, without limitation, financial institutions,  property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement  benefits, certain S corporations with “excess net passive income,” foreign corporations subject to the branch  profits tax, life insurance companies and taxpayers who may be deemed to have incurred or continued  indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Bonds.  Bond  Counsel expresses no opinion regarding any collateral tax consequences.  Prospective purchasers of the Bonds  should consult their tax advisors regarding collateral federal income tax consequences.    Payments of interest on tax‐exempt obligations such as the Bonds, are in many cases required to be reported to  the Internal Revenue Service (the “IRS”).  Additionally, backup withholding may apply to any such payments  made to any owner who is not an ”exempt recipient” and who fails to provide certain identifying information.   Individuals generally are not exempt recipients, whereas corporations and certain other entities generally are  exempt recipients.    Bond Counsel’s opinion is not a guarantee of result and is not binding on the IRS; rather, the opinion  represents Bond Counsel’s legal judgment based on its review of existing law and in reliance on the  representations made to Bond Counsel and the City’s compliance with its covenants.  The IRS has established  an ongoing program to audit tax‐exempt obligations to determine whether interest on such obligations is  includable in gross income for federal income tax purposes.  Bond Counsel cannot predict whether the IRS will  commence an audit of the Bonds.  Owners of the Bonds are advised that, if the IRS does audit the Bonds,  under current IRS procedures, at least during the early stages of an audit, the IRS will treat the City as the  taxpayer, and the owners of the Bonds may have limited rights to participate in the audit.  The commencement  of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded,  regardless of the ultimate outcome.    Qualified Tax‐Exempt Obligations  The City has designated the Bonds as “qualified tax‐exempt obligations” within the meaning of  Section 265(b)(3)(B) of the Code.  28  Rating  As noted on the cover page of this Official Statement, the City will apply for a rating for the Bonds from  Standard & Poor’s, a division of The McGraw Hill Companies, Inc..  When and if obtained, the rating will  reflect only the views of the rating agency and an explanation of the significance of the rating may be obtained  from the rating agency.  There is no assurance that the rating, once obtained, will be retained for any given  period of time or that the rating will not be revised downward or withdrawn entirely by the rating agency if,  in its judgment, circumstances so warrant.  Any such downward revision or withdrawal of the rating will be  likely to have an adverse effect on the market price of the Bonds.      Continuing Disclosure  In accordance with Section (b)(5) of Securities and Exchange Commission (the “Commission”) Rule 15c2‐12  under the Securities Exchange Act of 1934, as the same may be amended from time to time (the “Rule”), the  City has agreed in the Ordinance for the benefit of the Bond Owners or Beneficial Owners of the Bonds (the  “Undertaking”) to provide or cause to be provided to the Municipal Securities Rulemaking Board (“MSRB”),  the following annual financial information and operating data for the prior fiscal year (commencing in 2011 for  the fiscal year ended December 31, 2010):  (i) annual financial statements, which statements may or may not be  audited, showing ending fund balances for the City’s general fund prepared in accordance with the Budgeting  Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or  any successor statute); (ii) the assessed valuation of taxable property in the City; (iii) ad valorem taxes due and  percentage of taxes collected; (iv) property tax levy rate per $1,000 of assessed valuation; and (v) outstanding  general obligation debt of the City.  Items (ii) through (v) will be required only to the extent that such  information is not included in the annual financial statements.    The information and data described above will be provided on or before nine months after the end of the  City’s fiscal year.  The City’s current fiscal year ends December 31.  The City may adjust such fiscal year by  providing written notice of the change of fiscal year to the MSRB.  In lieu of providing such annual financial  information and operating data, the City may cross‐reference to other documents available to the public on the  MSRB’s internet website.    If not provided as part of the annual financial information discussed above, the City will provide the City’s  audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting  System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute)  when and if available to the MSRB.    Material Events.  The City agrees to provide or cause to be provided, in a timely manner, to the MSRB notice of  the occurrence 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 draws on debt service reserves reflecting financial difficulties;  (4) Unscheduled draws on credit enhancements reflecting financial difficulties;  (5) Substitution of credit or liquidity providers, or their failure to perform;   (6) Adverse tax opinions or events affecting the tax‐exempt status of the Bonds;  (7) Modifications to the rights of Bond owners;  (8) Bond calls (optional, contingent or unscheduled Bond calls other than scheduled sinking fund  redemptions for which notice is given pursuant to Exchange Act Release 34‐238560);  (9) Defeasances;  (10) Release, substitution or sale of property, securing repayment of the Bonds; and  (11) Rating changes.    Solely for purposes of disclosure, and not intending to modify this undertaking, the City advises that no debt  service reserves, credit enhancement or property secure payment of the Bonds.   29    Notification Upon Failure to Provide Financial Data.  The City agrees to provide or cause to be provided, in a  timely manner, to the MSRB notice of its failure to provide the annual financial information described above  on or prior to the date set forth above.    Format for Filings with the MSRB.  Until otherwise designated by the MSRB or the Commission, any information  or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB’s  Electronic Municipal Market Access system (“EMMA”), currently located at www.emma.msrb.org (such  website is not incorporated in this Official Statement by reference).  All notices, financial information and  operating data required by this undertaking to be provided to the MSRB must be in an electronic format as  prescribed by the MSRB.  All documents provided to the MSRB pursuant to this undertaking must be  accompanied by identifying information as prescribed by the MSRB.    Termination/Modification.  The City’s obligations to provide notices of material events will terminate upon the  legal defeasance, prior redemption or payment in full of all of the Bonds.  Any provision of this section will be  null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the  portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does  not apply to the Bonds, and (2) notifies the MSRB of such opinion and the cancellation of this section.      The City may amend this section with an opinion of nationally recognized bond counsel in accordance with  the Rule.  In the event of any amendment of this section, the City will describe such amendment in the next  annual report, and will include a narrative explanation of the reason for the amendment and its impact on the  type (or in the case of a change of accounting principles, on the presentation) of financial information or  operating data being presented by the City.  In addition, if the amendment relates to the accounting principles  to be followed in preparing financial statements, (i) notice of such change will be given in the same manner as  for a material event under this undertaking and (ii) the annual report for the year in which the change is made  will present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial  statements as prepared on the basis of the new accounting principles and those prepared on the basis of the  former accounting principles.    Bondowner’s Remedies Related to Continuing Disclosure Undertaking.  A Bondowner’s or a Beneficial Owner’s  right to enforce the provisions related to continuing disclosure undertaking will be limited to a right to obtain  specific enforcement of the City’s obligations related thereto, and any failure by the City to comply with the  provisions of this undertaking will not be an event of default with respect to the Bonds under the Ordinance.   For purposes of this section, “Beneficial Owner” means any person who has the power, directly or indirectly,  to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds  through nominees or depositories.    Other Continuing Disclosure Undertakings of the City. The City has entered into undertakings to provide annual  information and the notice of the occurrence of certain events with respect to all bonds issued by the City and  is in compliance with all such undertakings.      Legal and Underwriting  Approval of Counsel  Legal matters incident to the authorization, issuance and sale of the Bonds by the City are subject to the  approving legal opinion of Bond Counsel attached hereto in Appendix A.  The form of the opinion of Bond  Counsel is attached hereto.  Bond Counsel will be compensated only upon the issuance and sale of the Bonds.   Bond Counsel has not been retained to review and has not reviewed this Official Statement for completeness  or accuracy and will not offer an opinion concerning this Official Statement.    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.    30  Limitations on Remedies  The enforceability of the Ordinance is subject to applicable bankruptcy laws, equitable principles affecting the  enforcement of creditors’ rights generally, the police powers of the State and the City, the exercise of judicial  authority by state or federal courts and the exercise by the United States of the powers delegated to it by the  federal constitution.  All legal opinions with respect to the enforceability of the Ordinance and the Bonds will  be expressly subject to a qualification that enforceability thereof may be limited by bankruptcy, reorganization,  insolvency, fraudulent conveyance, moratorium or other similar laws affecting the rights of creditors  generally, and by general principles of equity.  The form of the opinion of Bond Counsel with respect to the  Bonds is attached as Appendix A.  Prospective investors concerned with the impact of any bankruptcy,  reorganization, insolvency, fraudulent conveyance, moratorium or other similar laws should consult with their  own independent counsel before purchasing any Bonds.    Potential Conflicts  Some or all of the fees of the Underwriter, the Financial Advisor and Bond Counsel are contingent upon the  sale of the Bonds.  K&L Gates LLP is serving as Bond Counsel to the City with respect to the Bonds.  From time  to time Bond Counsel may serve as counsel to the Underwriter and to the Financial Advisor with respect to  transactions other than the issuance of the Bonds.    Official Statement  To permit the Underwriter to comply with Rule 15c2‐12 of the Securities and Exchange Commission, the City  has deemed this Preliminary Official Statement final as of its date, except for the omission of offering prices,  interest rates, selling compensation, principal amounts, delivery date, ratings and other terms of the Bonds  depending on the foregoing matters.    Underwriting  The Bonds are being purchased by Seattle‐Northwest Securities Corporation (the “Underwriter”).  The  purchase contract between the City and the Underwriter provides that the Underwriter will purchase all of the  Bonds, if any are purchased, at a price of _____ percent of the par value of the Bonds.  The Bonds will be  reoffered at an average price of _____ percent of the par value of the Bonds.  After the initial public offering,  the public offering prices may be varied from time to time without prior notice to any person.      Financial Advisor  In connection with the authorization and issuance of the Bonds, the City has retained Piper Jaffray & Co.,  Seattle, Washington, as its financial advisor (the “Financial Advisor”).  The Financial Advisor is not obligated  to undertake, and has not undertaken, either to make an independent verification of or to assume  responsibility for, the accuracy, completeness, or fairness of the information contained in this Official  Statement.    Concluding Statement  So far as any statement herein includes matters of opinion, or estimates of future expenses and income,  whether or not expressly so stated, they are intended merely as such and not as representations of fact.    The information contained herein should not be construed as representing all conditions affecting the City or  the Bonds.  Additional information may be obtained from the City.  The statements relating to the Ordinance  are in summarized form, and in all respects are subject to and qualified in their entirety by express reference to  the provisions of such document in its complete form.    The agreements of the City are set forth in such documents, and the information assembled herein is not to be  construed as a contract with Owners of the Bonds.                    Appendix A    Form of Opinion of Bond Counsel                                                      This page left blank intentionally    ____________, 2010 City of Renton, Washington Seattle-Northwest Securities Corporation Seattle, Washington Re: City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 — $_________ Ladies and Gentlemen: We have acted as bond counsel to the City of Renton, Washington (the “City”), and have examined a certified transcript of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Refunding Bonds, 2010 (the “Bonds”), dated as of their date of initial delivery, in the aggregate principal amount of $________, issued for the purpose of refunding certain outstanding limited tax general obligation bonds of the City and paying costs of issuance of the Bonds. The Bonds are issued pursuant to Ordinance No. ____ passed by the City Council of the City on April 5, 2010 (the “Bond Ordinance”). Capitalized terms used in this opinion which are not otherwise defined shall have the meanings given to such terms in the Bond Ordinance. The Bonds are subject to redemption prior to their stated maturities as provided in the Bond Ordinance and in the Bond Purchase Agreement. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based on the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been legally issued and constitute valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bonds may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, City of Renton, Washington Seattle-Northwest Securities Corporation _______________, 2010 Page 2 except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 3. Both principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City within and as part of the tax levy permitted to the City without a vote of the electorate and in amounts which, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such covenants may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. The City has designated the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code. Except as expressly stated above, we express no opinion regarding any other federal or state income tax consequences of acquiring, carrying, owning or disposing of the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds, which may include original issue discount, original issue premium, purchase at a market discount or at a premium, taxation upon sale, redemption or other disposition, and various withholding requirements. This opinion is given as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, K&L GATES LLP DG:CF                   Appendix B    Book‐Entry Transfer System                                                    This page left blank intentionally      T  H  E       D  E  P  O  S  I  T  O  R  Y        T R  U  S  T        C  O  M  P  A  N  Y    SAMPLE OFFERING DOCUMENT LANGUAGE  DESCRIBING BOOK‐ENTRY‐ONLY ISSUANCE  (Prepared by DTC‐‐bracketed material may apply 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 $500 million, one certificate will be  issued with respect to each $500 million of principal amount, and an additional certificate will be issued  with respect to any remaining principal amount of such issue.]    2. DTC, the world’s largest securities depository, is a limited‐purpose trust company  organized under the New York Banking Law, a “banking organization” within the meaning of the New  York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the  meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the  provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing  for over 3.5 million issues of U.S. and non‐U.S. equity issues, corporate and municipal debt issues, and  money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”)  deposit with DTC. DTC also facilitates the post‐trade settlement among Direct Participants of sales and  other securities transactions in deposited securities, through electronic computerized book‐entry transfers  and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of  securities certificates. Direct Participants include both U.S. and non‐U.S. securities brokers and dealers,  banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly‐owned  subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for  DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are  registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC  system is also available to others such as both U.S. and non‐U.S. securities brokers and dealers, banks,  trust companies, and clearing corporations that clear through or maintain a custodial relationship with a  Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s  highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and  Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.    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. Beneficial Owners are, however, expected to receive written confirmations providing details of  the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant  through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the  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.    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 DTC 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 the 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.  For example, 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. 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.]    [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 any other DTC nominee) will consent or vote with  respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures.  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 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 dividend payments 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 will be the responsibility of DTC, and  disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect  Participants.    [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 are 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 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 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‐only transfers through  DTC (or a successor securities depository). In that event, Security certificates will be printed and  delivered to DTC.    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.    [03/08]                      Appendix C    2008 Audited Financial Statements                                                  This page left blank intentionally    i CITY OF RENTON 2008 COMPREHENSIVE ANNUAL FINANCIAL REPORT For Year Ended December 31, 2008 Iwen Wang, Administrator Michael Bailey, Former Administrator Linda M. Parks, CPA, CGFM, Fiscal Services Director Finance and Information Services City of Renton 1055 South Grady Way Renton, Washington 98057 (425) 430-6858 Website: www.rentonwa.gov ii ACKNOWLEDGEMENTS Prepared by the Finance Division of the Finance and Information Services Department Finance and IS Administrator Iwen Wang Fiscal Services Director Linda M. Parks, CPA, CGFM Accounting Staff Janee Hall, Finance Analyst II Tina Hemphill, Finance Analyst III Jill Masunaga, Senior Finance Analyst Greg Nelson, Finance Intern Hai Nguyen, Finance Analyst II Kristi Rowland, Senior Finance Analyst Tracy Schuld, Accounting Supervisor Vidya Vinod, Finance Analyst III Nancy Violante, Financial Services Manager Cindy Zinck, Financial Services Manager Administrative Assistant Mary Roy Print and Mail Coordinator Karl Hurst Form/Graphic Technician Beth Haglund TABLE OF CONTENTS DECEMBER 31, 2008 ITEM PAGE iii INTRODUCTORY SECTION Letter of Transmittal ..................................................................................................................................... 1-1 2007 Comprehensive Annual Financial Report Award ................................................................................ 1-7 Corporate Organization Structure & Reporting Relations ............................................................................ 1-8 FINANCIAL SECTION Independent Auditor’s Report .................................................................................................................. 2-1 Management Discussion and Analysis ...................................................................................................... 3-1 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets ......................................................................................................................... 4-1 Statement of Activities ........................................................................................................................... 4-2 Fund Statements Government Fund Financial Statements: Balance Sheet .................................................................................................................................. 4-4 Reconciliation of Balance Sheet to the Statement of Net Assets .................................................... 4-6 Statement of Revenues, Expenditures and Changes in Fund Balances ........................................... 4-7 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Government Funds to the Statement of Activities ......................................... 4-8 Proprietary Fund Financial Statements: Statement of Net Assets ................................................................................................................... 4-9 Statement of Revenues, Expenses, and Changes in Fund Balances .............................................. 4-11 Statement of Cash Flows ............................................................................................................... 4-12 Fiduciary Fund Statements: Statement of Fiduciary Net Assets ................................................................................................ 4-14 Statement of Changes in Fiduciary Net Assets ............................................................................. 4-15 Notes to Financial Statements: Note 1: Significant Accounting Policies ......................................................................................... 4-16 Note 2: Compliance and Accountability ......................................................................................... 4-26 Note 3: Deposits and Investments ................................................................................................... 4-28 Note 4: Property Taxes .................................................................................................................... 4-31 Note 5: Capital Assets and Depreciation ......................................................................................... 4-32 Note 6: Pensions .............................................................................................................................. 4-35 Note 7: Other Post Employment Benefits ....................................................................................... 4-45 Note 8: Contingencies ..................................................................................................................... 4-47 Note 9: Risk Management ............................................................................................................... 4-48 Note 10: Interfund Transactions ........................................................................................................ 4-51 Note 11: Net Assets ........................................................................................................................... 4-53 Note 12: Prior Year Restatements ..................................................................................................... 4-54 Note 13: Short Term Debt ................................................................................................................. 4-54 Note 14: Long Term Debt ................................................................................................................. 4-55 Note 15: Deferred Charges in Proprietary Funds .............................................................................. 4-59 Note 16: Segment Information .......................................................................................................... 4-59 Note 17: Joint Ventures ..................................................................................................................... 4-59 Note 18: Subsequent Events .............................................................................................................. 4-60 Required Supplemental Information Other than MD&A Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget to Actual General Fund .......................................................................................................................................... 5-1 Actuarial Valuation of Firefighters’ Pension Fund ................................................................................ 5-2 LEOFF I Retiree Medical Benefits - Schedule of Funding Progress………………………………....5-3 TABLE OF CONTENTS DECEMBER 31, 2008 ITEM PAGE iv Combining Statements Non-Major Fund Descriptions ............................................................................................................... 6-1 Combining Balance Sheet ...................................................................................................................... 6-5 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ............................. 6-11 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual .................................................................................................................................. 6-17 Combining Statement of Net Assets, Non-Major Enterprise Funds .................................................... 6-29 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets, Non-Major Enterprise Funds ......................................................................................................... 6-31 Statement of Cash Flows, Non-Major Enterprise Funds...................................................................... 6-32 Combining Statement of Net Assets, Internal Service Funds .............................................................. 6-34 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets, Internal Service Funds ................................................................................................................... 6-36 Combining Statement of Cash Flows, Internal Service Funds ............................................................. 6-37 Statement of Changes in Assets and Liabilities Agency Fund – Special Deposit ............................... 6-39 STATISTICAL SECTION Statistical Section Description ............................................................................................................... 7-1 Financial Trends: Table 1: Net Assets by Component .................................................................................................... 7-3 Table 2: Changes in Net Assets .......................................................................................................... 7-4 Table 3: Fund Balance of Government Funds .................................................................................... 7-6 Table 4: Changes in Fund Balances of Government Funds ................................................................ 7-8 Table 5: General Government Tax Revenue by Source ................................................................... 7-10 Revenue Capacity: Table 6: Principal Property Tax Payers ............................................................................................ 7-11 Table 7: Assessed Value Taxable Property ...................................................................................... 7-12 Table 8: Property Tax Rates Direct and Overlapping Governments ................................................ 7-14 Table 9: Property Tax Levies and Collections .................................................................................. 7-16 Table 10: Sales Tax Collections by Sector ......................................................................................... 7-18 Debt Capacity: Table 11: Ratios of Outstanding Debt by Type .................................................................................. 7-20 Table 12: Legal Debt Margin Information .......................................................................................... 7-22 Table 13: Ratios of General Bonded Debt Outstanding ..................................................................... 7-24 Table 14: Direct and Overlapping Governmental Activities Debt ..................................................... 7-25 Table 15: Pledged-Revenue Coverage for Water and Sewer and Golf Course Revenue Bonds ........ 7-26 Demographic and Economic Information: Table 16: Demographic and Economic Statistics ............................................................................... 7-27 Table 17: Principal Employers ........................................................................................................... 7-28 Operating Information: Table 18: Full Time Equivalent City Government Employees by Function ...................................... 7-30 Table 19: Operating Indicators by Function ....................................................................................... 7-32 Table 20: Capital Assets Statistics by Function .................................................................................. 7-34 July , 2009 Honorable Denis Law, Mayor Members of the Renton City Council Residents of Renton City of Renton, Washington RE: THE 2008 COMPREHENSIVE ANNUAL FINANCIAL REPORT Dear Mayor Law, City Councilmembers, and Residents of Renton: We are pleased to present the City’s Comprehensive Annual Financial Report for the year ended December 31, 2008. We publish this financial statement in conformity with generally accepted accounting principles (GAAP). It has been audited in accordance with generally accepted auditing standards by the Washington State Auditor’s Office. The report includes our own representations concerning the finances of the City of Renton. Consequently, we assume full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, we have established a comprehensive internal control framework that is designed both to protect the City of Renton’s assets from loss, theft, or misuse and to maintain sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh the benefits, the City’s comprehensive framework of internal controls is designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we attest that to the best of our knowledge and belief that this financial report is complete and reliable in all material aspects. These financial statements have been audited by the Washington State Auditor’s Office. The goal of this independent audit was to provide reasonable assurance that the City’s financial statements for the fiscal year ended December 31, 2008, are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in our financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. Based upon the audit, the independent auditor concluded that there was a reasonable basis for issuing an unqualified opinion that the City of Renton’s financial statements for the fiscal year ended December 31, 2008, are fairly presented in conformity with GAAP. The State Auditor’s report is included as the first component of the financial section of this report. 2008 Comprehensive Annual Financial Report City of Renton, Washington Introduction, 1-2 The independent audit of the City of Renton’s financial statements is part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also the City’s internal controls and compliance to legal requirements with special emphasis on internal controls and legal requirements involving the administration of federal grant programs. The City’s Single Audit Report is issued separately and is available upon request or directly from the Washington State Auditor. Another State mandate requires the Washington State Auditor’s Office to perform additional tests of compliance with State laws and regulations as required by RCW 43.09.260. This statute requires the State Auditor to inquire as to whether the City complied with the laws and the Constitution of the State of Washington, its own ordinances and orders, and the requirements of the State Auditor’s Office. The City’s State compliance report is also available upon request and from the Washington State Auditor. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of the Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the independent auditor’s report. THE CITY OF RENTON AND ITS SERVICES The City of Renton was incorporated on September 6, 1901. Located at the south end of Lake Washington, our city borders the City of Seattle to the north. We currently have a land area of 22.24 square miles. We have over 1,181 acres of parks that includes 29 active parks. As presented by the Washington State Office of Financial Management, our 2008 population was 80,708. The City of Renton has a strong mayor form of government with an appointed Chief Administrative Officer. 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 City Council. The Council establishes policies, appropriates monies through the budget process and adopts local laws through ordinances. Each Councilmember serves a four-year term and they are elected on a staggered two-year cycle. Both the Council and the Mayor are elected on a non-partisan basis. The City is a general-purpose governmental entity and provides the full range of municipal services allowed by statute or charter. These services include police, fire, emergency medical, street construction and maintenance, planning and zoning, libraries, parks and recreation, municipal court, and general administrative services. The City operates four utilities: water, sewer, surface water, and solid waste. These are operated very similar to a private business where the revenues from rates and other direct sources must pay for the operational, capital, and long-term debt costs. The City has its own water rights and does not purchase water from outside sources. The City’s sewage is treated by King County, but 2008 Comprehensive Annual Financial Report City of Renton, Washington Introduction, 1-3 the City is responsible for transferring and maintaining the system to King County. The City bills Renton residents a monthly fee for the cost of sewer treatment performed by King County. The City also operates a golf course. All costs of the Maplewood Golf Course are paid from green fees, driving range fees, revenue from the restaurant vendor, and other miscellaneous revenue. The golf course has short-term operational costs, an active capital maintenance program, and annual debt service payments for the construction of the clubhouse and the driving range. One operation the City has, which is somewhat unusual for cities our size, is its airport. The Renton Municipal Airport is used by small private plane operators, a floatplane tourist company, and Boeing initiates its maiden 737 flights from this airport. The operational costs of the airport are paid from rental fees. Much of the major capital projects are paid by fees or with Federal Aviation Administration grants. The City of Renton complies with the Budgeting, Accounting, and Reporting System (BARS) as delineated by the Office of the State Auditor as authorized under RCW 43.09.200 and 43.09.230. State law also mandates timely submission of annual financial reports to the State Auditor for annual independent audits. The City of Renton’s financial system incorporates financial and administrative controls to ensure the safeguarding of assets and reliability of financial reports. These controls are designed to provide reasonable assurance that transactions are executed in accordance with management authorization and are recorded in conformity with GAAP. They also provide accountability of and control over assets and obligations, and sufficient reporting and review exist to provide adequate information for analysis and comparability of data. The City of Renton maintains budgetary controls to ensure compliance with legal provisions embodied in the annual budget. All activities are appropriated through the annual budget process and published in the City’s Annual Budget document. The City Council must adopt an ordinance to increase or decrease total appropriations in a Fund. The Mayor has the authority to move appropriations within a Fund. A thorough discussion of the City’s accounting policies can be found under the Summary of Significant Accounting Policies in the Notes to the Financial Statements. FACTORS AFFECTING FINANCIAL CONDITION The information presented in the financial statements is a perspective of past activities that influence the City’s financial condition. The following information is presented to place that information in context with the general economy. 2008 Comprehensive Annual Financial Report City of Renton, Washington Introduction, 1-4 Economic Condition and Outlook In Mayor Denis Law’s 2009 State of the City’s address he highlighted: • “Total Renton employment is expected to decline about 3 percent this year. Housing permits have dropped from more than 1,300 units in 2007 to less than 450 units last year and are anticipated to continue to go down.” • “Pull-back in consumer and business spending in our region is expected to continue through this year, resulting in another cycle of falling taxable sales and sales tax collection for the City.” • “Within the first couple weeks of this year, it became very apparent that revenues were dropping at a rate higher than we could have foreseen, requiring that we prepare for deficits that may reach 8% or more this year. • “Despite the negative economy, Renton’s population, housing stock, and retail spending still outpaced comparable measures for King County and the region last year. New construction in the City has been between two and three times the regional average over the past three years. Employment growth for Renton between 2005 and 2008 outpaced that of King County by 4%. We continued to see increased numbers of jobs in wholesale, retail, and business services, and a diversification of our economy and employment base. The growth in Renton’s total taxable retail sales was among the highest in the region, at over 3% in 2008 when most cities were seeing declines. Renton’s assessed valuation has increased almost 100 percent over the last seven years, from $5.0 billion in 2001 to nearly $10 billion in 2008”. UPDATE FROM BUDGET DOCUMENT Outlook “The total 2009 proposed expenditure budget is $252 million, of which $171 million is for City operations, $57 million is for debt service and proposed capital projects, and $24 million represents internal transfers that are offset by revenues. This represents a 2% increase over the 2008 adopted budget. The total revenues equal $245 million. The difference between revenues and expenditures of about $7 million will be covered by prior year fund balances for capital equipment and projects. Of the $171 million operating budget, $101 million is for General Government Operations. These are activities primarily supported by tax revenues. With the slowing economy and a high rate of inflation, our preliminary projections indicate that maintaining current services in General Governmental Operations will result in a deficit of over $5 million in 2009.” 2008 Comprehensive Annual Financial Report City of Renton, Washington Introduction, 1-5 “The proposed budget also reflects cost increases for specific purposes. These include the cost of the Fire District 40 contract, an increase in equipment costs in the police operating budget, a full year’s cost for annexation-related personnel, and a proposed transfer of $1 million to fund capital projects. Funding for these increases will come from the Fire District 40 service contract, a full year of revenues from Annexation Sales Tax Credit, and continued growth in the share of our property taxes that comes from new construction. With these adjustments, we will be able to balance our operating budget with current operating revenues, and use prior year fund balances only for one-time capital purposes.” Source: 2009 Budget Message Letter by: Mayor Denis Law OTHER INFORMATION Cash Management The City has adopted an Investment Policy that states that the primary objectives of investment management, in priority order, are safety, liquidity, and return on investment. The Investment Policy reflects provisions in state statute and authorizes investments in obligations with: the US Government or its agencies; banker’s acceptances; certificates of deposit issued by public depositories in the State of Washington; the Washington State Local Government Investment Pool; and any other investment authorized by law for taxing districts in the State of Washington. The City has a Fire Pension Fund that is managed by an Oversight Board with members including Firefighters, the Mayor and one Councilmember. Their investment policies reflect the long-term obligations of investing these funds, which are invested primarily in US Treasury strips. In 2008, the independent actuarial study estimates a (negative) net pension obligation of ($1,082,280), and is included, as an asset in the City of Renton’s Government-wide Financial Statements. Risk Management The City belongs to the Washington Cities Insurance Authority (WCIA). The WCIA is a consortium of Washington State cities that purchases excess coverage in large blocks, thus leveraging the market and risk across a large base. It has a professional staff, but operates with an Oversight Board comprised of City representatives. This Board meets monthly. In most cases, the City of Renton has a variety of insurance deductibles that range from $5,000 to a maximum of $350,000. The City maintains a self-insurance program for health and dental coverage for City employees and dependents. The City purchases excess medical coverage from Berkley Risk for cases that exceed $350,000. The City also purchases life and disability insurance from various healthcare insurance providers. Awards and Acknowledgements The City has a long history of superior achievements in the preparation of its Comprehensive Annual Financial Reports through the peer review program conducted by the Government Finance Officers Association. The dedicated staff of the Finance Division work hard each day to 2008 Comprehensive Annual Financial Report City of Renton, Washington Introduction, 1-6 ensure that the City’s financial records always displays information in conformance with legal parameters. All members of the division are to be commended for their consistent dedication to excellence in local government finance. Significant contributors are specifically identified in the acknowledgements on page ii of this document. We are pleased with the comprehensive content and quality of this financial report knowing that the citizens of Renton can rely on this report as the definitive assessment of all City financial operations. Sincerely, Iwen Wang Linda M. Parks, CPA Finance & Information Services Administrator Fiscal Services Director H:\FINANCE\BUDGET\2009 Budget\2009 BUDGET DOC\Mary's Prelim Docs - Old Files\2009 Preliminary Budget\Org Charts\City of Renton Corporate Organization StructureRENTON CITIZENSCITY COUNCILRandy Corman, PresidentDon Persson, Marcie PalmerTerri Briere, King ParkerGreg Taylor, Rich Zwicker425-430-6501MAYORDenis Law425-430-6500CHIEF ADMINISTRATIVE OFFICERJay Covington425-430-6500COMMUNICATIONSPreeti Shridhar, Director425-430-6500COMMUNITY SERVICESTerry Higashiyama,Administrator425-430-6600FacilitiesPeter Renner, DirectorParksLeslie Betlach, DirectorRecreationJerry Rerecich, DirectorHuman ServicesKaren Bergsvik, ManagerLibraryBette Anderson, DirectorRenton History MuseumElizabeth Stewart, ManagerCommunity Resourcesand EventsPUBLIC WORKSGregg Zimmerman,Administrator425-430-7394Maintenance ServicesMichael Stenhouse, DirectorTransportation SystemsPeter Hahn, DeputyPW AdministratorUtility SystemsLys Hornsby, DirectorCOMMUNITY ANDECONOMIC DEVELOPMENTAlex Pietsch,Administrator425-430-6580Economic Developmentand NeighborhoodsSuzanne Dale Estey,DirectorDevelopment ServicesNeil Watts, DirectorPlanningADMINISTRATIVESERVICESMarty Wine, Assistant CAO425-430-6500Mayor's OfficeCity Clerk/Cable ManagerBonnie Walton,City ClerkCourt ServicesJoe McGuire, DirectorHearing ExaminerFred Kaufman,Hearing ExaminerPOLICEKevin Milosevich, Chief425-430-7503Support Operations BureauChuck Marsalisi, Deputy ChiefSpecial OperationsInvestigationsAdministrativeServicesStaff and AuxiliaryServicesField Operations BureauTim Troxel, Deputy ChiefPatrol ServicesPatrol OperationsFIRE AND EMERGENCYSERVICESI. David Daniels, Chief /Administrator425-430-7501Response OperationsMark PetersonDeputy Fire ChiefSafety andSupport ServicesRobert Van HorneDeputy Fire ChiefCommunity RiskReductionBill FloraDeputy Fire ChiefEmergency ManagementDeborah NeedhamDirectorHUMAN RESOURCESAND RISK MANAGEMENTNancy Carlson, Administrator425-430-7650Human ResourcesCivil Service CommissionRisk ManagementFINANCE ANDINFORMATION SERVICESIwen Wang, Administrator425-430-6858FinanceLinda Parks,Fiscal Services DirectorInformation ServicesGeorge McBride,IS DirectorPrint and MailServicesCity AttorneyLarry Warren, Administrator(425) 255-8678MUNICIPAL COURTJUDGETerry Jurado425-430-6550 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-1 MANAGEMENT’S DISCUSSION AND ANALYSIS The City of Renton’s discussion and analysis provides a narrative overview of the City’s financial activities for the fiscal year ended December 31, 2008. The intent of the discussion and analysis is to review the City’s financial performance as a whole. This Management’s Discussion and Analysis (MD&A) combined with the Transmittal Letter, the Financial Statements, and the Notes to the Financial Statements represent the complete 2008 financial activities for the City of Renton. These are all intended to help the reader understand the City’s significant financial issues. This MD&A provides an overview of the City’s financial records. The data in this financial report also identifies any material deviations from the financial plan and the adopted annual budget. Finally, the intent of the MD&A and other financial information is to isolate and identify individual fund issues or concerns. FINANCIAL INFORMATION Since 2003, the City of Renton prepared its financial records in accordance to what is known as Government Accounting Standards Board Statement 34 (GASB 34) with a phase in of the infrastructure component in 2004. The City’s general Government-wide Financial Statements were prepared on the full accrual basis of accounting in conformity with Generally Accepted Accounting Principles (GAAP). The City’s Fund Financial Statements for its major and non-major governmental funds were prepared on the modified accrual basis of accounting in conformity with GAAP. The City’s major and non-major enterprise funds, internal service funds, and pension funds were accounted for on the accrual basis. The City of Renton, along with all cities, counties, and other governmental entities in Washington, must comply with the Budgeting, Accounting, and Reporting System (BARS) as defined by the Washington State Office of the Auditor (SAO). SAO audits the financial records of all cities and other governmental units within the State. The City of Renton’s financial system integrates financial and administrative controls that ensure the safeguarding of assets and the reliability of financial reports. These controls are designed to provide: 1. reasonable assurance that transactions are executed in accordance to management understanding and approval; 2. reasonable assurance that transactions are executed in accordance to GAAP principles; 3. accountability for control of assets and obligations; and 4. assurance that sufficient reporting and review exists to provide adequate information for analysis and comparability of data. Internal control is a high priority for the City. SAO reviews the City’s internal controls, and the City receives and takes action on all the recommendations made. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-2 The City maintains strong budgetary controls in order to ensure compliance with legal provisions embodied in the annual appropriated budget as approved by the City Council. The City Council must authorize any budget increase or decrease to any fund. Financial Highlights • The City’s total assets as of December 31, 2008, exceeded liabilities by over $644.5 million. • As of December 31, 2008, the City’s Governmental Activities reported net assets of $420.7 million. Of this total, $34.2 million is defined as unrestricted and can be used for needs the Mayor and Council deem necessary. These monies are intended to provide a cushion against significant economic downturns in revenues and to maintain sufficient working capital and cash flow to meet daily financial needs. • Investments in capital assets comprise $353.2 million of the $420.7 million in Governmental Activities net assets. • The business type activities have total net assets of $223.9 million. Ninety (90.4%) percent of this total, $202.3 million, represents the City’s investments in capital assets. An unrestricted balance of $17.4 million remains and is used to meet day to day cash flow requirements and to ensure we can meet all obligations of the utilities and other funds if the revenues do not meet expectations. • The City’s total outstanding long-term debt as of December 31, 2008, was $101.5million. Of this amount, $50 million are revenue bonds and PWTF loans dedicated to the waterworks projects. Another $505,000 is for outstanding bonds for Senior Housing. These bonds have a special taxing authority. The Golf Course has $2.6 million outstanding in debt service. Employee leave balances total $6.49 million. The balance of $41.9 million of our debt is dedicated for general governmental purposes, including the purchase of City Hall, the construction of the downtown parking garage, and a replacement of a fire station (our share of a regional E-911), Communications Center, and other small projects, including municipal-bonds sold for fire equipment. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis provides an introduction and overview to the City of Renton’s basic financial statements. The basic financial statements are comprised of three components: 1. Government-wide Financial Statements; 2. Fund Financial Statements; and 3. Notes to the Financial Statements. The graphic representation below illustrates the required components of the City’s annual financial report and how the required parts are arranged and relate to one another. This illustration helps explain the City’s financial presentation in 2008. This graphic representation should be used in conjunction with the following explanations to help guide the reader in understanding the financial condition of the City of Renton. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-3 Figure 1 REQUIRED COMPONENTS OF THE ANNUAL FINANCIAL REPORT In addition to the required components shown in Figure 1, the City’s annual report also includes other voluntary supplementary information. The most significant section is the Combining Statements. These provide Balance Sheets, Statement of Revenues, Expenditures, and Changes in Fund Balances with Budget to Actual comparisons, Statement of Net Assets, and Cash Flows for all Non-Major Funds. The next section of information, the Statistical Section, provides a ten-year view of the City’s Revenue, Expenditures, Debt Obligations, and Debt Capacity; the City’s largest taxpayers, and those entities with the largest employment within the City of Renton. This section provides a long-term perspective on the City’s economy. BASIC FINANCIAL STATEMENTS Government-wide Financial Statements provide readers with a broad overview of the City of Renton’s finances in a manner similar to a private sector business. They provide both short-term and long-term information about the City’s overall financial status. The government-wide statements distinguish between functions of the City that are principally supported by taxes and intergovernmental revenues (referred to as “governmental activities”) from functions that are intended to recover all or a significant portion of their costs through user fees and charges (referred to as “business-type activities.”) The governmental activities of the City include a full range of local government services provided to the public such as police and fire protection; road maintenance and construction; community planning and economic development; libraries, parks, and recreational opportunities; and other community services. The business-type activities of the City include waterworks (water, sewer, and surface water), solid waste management and services, golf course, and airport. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-4 The Statement of Net Assets presents information on all of the City’s assets and liabilities with the difference between the two reported as net assets. This statement combines and consolidates governmental funds’ current financial resources (short term available resources) with capital assets and long-term obligations, which is primarily debt. The Statement of Net Assets serves a purpose similar to that of the Balance Sheet of a private-sector business. Over time, increases or decreases in net assets may serve as one indicator of whether the financial position of the City is improving or deteriorating. Other indicators to consider when evaluating the financial position of the City includes changes to the property tax base, general economic conditions as demonstrated through business licenses fees or sales tax revenue, and the condition of the City’s infrastructure (roads, drainage systems, bridges, and water infrastructure). The Statement of Activities focuses upon both the gross and net cost of various activities that are provided by the government’s general tax and other revenues. This is intended to summarize and simplify the user’s analysis of cost to various governmental services and/or subsidy to various business-type activities. By separating program revenue from general revenue, users of the financial statements can identify the extent to which each program relies on taxes for funding. The Governmental Activities reflect the City’s basic functions: General Government, Judicial, Security of Person and Property, Physical Environment, Mental and Physical Health, and Culture and Recreation. Property, sales, and utility taxes finance the majority of these functions. All changes in net assets are reported using accrual basis of accounting, which is similar to the accounting used in the private sector. The accrual basis of accounting requires that revenues are reported when earned and expenses are reported when incurred, no matter when the revenue will actually be received or the obligation will be paid. For example, property taxes are shown as a receivable and revenue even though some amount of these taxes will not be available to the City for several years. All unpaid vendor obligations are illustrated as an accounts payable obligation as of December 31. Fund Financial Statements The City uses funds to ensure and demonstrate fiscal integrity and compliance with finance related legal requirements with a focus on Major Funds. A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities and objectives. There are three types of funds: governmental, proprietary, and fiduciary. A Major Fund has three elements as defined by GASB 34: • Total assets, liabilities, revenues, or expenditures of that individual governmental or enterprise funds are at least ten percent (10%) of the corresponding total (assets, liabilities, etc.) for all funds of that category or type (i.e., governmental, proprietary, or fiduciary); and • Total assets, liabilities, revenues, or expenditures/expenses of the individual government fund or enterprise funds are at least five percent (5%) of the corresponding total for all governmental and enterprise funds combined; or • Any other governmental or enterprise fund that the government’s officials believe is particularly important. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-5 Governmental Funds present most of a government’s tax-supported activities. The Proprietary Funds describe and financially manage the government’s business-type activities where all or part of the activities’ costs are supported by fees and charges that are paid directly by those who benefit from the activities. Fiduciary Funds control resources held by the government as a trustee or agent for parties outside of the government. The resources of Fiduciary Funds cannot be used to support the government’s own programs. Governmental Funds The Governmental Fund Balance Sheet and Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances present separate columns of financial data for the General Fund and Capital Investment Fund. These comprise the City’s major governmental funds. Data from the remaining governmental funds are combined and presented in a single, aggregated column in the fund statements. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements. Governmental Funds are used to account for essentially the same functions reported as governmental activities in the Government-wide Financial Statements. The focus of Governmental Fund Financial Statements is on near-term inflows and outflows of available financial resources and on balances of resources available at the end of the fiscal year. Such information is useful in evaluating whether there are more or less financial resources that can be spent in the near future to finance City services. Because the focus of governmental Fund Financial Statements is a narrower view than that of the Government-wide Financial Statements, it is useful to compare information presented for governmental funds with similar information presented for governmental activities in the Government-wide Financial Statements. This gives the reader a better understanding of the long-term impact of the government’s near-term financing decisions. The Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide reconciliation to the governmental activities column in the government-wide statements to facilitate this comparison. The City maintains budgetary controls over its governmental funds. Budgetary controls ensure compliance with legal provisions embodied in the annual appropriated budget. Governmental fund budgets are established in accordance with state law and are adopted on a fund level. General fund budget variances are specifically addressed later in this discussion and analysis. Proprietary Funds These types of funds consist of two types of funds: Enterprise and Internal Service. They have always been operated as private business activity. Enterprise Funds are used to report the same functions as business-type activities in the Government-wide Financial Statements. Internal Service Funds are used to report activities that provide supplies and services to various City departments and to accumulate and allocate the associated costs of providing these services to the various functions. The revenues and expenses of Internal Service Funds that are duplicated in other funds are eliminated in the government-wide statements. Because the remaining balances primarily benefit governmental, rather than business-type activities, they have been included within Governmental Activities in the Government-wide Statements. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-6 The City of Renton has two major proprietary funds: Waterworks Utility (water, wastewater, and stormwater) and Solid Waste. The Proprietary Fund Balance Sheet and the Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Equity present separate columns of financial data for the Waterworks Utility and Solid Waste. Data from the remaining Enterprise Funds are combined and presented in a single, aggregated column in the fund statements. Governmental Activities Internal Service Funds are reported separately in this section. Proprietary Fund statements provide the same type of information as the Government-wide Financial Statements, only in more detail, since both apply the accrual basis of accounting. In comparing the total assets and total liabilities between the two statements, only slight differences will be noticed. One notable difference is that the “due from other funds” (asset) and the “due to other funds” (liability) in the proprietary fund statements are combined in a single line called “internal balances” in the asset section of the Government-wide Statement of Net Assets. Fiduciary Funds Fiduciary Funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reported in the Government-wide Financial Statements because the resources of those funds are not available to support the City’s own operations. All of the City’s fiduciary activities are reported in a separate Statement of Fiduciary Net Assets and a Statement of Changes in Fiduciary Net Assets. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided, and are an integral part of the Government-wide and Fund Financial Statements. Combining statements for non-major Governmental and Enterprise Funds, as well as Internal Service Funds, are presented immediately following the required supplementary information on pensions. GOVERNMENT-WIDE FINANCIAL ANALYSIS Statement of Net Assets Changes in Net Assets may serve as a useful indicator of a government’s financial position. The overall financial position has improved for the City of Renton over the prior year. Changes in Net Assets from 2007 to 2008 shows an increase in total net assets of $137 million. Table 1 is a condensed version of the Government-wide Statement of Net Assets. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-7 Table 1 NET ASSETS Total TotalGovernmental Governmental Business-type Business-type Primary Primary Activities Activities Activities Activities Government Government2007 2008 2007 2008 2007 2008 Current and other assets $88,100,131 83,713,100 $24,024,920 25,229,239 $112,125,051 108,942,339 Land Construction in process Capital assets (net of 88,947,494 41,893,039 175,559,921 29,912,496 6,976,321 5,699,290 6,976,321 10,014,741 95,923,814 47,592,327 182,536,242 39,927,237 accumulated depreciation) 143,161,082 191,794,358 218,642,046 236,611,238 361,803,128 428,405,596 TOTAL ASSETS $362,101,746 480,979,875 $255,342,577 278,831,539 $617,444,320 759,811,414 Long term liabilities $49,397,374 48,275,566 $43,999,200 53,152,711 93,396,574 101,428,277 Other liabilities 15,265,203 12,051,530 1,265,319 1,821,099 16,530,522 13,872,629 TOTAL LIABILITIES $64,662,577 60,327,096 $45,264,519 54,973,810 $109,927,096 115,300,906 NET ASSETS Invested in capital assets, net of related debt $232,714,563 353,197,782 $188,518,151 202,255,997 $421,232,714 555,453,779 Restricted 32,648,993 33,294,987 3,586,667 4,171,525 36,235,660 37,466,512 Unrestricted 32,075,613 34,160,010 17,973,237 17,430,207 50,048,850 51,590,217 TOTAL NET ASSETS $297,439,169 420,652,779 $210,078,055 223,857,729 $507,517,224 644,510,508 The majority of the City’s net assets (86%) are investments in capital assets (e.g., streets, drainage, construction in progress, buildings, equipment, water and sewer pipes) less any related outstanding debt used to acquire these assets. The City’s capital assets are used to provide services to citizens. It should be noted that although the investment in capital assets is reported net of related debt, resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. Investments in capital assets net of related debt increased from 2007 to 2008 by $134.3 million. Investment in capital assets increased by $120.5 million in the Governmental Funds and $13.7 million in the Business-type activities primarily due to annexations. The largest was Benson Hill adding over 16,000 new residents. This annexation is further discussed in Note 1 and 12 of the financials. Chart 1CATEGORIES OF NET ASSETS$0$100,000,000$200,000,000$300,000,000$400,000,000$500,000,000$600,000,000$700,000,0002007GovernmentalActivities2008GovernmentalActivities2007 BusinessTypeActivities2008 BusinessTypeActivities2007 TotalPrimaryGovernment2008 TotalPrimaryGovernmentUnrestrictedRestrictedInvested in capital assets2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-8 Restricted assets, representing resources that are subject to external restrictions on how they may be used, equate to seven percent (5.8) of total net assets, down from nine percent (7.1%) in 2007. The remaining balance (unrestricted net assets) of $51.6 million may be used to meet the City’s ongoing obligations. Chart 1 provides a graphical comparison of the three categories of net assets for 2007 and 2008. As of December 31, 2008, the City reports positive balances in all three categories of net assets, for the government as a whole, as well as for separate governmental and business-type activities. Statement of Change in Net Assets The City’s total net assets (before prior period adjustments and changes in accounting principles) increased in 2007 by $22.5 million. Governmental activities generated eighty percent (80%) of this total or $17.9 million, while business-type activities generated $4.6 million of this total. Chart 2 below illustrates the various sources and amounts of revenue received by the government as a whole. Table 2 follows the chart. This is a condensed version of the Statement of Activities for the City. Comparable data is available and provided in the 2008 Annual Report. Chart 22008 TOTAL REVENUES BY SOURCEProperty Taxes17%Sales Taxes 13%Excise Taxes2%Interest/Investment earnings2%Operating Grants & Contributions 6%Capital Grants/Contribution14%Charges for Services 36%Business Taxes7%Miscellaneous1% 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-9 Table 2 CHANGE OF NET ASSETS Governmental Activities 2007 Governmental Activities 2008 Business-Type Activities 2007 Business-Type Activities 2008 Total Primary Government 2007 Total Primary Government 2008 REVENUES: Program revenues: Charges for services $36,863,657 $17,592,481 $45,403,349 $44,651,684 $82,267,006 $62,244,165 Operating grants & contributions 5,265,737 9,570,931 243,537 264,784 5,509,274 9,835,715 Capital grants & contributions 4,940,471 18,109,124 1,761,802 6,888,975 6,702,273 24,998,099 GENERAL REVENUES: Property taxes 23,106,578 29,381,036 23,106,578 29,381,036 Sales taxes 22,749,831 23,190,076 22,749,831 23,190,076 Business taxes 11,962,879 14,945,173 11,962,879 14,945,173 Other taxes 8,236,876 4,362,945 8,236,876 4,362,945 Penalties and interest 33,949 6,477 33,949 6,477 Interest and investment earnings 3,465,517 2,419,260 1,041,576 1,120,342 4,507,093 3,539,602 Miscellaneous 1,218,889 2,104,133 135,986 85,493 1,354,875 2,189,626 TOTAL REVENUES $117,844,384 $121,681,636 $48,586,250 $53,011,278 $166,430,634 $174,692,914 PROGRAM EXPENSES GOVERNMENTAL ACTIVITIES: General government services $29,112,970 $12,010,422 $29,112,970 $12,010,422 Judicial 1,845,031 1,761,665 1,845,031 1,761,665 Security of persons and property 36,213,120 46,289,454 36,213,120 46,289,454 Physical environment 2,749,417 3,333,471 2,749,417 3,333,471 Transportation 11,237,287 13,675,581 11,237,287 13,675,581 Economic environment 6,880,687 6,823,426 6,880,687 6,823,426 Mental and physical health 301,495 325,066 301,495 325,066 Culture and recreation 11,036,931 17,025,800 11,036,931 17,025,800 Interest on long-term debt 2,594,784 2,663,436 2,594,784 2,663,436 Business-type activities Water $28,657,468 $32,738,366 28,657,468 32,738,366 Airport 1,396,054 1,733,894 1,396,054 1,733,894 Solid waste 10,606,560 11,518,047 10,606,560 11,518,047 Golf 2,277,454 2,334,838 2,277,454 2,334,838 TOTAL EXPENSES $101,971,722 $103,908,321 $42,937,536 $48,325,145 $144,909,258 $152,233,466 Increase in net assets before transfers $15,872,662 $17,773,315 $5,648,731 $4,686,133 $21,521,391 $22,459,448 Transfers 110,000 (110,000) Increase in net assets 15,872,662 17,883,315 5,648,731 4,576,133 21,521,391 22,459,448 Net assets - beginning 281,566,509 297,439,169 204,429,324 210,078,055 485,995,833 507,517,224 Prior period adjustment 105,330,297 9,203,541 114,533,838 Net Assets –ending $297,439,171 $420,652,781 $210,078,038 $223,857,729 $507,517,224 $644,510,510 Seventy percent (70%) of the City of Renton’s total revenue activities are for general governmental activities such as providing police, fire, parks, libraries, recreational, building safety, and planning services. The largest business type activities include water, sewer, surface water, solid waste, and golf activities. Governmental Activities Analysis Governmental activities cost a total of $103.9 million in 2008, up $1.9 million from 2007. Of this amount, $45.3 million was paid for either by those who directly benefited from the programs or by other governments and organizations that subsidized certain programs with grants Chart 3 2008 COMPARISON OF TOTAL GOVERNMENTAL vs BUSINESS TYPE EXPENSESGovernmental Activities68%Business Type Activities32%2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-10 and contribution. The net expense (total expenses less program revenues) of $58.6 million was the cost of governmental services City taxpayers primarily paid through various taxes. Chart 4 portrays the cost of each of the City’s major governmental programs along with each program’s generated revenues (fees and intergovernmental revenues specifically related to that program). Chart 4 GOVERNMENTAL ACTIVITIES PROGRAM REVENUES AND EXPENSES2007 vs 2008$0$5,000,000$10,000,000$15,000,000$20,000,000$25,000,000$30,000,000$35,000,000$40,000,000$45,000,000$50,000,0002007 General Govt2008 General Govt2007 Judicial2008 Judicial2007 Security of Persons and Property2008 Security of Persons and Property2007 Physical Environment2008 Physical Environment2007 Transportation2008 Transportation2007 Economic Environment2008 Economic Environment2007 Mental and Physical Health2008 Mental and Physical Health2007 Culture and Recreation2008 Culture and Recreation2007 Interest on Debt2008 Interest on DebtExpensesRevenues Chart 5 depicts the sources of revenues that fund governmental activities. Approximately fifty-eight (58%) is from various taxes. Charges for services, grants, and interest earnings generate forty-two percent (42%) of total revenue for general governmental activities. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-11 Chart 5 GOVERNMENTAL ACTIVITIES REVENUES BY SOURCEProperty Taxes23%Capital Grants15%Operating Grants8%Charges for Services14%Excise Taxes4%Interest Earnings3%Miscellaneous2%Business Taxes12%Retail Sales Taxes19% Business-Type Activities Analysis Charts 6 and 7 present the same information on business-type activities as illustrated for general governmental type activities. Chart 6 shows the expense of each of the City’s business-type programs along with each program’s generated revenues (fees and intergovernmental revenues specifically related to that program.) Chart 6 BUSINESS TYPE ACTIVITIES PROGRAM REVENUES AND EXPENSES$0$5,000,000$10,000,000$15,000,000$20,000,000$25,000,000$30,000,000$35,000,0002007Waterworks2008Waterworks2007 Airport 2008 Airport 2007 SolidWaste2008 SolidWaste2007 GolfCourse2008 GolfCourseExpensesRevenues The Waterworks Utility had a positive net change of $5.1 million at the end of 2008 compared to $5.2 million in 2007. The City generated $37.8 million in various fees for services and other sources from waterworks activities above the $32.7 million in expenses. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-12 The Airport’s total expenses were $1.7 million. Grant revenues for 2008 were $179,292 with total revenues of $1.3 million. The Solid Waste Utility’s revenues were $10.5 million generated from fees for services and $264,784 in grants. The total expenses were $11.5 million. The Golf Course generated a total of $2.3 million in green fees, driving range charges, and other user fees. The total expenses for the Golf Course were $2.3 million. The Golf Course had a loss of $71,997 for the year. Business-type activities are supported primarily from charges for services. In the City of Renton, $44.7 million was generated from charges for services in the business-type activities. These comprise eighty-five percent (85%) of the total financial support for these activities. Grant revenues increased $5.2 million from 2007 to 2008. Chart 7 BUSINESS TYPE ACTIVITIES REVENUES BY SOURCESCharges for Services85%Grants13%Interest & Miscellaneous2%FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS Governmental Funds Analysis The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the fiscal year, the City’s governmental funds reported combined ending fund balances of $47.8 million, a decrease of $2.7 million in comparison to last year. Approximately ten percent (10%) constitutes unreserved, undesignated fund balance, which is available for spending at the government’s discretion. The remainder of the fund balance is reserved or designated to indicate that it is not available for new spending because it has already been committed for operating reserves. The decrease resulted from higher actual expenditures (budgeted) over the previous year and shortfalls in actual revenues over projections due to the slowdown of economy. This is further discussed under the General Fund Budgetary Highlights in this document. The General Fund is the chief operating fund of the City. At the end of the current year, unreserved, undesignated fund balance of the general fund was $4.9 million, while total fund balance ended at $13.5 million. The fund balance total decreased $3 million during the fiscal year. Excess of expenditures over revenues, excluding internal transfers was $2.4 million in 2008. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-13 Besides the General Fund, the City has only one other major governmental fund. The Capital Improvement Fund was a new major fund in 2007 and had a net change (increase) in fund balance of $4.1 million. Even with this increase the City was able to spend $18 million on capital improvements and major maintenance. Proprietary Funds Analysis The fund financial statements for the proprietary funds are presented in more detail, but essentially provide the same type of information found in the business-type activities in the government-wide financial statements. Net assets in the Waterworks Utility Fund and the Solid Waste Fund were $203.7 million and $1.4 million respectively. This represents an increase in Waterworks Utility Fund of $15.2 million and a decrease in the Solid Waste Fund of $959,861 in net assets. Of the total net assets increase in the Waterworks Utility Fund, $9.2 million was a prior period adjustment and is discussed further in Note 12 of the financial statements. In addition capital contributions were $5 million over last year. While the Solid Waste fund’s revenues have not changed from the prior year, the amount to operate the fund has increased resulting in a $1.3 million dollar operating loss. Other factors concerning the finances of these two funds have already been addressed in the discussion of business-type activities. GENERAL FUND BUDGETARY HIGHLIGHTS During the year there was a $ 5,453,949 increase (excluding internal transfers) in appropriations between the original and final amended budget. This increase was mainly due to the Fire District #40 contract and Benson Hill annexation. The City however took aggressive action to reduce the level of spending in the General Fund to compensate for expected revenue shortfalls. The General Fund budget did not spend $5,304,891 (excluding internal transfers) of the legally appropriated expenditures. Even with this reduction the City had to use $2,965,287, including a $519,503 transfer out, of its prior years fund balance reducing the $16.5 million balance to $13.5 million. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City of Renton’s investment in capital assets, including construction in progress, for its governmental and business-type activities as of December 31, 2008, amounts to $650.9 million as presented on the following table. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-14 Table 3 CAPITAL ASSETS (Net of Accumulated Depreciation) Governmental Activities Business Type Activities Total Activities 1/1/2008 12/31/2008 1/1/2008 12/31/2008 1/1/2008 12/31/2008 Land $88,947,494 $175,559,920 $6,976,321 $6,976,321 $95,923,815 $182,536,241Construction in progress 41,893,039 29,912,497 5,699,288 10,014,741 47,592,327 39,927,238Buildings and structures 52,356,883 48,596,215 10,799,011 12,130,440 63,155,894 60,726,655Other improvements 78,576,142 127,068,177 206,963,989 223,715,208 285,540,131 350,783,385Machinery and equipment 12,228,057 16,129,966 879,046 765,590 13,107,103 16,895,556 $274,001,615 $397,266,775 $231,317,655 $253,602,300 $505,319,270 $650,869,075 General government infrastructure includes streets, bridges, overlays, and traffic controls. More detail about the City’s Capital Assets can be found in Note 5 to the financial statements. Debt Administration As shown in Table 4, the City’s total outstanding debt at December 31, 2008, was $101.5 million. This was a net increase (new issues less principal payments and refundings) of $8.1 million. Table 4 OUTSTANDING DEBT General Activities Business Type Activities Total Activities 1/1/2008 12/31/2008 1/1/2008 12/31/2008 1/1/2008 12/31/2008 General obligation bonds $44,956,950 $42,397,414$44,956,950 $42,397,414Revenue debt $33,405,000 43,310,00033,405,000 43,310,000Other long term debt 9,878,951 9,226,394 9,878,951 9,226,394Employee benefits 4,440,424 5,878,152 715,249 616,317 5,155,673 6,494,470 $49,397,374 $48,275,566 $43,999,200 $53,152,711 $93,396,574 $101,428,277 The Water and Sewer Revenue Bonds (A and B) were issued January 4, 2008 in the amount of $9,975,000 and $2,035,000, respectfully. The average interest rate is 4.17%. These bonds were issued for the purpose of providing money to pay part of the costs of construction and acquisition of certain improvements to the waterworks utility. The Water & Sewer Revenue Bond underlying ratings remain AA- at both rating agencies. More detailed information about the City’s long-term debt can be found in Note 14 and 18 to the financial statements. FUTURE YEAR’S BUDGETARY IMPACTS The City continues to benefit from progressive economic development activities allowing the City to continue to maintain its level of services during this economic slowdown. • The Landing is a master planning development area on land previously owned by Boeing. The development will add more than 900 residential units and 600,000 square feet of retail, including a major entertainment district to the city’s core. • The City has begun working with developers and the Boeing Company on the second phase of the Landing, which may include high-quality office buildings and a hotel. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-15 • The Boeing Company, the largest employer in the City, employs approximately 12,000 employees. • The Federal Reserve Bank of San Francisco Seattle headquarters and the Seattle Seahawks’ Virginia Mason Athletic Center opened in Renton this year. • The City annexed the Benson Hill area that included the Cascade Shopping Center. The City is working with the owner on redevelopment opportunities. For more information regarding the factors affecting the future year’s budgetary impacts, please refer to the Transmittal Letter within this document under: Factors Affecting Financial Condition - Economic Condition. REQUESTS FOR FINANCIAL INFORMATION This financial report is designed to provide our citizens, creditors, investors, and others interested in the City’s finances with a general overview of the City’s finances and to show the City’s accountability for financial resources it receives. If you have any questions about this report or need additional information, please contact Iwen Wang, FIS Administrator, 1055 South Grady Way, Renton, WA 98057 or visit our web site at http://rentonwa.gov/. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-16 This page intentionally left blank. 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTAL BUSINESS-TYPEACTIVITIESACTIVITIESTOTALASSETSCash and cash equivalents$ 23,540,666 $3,978,160 $ 27,518,826 Investments at fair value32,874,707 13,907,872 46,782,579 Receivables (net of allowancefor uncollectibles)21,011,971 5,488,640 26,500,611 Internal balances(5,269) 5,269 - Inventories- 555,337 555,337 Prepayments604,984 - 604,984 Other non-current assets5,686,041 853,808 6,539,849 Restricted assets:Investments at fair value- 440,153 440,153 Land175,559,921 6,976,321 182,536,242 Construction in progress29,912,496 10,014,741 39,927,237 Capital assets (net of accumulateddepreciation)191,794,358 236,611,238 428,405,596 Total assets$ 480,979,875 $ 278,831,539 $ 759,811,414 LIABILITIESAccounts payable andother liabilities11,094,623 1,642,023 12,736,646 Interest payable361,998 292,457 654,455 Unamortized (discount)/premium589,299 (336,283) 253,016 Unearned revenue5,610 222,902 228,512 Non-current liabilities:Due within one year5,633,558 3,277,619 8,911,177 Due in more than one year42,642,008 49,875,092 92,517,100 Total liabilities$ 60,327,096 $ 54,973,810 $ 115,300,906 NET ASSETSInvestment in capital assets, net of related debt$ 353,197,782 $ 202,255,997 $ 555,453,779 Restricted for:Promotional programs2,806,667 - 2,806,667 Construction projects29,217,384 - 29,217,384 Debt service1,270,936 4,171,525 5,442,461 Unrestricted34,160,010 17,430,207 51,590,217 Total net assets$ 420,652,779 $ 223,857,729 $ 644,510,508 PRIMARY GOVERNMENTSTATEMENT OF NET ASSETSDecember 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-1 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonOPERATINGCHARGES FOR GRANTS AND CAPITAL GRANTFUNCTIONS/PROGRAMSEXPENSESSERVICES CONTRIBUTIONS & CONTRIBUTIONSPrimary government:Governmental activities:General government$ 12,010,422 $ 5,614,638 $ 8,250,260 $3,261,380 Judicial1,761,665 2,420,913 - - Security of persons and property46,289,454 550,773 810,227 - Physical environment3,333,471 864,581 305,851 - Transportation13,675,581 2,165,538 12,519 14,207,150 Economic environment6,823,426 4,236,983 15,000 500,000 Mental and physical health325,066 - - 7,500 Culture and recreation17,025,800 1,739,055 177,074 133,094 Interest on long-term debt 2,663,436 - - - Total governmental activities $ 103,908,321 $ 17,592,481 $ 9,570,931 $ 18,109,124 Business-type activities:Waterworks utility$ 32,738,366 $ 31,110,061 $- $6,709,683 Airport1,733,894 1,086,064 - 179,292 Solid waste utility11,518,047 10,192,718 264,784 - Golf course2,334,838 2,262,841 - - Total business-type activities$ 48,325,145 $ 44,651,684 $264,784 $6,888,975 Total primary government$ 152,233,466 $ 62,244,165 $ 9,835,715 $ 24,998,099 Gain on Sales of AssetsPrior Period AdjustmentPROGRAM REVENUESSTATEMENT OF ACTIVITIESFor the Year Ended December 31, 2008Page 1 of 2Net assets - endingGeneral revenues:Taxes:Property taxesRetail sales taxesBusiness taxesExcise taxesPenalties and interestChange in net assetsNet assets - beginningInterest and investment earningsMiscellaneousTransfersTotal general revenues and transfersThe notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-2 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTAL BUSINESS-TYPEACTIVITIESACTIVITIESTOTAL$ 5,115,856 $ 5,115,856 659,248 659,248 (44,928,454) (44,928,454) (2,163,039) (2,163,039) 2,709,626 2,709,626 (2,071,443) (2,071,443) (452,102) (452,102) (14,842,043) (14,842,043) (2,663,436) (2,663,436) $ (58,635,787) $ (58,635,787) $ 5,081,378 $ 5,081,378 (468,538) (468,538) (1,060,545) (1,060,545) (71,997) (71,997) $ 3,480,298 $ 3,480,298 $ (58,635,787) $ 3,480,298 $ (55,155,489) $ 29,381,036 $ - $ 29,381,036 23,190,076 - 23,190,076 14,945,173 - 14,945,173 4,362,945 - 4,362,945 6,477 - 6,477 2,419,260 1,120,342 3,539,602 - - - 2,104,133 85,493 2,189,626 110,000 (110,000) - $ 76,519,100 $ 1,095,835 $ 77,614,935 $ 17,883,313 $ 4,576,133 $ 22,459,446 $ 297,439,169 $ 210,078,055 $ 507,517,224 $ 105,330,297 $ 9,203,541 $ 114,533,838 $ 420,652,779 $ 223,857,729 $ 644,510,508 CHANGES IN NET ASSETSPRIMARY GOVERNMENTNET (EXPENSE) REVENUE ANDPage 2 of 2The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-3 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonOTHER TOTAL CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL INVESTMENTFUNDSFUNDSASSETSCash & cash equivalents$ 3,731,827 $ 2,528,155 $ 7,814,267 $ 14,074,249 Investments6,418,107 196,482 14,965,657 21,580,246 Receivables (net of allowances)Taxes2,636,311 - 265,558 2,901,869 Customer accounts3,092,363 1,156 1,999,506 5,093,025 Accrued interest & penalty71,661 52,808 924,138 1,048,607 Interfund loans receivable- - 1,000,000 1,000,000 Due from other funds923 - 178,975 179,898 Due from other governmental units4,191,637 6,097,410 882,428 11,171,475 Prepayments8,000 - - 8,000 TOTAL ASSETS$ 20,150,829 $ 8,876,011 $ 28,030,529 $ 57,057,369 GOVERNMENTAL FUNDSBALANCE SHEETPage 1 of 2December 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-4 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonOTHER TOTAL CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL INVESTMENTFUNDSFUNDSLIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$ 1,654,643 $ 335,797 $998,840 $ 2,989,280 Taxes payable16,355 - 45,588 61,943 Retainage payable- 48,808 122,927 171,735 Due to other funds184,244 - - 184,244 Interfund loans payable- - 1,000,000 1,000,000 Custodial accounts39,438 - - 39,438 Deposits34,739 - 32,981 67,720 Deferred revenue1,194,583 - 22,292 1,216,875 Accrued employee wages and leave payable3,509,730 - 4,320 3,514,050 Total liabilities$ 6,633,732 $ 384,605 $ 2,226,948 $ 9,245,285 Fund balancesReserved for:Interfund loans receivable$- $- $ 1,000,000 $ 1,000,000 Prepaid items8,000.00- - 8,000.00Unreserved, designated for:General fund contingencies8,615,230 - - 8,615,230 Special revenue fund contingencies- - 2,806,667 2,806,667 Debt service fund contingencies- - 1,270,936 1,270,936 Capital project fund contingencies- 8,491,406 20,725,978 29,217,384 Unreserved reported in:General fund4,893,867 - - 4,893,867 Total fund balances$ 13,517,097 $ 8,491,406 $ 25,803,581 $ 47,812,084 TOTAL LIABILITIES AND FUND BALANCES $ 20,150,829 $ 8,876,011 $ 28,030,529 $ 57,057,369 December 31, 2008GOVERNMENTAL FUNDSBALANCE SHEETPage 2 of 2The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-5 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonFUND BALANCES - TOTAL GOVERNMENTAL FUNDS$ 47,812,084 Amounts reported for governmental activities in the statement of net assets aredifferent because:Capital assets used in governmental activities are not financial resourcesand therefore are not reported in the governmental funds.Capital assets (net) and other non-current assets.$ 391,390,014 The focus of governmental funds is on short-term financing, assets areoffset by deferred revenue and are not included in fund balancesDeferred revenue$ 840,007 Long-term liabilities, including bonds payable are not due and payable in thecurrent period and therefore are not reported in the governmental fundsInterest payable$Long-term liabilities(48,732,008) Internal service funds are used by management to charge the costs ofcertain activities to individual funds.Total assets and liabilities of the internal service funds that are reported with governmental activities, less capital assets reported above.$ 29,342,682 NET ASSETS OF GOVERNMENTAL ACTIVITIES$ 420,652,779 RECONCILIATION OF THE BALANCE SHEETTO THE STATEMENT OF NET ASSETSDecember 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-6 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonOTHER TOTAL CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL IMPROVEMENTFUNDSFUNDSREVENUESTaxes$ 66,844,997 $- $5,669,391 $ 72,514,388 Licenses and permits2,751,420 1,956,165 268,000 4,975,585 Intergovernmental revenues8,773,933 17,358,161 1,417,527 27,549,621 Charges for services3,976,920 - 3,169,030 7,145,950 Fines and forfeits2,002,854 - - 2,002,854 Interfund revenues3,072,526 - - 3,072,526 Contributions- - 135,000 135,000 Investment earnings587,590 - 1,152,445 1,740,035 Miscellaneous revenues64,359 - 1,209,000 1,273,359 TOTAL REVENUES$ 88,074,599 $ 19,314,326 $13,020,393 $ 120,409,318 EXPENDITURESCurrent:General government$ 14,387,478 $- $706,662 $15,094,140 Judicial1,761,665 - - 1,761,665 Security of persons and property45,530,208 - - 45,530,208 Physical environment3,123,883 - - 3,123,883 Transportation6,332,006 - - 6,332,006 Economic environment6,232,669 - 441,012 6,673,681 Mental & physical health16,459 - - 16,459 Culture & recreation11,119,073 - - 11,119,073 Capital outlay2,017,677 17,991,860 8,510,916 28,520,453 Debt service:Principal payment- - 2,079,551 2,079,551 Interest payment- - 2,729,247 2,729,247 TOTAL EXPENDITURES$ 90,521,118 $ 17,991,860 $14,467,388 $ 122,980,366 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (2,446,519) $ 1,322,466 $ (1,446,995) $(2,571,048) OTHER FINANCING SOURCES (USES)Transfer in$- $ 2,868,229 $1,185,378 $4,053,607 Transfer (out)(519,503) (75,000) (3,606,104) (4,200,607) Sale of capital assets735 19,908 - 20,643 TOTAL OTHER FINANCE SOURCES (USES) $ (518,768) $ 2,813,137 $ (2,420,726) $(126,357) NET CHANGE IN FUND BALANCE$ (2,965,287) $ 4,135,603 $ (3,867,721) $(2,697,405) FUND BALANCE JANUARY 1$ 16,482,384 $ 4,355,803 $29,671,302 $50,509,489 FUND BALANCE DECEMBER 31$ 13,517,097 $ 8,491,406 $25,803,581 $47,812,084 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESPage 1 of 1For the Year Ended December 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-7 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonNET CHANGES IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS$ (2,697,405) Amounts reported for governmental activities in the statement of activities are different because:Governmental funds report capital outlays as expenditures;however, in the statement of activities, the cost of thoseassets are depreciated over their estimated useful lives.Capital OutlayExpenditures for capital assets less current year depreciation$ 14,344,797 Repayment of long-term debt is an expenditure in governmen-tal funds, but the repayment reduces long-term liabilitiesin the statement of net assets. Loan or bond proceeds provide current financial resources to governmentalfunds, but the repayment reduces long-term liabilitiesin the statement of net assets.Principal payments$ 1,041,722 Some revenues or expenditures reported in the statement of activities are not yet available or expensed and therefore arenot reported as revenue or expenses in governmental funds$ 362,281 Net Pension Obligation over funded / (under funded)$ 155,079 Internal service funds or activities are used by management tocharge the costs of certain activities to individual funds.The net (expense) of the internal service fund andinternal balances reported with governmental activities.$ 4,676,837 CHANGES IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 17,883,311 For the Year Ended December 31, 2008RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSTO THE STATEMENT OF ACTIVITIESGOVERNMENTAL FUNDSThe notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-8 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTALOTHER TOTAL ACTIVITIESWATERWORKSENTERPRISE ENTERPRISE INTERNAL SERVICE UTILITYSOLID WASTE FUNDSFUNDSFUNDSASSETSCurrent assets:Cash & cash equivalents$ 2,300,930 $ 598,528 $ 1,078,701 $ 3,978,159 $9,466,418 Investments at fair value12,948,026 150,000 808,643 13,906,669 11,294,461 Receivables (net of allowances):Customer accounts3,471,137 869,753 40,394 4,381,284 16,689 Special assessments - current30,492 - - 30,492 - Interest - investments386,775 10,314 70,713 467,802 772,928 Due from other funds- - 5,269 5,269 - Due from other governmental units293,813 264,784 50,468 609,065 7,377 Inventory of materials and supplies408,805 - 146,531 555,336 - Prepayments- - - - 596,985 Total current assets$ 19,839,978 $ 1,893,379 $ 2,200,719 $ 23,934,076 $22,154,858 Noncurrent assets:Restricted Investments at fair value- - 441,358 441,358 - Special assessments deferred65,700 - - 65,700 - Capital assets (net)234,518,291 - 19,084,008 253,602,299 11,574,644 Deferred charges and other assets756,945 - 31,163 788,108 - Total noncurrent assets$ 235,340,936 $- $ 19,556,529 $ 254,897,465 $11,574,644 TOTAL ASSETS$ 255,180,914 $ 1,893,379 $ 21,757,248 $ 278,831,541 $33,729,502 BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF NET ASSETSPROPRIETARY FUNDSDecember 31, 2008Page 1 of 2The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-9 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTALOTHER TOTAL ACTIVITIESWATERWORKSENTERPRISE ENTERPRISE INTERNAL SERVICE UTILITYSOLID WASTE FUNDSFUNDSFUNDSLIABILITIESCurrent liabilities:Accounts payable$ 278,638 $ 414,376 $ 224,894 $ 917,908 $ 482,829 Retainage payable130,463 - - 130,463 - Due to other funds- - - - 923 Accrued interest payable292,458 - - 292,458 - Accrued employee wages and benefits payable247,496 16,832 50,228 314,556 52,871 Accrued taxes payable37,229 48,492 36,050 121,771 (405) Custodial accounts32,159 - 125,149 157,308 - Deferred revenue134,788 - 88,113 222,901 - Revenue bonds payable1,890,000 - 310,000 2,200,000 - Capital leases payable- - 31,187 31,187 - Total current liabilities$ 3,043,231 $ 479,700 $ 865,621 $ 4,388,552 $536,218 Long-term liabilities:Revenue bonds payable$ 38,910,000 $- $ 2,200,000 $ 41,110,000 $- Unamortized premium on revenue bonds675,662 - - 675,662 - Unamortized discount on revenue bonds (799,758) - (212,188) (1,011,946) - Accrued employee wages and benefits payable503,083 23,359 89,874 616,316 923,930 Claims incurred but not reported- - - - 2,926,675 Capital leases payable- - 23,993 23,993 - Public works trust fund loan payable9,171,235 - - 9,171,235 - Total long-term liabilities$ 48,460,222 $ 23,359 $ 2,101,679 $ 50,585,260 $3,850,605 TOTAL LIABILITIES$ 51,503,453 $ 503,059 $ 2,967,300 $ 54,973,812 $4,386,823 NET ASSETSInvestment in capital assets, net of related debt$ 184,671,152 $- $ 16,762,203 $ 201,433,355 $11,574,644 Restricted for waterworks utility debt3,730,167 - - 3,730,167 - Restricted for golf course debt- - 441,358 441,358 - Unrestricted15,276,142 1,390,320 1,586,387 18,252,849 17,768,035 TOTAL NET ASSETS$ 203,677,461 $ 1,390,320 $ 18,789,948 $ 223,857,729 $29,342,679 BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF NET ASSETSPROPRIETARY FUNDSDecember 31, 2008Page 2 of 2The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-10 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTALOTHER TOTAL ACTIVITIESWATERWORKSENTERPRISE ENTERPRISE INTERNAL SERVICE UTILITYSOLID WASTE FUNDSFUNDSFUNDSOPERATING REVENUES:Charges for services$ 30,328,794 $ 10,262,639 $ 3,349,095 $ 43,940,528 $ 11,178,965 Interdepartmental services559,415 4,460 - 563,875 - Other services241,493 - - 241,493 11,498,439 TOTAL OPERATING REVENUES$ 31,129,702 $ 10,267,099 $ 3,349,095 $ 44,745,896 $ 22,677,404 OPERATING EXPENSES:Operations and maintenance$ 6,194,147 $ 1,306,373 $ 1,845,626 $ 9,346,146 $ 3,030,509 Benefit payments1,529,215 113,734 419,684 2,062,633 12,242,087 Professional services156,492 9,337,773 48,452 9,542,717 909,785 Administrative and general13,253,116 137,965 716,990 14,108,071 2,044,990 Insurance62,400 - 60,520 122,920 1,217,146 Taxes2,571,067 622,202 129 3,193,398 - Depreciation6,709,291 - 807,971 7,517,262 517,357 TOTAL OPERATING EXPENSES$ 30,475,728 $ 11,518,047 $ 3,899,372 $ 45,893,147 $ 19,961,874 OPERATING INCOME (LOSS)$ 653,974 $ (1,250,948) $ (550,277) $ (1,147,251) $ 2,715,530 NON-OPERATING REVENUES(EXPENSES):Intergovernmental revenues$- $ 264,784 $- $ 264,784 $19,675 Investment earnings1,022,711 25,113 72,516 1,120,340 748,261 Gain (loss) on sale of capital assets(59,111) - (6,749) (65,860) 45,045 Other non-operating revenues (expenses)18,876 1,190 15,719 35,785 914,023 Interest expense(2,167,177) - (134,594) (2,301,771) (22,700) Amortization of debt discount and expense(95,461) - (34,764) (130,225) - NON-OPERATING REVENUE NET OF EXPENSE $ (1,280,162) $ 291,087 $ (87,872) $ (1,076,947) $ 1,704,304 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS$ (626,188) $ (959,861) $ (638,149) $ (2,224,198) $ 4,419,834 Capital contributions$ 6,731,040 $ - $ 179,292 $ 6,910,332 $- Transfers in (out)(110,000) - - (110,000) 257,000 CHANGE IN NET ASSETS$ 5,994,852 $ (959,861) $ (458,857) $ 4,576,134 $ 4,676,834 NET ASSETS, JANUARY 1$ 188,479,068 $ 2,350,181 $ 19,248,805 $ 210,078,054 $ 24,665,845 Prior Year Adjustment9,203,541 - - 9,203,541 - NET ASSETS, JANUARY 1 RESTATED197,682,609 2,350,181 19,248,805 219,281,595 24,665,845 NET ASSETS, DECEMBER 31$ 203,677,461 $ 1,390,320 $ 18,789,948 $ 223,857,729 $ 29,342,679 BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSPROPRIETARY FUNDSFor the Year Ended December 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-11 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTALOTHER TOTAL ACTIVITIESWATERWORKSENTERPRISE ENTERPRISE INTERNAL SERVICE UTILITY SOLID WASTE FUNDSFUNDSFUNDSCASH FLOWS FROM OPERATING ACTIVITIES:Cash received for services$ 30,367,387 $ 10,566,802 $ 3,421,904 $ 44,356,093 $ 22,693,578 Cash received from other funds for services696,315 - - 696,315 - Cash paid to suppliers for goods & services(22,512,091) (12,499,433) (2,595,575) (37,607,099) (3,138,836) Cash paid to other funds for goods & services(6,905) - - (6,905) - Cash paid to employees(1,377,182) (105,971) (407,348) (1,890,501) (12,137,918) Other operating receipts- 1,225,835 (38,684) 1,187,151 (3,690,911) Other non-operating receipts(40,235) - (125,624) (165,859) (232,432) NET CASH PROVIDED (USED) BYOPERATING ACTIVITIES$ 7,127,289 $ (812,767) $ 254,673 $ 6,569,195 $ 3,493,481 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESTransfers from other funds$ (110,000) $- $- $ (110,000) $(60,000) NET CASH PROVIDED (USED) BYNONCAPITAL FINANCING ACTIVITIES $ (110,000) $- $- $ (110,000) $(60,000) CASH FLOWS FROM CAPITALFINANCING ACTIVITIES:Acquisition & construction of capital assets $ (13,393,040) $- $ (294,994) $ (13,688,034) $ (4,100,399) Principal payments on debt9,568,358 - (310,000) 9,258,358 - Interest payments on debt(2,263,300) - 3,098 (2,260,202) - NET CASH PROVIDED (USED) BYCAPITAL FINANCING ACTIVITIES$ (6,087,982) $- $ (601,896) $ (6,689,878) $ (4,100,399) CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sale of investments$ (3,835,500) $- $- $ (3,835,500) $- BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF CASH FLOWSPROPRIETARY FUNDSPage 1 of 2For the Year Ended December 31, 2008Payments for investments- 502,379 - 502,379 3,440,726 Interest on investments1,014,125 29,287 22,143 1,065,555 312,957 NET CASH PROVIDED (USED) BYINVESTING ACTIVITIES$ (2,821,375) $ 531,666 $ 22,143 $ (2,267,566) $ 3,753,683 NET INCREASE (DECREASE) IN CASH &CASH EQUIVALENTS$ (1,892,068) $ (281,101) $ (325,080) $ (2,498,249) $ 3,086,765 - CASH & CASH EQUIVALENTS, JANUARY 12,797,689 879,629 1,403,781 5,081,099 6,379,653 RESTRICTED CASH, JANUARY 11,395,309 - - 1,395,309 - CASH , RESTRICTED CASH ,& CASH EQUIVALENTS, DECEMBER 31$ 2,300,930 $ 598,528 $ 1,078,701 $ 3,978,159 $ 9,466,418 The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-12 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTALACTIVITIESOTHER TOTAL INTERNALWATERWORKS SOLID ENTERPRISE ENTERPRISESERVICE UTILITYWASTEFUNDSFUNDSFUNDSRECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED (USED)BY OPERATING ACTIVITIES:Operating income (loss)$ 653,974 $ (1,250,948) $ (550,277) $ (1,147,251) $ 2,715,530 Adjustments to reconcile operating income(loss) to net cash provided (used)by operating activities:Depreciation & amortization ofdeferred charges$ 6,709,291 $- $ 807,971 $ 7,517,262 $517,357 Other non-operating revenue(40,235) 265,974 (125,624) 100,115 956,043 (Increase) decrease inaccounts receivable(202,900) 299,703 18,552 115,355 16,174 (Increase) decrease in due fromother funds/governmental units136,900 (121,301) (38,684) (23,085) 4,953 (Increase) decrease in inventory& prepaid items(57,412) - (54,463) (111,875) (221,159) Increase (decrease) in vouchersretainage payable34,616 - 14,636 49,252 (816,928) Increase (decrease) in due toother funds/governmental units(6,905) - - (6,905) - Increase (decrease) in payables& other short-term liabilities(191,592) (13,958) 114,636 (90,914) (3,817) Increase (decrease) in customer deposits- - 12 12 - Increase (decrease) in deferred revenues(60,481) - 55,578 (4,903) - Increase (decrease) in accruedemployee leave benefits152,033 7,763 12,336 172,132 325,328 Total adjustments$ 6,473,315 $ 438,181 $ 804,950 $ 7,716,446 $ 777,951 BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF CASH FLOWSPROPRIETARY FUNDSPage 2 of 2For the Year Ended December 31, 2008NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES$ 7,127,289 $ (812,767) $ 254,673 $ 6,569,195 $ 3,493,481 NONCASH INVESTING, CAPITAL, ANDFINANCING ACTIVITIESPrior Period Adjustment9,203,541 - - 9,203,541 - Contributions of capital assets6,731,040 - 179,292 6,910,332 - Net amort. bond prem. discount & bond issue costs95,461 - 34,764 130,225 - Depreciation6,709,291 - 807,971 7,517,262 517,357 The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-13 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPENSION TRUST AGENCYFIREFIGHTER'S SPECIAL PENSIONDEPOSITSASSETSCash & cash equivalents$ 1,182,339 $ 840,466 Investments at fair value:Federal National Mortgage Association134,821 - US Treasury Strips4,744,087 - Receivables (net of allowances)Interest on investments2,879,530 - TOTAL ASSETS$ 8,940,777 $ 840,466 LIABILITIESVouchers & contracts payable$- $31,935 Deposits payable- 808,531 TOTAL LIABILITIES$- $ 840,466 NET ASSETSHeld in trust for pension benefits& other purposes$ 8,940,777 $- STATEMENT OF FIDUCIARY NET ASSETSFIDUCIARY FUNDSDecember 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-14 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPENSION TRUSTFIREMEN'S PENSIONADDITIONS:Other contributions:Fire insurance premiums transferred in$85,950 Investment incomeInvestment earnings1,218,067 TOTAL ADDITIONS$ 1,304,017 DEDUCTIONS:Benefit payments$ 512,263 Medical benefit payments9,573 Administrative and general10,321 TOTAL DEDUCTIONS$ 532,157 NET INCREASE (DECREASE)$ 771,860 NET ASSETS - JANUARY 1$ 8,168,917 NET ASSETS - DECEMBER 31$ 8,940,777 STATEMENT OF CHANGES IN FIDUCIARY NET ASSETSFIREMEN'S PENSION FUNDFor the Year Ended December 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-152008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-16 NOTES TO THE FINANCIAL STATEMENTS January 1, 2008 through December 31, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Renton was incorporated on September 6, 1901, and operates under the laws of the State of Washington applicable to a Non-Charter code city with a Mayor/Council form of government. A full-time Mayor and seven part-time Council members serve the City, all elected at large to four-year terms. The City provides the full range of municipal services authorized by state statues, together with a Municipal Airport, a Waterworks Utility, a Solid Waste Utility, and a Municipal Golf Course. The accounting and reporting policies of the City related to the funds included in the accompanying financial statements conform to generally accepted accounting principles (GAAP) applicable to state and local governments. GAAP for local governments include those principles prescribed by the Governmental Accounting Standards Board (GASB), the Financial Accounting Standards Board (FASB), when applicable, and the American Institute of Certified Public Accountants (AICPA) pronouncements that have been made applicable by GASB Statements or Interpretations. In accordance with GASB Statement 20 the City has not applied to its enterprise activities FASB Statements and Interpretations, Accounting Principles Board opinions, and Accounting Research Bulletins of the Committee of Accounting Procedure issued after November 30, 1989. The City had implemented all applicable GASB Statements through Statement No. 53, with the exception of GASB Statement No. 51. The City is required to implement Statement No. 51: Accounting and Financial Reporting for Intangible Assets by 2010. All other applicable statements were implemented prior to 2008. A. REPORTING ENTITY As required by GAAP the City’s financial statements present the City of Renton – the primary government. The City of Renton’s Mayor appoints the Governing Board for the Renton Housing Authority, which is not considered a component unit of the City. The City is under no obligation to subsidize, nor does it exercise any other prerequisite for inclusion. The City of Renton has no component units (either blended or discretely presented) included in these statements. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-17 During 2008 the City of Renton annexed several communities that were identified as Potential Annexation Areas (PAA). These annexations increased the City’s capital assets by $110,945,752. See Capital Assets and Depreciation (Note 5) for details. B. BASIC FINANCIAL STATEMENTS – GASB 34 PRESENTATION The City’s basic financial statements include both Government-wide (reporting the City as a whole) and fund financial statements (reporting the City’s major funds). Both the Government-wide and fund financial statements categorize primary activities as either government or business-type. GOVERNMENT-WIDE STATEMENTS In the Government-wide Statement of Net Assets, both the governmental and business-type activities columns (a) are presented on a consolidated basis by column, and (b) are reported on a full accrual, economic resource basis, which recognized all long-term assets and receivables as well as long-term debt and obligations. The City’s net assets are reported in three parts – investment in capital assets, net of related debt; restricted net assets; and unrestricted net assets. The City first utilizes restricted resources to finance qualifying activities. The Government-wide Statement of Activities reports both the gross and net cost of each of the City’s functions and business-type activities (general government, judicial, security of persons and property, physical environment, transportation, economic environment, mental and physical health, culture and recreation, waterworks utility, airport, solid waste utility, and golf course). General government revenues (property taxes, timber taxes, retail sales and use taxes, business taxes, excise taxes, and other taxes) also support the functions. The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants and contributions. Program revenues must be directly associated with the function or a business-type activity. Operating grants include operating specific and discretionary (either operating or capital) grants while the capital grants column reflects capital specific grants. General revenues normally cover the net cost, by function or business-type activity. The Government-wide focus is more on the sustainability of the City as an entity and the change in the City’s net assets resulting from the current year’s activities. The City’s fiduciary funds are presented in the fund financial statements. Since the assets are being held for the benefit of a third party and cannot be used for obligations of the City, they are not included in the Government-wide statements. FUND FINANCIAL STATEMENTS In the fund financial statements, the financial transactions are recorded in individual funds, each accounted for by a separate set of self-balancing accounts that comprise assets, liabilities, reserves, fund equity, revenues, and expenditures or expenses. The presentation is by major funds in either the governmental or business-type categories. GASB Statement 34 sets forth the 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-18 minimum criteria for the determination of a major fund. The non-major funds are combined in the fund financial statements and are detailed in the combining section. The governmental major fund statements in the fund financial statement are presented on current financial resources and modified accrual basis of accounting. Since governmental fund statements are presented on a different measurement focus and basis of accounting than the Government-wide statements’ governmental column, reconciliation is presented at the end of the statement, which briefly explains the adjustments necessary to transform the fund statements into the Government-wide presentation. Internal service funds of a government are presented in summary form as part of the proprietary fund financial statements. Since the principal users of the internal services are the City’s governmental activities, financial statements for internal service funds are consolidated into the governmental column when presented at the governmental level. These services are reflected in the appropriate functional activity (general government, judicial, security of persons and property, physical environment, transportation, economic environment, mental and physical health, culture and recreation). Interfund fund activity has been eliminated from the Government-wide financial statements. Exceptions are payments in lieu of taxes, external type transactions within the internal service funds (revenue and expenses for interest or services provided to other governmental organizations), and other charges for utilities. Elimination of these charges would distort the direct cost and program revenues for these functions. The following describes each fund as presented in the fund financial statements. MAJOR FUNDS GOVERNMENTAL FUNDS GENERAL FUND The General Fund is the primary operating fund of the City. It is used to account for the resources and disbursements of ordinary City operations that are not required to be accounted for in another fund. These include the costs of legislative and executive departments, court services, finance and legal departments, development services, police and fire departments, human resources and technical services, community services, parks, economic development, streets, library and museum, parking garage maintenance, fire memorial, and fire department’s health and wellness programs. The major sources of revenue are property taxes, utility taxes, and sales taxes. Licenses and permits, charges for services, and fines and forfeits provide additional support. Community development block grant activities are accounted for within this fund, which is federally funded. CAPITAL INVESTMENT FUND This fund supports the City of Renton transportation projects and projects linked with various State and Federal funding programs. Many of the projects depend on grants, LIDs, and mitigation revenue. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-19 ENTERPRISE FUNDS WATERWORKS UTILITY The Waterworks Utility Fund accounts for all operation and capital improvement programs for water, wastewater, and storm water services within the City. The activities primarily supported by user fees include: administration, billings and collections, debt service, engineering and operation, maintenance and repairs. The primary resources for the capital improvement programs are revenue bond proceeds, grants (as available), and utility collection charges. SOLID WASTE Solid waste, recycling, and yard waste collection services for the City are accounted for in this fund, supported entirely by service fees. The expenses include payment to the City’s garbage contractor and other service charges. NON-MAJOR FUNDS SPECIAL REVENUE FUNDS ARTERIAL STREET FUND The Arterial Street Fund was established pursuant to state law allocating the one-half cent State Gasoline Tax revenue to cities and towns for construction, improvements, and major repair of streets. LEASED CITY PROPERTY FUND Accounts for revenue and expenditures related to City property leased to outside entities. HOTEL/MOTEL TAX FUND Accounts for monies collected through an increase of one percent in hotel/motel taxes for the purpose of increasing tourism in the City of Renton. PATHS AND TRAILS RESERVE FUND The Paths and Trails Reserve Fund was created for the purpose of planning, accommodating, and establishing and maintaining certain paths and trails within the City of Renton. SPRINGBROOK WETLANDS BANK FUND The City of Renton established this fund in 2007 for the purpose of providing accounting for the Springbrook Creek Wetland and Habitat Mitigation Bank project. The fund will receive revenue by selling Wetlands Credits to third parties and to the City’s internal departments. 1% FOR ART FUND The City of Renton established this fund by contributing one percent of general governmental capital project funding for art projects. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-20 CABLE COMMUNICATIONS DEVELOPMENT FUND The Cable Communications Development Fund accounts for funding for promotion and development of cable communications as established by City ordinance. DEBT SERVICE FUNDS GENERAL GOVERNMENTAL MISCELLANEOUS DEBT SERVICE FUND Accounts for debt service on installment contracts for equipment, City Shop land purchase, the 1984 and 1985 Limited General Obligation Bond issue for equipment and the 1986 Limited Bond issue to finance a community center, library improvements, permanent financing for purchase of a golf course, acquisition of wetland property, and equipment. This fund also includes the 1978 Limited General Obligation Bond Redemption issue to account for debt service on a Council-approved bond, which provided partial funding for construction of the Renton Senior Activity Center and the 1978 Limited General Obligation Bond Redemption issue to account for debt service on a Council-approved bond, which provided partial funding for construction of the Renton Senior Activity Center. 1989 UNLIMITED GENERAL OBLIGATION BOND REDEMPTION FUND Accounts for debt service on a voter-approved bond issue, which provided financing to: acquire, construct, rehabilitate, equip, and develop low-income housing for the elderly. CAPITAL PROJECT FUNDS COMMUNITY DEVELOPMENT IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. FIRE IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. TRANSPORTATION IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities MUNICIPAL FACILITIES CONSTRUCTION FUND The Municipal Facilities Construction Fund accounts for the acquisition and development of municipal facilities. Resources included general and special revenue taxes and Council-approved general obligation bonds. SOUTH LAKE WASHINGTON INFRASTRUCTURE PROJECT FUND The South Lake Washington Infrastructure Project Fund accounts for the infrastructure improvements at the south end of Lake Washington. Primary resources include: REET, sales tax, grants, and GO Bonds that will provide for the design, construction, labor wages and benefits, and equipment required to implement the project. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-21 ENTERPRISE FUNDS AIRPORT FUND Provides accounting for revenues and expenses, which provides administration, debt services, operation, capital improvements, and maintenance of the Renton Municipal Airport and Will Rodger-Wily Post Memorial Seaplane Base. Sources of support to the fund are leases, fuel charges, investment interest, and grant funding as available. GOLF COURSE FUND The Golf Course Fund was created after the City acquired the Maplewood Golf Course. It accounts for the operation, maintenance, debt service, and capital improvements of the facility. OTHER FUND TYPES INTERNAL SERVICE FUNDS EQUIPMENT RENTAL The Equipment Rental Fund accounts for the costs of maintaining and replacing all City vehicles, computers, and auxiliary equipment except for fire apparatus and replacement of police patrol vehicles. The fund also accounts for communication, data support, and printing services provided to City employees. All equipment costs, including depreciation, are factors in calculating the rates, which are charged to each user department. INSURANCE FUND The Insurance Fund provides accounting for self-insurance services to all City departments, including provisions for losses on property, liability, worker’s compensation, unemployment compensation, and the health care program. The Insurance Fund pays expenses and rates are charged to departments based on use and/or coverage requirements. FIDUCIARY FUNDS Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governmental units and/or other funds. The City has one Pension Trust Fund and one Agency Fund. PENSION TRUST FUND FIREMEN’S PENSION FUND The Firemen’s Pension Fund accounts for the payment of administrative costs and benefits for retired firefighters and their beneficiaries, who were employed prior to March 1, 1970. Primary revenues sources are general property tax allocations in accordance with actuarial calculations, the fire premium tax, and investment income. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-22 AGENCY FUND SPECIAL DEPOSIT FUND The Special Deposit Fund was established for the purpose of holding or retaining cash deposits or other securities pending fulfillment of certain conditions and/or requirements by the depositor. Refunds are made when all obligations have been met and only upon authorization from the transmitting department. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING Basis of Accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurement made regardless of the measurement focus applied: 1. Accrual Both governmental and business-type activities in the Government-wide financial statements and the proprietary and fiduciary fund financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. Substantially all government fund revenues are accrued. Property taxes are billed and collected within the same period in which taxes are levied. Subsidies and grants to proprietary funds, which finance either capital or current operations, are reported as non-operating revenue based on GASB Statement 33. In applying GASB Statement 33 to grant revenues, the provider recognizes liabilities and expenses and the recipient recognizes receivables and revenue when the eligibility requirements, including time requirements, are met. Resources transmitted before the eligibility requirements are met, are reported as advances by the provider and deferred revenue by the recipient. 2. Modified Accrual The governmental funds financial statements are presented on the modified basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual: i.e., both measurable and available. “Available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers all revenue reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt, if any, is recognized when due. D. ASSETS, LIABILITIES, AND FUND EQUITY 1. Cash and Cash Equivalents The City has defined cash and cash equivalents as cash on hand, demand deposits, and all highly liquid investments (including restricted assets) with maturity of three months or less when purchased. These amounts are classified on the balance sheet or in the statement of net assets as cash and cash equivalents or investments in the various funds. The interest on these investments is prorated to the applicable funds. Included in this category are all funds invested in the Local 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-23 Government Investment Pool and Municipal Investor Account. Excluded from this category are cash balances held by Fiscal Agents since the City does not have discretionary use of these funds. 2. Investments (refer to Note 3B.) 3. Receivables and Payables – Amounts owed/payable to/by the City at year-end. Taxes receivable consists of property taxes and related interest and penalties (refer to Note 4). Accrued interest receivable consists of amounts earned on investments, notes, and contracts. Accrued interest payable consists of amounts owed on notes, loans, and contracts. Customer accounts receivable/payable consists of amounts owed from/to private individuals or organizations for goods and services. If the transactions are with another governmental unit, it is accounted for within “due from/to other governments.” Special assessments are recorded when levied and are liens against the property benefited. Special assessments receivable consist of current and delinquent assessments and related interest and penalties. Deferred assessments consist of special assessments not due within one year. Receivables have been reported net of estimated uncollectible accounts. Because property taxes, special assessments, and utility billings are considered liens on property, no estimated uncollectible amounts are established. Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between the governmental activities and business-type activities are reported in the Government-wide financial statements as “internal balances” (Refer to Note 10). Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. In the Government-wide financial statements, and proprietary fund types in the fund financial statements, long-term liabilities are reported in applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Unamortized Premium is the unamortized portion of the excess of bonds proceeds over their face value (excluding accrued interest and issuance costs). Deferred Amount-Refunding is the difference between the carrying amount of redeemed/defeased debt and its reacquisition price. This amount is deferred and amortized over the remaining life of the debt, or the life of the new debt, whichever is shorter. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-24 4. Inventories and prepaid items All City inventories are maintained on a consumption basis of accounting where items are purchased for inventory and charged to the budgetary accounts as the items are consumed. Any material inventories at year-end are included in the balance sheet of the appropriate fund. Inventories are carried at cost on the first in, first out – FIFO basis. Certain payments to vendors reflect costs applicable to future accounting periods and are reported as prepaid items in both the Government-wide and fund statements. 5. Capital Assets and Depreciation (refer to Note 5). 6. Deferred Revenues This account includes amounts recognized as receivables but not revenues in the governmental funds because the revenue recognition criterion has not been met. 7. Custodial Accounts This account reflects the liability for net monetary assets being held by the City in its agency capacity. 8. Compensated Absences The City accrues accumulated unpaid vacation and other leave and associated employee-related costs when earned (or estimated to be earned) by the employee. The non-current portion (the amount estimated to be used in subsequent fiscal years) for governmental funds is maintained separately and represents a reconciling item between the fund and Government-wide presentations. 9. Fund Balance Designations and Reservations In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. The City has the following reserved or designated fund balances. Fund Reserved Purpose of Reservation Amount General Fund Prepaid Postage $ 8,000 Municipal Facilities CIP Interfund loan receivable 1,000,000 TOTAL $ 1,008,000 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-25 Fund Designated Purpose of Designation Amount Totals General Fund Operating cash reserves $6,184,384 General Fund Operating reserves for Community Services 1,060,647 General Fund Operating reserves for Streets 805,407 General Fund Designated for CDBG projects 44,981 General Fund Operating reserves for Library/Museum 202,721 General Fund Designated for Farmers Market 53,632 General fund Designated for Fire Memorial 55,852 General Fund Designated for Fire Wellness 34,153 General Fund Designated for Park Memorial 173,453 $8,615,230 Arterial Street Fund Construction and improvements of streets 552,576 Leased City Properties Fund Leased Property1,239,206 Hotel/Motel Tax Fund Increase Tourism321,093 Paths and Trails Fund Acquisition and maintenance of paths and trails3,243 1% For Art Fund Funding for art projects121,678 Cable Communications Development Fund Promotion and development of cable communications112,369 Springbrook Wetlands Bank Sale of Wetland Credits 456,502 2,806,667 General Governmental Miscellaneous Debt Service Parking Garage Construction673,529 1989 Unlimited General Obligation Bond Redemption Fund Low income housing597,407 1,270,936 Community Development Impact Mitigation Fund Offset impact created by new development1,688,926 Fire Impact Mitigation Fund Offset impact created by new development2,483,647 Transportation Mitigation Fund Offset impact created by new development3,576,947 Municipal Facilities Fund Acquisition and development of City facilities 12,774,100 Capital Improvement Fund City infrastructure 8,491,406 South Lake Washington 202,358 29,217,384 TOTAL $41,910,217 $41,910,217 10. Net Assets (refer to Note 11). 11. Encumbrances An encumbrance system is maintained to account for commitments resulting from approved purchase orders, contracts, and other commitments. Encumbrances remaining at year-end lapse and are canceled. Upon request by the department and approval of the City Council, encumbrances may be re-appropriated in the following year. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-26 E. REVENUES, EXPENDITURES, AND EXPENSES 1. Program Revenues Program revenues include charges for services to customers for goods and services provided, operating grants and contributions, and non-operating grants and contributions within the Government-wide Statement of Activities. Charges for services include business licenses, construction permits, and weapon permits. 2. General Revenues Property taxes, timber taxes, retail taxes, business taxes, excise taxes, and associated penalties and interest, and interest and investment earnings are classified as general revenues within the Government-wide Statement of Activities. 3. Interfund Transfers Permanent reallocation of resources between funds of the reporting entity are classified as interfund transfers. For purposes of the Government-wide Statement of Activities, all interfund transfers between individual governmental funds have been eliminated. 4. Expenditures/Expenses Expenses in the Government-wide Statement of Activities are reported by function as a governmental activity (general government, judicial, security of persons and property, physical environment, transportation, economic environment, culture and recreation, or interest on long-term debt) or business-type activity (waterworks utility, airport, solid waste utility, or golf course). In the fund financial statements, expenditures of governmental funds are classified by: function, debt service principal and interest payments, or purchases of capital items. Proprietary expenditures are classified as operating or non-operating . 5. Operating and Non-operating Revenues and Expenses Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and/or services in connection to the proprietary fund’s principle ongoing operations. It includes all revenue and expenses not related to capital and related financing, non-capital financing, or investing activities. All revenues and expenses not meeting this definition are non-operating revenues and expenses. NOTE 2. COMPLIANCE AND ACCOUNTABILITY The City of Renton budgets its funds under Generally Accepted Accounting Principles (GAAP) at the fund level. Annual appropriated budgets are adopted for governmental funds. Budgets for proprietary funds are “management budgets” and are not legally required to be reported. Included in the Required Supplemental and Combining sections of the CAFR are Schedules of Revenues, Expenditures, and Changes in Fund Balances (Budget to Actual) reporting the Actual Budgetary GAAP Basis verses Actual GAAP Basis of Accounting for all legally adopted budgets. There have been no material violations of finance-related legal or contractual provisions, and there have been no expenditures exceeding legal appropriations in any of the funds of the City. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-27 A. PROCEDURES FOR ADOPTING THE ORIGINAL BUDGET The City of Renton’s budget procedures are mandated by the Chapter 35A.33 of the Revised Code of Washington (RCW). The steps in the budget process are as follows: 1. Prior to November 1, the Mayor submits a proposed budget to the City Council. This budget is based on priorities established by the Council; estimates provided by the City departments during the preceding months; balanced by revenue estimates made by the Mayor. 2. The City Council conducts public hearings on the proposed budget in November and December. 3. The Council makes their adjustments to the proposed budget and adopts, by ordinance, a final balanced budget no later than December 31. 4. The final operating budget, as adopted, is published and distributed within the first four months of the following year. B. AMENDING THE BUDGET The budget, as adopted, constitutes the legal authority for expenditures. Budgets are adopted on the GAAP basis of accounting. Any comparisons between budget and actual revenues and expenditures are reported under the GAAP basis. The annual budget is adopted with budgetary control at the fund level, so expenditures may not legally exceed appropriations at that level of detail. Transfers or revisions within funds are allowed, but only the City Council has the legal authority to increase or decrease a given fund’s annual budget. This is accomplished by City ordinance. The budget was amended twenty-seven times during 2008. Original budgeted inflows as compared to the final budgeted inflows are as follows: IncreaseOriginal Final (Decrease)Budgeted Budgeted BudgetedFundInflows Inflows InflowsGeneral Fund$90,046,254 $94,206,787 $4,160,533Arterial Street Fund585,000 585,000- Leased City Properties Fund1,237,703 1,237,703- Hotel/Motel Tax Fund307,000 307,000- 1% for Art Fund77,505 77,505- Cable Communications Development Fund38,900 38,900- General Government Miscellaneous Debt Service Fund4,269,400 4,269,400- 1989 UGO Bond Redemption Fund555,000 555,000- Community Development Impact Mitigation Fund255,000 255,000- Fire Impact Mitigation Fund540,000 540,000- Transportation Impact Mitigation Fund750,000 750,000- Municipal Facilities Construction Fund3,679,723 6,413,418 2,733,695General Government Capital Investment Program Fund27,235,324 43,565,800 16,330,476South Lake Washington Infrastructure Project Fund- 3,321,211 3,321,211Airport Fund2,708,713 2,708,713- Solid Waste Utility Fund10,097,267 10,097,267- Golf Course Fund2,681,420 2,681,420- Waterworks Utility Fund36,867,722 62,928,116 26,060,394Equipment Repair and Replacement / IS / Facilities Fund11,285,713 10,735,713 (550,000)Insurance Fund13,883,116 13,883,116- TOTAL$207,100,760 $259,157,069 $52,056,3092008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-28 Original budgeted outflows as compared to the final budgeted outflows are as follows: IncreaseOriginal Final (Decrease)Budgeted Budgeted BudgetedFundOutflows Outflows OutflowsGeneral Fund$90,822,783 $96,560,335 $5,737,552Arterial Street Fund585,000 585,000- Leased City Properties Fund1,146,836 1,181,680 34,844Hotel/Motel Tax Fund267,000 347,000 80,0001% for Art Fund77,505 141,698 64,193Cable Communications Development Fund74,778 88,004 13,226General Government Miscellaneous Debt Service Fund4,269,400 4,269,400- 1989 UGO Bond Redemption Fund548,750 548,750- Community Development Impact Mitigation Fund- 111,875 111,875Fire Impact Mitigation Fund300,000 300,000- Transportation Impact Mitigation Fund1,873,229 5,300,000 3,426,771Municipal Facilities Construction Fund13,708,000 19,057,785 5,349,785General Government Capital Investment Program Fund29,928,671 46,428,715 16,500,044South Lake Washington Infrastructure Project Fund50,000 2,296,000 2,246,000Airport Fund3,258,192 4,213,971 955,779Solid Waste Utility Fund11,184,614 11,279,614 95,000Golf Course Fund2,738,431 2,885,721 147,290Waterworks Utility Fund47,496,939 70,885,454 23,388,515Equipment Repair and Replacement / IS / Facilities Fund11,939,283 13,734,966 1,795,683Insurance Fund13,861,706 13,921,706 60,000TOTAL$234,131,117 $294,137,674 $60,006,557 At year-end 2008, the City of Renton noted the Solid Waste Utility Fund exceeded its final adopted budget by approximately $238,433. NOTE 3. DEPOSITS AND INVESTMENTS A. Deposits The City’s deposits and certificates of deposit are insured by the Federal Depository Insurance Corporation (FDIC) and the State of Washington Public Deposit Protection Commission (WPDPC) Act of 1969. B. Investments The City invests excess and inactive funds in accordance with the City’s Investment Policy (updated and approved on June 5, 2006), which complies with the guidelines within Chapter 35A.40.050 RCW. This allows for investment of excess cash and inactive cash, directs that the responsibility for determining available cash for investment is placed upon the department administering the funds, and allows for pooling of the cash provided that the allocation of income is proportionate to the investment of each fund. Currently, the City invests in obligations of the U.S. Government, U.S. agency issues, Certificates of Deposit with Washington State banks and savings and loan institutions, the State 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-29 of Washington Local Government Investment Pool (LGIP), and general obligations of Washington State municipalities. The LGIP, managed by the Washington State Office of the Treasurer, is comparable to a Rule 2a7-pools recognized by the Securities and Exchange Commission. A 2a7-like-pool is an external investment pool that is not registered with the SEC as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940. Rule 2a7 allows SEC-registered mutual funds to use amortized cost rather than market value to report net assets and compute share prices. Investments are shown on the entity-wide Statement of Net Assets at fair value or for 2a7-like pools at amortized cost, which approximates fair value. Investments are reported within Cash and Investments of Governmental Activities and within Cash and Cash Equivalents or Investments of Business-type Activities. C. Deposit and Investment Schedule As of December 31, 2008, the City of Renton had the following investments: Security Type Cost Fair Value Weighted Average Maturity (in years) US Agencies $14,049,463 $14,177,850 0.2544 Certificates of Deposit (within WPDPC) 33,044,882 33,044,882 0.4016 Local Governmental Investment Pool (LGIP) 13,480,100 13,480,100 0.0008 TOTAL $60,574,445 $60,702,832 0.6567 Fireman’s Pension Portion of LGIP excluded from above 454,767 454,767 Total LGIP reported as Cash & Cash Equivalents in Statement of Net Assets 13,934,867 13,934,867 Total Investments $61,029,211 $61,157,599 Reconciliation of Cash and Investments to Statements of Net AssetsPrimary GovernmentStatement of Net AssetsFiduciary FundsStatement of Net AssetsVariance Total Note (plus Cash)Cash 14,038,726$ 1,568,038$ 180$ 15,606,944$ 15,606,944$ Cash Equivalents13,480,100$ 454,767$ -$ 13,934,867$ 13,934,867$ Total Cash27,518,826$ 2,022,805$ 180$ 29,541,811$ 29,541,811$ Investments46,782,579$ -$ -$ 46,782,579$ 14,177,850$ Restricted investments440,153$ -$ -$ 440,153$ 33,044,882$ Total Investments 47,222,732$ -$ -$ 47,222,732$ 47,222,732$ Grand Total74,741,558$ 2,022,805$ 180$ 76,764,543$ 76,764,543$ Fair Value Total:60,702,832$ Items in bold may be found in "Security Types" table, above 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-30 Credit risk. Credit Risk is the risk that an issuer or other counter party to an investment will not fulfill its obligations. All Agency securities in the City’s portfolio are rated “Aaa” by Moody’s Investors Service and “AAA” by Standard & Poor – each rating is the highest possible. Certificates of Deposit are insured by the FDIC up to $250,000 and, additionally, by collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (WPDPC). The Washington State Local Government Investment Pool (LGIP) is a 2a7-like-pool and is operated in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940. Security Type Cost Fair Value Moody's S&P Federal National Mortgage Association $7,032,445 $7,006,580 Aaa AAA Federal Home Loan Bank 2,019,368 2,043,120 Aaa AAA Federal Farm Credit Bank 4,997,650 5,128,150 Aaa AAA Local Governmental Investment Pool (LGIP) 7,738,375 7,738,375 unrated unrated Municipal Investor Account (MIA) 5,741,725 5,741,725 unrated unrated Certificates of Deposit (within WPDPC) 33,044,882 33,044,882 unrated unrated TOTAL $60,574,445 $60,702,832 The City’s Investment Policy directs that the standard of prudence for investment activities shall be the Prudent Investor Standard that states: “Investments shall be made with judgment and care, under circumstances then prevailing, which person of prudence, discretion, and intelligence would use in the management of their own affairs, not for speculation, but for investment purposes, considering the probable safety of their capital as well as the probable income to be derived.” Custodial credit risk. Custodial credit risk for investments is the risk that, in the event of the failure of the counter party to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. All security transactions, including collateral for repurchase agreements, entered into by the City are conducted on a delivery-versus-payment (DVP) basis. Securities held by a third-party custodian are designated by the City’s Finance and Information Services Administrator. Certificates of Deposit are delivered to and held by the Finance Division. Concentration of credit risk. Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The City diversifies its investment instruments to avoid incurring unreasonable risk inherent with the over-investment of instruments and issuers as follows: Maximum’s per Policy Instrument Maximum Issuer Maximum U.S. Treasuries 100% 100% U.S. Agencies 75% 50% Certificates of Deposit (within WPDPC) 50% 25% Local Governmental Investment Pool (LGIP) 50% 50% Commercial Paper 25% 5% 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-31 Interest Rate Risk. Interest rate risk is the risk that changes in interest rates over time, adversely affecting the fair value of an investment. The City’s portfolio is managed within the parameters established by the Investment Policy, which limits the weighted average maturity of the portfolio to five years. Security Type 0-6 months 6 months – 1 year 1-3 years 3+ years Totals US Agencies $ - $4,997,650 $9,051,813 $ - $14,049,463 Certificates of Deposit (within WPDPC) 17,000,000 7,044,882 9,000,000 - 33,044,882 Local Governmental Investment Pool (LGIP) 13,480,100 - - - 13,480,100 TOTAL $30,480,100 $12,042,532 $18,051,813 $ - $60,574,445 NOTE 4. PROPERTY TAXES The King County Finance Director acts as an agent to collect property taxes levied in the county for all taxing authorities. Taxes are levied annually, January 1, on property value listed as of the prior August 31. Assessed values are established by the King County Assessor at 100 percent of fair market value. A revaluation of all property is required every two years; however, King County has the ability to revalue annually. Property taxes levied by the King County Assessor and collected by the King County Finance Director become a lien on the first day of the levy year and may be paid in two equal installments if the total amount exceeds $30. The first half of real property taxes is due on April 30 and the balance is due October 31. Delinquent taxes bear interest at the rate of 12 percent and are subject to additional penalties if not paid as scheduled. No allowance for uncollectible taxes is established because delinquent taxes are considered fully collectible. At year-end, property taxes are recorded as a receivable with the portion not expected to be collected within 60 days offset by deferred revenue. During the year, property tax revenues are recognized when cash is received. The tax rate for general City operations is limited to $3.375 per $1,000 of assessed value (RCW 84.52.043). Of this amount, up to .45 cents per thousand dollars may be designated for contribution to the Firemen’s Pension Fund. If a report by a qualified actuary on the condition of the Firemen’s Pension Fund establishes that this amount (or portion of) is not necessary to maintain the actuarial soundness of the fund, the amount can be used for any other municipal purpose (RCW 41.16.060). The tax rate limit may be reduced for any of the following reasons: 1. The Levy Limit: the levy limit calculation applies to a taxing district’s budget, and not to increases in the assessed value or tax bill of individual properties. Initiative 747 which restricted individual taxing districts from collecting, in any year, more than a one percent increase in their regular, non-voted, levy over the highest levy amount since 1985 was overturned by the courts. However during 2007, the state legislature reinstated this limit with the passage of HB2416. New construction, annexations, and excess levies approved by the 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-32 voters are not included in the levy limit calculation. If the assessed valuation increases by more than one percent due to revaluation, the levy rate will be decreased. 2. The One Percent Constitution Limit: The Washington State Constitution limits the regular (non-voted) combined property tax rate applied to an individual’s property to one percent ($10 per $1,000) on the market valuation. Voters may approve special levies that are added to this figure. If the taxes of all districts exceed this amount, each is proportionately reduced until the total is at or below the one percent limit. 3. The City may voluntarily levy taxes below the legal limit. Special levies approved by the voters are not subject to the above limitations. There is currently no excess levy for General Obligation Bond debt. The City’s regular levy per the King County Assessor’s 2009 Annual Report is $2.36923. NOTE 5. CAPITAL ASSETS AND DEPRECIATION A. GENERAL POLICES Major expenditures for capital assets, including capital leases and major repairs that increase the useful life, are capitalized. The capitalization threshold applied to the City’s assets is $5,000. Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when incurred. All capital assets are valued at historical cost (or estimated cost, where historical cost is not known/or estimated market value for donated assets/or the original historical cost when transferred between proprietary and governmental funds.) The City has acquired certain assets with funding provided by federal financial assistance programs. Depending on the terms of the agreements involved, the federal government could retain an interest in these assets. However, the City has sufficient legal interest to accomplish the purposes for which the assets were acquired, and has included such assets within the applicable statements. The City capitalizes art and historical treasures. Art and historical treasures are expected to be maintained or enhanced over time and thus, are not depreciated. B. GOVERNMENTAL CAPITAL ASSETS Governmental long-lived assets of the City purchased, leased, or constructed are recorded as expenditures in the governmental funds and are capitalized, net of depreciation, in the Government-wide statements. The infrastructure component of GASB 34 for assets acquired after January 1, 1980 was implemented retroactively in 2004. Any gain on the sale of capital assets is recorded in the Statement of Activities as General revenues, Miscellaneous. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-33 C. PROPRIETARY FUND CAPITAL ASSETS Capital assets of proprietary funds are capitalized in their respective statement of net assets, net of depreciation. Any gain on the sale of capital assets is recorded in the Statement of Activities as General revenues, Miscellaneous. D. DEPRECIATION Depreciation on all depreciable assets is provided on the straight-line basis over the following useful lives: Type of Asset Estimated Service Life Buildings and structures, except utility plant 10-50 years Other improvements 10-80 years Utility plant 25-75 years Machinery and equipment 3-40 years Infrastructure 25-50 years Depreciation Expense was charged to governmental and business-type activities as follows: Governmental Activities Amount General government $2,317,396 Judicial - Security of persons and property 755,905 Physical environment 9,588 Transportation 3,663,590 Economic development 47,540 Culture and recreation 1,398,149 Health and human services Fleet 308,607 452,065 TOTAL Governmental Activities Depreciation Expense $8,952,840 Business-type Activities Amount Waterworks $6,709,291 Airport 470,301 Solid waste - Golf course 337,670 TOTAL Business-type Activities Depreciation Expense $7,517,262 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-34 E. SUMMARY OF CHANGES Description Beginning Balance Reclassification Adjustments during System Conversion Additions for Change in Reporting Entity (Annexations) Adjusted Beginning Balance Increases Adjustments Decreases Ending Balance GOVERNMENTAL ACTIVITIES Capital assets not being depreciated: Land and land improvements $ 88,947,494 $ - $ 84,439,578 $173,387,072 $2,172,848 $ - $175,559,920 Construction in progress 41,893,039 - - 41,893,039 18,495,058 30,475,600 29,912,497 TOTAL capital not being depreciated $130,840,533 $ - $ 84,439,578 $215,280,111 $20,667,906 $30,475,600 $205,472,417 Other capital assets: Buildings and structures $74,351,604 ($2,976,098) $ - $71,375,506 $1,222,187 $ - $72,597,693 Other improvements 116,506,866 2,701,281 20,891,389 140,099,536 29,784,300 - 169,883,836 Machinery and equipment 29,106,354 274,817 - 29,381,171 5,687,572 - 35,068,743 TOTAL other capital assets at capitalized cost $219,964,824 $ - $ 20,891,389 $240,856,213 $36,694,059 $ - $277,550,272 Less accumulated depreciation for: Buildings and structures $21,994,722 $121,677 $ - $22,116,399 $1,885,079 $ - $ 24,001,478 Other improvements 37,930,725 -210,867 - 37,719,858 5,095,801 - 42,815,659 Machinery and equipment 16,878,297 89,190 -670 16,966,817 1,971,960 - 18,938,777 TOTAL accumulated depreciation $76,803,744 $ - $ -670 $ 76,803,074 $ 8,952,840 $ - $ 85,755,914 Governmental activities capital assets, net of depreciation $274,001,613 $ - $105,331,637 $379,333,250 $48,409,125 $30,475,600 $397,266,775 BUSINESS-TYPE ACTIVITIES Capital assets not being depreciated: Land and land improvements $ 6,976,321 $ - $ - $ 6,976,321 $ - $ - $ 6,976,321 Construction in progress 5,699,290 - - 5,699,290 6,464,495 2,149,014 10,014,741 TOTAL capital assets not being depreciated $12,675,611 $ - $ - $12,675,611 $ 6,464,465 $2,149,014 $16,991,062 Other capital assets Buildings and structures $15,032,621 $ 1,044,463 $- $ 16,077,084 $ 727,971 $ - $ 16,805,055 Other improvements 280,522,813 -1,044,463 8,151,248 287,629,598 19,456,835 326,795 306,759,638 Machinery and equipment 5,938,255 - - 5,938,255 58,912 6,746 5,990,421 TOTAL other capital assets at capitalized cost $30 1,493,689 $ - $8,151,248 $309,644,937 $20,243,718 $333,541 $329,555,114 Less accumulated depreciation for: Buildings and structures $4,233,610 $18,512 $-40 $4,252,082 $422,533 $ - $4,674,615 Other improvements 73,558,825 -18,512 2,537,173 76,077,486 6,966,944 - 83,044,430 Machinery and equipment 5,059,209 - - 5,059,209 165,622 - 5,224,831 TOTAL accumulated depreciation $82,851,644 $ - $2,537,133 $85,388,777 $7,555,099 $ - $92,943,876 Business-type capital assets, net of depreciation $231,317,656 $ - $5,614,115 $236,931,771 $19,646,576 $2,976,047 $253,602,300 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-35 At the end of 2008, 50 projects comprise the Construction in Progress. Upon completion, the projects will be capitalized in the Government-wide statements in their appropriate categories and in the fund statements for proprietary funds, if applicable. Construction commitments at December 31, 2008, are as follows: Fund – Funding Source Cost to Date Estimated RemainingCost Estimated Total Cost Future Funding Required Waterworks – charges for services $9,031,341 62,210,000 71,241,341 None Airport – charges for services 805,389 11,730,000 12,535,389 None General governmental – taxes, charges for services, grants 69,360,223 190,513,335 259,873,558 None Golf course – charges for services 51,202 2,272,000 2,326,202 None NOTE 6. PENSION PLANS With the exception of firefighters employed prior to March 1, 1970, substantially all City’s full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing multiple-employer public employee defined benefit and defined contribution retirement plans. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA 98504-8380. The City is the administrator of the Firefighter Pension Plan for all firefighters employed prior to March 1, 1970. The Firefighter Pension Plan is included within the City of Renton’s statements as a pension trust fund. There is no separate GAAP-based audited report. A schedule of employer contributions for six years, prepared by Milliman, Consultants and Actuaries, is included in the Required Supplemental Information section. Additional information from the actuarial report prepared for the Firefighter Pension Plan, by Milliman, Consultants and Actuaries, may be obtained by contacting the City of Renton, Finance Division, 1055 South Grady Way, Renton, WA 98057. The following disclosures are made pursuant to GASB Statements No. 27, Accounting for Pensions by State and Local Government Employers and No. 50, Pension Disclosures, an Amendment of GASB Statements No. 25 and No. 27. Public Employees’ Retirement System (PERS) Plans 1, 2, and 3 Plan Description PERS is a cost-sharing multiple-employer retirement system comprised of three separate plans for membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a defined benefit plan with a defined contribution component. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-36 Membership in the system includes: elected officials; state employees; employees of the Supreme, Appeals, and Superior courts (other than judges currently in a judicial retirement system); employees of legislative committees; community and technical colleges, college and university employees not participating in national higher education retirement programs; judges of district and municipal courts; and employees of local governments. PERS participants, who joined the PERS system by September 30, 1977, are Plan 1 members. Those who joined on or after October 1, 1977; and by either, February 28, 2002 for state and higher education employees, or August 31, 2002 for local government employees, are Plan 2 members unless they exercise an option to transfer their membership to Plan 3. PERS participants joining the system on or after March 1, 2002 for state and higher education employees, or September 1, 2002 for local government employees, have the irrevocable option of choosing membership in either PERS Plan 2 or PERS Plan 3. The option must be exercised within 90 days of employment. An employee is reported in Plan 2 until a choice is made. Employees who fail to choose within 90 days default to PERS Plan 3. Notwithstanding, PERS Plan 2 and Plan 3 members may opt out of plan membership if terminally ill, with less than five years to live. PERS defined benefit retirement benefits are financed from a combination of investment earnings and employer and employee contributions. PERS retirement benefit provisions are established in state statute and may be amended only by the State Legislature. PERS Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are eligible for retirement at any age after 30 years of service, or at age 60 with five years of service, or at age 55 with 25 years of service. The annual benefit is two percent of the average final compensation (AFC) per year of service, capped at 60 percent. (The AFC is based on the greatest compensation during any 24 eligible consecutive compensation months.) Plan 1 members who retire from inactive status prior to the age of 65 may receive actuarially reduced benefits. The benefit is actuarially reduced to reflect the choice of a survivor option. A cost-of-living allowance (COLA) is granted at age 66 based on years of service credit times the COLA amount, increased by three percent annually. Plan 1 members may also elect to receive an additional COLA amount that provides an automatic annual adjustment based on the Consumer Price Index. To offset the cost of this annual adjustment, the benefit is reduced. PERS Plan 2 members are vested after completion of five years of eligible service. Plan 2 members may retire at age 65 with five years of service with an allowance of two percent of the AFC per year of service. (The AFC is based on the greatest compensation during any eligible consecutive 60-month period.) Plan 2 members who retire prior to the age of 65 receive reduced benefits. If retirement is at 55 or older with at least 30 years of service, a three percent per year reduction applies; otherwise an actuarial reduction will apply. The benefit is also actuarially reduced to reflect the choice of a survivor option. The benefit is also actuarially reduced to reflect the choice of a survivor option. There is no cap on years of service credit; and a cost-of-living allowance is granted (based on the Consumer Price Index), capped at three percent annually. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-37 Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component, and member contributions finance a defined contribution component. The defined benefit portion provides a benefit calculation at one percent of the AFC per year of service. (The AFC is based on the greatest compensation during any eligible consecutive 60-month period.) Effective June 7, 2006, Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years if twelve months were earned after age 44; or after five service credit years earned in PERS 2 prior to June 1, 2003. Plan 3 members are immediately vested in the defined contribution portion of their plan. Vested Plan 3 members are eligible to retire with full benefits at age 65, or at age 55 with 10 years of service. Plan 3 members who retire prior to age 65 receive reduced benefits. If retirement is at age 55 or older with at least 30 years of service, a three percent per year reduction applies; otherwise an actuarial reduction will apply. The benefit is also actuarially reduced to reflect the choice of a survivor option. There is no cap on years of service credit; and Plan 3 provides the same cost-of-living allowance as Plan 2. The defined contribution portion can be distributed in accordance with an option selected by the member, either as a lump sum or pursuant to other options authorized by the Employee Retirement Benefits Board. Judicial Benefit Multiplier Beginning January 1, 2007 through December 31, 2007 judicial members of PERS were given the choice to participate in the Judicial Benefit Program (JBM). Justices and judges in PERS 1 and 2 may make a one-time irrevocable election to pay increased contributions that would fund a retirement benefit with a 3.5% multiplier. The benefit would be capped at 75% of AFC. Judges in PERS Plan 3 can elect a 1.6% of pay per year of service benefit, capped at 37.5% of average compensation. Members who choose to participate in JBM will accrue service credit at a higher multiplier beginning with the date of their election, be subject to the benefit cap of 75% of AFC, pay higher contributions, stop contributing to the Judicial Retirement Account (JRA), and be given the option to increase the multiplier on past judicial service. Members who do not choose to participate will: continue to accrue service credit at the regular multiplier; continue to participate in JRA, if applicable; never be a participant in the JBM Program; and continue to pay contributions at the regular PERS rate. Newly elected or appointed justices and judges who chose to become PERS members on or after January 1, 2007, or who have not previously opted into PERS membership, were required to participate in the JBM Program. Members required into the JBM program would: return to prior PERS Plan if membership had previously been established; be mandated into Plan 2 and not have a Plan 3 transfer choice, if a new PERS member; accrue the higher multiplier for all judicial service; not contribute to JRA; and not have the option to increase the multiplier for past judicial service. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-38 Membership in PERS consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2007: Retirees and beneficiaries receiving benefits 71,244 Terminated plan members entitled to but not yet receiving benefits 26,583 Active plan members vested 105,447 Active plan members non-vested 52,575 TOTAL 255,849 There are 2,310 participating employers in PERS as of June 30, 2008. Funding Policy Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates, Plan 2 employer and employee contributions rates, and Plan 3 employer contribution rates. Employee contribution rates for Plan 1 are established by statute at 6 percent for state agencies and local government unit employees, and 7.5 percent for state government elected officials. The employer and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. All employers are required to contribute at the level established by the Legislature. Under PERS 3, employer contributions finance the defined benefit portion of the plan, and member contributions finance the defined contribution portion. The Employee Retirement Benefits Board sets Plan 3 employee contribution rates. Six rate options are available ranging from 5 to 15 percent; two of the options are graduated rates dependent on the employee’s age. As a result of the implementation of the Judicial Benefit Multiplier Program in January 2007, a second tier of employer and employee rates was developed to fund, along with investment earnings, the increased retirement benefits of those justices and judges that participate in the program. The methods used to determine the contribution requirements are established under state statute in accordance with Chapters 41.40 and 41.45 RCW. The required contribution rates expressed as a percentage of current-year covered payroll, as of December 31, 2008, were as follows: Members not participating in JBM: Contributor PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer* 8.31%** 8.31%** 8.31*** Employee 6.00%**** 5.45%**** ***** * The employer rates include the employer administrative expense fee currently at 0.16%. ** The employer rate for state elected officials is 12.39% for Plan 1 and 8.31% for Plan 2 & 3. *** Plan 3 defined benefit portion only. **** The employee rate for state elected officials in 7.5% for Plan 1 and 5.45% for Plan 2. ***** Variable from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-39 Members participating in JBM: Contributor PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer-State Agency* 10.81% 10.81% 10.81%** Employer-Local Govt.* 8.31% 8.31% 8.31** Employee-State Agency 9.76% 11.13% 7.50%*** Employee-Local Govt. 12.26% 13.63% 7.50%*** * The employer rates include the employer administrative expense fee currently at .16%. ** Plan 3 defined benefit portion only. *** Minimum rate. Both the City and the employees made the required contributions. The City’s required contributions for years ended December 31, were as follows: Year PERS Plan 1 PERS Plan 2 PERS Plan 3 2008 $75,956 $1,692,603 $287,302 2007 $85,411 $1,229,641 $196,584 2006 $50,609 $616,903 $92,216 Law Enforcement Officers’ and Firefighters’ Retirement System (LEOFF) Plans 1 and 2 Plan Description LEOFF is a cost-sharing multiple-employer retirement system comprised of two separate defined benefit plans. LEOFF participants who joined the system by September 30, 1977, are Plan 1 members. Those who joined on or after October 1, 1977, are Plan 2 members. Membership in the system includes all full-time, fully compensated; local law enforcement officers, firefighters and as of July 24, 2005, those emergency medical technicians who were given the option and chose LEOFF Plan 2 membership. LEOFF membership is comprised primarily of non-state employees, with the Department of Fish and Wildlife enforcement officers, who were first included prospectively effective July 27, 2003, being an exception. Effective July 1, 2003, the LEOFF Plan 2 Retirement Board was established by Initiative 790 to provide governance of LEOFF Plan 2. The Board’s duties include adopting contribution rates and recommending policy changes to the Legislature for the LEOFF Plan 2 retirement plan. LEOFF defined benefits retirement benefits are financed from a combination of investment earnings, employer and employee contributions, and a special funding situation in which the state pays through state legislative appropriations. LEOFF retirement benefit provisions are established in state statute and may be amended by the State Legislature. LEOFF Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are eligible for retirement with five years of service at the age of 50. The benefit per year of service calculated as a percent of final average salary (FAS) is as follows: Term of Service Percent of FinalAverage Salary 20 or more years 2.0% 10 but less than 20 years 1.5% 5 but less than 10 years 1.0% 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-40 The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months’ salary within the last ten years of service. A cost-of-living allowance is granted (indexed to the Consumer Price Index). LEOFF Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members may retire at the age of 50 with 20 years of service, or at age 53 with five years of service, with an allowance of two percent of the FAS per year of service. The FAS is based on the highest consecutive 60 months. Plan 2 members who prior to age 53 receive reduced benefits. Benefits are actuarially reduced for each year that the benefit commences prior to age 53 and to reflect the choice of a survivor option. If the member has at least 20 years of service credit and is age 50, the reduction is three percent for each year prior to age 53. There is no cap on years of service credit; and a cost-of-living allowance is granted (indexed to the Consumer Price Index), capped at three percent annually. Membership in LEOFF consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2007: Retirees and beneficiaries receiving benefits 9,085 Terminated plan members entitled to but not yet receiving benefits 633 Active plan members vested 12,904 Active plan members non-vested 3,708 TOTAL 26,330 There are 461 participating employers in LEOFF as of June 30, 2008. Funding Policy Starting on July 1, 2000, LEOFF Plan 1 employers and employees will contribute zero percent as long as the plan remains fully funded. Employer and employee contribution rates are developed by the Office of the State Actuary to fully fund the plan. LEOFF Plan 2 employer and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. All employers are required to contribute at the level required by state law. The Legislature, by means of a special funding arrangement, appropriated money from the state General Fund to supplement the current service liability and fund the prior service cost of LEOFF Plan 2 in accordance with the requirements of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. However, this special funding situation is not mandated by the state constitution and this funding requirement could be returned to the employers by a change in statute. The required contribution rates expressed as a percentage of current-year covered payroll, as of December 31, 2008, were as follows: Contributor LEOFF Plan 1 LEOFF Plan 2 Employer* .16% 5.46%** Employee .00% 8.83% State N/A 3.53% * The employer rates include the employer administration expense fee currently at .16%. ** The employer rate for ports and universities is 8.99%. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-41 Both the City and the employees made the required contributions. The City’s required contributions for years ended December 31, were as follows: Year LEOFF Plan 1 LEOFF Plan 2 2008 $1,348 $1,200,963 2007 $1,676 $891,932 2006 $2,050 $716,583 Public Safety Employee’s Retirement System (PSERS) Plan 2 Plan Description PSERS is a cost-sharing multiple-employer retirement system comprised of a single defined benefit plan, PSERS Plan 2. PSERS was created by the 2004 legislature and became effective July 1, 2006. PSERS Plan 2 membership includes full-time employees of a covered employer on or before July 1, 2006, who met at least one of the PSERS eligibility criteria, and elected membership during the election period of July 1, 2006 to September 30, 2006; and those full-time employees, hired on or after July 1, 2006 by a covered employer, that meet at least one of the PSERS eligibility criteria. A “covered employer” is one that participates in PSERS. Covered employers include: State of Washington agencies: Department of Corrections, Department of Natural Resources, Parks and Recreation Commission, Gambling Commission, Washington State Patrol, Liquor Control Board; Washington state counties; and Washington state cities except for Seattle, Tacoma, and Spokane. To be eligible for PSERS, an employee must work on a full-time basis and: • have completed a certified criminal justice training course with authority to arrest, conduct criminal investigations, enforce that criminal laws of Washington, and carry a firearm as part of the job: or • have primary responsibility to ensure the custody and security or incarcerated or probationary individuals; or • function as a limited authority Washington peace officer, as defined in RCW 10.93.020; or • have primary responsibility to supervise eligible members who meet the above criteria. PSERS defined benefit retirement benefits are financed from a combination of investment earnings and employer and employee contributions. PSERS retirement benefit provisions are established in state statue and may be amended only by the State Legislature. Plan 2 members are vested after the completion of five years of eligible service. PSERS Plan 2 members may retire at the age of 65 with five years of service, or at the age of 60 with at least ten years of PSERS service credit, with an allowance of two percent of the average final compensation (AFC) per year of service. The AFC is the monthly average of the member’s 60 consecutive highest-paid service credit months, excluding any severance pay such as lump-sum payments for deferred sick leave, vacation, or annual leave. Plan 2 retirees prior to the age of 60 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-42 receive reduced benefits. If retirement is at age 53 or older with at least 20 years of service, a three percent per year reduction for each year between the age at retirement and age 60 applies. There is no cap on years of service credit; and a cost-of-living allowance is granted (based on the Consumer Price Index), capped at three percent annually. Membership is PSERS consisted of the following as of the latest actuarial valuation date for the plan of June 30, 2007: Retirees and beneficiaries receiving benefits 0 Terminated plan members entitled to but not yet receiving benefits 0 Active plan members vested 0 Active plan members non-vested 2,755 TOTAL 2,755 There are 71 participating employers in PSERS as of June 30, 2008. Funding Policy Each biennium, the state Pension Funding Council adopts PSERS Plan 2 employer and employee contribution rates. The employer and employee contribution rates for Plan 2 are developed by the Office of the State Actuary to fully fund Plan 2. All employers are required to contribute at the level established by the Legislature. The methods used to determine the contribution requirements are established under state statute in accordance with Chapters 41.37 and 41.45 RCW. The required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2008 were as follows: Contributor PSERS Plan 2 Employer* 9.43% Employee 6.57% * The employer rates include the employer administrative expense fee currently at .16%. Both the City and the employees made the required contributions. The City’s required contributions for years ended December 31, were as follows: Year PSERS Plan 2 2008 $63,747 2007 $41,424 2006 $8,006 Firefighter’s Pension Plan Description The Firefighter’s Pension Plan is a closed, single-employer, defined benefit pension plan established in accordance with RCW 41.18 and Renton Municipal Code. This plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. This system was established for firefighters employed prior to 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-43 March 1, 1970, when the LEOFF retirement system was established. The retirement benefits vest after 20 years of service. Members may retire after 25 years of service regardless of age, and after age 50 with 20 or more years of service. At December 31, 2008, there were 40 members in the System: Retirees and beneficiaries receiving benefits 38 Retirees and beneficiaries currently receiving full retirement through LEOFF 2 Active plan members vested 0 Active plan members non-vested 0 TOTAL 40 Funding Policy Under state law, the Firefighter’s Pension Plan is provided an allocation of all monies received by the state from taxes on fire insurance premiums; interest earnings; member contributions made prior to the inception of LEOFF; and City contributions required to meet projected future pension obligations. Costs of administering the Firefighter’s Pension Plan are paid by the Plan. For 2008, this cost was $10,321. An actuarial valuation is done every two years and was completed as of January 1, 2009. The Actuarial Valuation of Firefighters’ Pension Fund table is reported in the Required Supplemental Information section, and a recap of the Schedule of Funding Progress for the last five valuations is as follows: Valuation Date January 1 Actuarial Value of Assets (rounded to thousands) Actuarial Accrued Liabilities Entry Age (rounded to thousands) Unfunded Actuarial Accrued Liabilities (UAAL) (rounded to Funded Ratio Covered Payroll (rounded to thousands) UAAL as a % of Covered Payroll 1997 $5,238 $6,444 $1,206 81% $260 464% 2001 7,067 6,780 (287) 104% - - 2003 9,189 6,472 (2,717) 142% - - 2005 7,777 6,254 *(1,523) 124% - - 2007 7,847 6,364 (1,483) 123% - - * A $29 decrease in the actuarial accrued liabilities was made after the City’s financial report was published and before the valuation was released. Significant actuarial assumptions used in the January 1, 2009, valuation include: Valuation date: January 1, 2009 Actuarial cost method: entry age normal Amortization method: 30-year, closed as of January 1, 2000 Remaining amortization period: 21 years Asset valuation method: fair value Actuarial assumptions: 1) investment rate of return – 4%; 2) projected salary increases – 3.5%; 3) inflation – 2.5%; and, 4) cost-of-living adjustments – based upon salary increase assumption for FPF benefits, inflation assumption for LEOFF benefits. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-44 The Annual Required Contribution (ARC) was computed using the Entry Age Normal Cost Method. Under this method the projected benefits are allocated on a level basis as a percentage of salary over the earnings of each individual between entry age and assumed exit age. The amount allocated to each year is called the Normal Cost and the portion of the Actuarial Present Value of all benefits not provided for by future Normal Cost payments is called the Actuarial Accrued Liability. Since all members have already retired, the amount of the Normal Cost is zero. The Unfunded Actuarial Accrued Liability (UAAL) is the Actuarial Accrued Liability minus the actuarial value of the Fund’s assets. The following Annual Pension Cost and Net Pension Obligation table presents the annual Normal Cost and the ARC as of January 1, 2009, assuming the UAAL is amortized over a closed 30-year period beginning January 1, 2000. Annual required contribution (ARC) Fiscal YearEnding 12/31/2006 Fiscal YearEnding 12/31/2007 Fiscal Year Ending 12/31/2008 Annual normal cost (BOY) $ - $ - $ - Amortization of UAAL (BOY) (107,622) (104,731) (104,731) Interest to end of year (EOY)* (5,919) (5,237) (5,237) ARC at EOY ($113,541) ($109,968) ($109,968) Interest on NPO ($33,604) ($38,658) ($46,349) Adjustment to ARC (44,035) (54,591) (67,070) Annual pension cost (APC) ($103,110) ($94,035) ($89,247) Employer contributions** $59,068 $59,777 $66,055 Change in NPO (162,178) (153,812) (155,302) NPO at BOY prior year ($610,988) ($773,166) ($926,978) NPO at EOY ($773,166) ($926,978) ($1,082,280) * Assumed interest rate: 5.5% in 2006 and 5.0% in 2007and 2008. ** Employer contributions are total contributions to the fund net of disbursements for medical and administrative expenses. The Annual Development of Pension Cost is recapped as follows: Fiscal Year Ending 12/31 ARC @ EOY Interest onNPO ARC Adjustment Annual Pension Cost (APC) Total Employer Contributions Changein NPO 2003 $ - $ (7,088) $ (8,433) $ 1,347 $ 63,088 $(61,741)2004 (205,680) (10,790) (13,047) (203,423) 63,151 (266,574) 2005 (113,541) (24,553) (31,545) (106,549) 58,029 (164,578) 2006 (113,541) (33,604) (44,035) (103,110) 59,068 (162,178) 2007 (109,968) (38,658) (54,591) (94,035) 59,777 (153,812) 2008 (109,968) (46,349) (67,070) (89,247) 66,055 (155,302) Fiscal Year Ending December 31 NPO Balance (Gain)/ Loss Amort. Factor** Amort. of (Gain)/ LossEnding Balance 2003 $(179,836) $ (63,088) 14.0032 $ (8,433) $ (179,836) 2004 (446,410) (268,831) 13.7834 (13,047) (446,410) 2005 (610,988) (171,570) 14.1517 (31,545) (610,988) 2006 (733,166) (172,609) 13.8750 (44,035) (773,166) 2007 (926,978) (169,745) 14.1630 (54,591) (926,978) 2008 (1,082,280 (176,023) 13.8212 (67,070) (1,082,280) 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-45 Three year trend information is recapped as follows: Fiscal Year Ending December 31 Annual Pension Cost (APC) Contribution as a Percentage of APC Net Pension Obligation (NPO) 2006 $ (103,110) N/A $ (773,166) 2007 (94,035) N/A (926,978) 2008 (89,247) N/A (1,082,280) Employees are not required to make contributions. The contributions to the System for 2008 include $85,949 from fire insurance premiums and $1,218,067 of investment income. Benefits and refunds of the defined benefit pension plan are recognized when due and payable in accordance with the terms of the plan. For 2008, $512,263 was paid for benefit payments and $9,573 for medical payments. The Net Pension Obligation moves from ($926,978) to ($1,082,280) and is included, as a non-current asset, in the City of Renton’s Governmental-wide Statement of Net Assets. NOTE 7. OTHER POST EMPLOYMENT BENEFITS Plan Description As required by the Revised Code of Washington (RCW) Chapter 41.26, the City provides lifetime medical care for members of the Law Enforcement Officers and Firefighters (LEOFF) retirement system hired before October 1, 1977 under a defined benefit healthcare plan administered by the City. The City is required to pay all healthcare expenses incurred by LEOFF 1 retirees. The City’s cost is reduced by any amounts retirees receive from Medicare or other health plans. LEOFF 1 retirees may request reimbursement for healthcare expenses that are not paid by their primary healthcare plan. The City pays the Medicare Part B premium. In addition, LEOFF 1 retirees are eligible for long term care, dental, and vision benefits and coverage continues throughout the lifetime of the retiree. Dependents do not receive LEOFF 1 postemployment healthcare benefits. Under the authorization of the LEOFF Disability Board, direct payment is made for other retiree medical expenses not covered by standard medical plan benefit provisions. Coverage continues throughout the lifetime of the retiree. Financial reporting for the LEOFF retiree healthcare plan is included in the City’s Comprehensive Annual Financial Report. Membership Membership in this program includes Plan 1 participants of LEOFF who joined the system by September 30, 1977. As of December 31, 2008, 103 retirees met those eligibility requirements. This is considered a closed group with no new members, with the exception of 3 active employees who have not retired. Funding Policy Funding for LEOFF retiree healthcare costs is provided entirely by the City as required by RCW. The City’s funding policy is based upon pay-as-you-go financing requirements. Retirees are not required to contribute any portion of the cost coverage. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-46 Annual OPEB Cost and Net OPEB Obligation The City’s annual other postemployment benefit (OPEB) cost is calculated based upon the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities over a period of 30 years as of January 1, 2008. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB. Fiscal Year Ending 12/31/2008 Determination of Required Annual Contribution: Normal Cost $154,545 Amortization of UAAL* $1,869,523 Annual Required Contribution (ARC) $2,024,068 Determination of Net OPEB Obligation: Annual Required Contribution (ARC) $2,024,068 Interest on net OPEB Obligation - Adjustment to ARC - Annual OPEB Cost $2,024,068 Contributions Made ($1,266,192) Increase in net OPEB Obligation $757,876 Net OPEB Obligation – Beginning of Year $ - Net OPEB Obligation – End of Year $757,876 *Unfunded Actuarial Accrued Liability (UAAL) The net OPEB obligation of $757,876 is included as a noncurrent liability on the Statement of Net Assets. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2008 were as follows: Annual OPEB Cost Employer Contribution Percentage of OPEB Cost Contributed Net OPEB Obligation 2008 $2,024,068 $1,266,192 59.85% $757,876 Funded Status and Funding Progress As of January 1, 2008, the most recent actuarial valuation date, the plan was 0% funded. The accrued liability for benefits was $32,327,794 and the actuarial value of the assets was $0 resulting in a UAAL of $32,327,794. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-47 Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation. Employer contributions are financed on a pay-as-you-go basis. During the fiscal year ended December 31, 2008, expenditures of $1,266,192 were recognized for post-retirement health care. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents the results of the OPEB valuations as of December 31, 2008. In future years, the schedule of funding progress will provide multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial liabilities for benefits Actuarial Methods and Assumptions Nicolay Consulting prepared for the City an actuarial valuation report dated January 1, 2008. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the long-term perspective of the calculations. The actuarial valuation report was prepared using the projected unit credit method. The projected unit credit method is an actuarial cost method under which the projected benefits of each individual included in an Actuarial Valuation are separately calculated and allocated to each year of service by a consistent formula. The actuarial assumptions used included a 4.00% discount rate, which is based upon the long-term investment yield on the investments that are expected to be used to finance payment of benefits. Additionally, the following health care trend rate assumptions were used: Expected Annual Increase in Health Care Cost Medical Medicare -Part B Nursing Home Dental and Vision Initial 8.50% 0.00% 4.00% 2.00% Ultimate 5.50% 5.50% 4.00% 2.00% The UAAL is being amortized based on a level dollar amortization over a closed 30 year-period at the assumed discount rate. The remaining amortization period at December 31, 2008 was 29 years. NOTE 8. CONTINGENCIES Litigation The City has recorded in its financial statements all material liabilities, including an estimate for situations that are not yet resolved but where, based on available information, management believes it is probable that the City will have to make payment. In the opinion of management, the City’s insurance policies and/or self-insurance reserves are adequate to pay all known or pending claims. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-48 Contingencies under Grant Provisions The City participates in a number of federal and state assisted programs. These grants are subject to audit by the grantors of their representatives. Such audits could result in requests for reimbursement to grantor agencies for expenditures disallowed under the terms of the grants. The City’s management believes that such disallowances, if any, will be immaterial. Bond Indentures The City is in compliance with all significant bond indenture and restrictions, with the following exception. Golf Course net revenues in 2007 and 2008 were severely impacted by inclement weather and general economic conditions, causing it to be temporarily out of compliance with the bond debt service coverage covenant of 125% of annual debt service at the end of 2007 and 2008. The City continues to review rates and the business plan and strategy that aims to adjust and maintain coverage. Construction Commitments Refer to Note 5. NOTE 9. RISK MANAGEMENT The City of Renton is exposed to various risks of loss related to tort; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City of Renton protects itself against unforeseen losses by utilizing a three-pronged risk management approach. First, the City self-funds first level losses through its Insurance Fund. Second, excess insurance is purchased to cover medium and large losses. Third, the City reserves the right to utilize the provisions of Chapter 35A.31.060 RCW to fund catastrophic or uninsured losses. This State statute allows cities to levy a non-voted property tax increase to pay for uninsured claims. An analysis of the self-insurance retention levels, limits of insurance, and claims administrator for the major types of coverage are as follows: 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-49 Type of Coverage Risk Retention Occurrence Claims Administrator Aggregate Amount Carrier Property – Expires 01/01/2010 $ 25,000 WA Cities Ins Authority $500,000,000 (per occurrence subject to annual aggregate & sub-limits) WA Cities Ins Authority Liability – Expires 01/01/2010 250,000 WA Cities Ins Authority 20,000,000 (per occurrence) WA Cities Ins Authority Auto Liability – Expires 01/01/2010 25,000 WA Cities Ins Authority ACV or Replacement Cost; per Occurrence WA Cities Ins Authority Public Officials (E&O) – Expires 01/01/2010 250,000 WA Cities Ins Authority 15,000,000 WA Cities Ins Authority Jail (Police Professional Liability) - Expires 01/01/2010 10,000 WA Cities Ins Authority 30,000,000 WA Cities Ins Authority Equipment breakdown – Expires 1/1/2010 5,000* Arthur J. Gallagher 50,000,000 Zurich Crime – Expires 12/31/2009 10,000 WA Cities Ins Authority 2,500,000 National Union Fire Airport liability – Expires 1/1/2010 - Arthur J. Gallagher 100,000,000 Ace Property & Casualty Underground storage tank – Expires 1/1/2010 25,000 Arthur J. Gallagher 2,000,000 Commerce & Industry Worker’s comp – Expires 1/1/2010 350,000 Berkley Risk 1,000,000 Midwest Casualty Employee health – Expires 1/1/2009 150,000 HMA, Inc N/A SunLife * There is a 4-hour utility interruption clause, prior to the deductible becoming applicable. For policy term January 1, 2009 to January 1, 2010, there were no reductions in insurance coverage and an increase in premiums; however, settlements for the last three years have not exceeded insurance coverage. The City of Renton is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self-insuring, and/or jointly contracting for risk management services. WCIA has a total of 126 members. New members initially contract for a three-year term and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, public officials’ errors or omissions, stop gap, and employee benefits liability. Limits are $3 million per occurrence self insured layer, and $12 million per occurrence in the re-insured excess layer. The excess layer is insured by the purchase of reinsurance and 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-50 insurance and is subject to aggregate limits. Total limits are $15 million per occurrence subject to aggregate sublimits in the excess layers. The Board of Directors determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and machinery are purchased on a group basis. Various deductibles apply by type of coverage. Property insurance and auto physical damage are self-funded from the members’ deductible to $500,000 for all perils other than flood and earthquake, and insured above that amount by the purchase of reinsurance. In-house services include risk management consultation, loss control field services, claims and litigation administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance brokerage, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal agreement, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA’s assets in financial instruments, which comply with all State guidelines. These revenues directly offset portions of the membership’s annual assessment. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day-to-day operations of WCIA. The City's Risk Management Program is administered by the Human Resources and Risk Management Administrator, with claims being processed by the independent claims administrators noted above. As of December 31, 2008, the City had accrued the following amounts for outstanding claims: Coverage Total Claims Payable 12/31/2008 Property & liability $591,502 Worker’s compensation 590,708 Employee health 1,722,915 TOTAL $2,904,675 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-51 2008 Property & Liability Worker’s Compensation Employee Health Totals IBNR claims at beginning of the year $792,487 $794,043 $1,399,425 $2,985,955 Current year and changes in estimates 764,281 (139,458) 9,275,803 9,900,626 Claims payments (965,716) (63,877) (8,952,313) (9,981,906) IBNR claims at end of the year $591,052 $590,708 $1,722,915 $2,904,675 2007 Property & Liability Worker’s Compensation Employee Health Totals IBNR claims at beginning of the year $537,693 $765,089 $1,325,000 $2,627,782 Current year and changes in estimates 1,662,228 863,439 1,739,459 4,265,126 Claims payments (1,407,434) (834,485) (1,665,034) (3,906,953) IBNR claims at end of the year $792,487 $794,043 $1,399,425 $2,985,955 NOTE 10. INTERFUND TRANSACTIONS Interfund transactions are classified as follows: 1. Services Provided – Transactions that would be treated as revenues, expenditures, or expenses if they involve external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City of Renton. 2. Transfers – Transactions to support the operations of other funds are recorded as “Transfers” and classified with “Other Financing Sources or Uses” in the fund statements. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the Government-wide financial statements. 3. Contributions – Contributions to the capital of enterprise or internal service funds, transfers of capital assets between proprietary and governmental funds, transfers to establish or reduce working capital in other funds, and transfers remaining balances when funds are closed are classified non-operating revenue. 4. Loans/Advances – Loans between funds are classified as interfund loans receivable and payable or as advances to and from other funds in the fund statements. Interfund loans do not affect total fund equity, but advances to other funds are offset by a reservation of fund equity. Loans and advances are subject to elimination upon consolidation. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-52 As of December 31, 2008, outstanding interfund balances (resulting from various interfund transactions) were as follows: Fund Receivables Due From Other Funds Payables Due To Other Funds Purpose General fund $ 922 $184,244 Reclassification of expenditures between funds after 12/31/2008 Reclassification of revenues between funds after 12/31/2008 Municipal Facilities CIP 48,189 Reclassification of revenues between funds after 12/31/2008 1989 Unlimit GO Bonds Sr Housing 94,249 Reclassification of revenues between funds after 12/31/2008 Airport Operations 5,269Reclassification of expenditures between funds after 12/31/2008 Insurance 922Reclassification of expenditures between funds after 12/31/2008 Special Hotel/ Motel Tax 36,537Reclassification of expenditures between funds after 12/31/2008 TOTAL* $185,166$185,166 *Difference is the result of rounding individual fund numbers in the aggregate. The following is a recap of interfund loans: Fund Interfund loans Receivable Interfund loans Payable Purpose Municipal facilities CIP $1,000,000 $ - Interfund Loan to South lake WA infrastructure fund South Lake WA infrastructure - 1,000,000 Interfund Loan from Municipal facilities CIP fund TOTAL* $1,000,000 $ 1,000,000 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-53 Transfers for 2008 were as follows: TransferInGeneral$317,000 Contribution for Capital Equipment$579,503 Contribution for Capital Improvements and Establish Housing Opportunity FundArterial street Contribution for CIP Overlay Projects$585,000 Contribution for Capital ImprovementsLeased City Properties$386,000 Contribution for Capital ImprovementsGeneral debt$300,000 Contribution from Fire Impact for Debt PaymentsFire Impact Mitigation$300,000 Contribution for Fire Impact Debt PaymentsTransportation Impact Mitigation$2,223,229 Contribution to Transportation CIPTransportation CIP$2,868,229 Contribution for Capital Improvements$75,000 Contribution to Municipal CIP Fund for Capital ImprovementsCommunity Development Impact Mitigation$111,875 Municipal CIP$685,378 Contribution for Capital ImprovementsHousing Opportunity$200,000 Contribution from General Fund to Establish FundWaterworks$110,000 Contribution for Capital EquipmentTOTAL$4,370,607 $4,370,607 FundTransfer OutPurpose NOTE 11. NET ASSETS The Government-wide and business type fund financial statements utilize a net asset presentation. Net assets are the difference between assets and liabilities. Net assets are categorized as investments in capital assets (net of related debt), restricted, and unrestricted. A. Investment in Capital Assets (net of related debt) is intended to reflect the portion of net assets that are associated with non-liquid, capital assets less outstanding capital asset related debt. The net related debt is the debt less the outstanding liquid assets and any associated unamortized costs. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-54 B. Restricted assets are liquid assets (generated from revenues and not bond proceeds), which have third party (statutory, bond covenant, or granting agency) limitations on their use. The City would typically use restricted assets first, as appropriated opportunities arise, but reserve the right to selectively defer the use thereof to a future project or replacement equipment acquisition. Restricted assets are as follows: FundPurposeAmountHotel / Motel TaxTourism$321,093 Arterial StreetRoad construction552,576Cable CommunicationsCable development112,369Paths and TrailsAcquire and maintain city trails3,243Springbrook Wetlands Bank Accounting for wetlands management456,5021% for ArtFunding for art projects121,678Leased City PropertiesLeased to outside source1,239,206Community Development Impact Mitigation for park development1,688,926Municipal FacilitiesCapital projects13,774,100Capital Projects General governmental capital projects8,491,406South Lake WashingtonConstruction infrastructure for SLW202,358Fire ImpactMitigation for fire improvements2,483,647Transportation ImpactMitigation for transportation projects3,576,947WaterworksDebt service reserves3,730,167Golf CourseDebt service reserves441,358TOTAL$37,195,576 Unrestricted assets represent unrestricted liquid assets. The City’s management may have plans or tentative commitments to expend resources certain purposes in future periods. Further legal action will be required to authorize the actual expenses or expenditures. NOTE 12. PRIOR YEAR RESTATEMENTS In 2008, the City of Renton annexed several communities identified as Potential Annexation Areas (PAA), transferring capital assets to the City from King County. The annexations resulted in a restatement of $105,330,297 in the General Governmental Funds and $5,613,984 in the Waterworks Utility Fund. In addition, there was restatement of $3,589,557 within the Waterworks Utility Fund for surface water infrastructure located at The Landing. NOTE 13. SHORT TERM DEBT The City of Renton’s short-term debt consists of one interfund loan from the Municipal Facilities CIP Fund to the South Lake Washington Infrastructure Fund, as a means to temporarily fund the project prior to the receipt of contractual project revenues. This loan of an amount no greater than $2,000,000 is payable prior to September 15, 2009, and has an annual interest rate equal to the current rate of interest as established by the State of Washington Investment Pool at the time that each loan advance is made. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-55 Short-term activities for the year ended December 31, 2008 was as follows: Debt Beginning Balance 01/01/2007 Issued Redeemed Ending Balance 12/31/2007 $2,000,000 $975,000 $1,391,000 $1,366,000 $1,000,000 NOTE 14. LONG TERM DEBT The City of Renton's long-term debt consists of General Obligation Debt, repaid mainly from general governmental revenue sources and Proprietary Debt, repaid from proprietary revenues. These debts are accounted for in the following areas: 1) The outstanding general obligation debt is reported in the government-wide financial statements; 2) The repayment, or debt service of the same, is recorded in the Debt Service Funds; and, 3) The proprietary debt liability and repayment of the same are reported in individual Proprietary Funds. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-56 Outstanding debt issues as of December 31, 2008, are as follows: Type of Debt Interest Rates Issued Date Maturity Date Original Issued Amount GOVERNMENTAL DEBT: General Obligation Bonds: Limited 1997 GO Bonds 5.55%-5.75% 05/01/97 12/01/17 $14,697,744 2000 GO Valley Comm Bonds 4.30%-5.38% 09/15/00 12/01/15 2,551,600 2001 GO Refunding Bonds 2.10%-5.25% 11/01/01 12/01/17 13,505,000 2001 GO Bonds 5.0%-5.25% 11/01/01 12/01/21 6,000,000 2002 GO Bonds 2.50%-5.00% 7/15/02 12/01/22 3,895,000 2006 GO Bonds 4.25%-5.00% 8/08/06 12/01/28 17,980,000 SUBTOTAL LIMITED GO $58,629,344 Unlimited 1993 GO Refunding Bonds - Senior Housing 5.20%-6.10% 09/01/93 02/01/09 4,270,000 SUBTOTAL UNLIMITED GO 4,270,000 TOTAL GENERAL OBLIGATION BONDS $62,899,344 TOTAL GOVERNMENTAL-TYPE DEBT ISSUANCE $62,899,344 BUSINESS-TYPE DEBT: Revenue Bonds: 1998 Water/Sewer Refunding 4.46% 03/01/98 06/01/13 $6,120,000 1999 Golf System Refunding 4.96% 04/01/99 12/01/15 5,040,000 2002 Water/Sewer 4.80% 07/01/02 12/01/22 3,660,000 2003 Water/Sewer Refunding 3.20% 09/15/03 06/01/13 8,035,000 2004 Water/Sewer 4.33% 11/01/04 12/01/27 10,335,000 2007 Water/Sewer 4.00%-5.00% 11/06/07 12/01/22 1,430,000 2007 Water/Sewer Refunding 2008 Water/Sewer (a) 2008 Water/Sewer (b) 4.00%-5.00% 4.17% 4.17% 11/06/07 01/04/08 01/04/08 12/01/22 12/01/27 12/01/16 8,320,000 9.975,000 2,035,000 TOTAL REVENUE BONDS $54,950,000 Public Works Trust Fund Loans: Sierra Heights Sewer Improvements 2.00% 01/20/92 07/01/12 $888,462 Central Renton Sewer Replacement 1.00% 05/04/93 07/01/15 1,631,800 East Renton Interceptor 1.00% 06/07/93 07/01/13 2,542,704 Dayton Avenue NE 2.00% 05/12/94 07/01/14 96,958 NE 27th/Aberdeen Drainage Improvements 1.00% 05/15/95 07/01/15 731,000 East Kennydale Interceptor 2.00% 01/24/98 07/01/16 2,093,740 Honeycreek Interceptor 2.00% 12/04/95 07/01/16 1,840,568 Corrosion Control Treatment Facilities 1.00% 01/06/97 07/01/17 1,106,000 Maplewood Water Treatment Improvement 0.50% 1/22/02 07/01/21 567,831 Construct CT Pipeline for Wells 0.50% 11/5/02 7/1/22 814,527 Maplewood Water Treatment Improvement 0.50% 06/03/04 07/01/24 4,892,500 TOTAL PUBLIC WORKS TRUST FUND LOANS $17,206,090 Leases: Golf Course Operating Lease 5.25 6/15/07 5/15/11 87,800 TOTAL BUSINESS-TYPE DEBT ISSUANCE $72,243,890 TOTAL AMOUNT ISSUED ON OUTSTANDING DEBT AS OF DECEMBER 31, 2008 $135,143,234 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-57 For outstanding debt additions and retirements are summarized as follows: GOVERNMENTAL DEBT Balance 1/1/2008Additions Deductions Balance 12/31/2008 Due Within One Year Limited General Obligation Debt 1997 GO Bonds $1,145,575 $ - $655,575 $490,000 $490,000 1997 GO Bonds - CAB Long Term Interest 939,399 52,264 532,249 459,414 510,000 2000 GO Valley Comm. Bonds 1,595,000 - 167,000 1,428,000 175,000 2001 GO Refunding Bonds 13,120,000 - 85,000 13,035,000 335,000 2001 GO Bonds 6,000,000 - - 6,000,000 - 2002 GO Bonds 3,175,000 - 155,000 3,020,000 160,000 2006 GO Bonds 17,980,000 - 520,000 17,460,000 540,000 Total Limited GO Bonds $43,954,974 $52,264 $2,114,824 $41,892,414 $2,210,000 Unlimited General Obligation Debt 1993 GO Refunding Bonds- Senior Housing 985,000 - 480,000 505,000 505,000 Total General Obligation Bonds $44,939,974 $52,264 $2,594,824 $42,397,414 $2,715,000 Installment Contracts: Certificated of participation 16,976 - 16,976 - - Employee Leave Benefits (Comp. Absences) 4,440,424 3,210,894 2,531,042 5,120,276 2,918,558 Other post-employment benefits payable - 2,024,068 1,266,192 757,876 - Total General Obligation Debt $49,397,374 $5,287,226 $6,409,034 $48,275,566 $5,633,558 BUSINESS-TYPE DEBT Revenue Bonds: 1998 Water/Sewer Refunding 3,485,000 - 570,000 2,915,000 595,000 1999 Golf System Refunding 2,805,000 - 295,000 2,510,000 310,000 2002 Water/Sewer Bond 3,230,000 - 110,000 3,120,000 455,000 2003 Water/Sewer Refunding 3,800,000 - 1,130,000 2,670,000 825,000 2004 Water/Sewer Bond 10,335,000 - - 10,335,000 - 2007 Water/Sewer Bond 1,430,000 - - 1,430,000 - 2007 Water/Sewer Bond (02) 8,320,000 - - 8,320,000 15,000 2008 Water/Sewer Bond (a) - 9,975,000 - 9,975,000 - 2008 Water/Sewer Bond (b) - 2,035,000 - 2,035,000 - Total Revenue Bonds $33,405,000 $12,010,000 $2,105,000 $43,310,000 $2,200,000 Public Works Trust Fund Loans: Sierra Heights Sewer Improvements 128,210 - 25,642 102,568 25,642 Central Renton Sewer Replacement 628,934 - 87,483 541,451 87,483 East Renton Interceptor 807,420 - 134,570 672,850 134,570 Dayton Avenue NE 35,721 - 5,103 30,618 5,103 NE 27th/Aberdeen Drainage Improvement 340,720 - 42,590 298,130 42,590 East Kennydale Interceptor 1,051,695 - 116,855 934,840 116,855 Honeycreek Interceptor 871,848 - 96,872 774,976 96,872 Corrosion Control Treatment Facilities 493,570 - 49,357 444,213 49,357 Maplewood Water Improvement 424,214 - 30,301 393,913 30,301 Const. CT Pipeline for Wells 643,050 - 42,870 600,180 42,870 Maplewood Water Improvements 4,377,500 257,500 257,500 4,377,500 272,647 Total Public Work Trust Fund Loan 9,802,882 257,500 889,143 9,171,239 904,290 Golf Course Cart Operating Lease 76,074 - 20,919 55,155 21,995 Employee Leave Benefits (Comp. Absences) 715,249 235,514 334,446 616,317 151,334 Total Business-Type Debt $43,999,205 $12,503,014 $3,349,508 $53,152,711 $3,277,619 GRAND TOTALS $93,396,578 $17,790,240 $9,758,542 $101,428,277 $8,911,177 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-58 DEEP DISCOUNT DEBT The 1997 Limited General Obligation Bond issue included capital appreciation bonds that are issued at a deep discount. The deep-discount debt will mature in the year 2009 with an accreted value of $1,000,000. The deep-discount debt is reported in the Government-wide financial statements in the amount of $490,000, net of the remaining unamortized discount. SPECIAL ASSESSMENT DEBT WITH GOVERNMENTAL COMMITMENT As of December 31, 2008, the City of Renton has no special assessment debt outstanding. DEBT LIMIT CAPACITIES State law provides that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the City: 1.5 percent without a vote of the people provided the indebtedness with a vote is 1 percent or less; 2.5 percent with a vote of the people; 5.0 percent with a vote of the people, provided the indebtedness in excess of 2.5 percent is for utilities; and 7.5 percent with a vote of the people provided the indebtedness in excess of 5.0 percent is for open space development and parks facilities. Table 12 in the Statistical Section shows the computation of legal debt margin for general and special purpose capacities for the City of Renton. ARBITRAGE The City engages an outside agency to calculate its’ arbitrage rebate liability on outstanding tax-exempt bonds and certificates of participation under Section 148(f) of the Internal Revenue Code. For bonds that have reached their installment computation dates (bonds outstanding for five years initially and every five years thereafter until the last of the bond issue matures) the City paid an arbitrage rebate in the amount of $9,594 on the City’s 2003 Water and Sewer Revenue Refunding Bonds. No additional rebate was found due for other revenue or general obligation bonds for 2008. NEWLY ISSUED DEBT The Water and Sewer Revenue Bonds (A and B) were issued January 4, 2008 in the amount of $9,975,000 and $2,035,000, respectively. The average interest rate is 4.17%. These bonds were issued for the purpose of providing money to pay part of the costs of construction and acquisition of certain improvements to the waterworks utility. The Series A (tax exempt) bonds are payable semiannually with interest-only payments until December 1, 2016 when annual principal payments will also be required. The final payment will be December 1, 2027. The Series B (taxable) bonds are payable semi-annually with interest-only payments until December 1, 2013 when annual principal payment will also be required. The final payment will be December 1, 2016. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-59 ANNUAL DEBT SERVICE REQUIREMENTS The annual debt service requirements to maturity, including principal and interest, for long-term debt as of December 31, 2008, are as follows: Governmental Activities Business-Type Activities Year Principal Interest Principal Interest 2009 $2,205,000 $2,549,448 $3,141,433 $1,963,233 2010 2,269,000 1,975,553 3,207,417 1,869,186 2011 2,353,000 1,883,688 3,284,324 1,770,243 2012 2,467,000 1,786,176 3,374,290 1,657,422 2013 2,580,000 1,660,989 2,863,648 1,547,100 2014-2018 13,579,000 6,232,638 12,642,018 6,354,836 2019-2023 10,415,000 2,896,971 12,850,618 4,074,204 2024-2028 6,070,000 943,238 11,172,647 1,312,281 Subtotal $ 41,938,000 $ 19,928,699 $ 52,536,394 $ 20,548,504 CAB Interest 459,414 - - - Totals $ 42,397,414 $ 19,928,699 $ 52,536,394 $ 20,548,504 AMOUNT AVAILABLE FOR DEBT SERVICE Fund balances that have been reserved for debt repayment are $1,270,936 in the debt service funds. NOTE 15 - DEFERRED CHARGES IN PROPRIETARY FUNDS As of December 31, 2008, the total amount of deferred charges and other assets reported in the proprietary funds is $788,108. The Waterworks Utility Fund had deferred charges and other assets in the amount of $756,945 for debt issuance costs related to the 2002-2008 Revenue Bonds. This amount will be fully amortized by 2027. The Golf Course Fund had deferred charges and other assets amounting to $31,163 for debt issuance costs related to the 1999 Refunding Revenue Bond. This amount will be fully amortized by 2016. NOTE 16. SEGMENT INFORMATION An identifiable activity (or grouping of activities) required to be accounted for separately, which (a) is reported as or within an enterprise fund; (b) for which one or more revenue bonds are outstanding; and, (c) where the revenue stream is pledged for payment of, are required to disclose segment information. The City of Renton has no required segment information to disclose for 2008. NOTE 17. JOINT VENTURES A joint venture is a legal entity or other organization that results from a contractual agreement and that is owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on-going financial interest or (b) an on-going financial responsibility. The City participates in one joint venture. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-60 VALLEY COMMUNICATIONS CENTER The “Valley Communications Center” was established August 20, 1976, when an Interlocal Agreement was entered into by four original participating municipal corporations, including the cities of Renton, Kent, Auburn, and Tukwila. Federal Way was formally admitted in 2000. The agreement is sanctioned by the provisions and terms of the Interlocal Cooperation Act pursuant to Chapter 39.34 RCW. The initial duration of the agreement was five years, and thereafter is automatically extended for consecutive five-year periods. The purpose of the joint operation, hereafter referred to as Valley Comm, is to provide improved consolidated emergency communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing agencies that include: King County Fire Districts 2, 17 (Black Diamond), 20, 26, 40, 43, 44, 47; City of Pacific Police and Fire Departments; City of Black Diamond Police Department; City of Des Moines Police Department; SeaTac Fire Department; North Highline Fire Department; King County EMS Units; and Vashon Island Fire Department. Separate agreements between Valley Comm and the subscribing agencies have been executed, which set forth conditions of services and rates charged. The City of Renton reports its share of equity interest in the Governmental Activities column within the Government-wide financial statements under non-current assets. The following is condensed (unaudited) financial information as of December 31, 2008, on Valley Comm: Valley Comm Renton Interest Assets $25,107,535 21.92%* Liabilities 744,100 TOTAL Equity $24,363,434 $4,454,176 *After removing $4,042,221 in assets not subject to the equity interest calculations. Completed Financial Statements for Valley Comm can be obtained from the Valley Communications Center, 23807 – 98th Avenue South, Kent, WA 98031. NOTE 18. SUBSEQUENT EVENTS On April 7, 2008 the City of Renton passed Ordinance 3938 stating the intend of the City of Renton to build a Facilities Maintenance Shop with General Obligation Bonds issued in 2008 to a maximum of $12.5 million. The City postponed the project and did not issue bonds for this purpose. The City of Renton established a public corporation, the South Correctional Entity Facility Public Development Authority (SCORE) on February 25, 2009. The Authority is issuing bonds to pay a portion of the costs of acquiring, constructing, and equipping a correctional facility to be located in Des Moines. Payment for the bonds, estimated to be $100 million, would be secured by the full faith and credit of “member” cities under interlocal agreements with the cities of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac, and Tukwila. On May 11, 2009 Fitch Rating Service “Fitch” downgraded the insurer’s financial strength rating on FSA to "AA-" from "AAA". FSA’s rating outlook is negative. The City of Renton, Washington’s underlying rating is “AA-“. 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARYDIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 70,602,536 $ 70,602,536 $ 66,844,997 $ (3,757,539) Licenses and permits4,005,050 4,005,050 2,751,420 (1,253,630) Intergovernmental revenues4,614,140 8,555,562 8,773,933 218,371 Charges for services4,885,250 4,956,932 3,976,920 (980,012) Fines and forfeits1,585,000 1,585,000 2,002,854 417,854 Interfund revenues3,065,778 3,065,778 3,072,526 6,748 Contributions98,000 164,065 - (164,065) Interest1,026,800 1,026,800 587,590 (439,210) Miscellaneous revenues163,700 163,700 64,359 (99,341) TOTAL REVENUES$ 90,046,254 $ 94,125,423 $ 88,074,599 $ (6,050,824) EXPENDITURESCurrent:General government$ 15,112,327 $ 15,456,188 $ 14,387,478 $ (1,068,710) Judicial1,804,091 1,804,091 1,761,665 (42,426) Security of persons and property42,164,497 46,529,020 45,530,208 (998,812) Physical environment3,578,057 3,777,678 3,123,883 (653,795) Transportation6,761,824 6,857,404 6,332,006 (525,398) Economic environment7,068,014 7,178,308 6,232,669 (945,639) Mental & physical health10,600 10,600 16,459 5,859 Culture & recreation11,899,559 12,025,076 11,119,073 (906,003) Capital outlay1,973,091 2,187,644 2,017,677 (169,967) TOTAL EXPENDITURES$ 90,372,060 $ 95,826,009 $ 90,521,118 $ (5,304,891) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (325,806) $ (1,700,586) $ (2,446,519) $ (745,933) OTHER FINANCING SOURCES (USES)Transfer in$- $ 81,364 $- $ (81,364) Transfer (out)(450,723) (734,326) (519,503) 214,823 Sale of capital assets- - 735 735 TOTAL OTHER FINANCE SOURCES (USES)$ (450,723) $ (652,962) $ (518,768) $ 134,194 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - GENERAL FUNDFor the Year Ended December 31, 2008NET CHANGE IN FUND BALANCE$ (776,529) $ (2,353,548) $ (2,965,287) $ (611,739) FUND BALANCE JANUARY 1$ 16,471,966 $ 16,482,384 $ 16,482,384 $- FUND BALANCE DECEMBER 31$ 15,695,437 $ 14,128,836 $ 13,517,097 $ (611,739) Required Supplemental Information, 5-1 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonANNUALFIRETOTALREQUIRED PERCENTAGEEMPLOYERINSURANCE EMPLOYERCONTRIBUTION OF ARCFISCAL YEAR ENDINGCONTRIBUTIONS* PREMIUMS CONTRIBUTIONS (ARC)**CONTRIBUTEDDecember 31, 2003$- $63,088 $63,088 $- N/A %December 31, 2004(7,099) 70,250 63,151 (205,680) N/A December 31, 2005(14,375) 72,404 58,029 (113,541) N/A December 31, 2006(18,753) 77,821 59,068 (113,541) N/A December 31, 2007(25,285) 85,062 59,777 (109,968) N/A December 31, 2008(19,894) 85,949 66,055 (109,968) N/A *** The ARC is documented as 0 for negative amounts prior to 2004.Employer contributions for pension are total contributions to the Fund net of disbursements from the Fund for medical expenses under RCW 41.26.150 andadministrative expenses.ACTUARIAL VALUATION OF FIREFIGHTERS' PENSION FUNDEMPLOYER CONTRIBUTIONSDecember 31, 2008Required Supplemental Information, 5-2 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUARIAL ACCRUED UAAL AS A ACTUARIAL LIABILITY (AAL)-PERCENTAGE OF ACTUARIALVALUE OF PROJECTED UNIT UNFUNDED FUNDED COVERED COVERED VALUATION ASSETSCREDITUAALRATIOPAYROLLPAYROLLDATE(a)(b)(b-a)(a/b)( c)((b-a) /c)January 1, 2008 $- $ 32,327,794 $ 32,327,794 $0%842,500 3837%LEOFF 1 RETIREE MEDICAL BENEFITSSCHEDULE OF FUNDING PROGRESSDecember 31, 2008Required Supplemental Information, 5-32008 Comprehensive Annual Financial Report City of Renton, Washington , This page intentionally left blank. 2008 Comprehensive Annual Financial Report City of Renton, Washington Combining Statements & Schedules, 6-1 Non-Major Governmental Fund Special Revenue Funds ARTERIAL STREET FUND The Arterial Street Fund was established pursuant to state law allocating the one-half cent State Gasoline Tax revenue to cities and towns for construction, improvements, and major repair of streets. LEASED CITY PROPERTIES Accounts for revenue and expenditures related to City property leased to outside entities. HOTEL/MOTEL TAX FUND Accounts for monies collected through an increase of 1% in hotel/motel taxes for the purpose of increasing tourism in the City of Renton. SPRINGBROOK WETLANDS BANK FUND The City of Renton established this fund in 2007 for the purpose of providing accounting for the Springbrook Creek Wetland and Habitat Mitigation Bank project. The fund will receive revenue by selling Wetlands Credits to third parties and to the City’s internal departments. PATHS AND TRAILS RESERVE FUND The Paths and Trails Reserve Fund was created for the purpose of planning, accommodating, and establishing and maintaining certain paths and trails within the City of Renton. 1% FOR ART FUND The City of Renton established this fund by contributing 1% of general governmental capital project funding for art projects. CABLE COMMUNICATIONS DEVELOPMENT FUND The Cable Communications Development Fund accounts for funding for promotion and development of cable communications as established by City ordinance. 2008 Comprehensive Annual Financial Report City of Renton, Washington Combining Statements & Schedules, 6-2 Debt Service Funds GENERAL GOVERNMENTAL MISCELLANEOUS DEBT Accounts for 1997 limited general obligation bond redemption on a Council-approved bond issue, which provided funding for the purchase of Renton City Hall (2001 GO Refund Bonds) and for 1978 limited general obligation bond redemption on a Council-approved bond issue, which provided partial funding for construction of the Renton Senior Activity Center (1997 GO Refunding Bonds). 1989 UNLIMITED GENERAL OBLIGATION BOND REDEMPTION FUND Accounts for debt service on a voter-approved bond issue, which provided financing to acquire, construct, rehabilitate, equip, and develop low-income housing for the elderly. 2008 Comprehensive Annual Financial Report City of Renton, Washington Combining Statements & Schedules, 6-3 Capital Project Funds COMMUNITY DEVELOPMENT IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. FIRE IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. TRANSPORTATION IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. MUNICIPAL FACILITIES CONSTRUCTION FUND The Municipal Facilities Construction Fund accounts for the acquisition and development of municipal facilities. Resources included general and special revenue taxes and Council-approved general obligation bonds. SOUTH LAKE WASHINGTON INFRASTRUCTURE PROJECT FUND The South Lake Washington Infrastructure Project Fund accounts for the infrastructure improvements at the south end of Lake Washington. Primary resources include: REET, sales tax, grants, and GO Bonds that will provide for the design, construction, labor wages and benefits, and equipment required to implement the project. 2008 Comprehensive Annual Financial Report City of Renton, Washington Combining Statements & Schedules, 6-4 Non-Major Proprietary Funds Enterprise Funds AIRPORT FUND Accounts for revenues and expenses for administration, debt services, operation, capital improvements, and maintenance of the Renton Municipal Airport and Will Rodger-Wily Post Memorial Seaplane Base. Sources of support to the fund are leases, fuel charges, investment interest, and grant funding as available. GOLF COURSE FUND The Golf Course Fund was created after the City acquired the Maplewood Golf Course. It accounts for the operation, maintenance, debt service, and capital improvements of the facility. Internal Service Funds EQUIPMENT RENTAL The Equipment Rental Fund accounts for the costs of maintaining and replacing all City vehicles and auxiliary equipment, except for fire apparatus and replacement of police patrol vehicles. All equipment costs, including depreciation, are factors in calculating the rates that are charged to each user department. INSURANCE FUND The Insurance Fund provides accounting for self-insurance services to all City departments, including provisions for losses on property, liability, worker’s compensation, unemployment compensation, and the health care program. Expenses are paid from the Insurance Fund and rates are charged to departments based on use and/or coverage requirements. 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonARTERIAL LEASED CITY HOTEL/ SPRINGBROOKASSETSSTREET PROPERTIES MOTEL TAXWETLANDSCash & cash equivalents$ 372,729 $ 1,221,941 $ 250,779 $ 456,502 Receivables (net of allowances):Customer accounts- 122,220 - - Due from other funds- - 36,537 - Due from other governmental units179,847 - 33,809 - TOTAL ASSETS$ 552,576 $ 1,344,161 $ 321,125 $ 456,502 LIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$- $ 4,726 $32 $ - Taxes payable- 45,588 - - Retainage payable- 1,739 - - Deposits- 32,981 - - Deferred revenue- 15,601 - - Accrued employee wages and leave payable- 4,320 - - Total liabilities$- $ 104,955 $32 $- Fund balancesUnreserved, designated for:Special revenue fund contingencies552,576 1,239,206 321,093 456,502 Total fund balances$ 552,576 $ 1,239,206 $ 321,093 $ 456,502 TOTAL LIABILITIES AND FUND BALANCES $ 552,576 $ 1,344,161 $ 321,125 $ 456,502 SPECIAL REVENUE FUNDSCOMBINING BALANCE SHEETOTHER GOVERNMENTAL FUNDSDecember 31, 2008Page 1 of 6Combining Statements & Schedules, 6-5 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPATHS &1% FOR CABLE COMM. TOTALASSETSTRAILSART & DEVELOPMENT SRFCash & cash equivalents$3,243 $ 121,678 $ 113,873 $ 2,540,745 Receivables (net of allowances):Customer accounts- - - 122,220 Due from other funds- - - 36,537 Due from other governmental units- - - 213,656 TOTAL ASSETS$3,243 $ 121,678 $ 113,873 $ 2,913,158 LIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$- $- $1,504 $6,262 Taxes payable- - - 45,588 Retainage payable- - - 1,739 Deposits- - - 32,981 Deferred revenue- - - 15,601 Accrued employee wages and leave payable- - - 4,320 Total liabilities$- $- $1,504 $ 106,491 Fund balancesUnreserved, designated for:Special revenue funds contingencies3,243 121,678 112,369 2,806,667 Total fund balances$3,243 $ 121,678 $ 112,369 $ 2,806,667 TOTAL LIABILITIES AND FUND BALANCES $3,243 $ 121,678 $ 113,873 $ 2,913,158 SPECIAL REVENUE FUNDSCOMBINING BALANCE SHEETOTHER GOVERNMENTAL FUNDSDecember 31, 2008Page 2 of 6Combining Statements & Schedules, 6-6 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGENERAL 1989 UGO BONDTOTALASSETSDEBTREDEMPTIONDSFCash & cash equivalents$146,493 $496,153 $642,646 Investments350,000 - 350,000 Receivables (net of allowances):Taxes126,217 13,124 139,341 Accrued interest & penalty50,819 572 51,391 Due from other funds- 94,249 94,249 TOTAL ASSETS$673,529 $604,098 $ 1,277,627 LIABILITIES AND FUND BALANCESLiabilitiesDeferred revenue$- $6,691 $6,691 Total liabilities$- $6,691 $6,691 Fund balancesUnreserved. Designated for:Debt service funds$673,529 $597,407 $ 1,270,936 Total fund balances$673,529 $597,407 $ 1,270,936 $673,529 $604,098 $ 1,277,627 COMBINING BALANCE SHEETOTHER GOVERNMENTAL FUNDSDecember 31, 2008Page 3 of 6Combining Statements & Schedules, 6-7 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonC.D. IMPACTFIRE IMPACTTRANS. IMPACT MUNICIPALASSETSMITIGATION MITIGATION MITIGATION FACILITIES CIPCash & cash equivalents$ 1,425,709 $ 915,771 $ 1,399,103 $ 889,771 Investments250,000 1,500,000 1,943,852 10,921,805 Receivables (net of allowances):Taxes- - - 126,217 Customer accounts- - 173,102 - Accrued interest & penalty13,217 107,880 60,890 690,760 Interfund loans receivable- - - 1,000,000 Due from other funds- - - 48,189 Due from other governmental units- - - 320,922 TOTAL ASSETS$ 1,688,926 $ 2,523,651 $ 3,576,947 $ 13,997,664 LIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$- $- $- $ 142,380 Retainage payable- 40,004 - 81,184 Interfund loans payable- - - - Total liabilities$- $40,004 $- $ 223,564 Fund balancesReserved for:Interfund loans receivable1,000,000 Unreserved, designated for:Capital projects funds$ 1,688,926 $ 2,483,647 $ 3,576,947 $ 12,774,100 Total fund balances$ 1,688,926 $ 2,483,647 $ 3,576,947 $ 13,774,100 TOTAL LIABILITIES AND FUND BALANCES $ 1,688,926 $ 2,523,651 $ 3,576,947 $ 13,997,664 Page 4 of 6December 31, 2008OTHER GOVERNMENTAL FUNDSCOMBINING BALANCE SHEETCombining Statements & Schedules, 6-8 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonSO LK WA INFRA- TOTALASSETSSTRUCTURECPFCash & cash equivalents$522 $ 4,630,876 Investments- 14,615,657 Receivables (net of allowances):- Taxes- 126,217 Customer accounts1,704,184 1,877,286 Accrued interest & penalty- 872,747 Interfund loans receivable- 1,000,000 Due from other funds- 48,189 Due from other governmental units347,850 668,772 TOTAL ASSETS$ 2,052,556 $ 23,839,744 LIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$ 850,198 $ 992,578 Retainage payable- 121,188 Interfund loans payable1,000,000 1,000,000 Total liabilities$ 1,850,198 $ 2,113,766 Fund balancesReserved for:Interfund loans receivable- 1,000,000 Unreserved, designated for:- Capital projects funds$ 202,358 $ 20,725,978 Total fund balances$ 202,358 $ 21,725,978 TOTAL LIABILITIES AND FUND BALANCES $ 2,052,556 $ 23,839,744 Page 5 of 6December 31, 2008OTHER GOVERNMENTAL FUNDSCOMBINING BALANCE SHEETCombining Statements & Schedules, 6-9 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTAL OTHERTOTALTOTALTOTAL GOVERNMENTALASSETSSRFDSFCPFFUNDSCash & cash equivalents$ 2,540,745 $ 642,646 $ 4,630,876 $ 7,814,267 Investments- 350,000 14,615,657 14,965,657 Receivables (net of allowances):Taxes- 139,341 126,217 265,558 Customer accounts122,220 - 1,877,286 1,999,506 Accrued interest & penalty- 51,391 872,747 924,138 Interfund loans receivable- - 1,000,000 1,000,000 Due from other funds36,537 94,249 48,189 178,975 Due from other governmental units213,656 - 668,772 882,428 TOTAL ASSETS$ 2,913,158 $ 1,277,627 $ 23,839,744 $ 28,030,529 LIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$6,262 $- $ 992,578 $ 998,840 Taxes payable45,588 - - 45,588 Retainage payable1,739 - 121,188 122,927 Interfund loans payable- - 1,000,000 1,000,000 Deposits32,981 - - 32,981 Deferred revenue15,601 6,691 - 22,292 Accrued employee wages and leave payable4,320 - - 4,320 Total liabilities$ 106,491 $6,691 $ 2,113,766 $ 2,226,948 Fund balancesReserved for:Interfund loans receivable- - 1,000,000 1,000,000 Unreserved, designated for:Special revenue funds contingency2,806,667 - - 2,806,667 Unreserved reported in:Debt service funds- 1,270,936 - 1,270,936 Capital projects funds- - 20,725,978 20,725,978 $ 2,806,667 $ 1,270,936 $ 21,725,978 $ 25,803,581 TOTAL LIABILITIES AND FUND BALANCES $ 2,913,158 $ 1,277,627 $ 23,839,744 $ 28,030,529 Page 6 of 6COMBINING BALANCE SHEETOTHER GOVERNMENTAL FUNDSDecember 31, 2008Combining Statements & Schedules, 6-10 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonARTERIALLEASED CITYHOTEL/SPRINGBROOKSTREETPROPERTIES MOTEL TAXWETLANDSREVENUESTaxes$- $84,564 $252,233 $- Intergovernmental revenues650,721 - - - Charges for services- 1,072,669 - - Contributions- - 60,000 - Interest10,528 18,700 7,276 8,502 TOTAL REVENUES$661,249 $ 1,175,933 $319,509 $8,502 EXPENDITURESCurrent:General government$- $ 706,662 $ - $ - Economic environment- - 346,432 - Capital outlay- - - - TOTAL EXPENDITURES$- $ 706,662 $346,432 $- EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$661,249 $ 469,271 $(26,923) $8,502 OTHER FINANCING SOURCES (USES)Transfer (out)$(585,000) $ (386,000) $- $- TOTAL OTHER FINANCE SOURCES (USES)$(585,000) $ (386,000) $- $- NET CHANGE IN FUND BALANCE$76,249 $83,271 $(26,923) $8,502 FUND BALANCE JANUARY 1$476,327 $ 1,155,935 $348,016 $ 448,000 FUND BALANCE DECEMBER 31$552,576 $ 1,239,206 $321,093 $ 456,502 SPECIAL REVENUE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESOTHER GOVERNMENTAL FUNDSFor the Year Ended December 31, 2008Page 1 of 6Combining Statements & Schedules, 6-11 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPATHS &1% FOR CABLE COMM. TOTALTRAILSART & DEVELOPMENT SRFREVENUESTaxes$- $- $ 70,000 $ 406,797 Intergovernmental revenues- - - 650,721 Charges for services- - - 1,072,669 Contributions- - - 60,000 Interest60 2,300 1,705 49,071 TOTAL REVENUES$60 $2,300 $ 71,705 $ 2,239,258 EXPENDITURESCurrent:General government$- $- $- $ 706,662 Economic environment- - 23,114 369,546 Capital outlay- 1,979 - 1,979 TOTAL EXPENDITURES$- $1,979 $ 23,114 $ 1,078,187 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$60 $321 $ 48,591 $ 1,161,071 OTHER FINANCING SOURCES (USES)Transfer (out)$- $- $- $ (971,000) TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $ (971,000) NET CHANGE IN FUND BALANCE$60 $321 $ 48,591 $ 190,071 FUND BALANCE JANUARY 1$3,183 $ 121,357 $ 63,778 $ 2,616,596 FUND BALANCE DECEMBER 31$3,243 $ 121,678 $ 112,369 $ 2,806,667 SPECIAL REVENUE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESOTHER GOVERNMENTAL FUNDSFor the Year Ended December 31, 2008Page 2 of 6Combining Statements & Schedules, 6-12 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGENERAL 1989 UGO BOND TOTALDEBTREDEMPTIONDSFREVENUESTaxes$3,805,277 $ 501,576 $ 4,306,853 Interest52,637 5,756 58,393 TOTAL REVENUES$3,857,914 $ 507,332 $ 4,365,246 EXPENDITURESDebt service:Debt service:$1,599,551 $ 480,000 $ 2,079,551 Interest payment2,664,188 43,485 2,707,673 TOTAL EXPENDITURES$4,263,739 $ 523,485 $ 4,787,224 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$(405,825) $ (16,153) $ (421,978) OTHER FINANCING SOURCES (USES)Transfer in$300,000 $- $ 300,000 TOTAL OTHER FINANCE SOURCES (USES) $300,000 $- $ 300,000 NET CHANGE IN FUND BALANCE$(105,825) $ (16,153) $ (121,978) FUND BALANCE JANUARY 1$779,354 $ 613,560 $ 1,392,914 FUND BALANCE DECEMBER 31$673,529 $ 597,407 $ 1,270,936 Page 3 of 6COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEOTHER GOVERNMENTAL FUNDSFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-13 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonC.D. IMPACTFIRE IMPACTTRANS. IMPACT MUNICIPALMITIGATION MITIGATION MITIGATION FACILITIES CIPREVENUESTaxes$- $- $- $ 824,707 Licenses and permits- - - - Intergovernmental revenues- - - 266,806 Charges for services273,952 339,623 782,584 - Contributions- - - 75,000 Interest28,662 99,736 260,618 655,931 Miscellaneous revenues- - - 1,209,000 TOTAL REVENUES$ 302,614 $ 439,359 $ 1,043,202 $ 3,031,444 EXPENDITURESCurrent:Economic environment$- $- $- $67,248 Capital outlay- - - 6,596,162 Debt service:Interest payment- - - - TOTAL EXPENDITURES$- $- $- $ 6,663,410 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 302,614 $ 439,359 $ 1,043,202 $ (3,631,966) OTHER FINANCING SOURCES (USES)Transfer in$- $- $- $ 885,378 Transfer (out)(111,875) (300,000) (2,223,229) - TOTAL OTHER FINANCE SOURCES (USES)$ (111,875) $ (300,000) $ (2,223,229) $ 885,378 NET CHANGE IN FUND BALANCE$ 190,739 $ 139,359 $ (1,180,027) $ (2,746,588) FUND BALANCE JANUARY 1$ 1,498,187 $ 2,344,288 $ 4,756,974 $ 16,520,688 FUND BALANCE DECEMBER 31$ 1,688,926 $ 2,483,647 $ 3,576,947 $ 13,774,100 For the Year Ended December 31, 2008OTHER GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESPage 4 of 6Combining Statements & Schedules, 6-14 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonSO LK WA INFRA- TOTALSTRUCTURECPFREVENUESTaxes$ 131,034 $ 955,741 Licenses and permits268,000 268,000 Intergovernmental revenues500,000 766,806 Charges for services700,202 2,096,361 Contributions- 75,000 Interest34 1,044,981 Miscellaneous revenues- 1,209,000 TOTAL REVENUES$ 1,599,270 $ 6,415,889 EXPENDITURESCurrent:Economic environment$4,218 $ 71,466 Capital outlay1,912,775 8,508,937 Debt service:- Interest payment21,574 21,574 TOTAL EXPENDITURES$ 1,938,567 $ 8,601,977 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (339,297) $ (2,186,088) OTHER FINANCING SOURCES (USES)Transfer in$- $ 885,378 Transfer (out)- (2,635,104) TOTAL OTHER FINANCE SOURCES (USES)$- $ (1,749,726) NET CHANGE IN FUND BALANCE$ (339,297) $ (3,935,814) FUND BALANCE JANUARY 1$ 541,655 $ 25,661,792 FUND BALANCE DECEMBER 31$ 202,358 $ 21,725,978 Page 5 of 6For the Year Ended December 31, 2008OTHER GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESCombining Statements & Schedules, 6-15 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTAL OTHERTOTALTOTALTOTAL GOVERNMENTALSRFDSFCPFFUNDSREVENUESTaxes$406,797 $ 4,306,853 $955,741 $ 5,669,391 Licenses and permits- - 268,000 268,000 Intergovernmental revenues650,721 - 766,806 1,417,527 Charges for services1,072,669 - 2,096,361 3,169,030 Contributions60,000 - 75,000 135,000 Interest49,071 58,393 1,044,981 1,152,445 Miscellaneous revenues- - 1,209,000 1,209,000 TOTAL REVENUES$ 2,239,258 $ 4,365,246 $ 6,415,889 $ 13,020,393 EXPENDITURESCurrent:General government$706,662 $- $- $706,662 Economic environment369,546 - 71,466 441,012 Capital outlay1,979 - 8,508,937 8,510,916 Debt service:Principal payment- 2,079,551 - 2,079,551 Interest payment- 2,707,673 21,574 2,729,247 TOTAL EXPENDITURES$ 1,078,187 $ 4,787,224 $ 8,601,977 $ 14,467,388 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 1,161,071 $(421,978) $ (2,186,088) $ (1,446,995) OTHER FINANCING SOURCES (USES)Transfer in$- $300,000 $885,378 $ 1,185,378 Transfer (out)(971,000) - (2,635,104) (3,606,104) TOTAL OTHER FINANCE SOURCES (USES) $(971,000) $300,000 $ (1,749,726) $ (2,420,726) NET CHANGE IN FUND BALANCE$190,071 $(121,978) $ (3,935,814) $ (3,867,721) FUND BALANCE JANUARY 1$ 2,616,596 $ 1,392,914 $ 25,661,792 $ 29,671,302 FUND BALANCE DECEMBER 31$ 2,806,667 $ 1,270,936 $ 21,725,978 $ 25,803,581 Page 6 of 6COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESOTHER GOVERNMENTAL FUNDSFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-16 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESIntergovernmental revenues$ 580,000 $ 580,000 $ 650,721 $70,721 Interest5,000 5,000 10,528 5,528 TOTAL REVENUES$ 585,000 $ 585,000 $ 661,249 $76,249 TOTAL EXPENDITURES$- $- $- $- EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 585,000 $ 585,000 $ 661,249 $76,249 OTHER FINANCING SOURCES (USES)Transfer (out)(585,000) (585,000) (585,000) - TOTAL OTHER FINANCE SOURCES (USES) $ (585,000) $ (585,000) $ (585,000) $- NET CHANGE IN FUND BALANCE$- $- $ 76,249 $76,249 FUND BALANCE JANUARY 1$ 476,327 $ 476,327 $ 476,327 $- FUND BALANCE DECEMBER 31$ 476,327 $ 476,327 $ 552,576 $76,249 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - ARTERIAL STREET FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-17 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 84,564 $ 84,564 $ 84,564 $- Charges for services1,153,139 1,153,139 1,072,669 (80,470) Interest- - 18,700 18,700 TOTAL REVENUES$ 1,237,703 $ 1,237,703 $ 1,175,933 $(61,770) EXPENDITURESCurrent:General government$ 760,836 $ 732,080 $ 706,662 $ (25,418) Debt service:Principal payment- 60,000 - (60,000) Interest payment- 3,600 - (3,600) TOTAL EXPENDITURES$ 760,836 $ 795,680 $ 706,662 $(89,018) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 476,867 $ 442,023 $ 469,271 $27,248 OTHER FINANCING SOURCES (USES)Transfer (out)$ (386,000) $ (386,000) $ (386,000) $- TOTAL OTHER FINANCE SOURCES (USES) $ (386,000) $ (386,000) $ (386,000) $- NET CHANGE IN FUND BALANCE$ 90,867 $ 56,023 $ 83,271 $27,248 FUND BALANCE JANUARY 1$ 1,155,935 $ 1,155,935 $ 1,155,935 $- FUND BALANCE DECEMBER 31$ 1,246,802 $ 1,211,958 $ 1,239,206 $27,248 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - LEASED CITY PROPERTIESFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-18 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 232,000 $ 232,000 $ 252,233 $20,233 Contributions65,000 65,000 60,000 (5,000) Interest10,000 10,000 7,276 (2,724) TOTAL REVENUES$ 307,000 $ 307,000 $ 319,509 $12,509 EXPENDITURESCurrent:Economic environment$ 267,000 $ 347,000 $ 346,432 $(568) TOTAL EXPENDITURES$ 267,000 $ 347,000 $ 346,432 $(568) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 40,000 $ (40,000) $ (26,923) $13,077 TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $- NET CHANGE IN FUND BALANCE$ 40,000 $ (40,000) $ (26,923) $13,077 FUND BALANCE JANUARY 1$ 348,016 $ 348,016 $ 348,016 $- FUND BALANCE DECEMBER 31$ 388,016 $ 308,016 $ 321,093 $13,077 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - HOTEL/MOTEL TAX FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-19 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESInterest$- $- $60 $60 TOTAL REVENUES$- $- $60 $60 TOTAL EXPENDITURES$- $- $- $- EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$- $- $60 $60 TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $- NET CHANGE IN FUND BALANCE$- $- $60 $60 FUND BALANCE JANUARY 1$ 3,183 $ 3,183 $ 3,183 $- FUND BALANCE DECEMBER 31$ 3,183 $ 3,183 $ 3,243 $60 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - PATHS AND TRAILS FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-20 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESInterest$- $- $ 8,502 $8,502 TOTAL REVENUES$- $- $ 8,502 $8,502 TOTAL EXPENDITURES$- $- $- $- EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$- $- $ 8,502 $8,502 TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $- NET CHANGE IN FUND BALANCE$- $- $ 8,502 $8,502 FUND BALANCE JANUARY 1$ 448,000 $ 448,000 $ 448,000 $- FUND BALANCE DECEMBER 31$ 448,000 $ 448,000 $ 456,502 $8,502 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - SPRINGBROOK WETLANDS BANK FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-21 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESInterest$- $- $ 2,300 $2,300 TOTAL REVENUES$- $- $ 2,300 $2,300 EXPENDITURESCurrent:Economic environment$- $ 141,698 $- $ (141,698) Capital outlay77,505 - 1,979 1,979 TOTAL EXPENDITURES$ 77,505 $ 141,698 $ 1,979 $ (139,719) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (77,505) $ (141,698) $321 $ 142,019 OTHER FINANCING SOURCES (USES)Transfer in$ 77,505 $ 77,505 $- $ (77,505) TOTAL OTHER FINANCE SOURCES (USES) $ 77,505 $ 77,505 $- $ (77,505) NET CHANGE IN FUND BALANCE$- $ (64,193) $321 $64,514 FUND BALANCE JANUARY 1$ 121,357 $ 121,357 $ 121,357 $- FUND BALANCE DECEMBER 31$ 121,357 $ 57,164 $ 121,678 $64,514 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - 1% FOR ART FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-22 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 35,000 $ 35,000 $ 70,000 $35,000 Interest2,400 2,400 1,705 (695) Miscellaneous revenues1,500 1,500 - (1,500) TOTAL REVENUES$ 38,900 $ 38,900 $ 71,705 $32,805 EXPENDITURESCurrent:Economic environment$ 74,778 $ 88,004 $ 23,114 $ (64,890) TOTAL EXPENDITURES$ 74,778 $ 88,004 $ 23,114 $ (64,890) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (35,878) $ (49,104) $ 48,591 $97,695 TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $- NET CHANGE IN FUND BALANCE$ (35,878) $ (49,104) $ 48,591 $97,695 FUND BALANCE JANUARY 1$ 63,778 $ 63,778 $ 63,778 $- FUND BALANCE DECEMBER 31$ 27,900 $ 14,674 $ 112,369 $97,695 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - CABLE COMMUNICATIONS DEVELOPMENT FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-23 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASISOVER (UNDER)REVENUESTaxes$ 3,868,600 $ 3,868,600 $ 3,805,277 $(63,323) Interest100,800 100,800 52,637 (48,163) TOTAL REVENUES$ 3,969,400 $ 3,969,400 $ 3,857,914 $(111,486) EXPENDITURESDebt service:- Principal payment$ 1,600,000 $ 1,600,000 $ 1,599,551 $(449) Interest payment2,669,400 2,669,400 2,664,188 (5,212) TOTAL EXPENDITURES$ 4,269,400 $ 4,269,400 $ 4,263,739 $(5,661) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES $ (300,000) $ (300,000) $ (405,825) $(105,825) OTHER FINANCING SOURCES (USES)Transfer in$ 300,000 $ 300,000 $ 300,000 $- TOTAL OTHER FINANCE SOURCES (USES) $ 300,000 $ 300,000 $ 300,000 $- NET CHANGE IN FUND BALANCE$- $- $ (105,825) $(105,825) FUND BALANCE JANUARY 1$ 774,772 $ 779,354 $ 779,354 $- FUND BALANCE DECEMBER 31$ 774,772 $ 779,354 $ 673,529 $(105,825) SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - GENERAL GOVERNMENTAL MISCELLANEOUS DEBT SERVICE FUNDFor the Year Ended December 31, 2008BUDGETED AMOUNTSCombining Statements & Schedules, 6-24 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 550,000 $ 550,000 $ 501,576 $ (48,424) Interest5,000 5,000 5,756 756 TOTAL REVENUES$ 555,000 $ 555,000 $ 507,332 $ (47,668) EXPENDITURESCurrent:Economic environment$ 488,250 $- $- $ - Debt service:Principal payment- 480,000 480,000 - Interest payment60,500 68,750 43,485 (25,265) TOTAL EXPENDITURES$ 548,750 $ 548,750 $ 523,485 $ (25,265) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 6,250 $ 6,250 $ (16,153) $ (22,403) TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $- NET CHANGE IN FUND BALANCE$ 6,250 $ 6,250 $ (16,153) $ (22,403) FUND BALANCE JANUARY 1$ 613,560 $ 613,560 $ 613,560 $- FUND BALANCE DECEMBER 31$ 619,810 $ 619,810 $ 597,407 $ (22,403) BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - 1989 UNLIMITED GENERAL OBLIGATION BOND REDEMPTION FUND (Coulon Park)For the Year Ended December 31, 2008Combining Statements & Schedules, 6-25 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARYDIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 2,150,000 $ 2,700,000 $ 824,707 $ (1,875,293) Intergovernmental revenues300,000 300,000 266,806 (33,194) Contributions- 75,000 75,000 - Interest750,000 750,000 655,931 (94,069) Miscellaneous revenues- 1,209,000 1,209,000 - TOTAL REVENUES$ 3,200,000 $ 5,034,000 $ 3,031,444 $ (2,002,556) EXPENDITURESCurrent:Economic environment$ 60,000 $ 78,780 $ 67,248 $ (11,532) Capital outlay13,648,000 18,979,005 6,596,162 (12,382,843) TOTAL EXPENDITURES$ 13,708,000 $ 19,057,785 $ 6,663,410 $ (12,394,375) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (10,508,000) $ (14,023,785) $ (3,631,966) $ 10,391,819 OTHER FINANCING SOURCES (USES)Transfer in$ 479,723 $ 1,379,418 $ 885,378 $ (494,040) TOTAL OTHER FINANCE SOURCES (USES)$ 479,723 $ 1,379,418 $ 885,378 $ (494,040) NET CHANGE IN FUND BALANCE$ (10,028,277) $ (12,644,367) $ (2,746,588) $ 9,897,779 FUND BALANCE JANUARY 1$ 16,520,688 $ 16,520,688 $ 16,520,688 $- FUND BALANCE DECEMBER 31$ 6,492,411 $ 3,876,321 $ 13,774,100 $ 9,897,779 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - MUNICIPAL FACILITIES CAPITAL IMPROVEMENT FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-26 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESLicenses and permits$ 1,800,000 $ 1,800,000 $ 1,956,165 $ 156,165 Intergovernmental revenues22,827,095 35,730,800 17,358,161 (18,372,639) TOTAL REVENUES$ 24,627,095 $ 37,530,800 $ 19,314,326 $ (18,216,474) EXPENDITURESCapital outlay$ 29,928,671 $ 46,353,715 $ 17,991,860 $ (28,361,855) TOTAL EXPENDITURES$ 29,928,671 $ 46,353,715 $ 17,991,860 $ (28,361,855) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (5,301,576) $ (8,822,915) $ 1,322,466 $ 10,145,381 OTHER FINANCING SOURCES (USES)Transfer in$ 2,608,229 $ 6,035,000 $ 2,868,229 $ (3,166,771) Transfer (out)- (75,000) (75,000) - Sale of capital assets - 19,908 19,908 TOTAL OTHER FINANCE SOURCES (USES) $ 2,608,229 $ 5,960,000 $ 2,813,137 $ (3,146,863) NET CHANGE IN FUND BALANCE$ (2,693,347) $ (2,862,915) $ 4,135,603 $ 6,998,518 FUND BALANCE JANUARY 1$ 4,355,803 $ 4,355,803 $ 4,355,803 $- FUND BALANCE DECEMBER 31$ 1,662,456 $ 1,492,888 $ 8,491,406 $ 6,998,518 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - GENERAL GOVERNMENT CAPITAL IMPROVEMENT FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-27 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$- $ 1,227,210 $ 131,034 $ (1,096,176) Licenses and permits- 268,000 268,000 - Intergovernmental revenues- 847,849 500,000 (347,849) Charges for services- 978,152 700,202 (277,950) Interest- - 34 34 TOTAL REVENUES$- $ 3,321,211 $ 1,599,270 $ (1,721,941) EXPENDITURESCurrent:Economic environment$- $ 56,000 $ 4,218 $ (51,782) Capital outlay- 2,166,000 1,912,775 (253,225) Debt service:Interest payment50,000 50,000 21,574 (28,426) TOTAL EXPENDITURES$ 50,000 $ 2,272,000 $ 1,938,567 $ (333,433) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (50,000) $ 1,049,211 $ (339,297) $ (1,388,508) OTHER FINANCING SOURCES (USES)Transfer (out)$- $ (24,000) $- $ (24,000) TOTAL OTHER FINANCE SOURCES (USES) $- $ (24,000) $- $24,000 NET CHANGE IN FUND BALANCE$ (50,000) $ 1,025,211 $ (339,297) $ (1,364,508) FUND BALANCE JANUARY 1$ 541,655 $ 541,655 $ 541,655 $- FUND BALANCE DECEMBER 31$ 491,655 $ 1,566,866 $ 202,358 $ (1,364,508) BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - SOUTH LAKE WASHINGTON INFRASTRUCTUREFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-28 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonT0TALNON-MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDSASSETSCurrent assets:Cash & cash equivalents$ 545,204 $ 533,497 $1,078,701 Investments at fair value500,000 308,643 808,643 Receivables (net of allowances):Customer accounts9,694 30,700 40,394 Interest - investments17,978 52,735 70,713 Due from other funds5,269 - 5,269 Due from other governmental units50,468 - 50,468 Inventory of materials and supplies- 146,531 146,531 Total current assets$ 1,128,613 $ 1,072,106 $ 2,200,719 Restricted assets:Investments at fair value$- $ 441,358 $ 441,358 Total restricted assets$- $ 441,358 $ 441,358 Capital assets (net)$ 10,024,768 $ 9,059,240 $ 19,084,008 Deferred charges and other assets- 31,163 31,163 TOTAL ASSETS$ 11,153,381 $ 10,603,867 $21,757,248 COMBINING STATEMENT OF NET ASSETSNON-MAJOR ENTERPRISE FUNDSDecember 31, 2008Page 1 of 2Combining Statements & Schedules, 6-29 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonT0TALNON-MAJORAIRPORT GOLF COURSE ENTERPRISE FUNDSLIABILITIESCurrent liabilities:Accounts payable$ 160,974 $63,920 $224,894 Accrued employee benefits payable19,241 30,987 50,228 Accrued taxes payable24,663 11,387 36,050 Custodial Accounts- 125,149 125,149 Deferred revenue88,113 - 88,113 Operating leases payable- 31,187 31,187 Total current liabilities$ 292,991 $ 262,630 $555,621 Liabilities payable from restricted assets:Revenue bonds payable - current$- $ 310,000 $310,000 Total liabilities payable from restricted assets$- $ 310,000 $310,000 Long-term liabilities:Revenue bonds payable$- $ 2,200,000 $2,200,000 Unamortized discounts on revenue bonds- (212,188) (212,188) Accrued employee wages and benefits payable26,199 63,675 89,874 Operating leases payable- 23,993 23,993 Total long-term liabilities$26,199 $ 2,075,480 $2,101,679 TOTAL LIABILITIES$ 319,190 $ 2,648,110 $2,967,300 NET ASSETSInvestment in capital assets, net of related debt$ 10,024,768 $ 6,737,435 $ 16,762,203 Restricted441,358 441,358 Unrestricted809,423 776,964 1,586,387 TOTAL NET ASSETS$ 10,834,191 $ 7,955,757 $ 18,789,948 NON-MAJOR ENTERPRISE FUNDSCOMBINING STATEMENT OF NET ASSETSDecember 31, 2008Page 2 of 2Combining Statements & Schedules, 6-30 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonT0TALNON-MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDSOPERATING REVENUES:Charges for services$ 1,086,254 $ 2,262,841 $3,349,095 TOTAL OPERATING REVENUES$ 1,086,254 $ 2,262,841 $3,349,095 OPERATING EXPENSES:Operations and maintenance$ 671,011 $ 1,174,615 $1,845,626 Benefit payments135,813 283,871 419,684 Professional services48,452 - 48,452 Administrative and general356,166 360,824 716,990 Insurance52,020 8,500 60,520 Taxes129 - 129 Depreciation470,301 337,670 807,971 TOTAL OPERATING EXPENSES$ 1,733,892 $ 2,165,480 $3,899,372 OPERATING INCOME (LOSS)$ (647,638) $97,361 $(550,277) NON-OPERATING REVENUES(EXPENSES):Interest revenues$24,488 $48,028 $72,516 Gain (loss) on sale of capital assets- (6,749) (6,749) Other non-operating revenues(expenses)14,215 1,504 15,719 Interest expense- (134,594) (134,594) Amortization of debt discount and expense- (34,764) (34,764) NON-OPERATING REVENUE NET OF EXPENSES $38,703 $ (126,575) $(87,872) INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS$ (608,935) $ (29,214) $(638,149) Capital Contributions$ 179,292 $- $ 179,292 CHANGE IN NET ASSETS$ (429,643) $ (29,214) $(458,857) NET ASSETS, JANUARY 1$ 11,263,834 $ 7,984,971 $19,248,805 NET ASSETS, DECEMBER 31$ 10,834,191 $ 7,955,757 $18,789,948 ENTERPRISE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSNON - MAJOR ENTERPRISE FUNDSFor the Year Ended December 31, 2008BUSINESS-TYPE ACTIVITIESCombining Statements & Schedules, 6-31 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonT0TALNON-MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDSCASH FLOWS FROM OPERATING ACTIVITIES:Cash received for services$ 1,134,361 $ 2,287,543 $3,421,904 Cash paid to suppliers for goods & services(990,916) (1,604,659) (2,595,575) Cash paid to employees(131,755) (275,593) (407,348) Other operating receipts(38,684) - (38,684) Other non-operating receipts14,215 (139,839) (125,624) NET CASH PROVIDED (USED) BYOPERATING ACTIVITIES$ (12,779) $ 267,452 $254,673 NONCAPITAL FINANCING ACTIVITIES$- $- $- CASH FLOWS FROM CAPITALFINANCING ACTIVITIES:Acquisition & construction of capital assets$ (228,759) $(66,235) $(294,994) Principal payments on debt- (310,000) (310,000) Interest payments on debt- 3,098 3,098 NET CASH PROVIDED (USED) BYCAPITAL FINANCING ACTIVITIES$ (228,759) $ (373,137) $(601,896) CASH FLOWS FROM INVESTING ACTIVITIES:Interest on investments$12,955 $9,188 $22,143 NET CASH PROVIDED (USED) BYINVESTING ACTIVITIES$12,955 $9,188 $22,143 BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF CASH FLOWSNON-MAJOR ENTERPRISE FUNDSFor the Year Ended December 31, 2008Page 1 of 2NET INCREASE (DECREASE) IN CASH &CASH EQUIVALENTS$ (228,583) $(96,497) $(325,080) CASH & CASH EQUIVALENTS, JANUARY 1$ 773,787 $ 629,994 $1,403,781 CASH , RESTRICTED CASH ,& CASH EQUIVALENTS, DECEMBER 31$ 545,204 $ 533,497 $1,078,701 Combining Statements & Schedules, 6-32 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTAL NON-MAJORAIRPORT GOLF COURSE ENTERPRISE FUNDSRECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED (USED)BY OPERATING ACTIVITIES:Operating income (loss)$ (647,638) $97,361 $(550,277) Adjustments to reconcile operating income(loss) to net cash provided (used)by operating activities:Depreciation & amortization ofdeferred charges$ 470,301 $ 337,670 $807,971 Other non-operating revenue14,215 (139,839) (125,624) (Increase) decrease inaccounts receivable(7,471) 26,023 18,552 (Increase) decrease in due fromother funds/governmental units(38,684) - (38,684) (Increase) decrease in inventory& prepaid items- (54,463) (54,463) Increase (decrease) in vouchersretainage payable- 14,636 14,636 Increase (decrease) in payables& other short-term liabilities136,862 (22,226) 114,636 Increase (decrease) in customer deposits- 12 12 Increase (decrease) in deferred revenues55,578 - 55,578 Increase (decrease) in accruedemployee leave benefits4,058 8,278 12,336 Total adjustments$ 634,859 $ 170,091 $804,950 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES$ (12,779) $ 267,452 $254,673 NONCASH INVESTING, CAPITAL, ANDFINANCING ACTIVITIESDepreciation $ 470,301 $ 337,670 $807,971 Net amort. bond prem. discount & bond issue costs- 34,764 34,764 Contributions of capital assets179,292 - 179,292 ENTERPRISE FUNDSBUSINESS-TYPE ACTIVITIESSTATEMENT OF CASH FLOWSNON-MAJOR ENTERPRISE FUNDSFor the Year Ended December 31, 2008Page 2 of 2Combining Statements & Schedules, 6-33 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTALEQUIPMENT INSURANCEINTERNAL RENTALFUNDSERVICE FUNDSASSETSCurrent assets:Cash & cash equivalents$ 2,311,623 $ 7,154,795 $9,466,418 Investments at fair value1,650,000 9,644,461 11,294,461 Receivables (net of allowances):Customer accounts3,286 13,403 16,689 Interest - investments172,474 600,454 772,928 Due from other governmental units7,377 - 7,377 Prepayments139,911 457,074 596,985 Total current assets$ 4,284,671 $ 17,870,187 $ 22,154,858 Property, plant, and equipment:Capital assets (net)$ 11,574,644 $- $ 11,574,644 Total property, plant, and equipment$ 11,574,644 $- $ 11,574,644 TOTAL ASSETS$ 15,859,315 $ 17,870,187 $ 33,729,502 COMBINING STATEMENT OF NET ASSETSINTERNAL SERVICE FUNDSDecember 31, 2008Page 1 of 2Combining Statements & Schedules, 6-34 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTALEQUIPMENT INSURANCEINTERNALRENTALFUNDSERVICE FUNDSLIABILITIESCurrent liabilities:Accounts payable$145,741 $337,088 $482,829 Due to other funds- 923 923 Accrued employee benefits payable32,925 19,946 52,871 Accrued taxes payable(405) - (405) Total current liabilities$178,261 $357,957 $536,218 Long-term liabilities:Accrued employee wages and benefits payable$192,682 $731,248 $923,930 Claims incurred but not reported- 2,926,675 2,926,675 Total long-term liabilities$192,682 $ 3,657,923 $3,850,605 TOTAL LIABILITIES$370,943 $ 4,015,880 $4,386,823 NET ASSETSInvestment in capital assets, Net of related debt$ 11,574,644 $- $11,574,644 Unrestricted3,913,728 13,854,307 17,768,035 TOTAL NET ASSETS$ 15,488,372 $ 13,854,307 $29,342,679 COMBINING STATEMENT OF NET ASSETSINTERNAL SERVICE FUNDSDecember 31, 2008Page 2 of 2Combining Statements & Schedules, 6-35 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTALEQUIPMENT INSURANCEINTERNAL RENTALFUNDSERVICE FUNDSOPERATING REVENUES:Charges for services$ 8,525,692 $ 2,653,273 $ 11,178,965 Other operating revenues- 11,498,439 11,498,439 TOTAL OPERATING REVENUES$8,525,692 $ 14,151,712 $22,677,404 OPERATING EXPENSES:Operations and maintenance$2,790,860 $239,649 $3,030,509 Benefit payments1,783,211 10,458,876 12,242,087 Professional services400,419 509,366 909,785 Administrative and general1,907,393 137,597 2,044,990 Insurance251,430 965,716 1,217,146 Depreciation517,357 - 517,357 TOTAL OPERATING EXPENSES$7,650,670 $ 12,311,204 $19,961,874 OPERATING INCOME (LOSS)$875,022 $1,840,508 $2,715,530 NON-OPERATING REVENUES (EXPENSES):Intergovernmental revenues$- $19,675 $19,675 Interest revenues182,726 565,535 748,261 Gain (loss) on sale of capital assets45,045 - 45,045 Other non-operating revenues (expenses)336,355 577,668 914,023 Interest expense(22,700) - (22,700) NON-OPERATING REVENUE NET OF EXPENSE$541,426 $1,162,878 $1,704,304 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS$1,416,448 $3,003,386 $4,419,834 Transfers in (out)$317,000 $(60,000) $257,000 CHANGE IN NET ASSETS$1,733,448 $2,943,386 $4,676,834 NET ASSETS, JANUARY 1$ 13,754,924 $ 10,910,921 $24,665,845 NET ASSETS, DECEMBER 31$ 15,488,372 $ 13,854,307 $29,342,679 COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSINTERNAL SERVICE FUNDSFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-36 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTALEQUIPMENT INSURANCEINTERNAL RENTALFUNDSERVICE FUNDSCASH FLOWS FROM OPERATING ACTIVITIES:Cash received for services$ 8,524,299 $ 14,169,279 $ 22,693,578 Cash paid to suppliers for goods & services(3,816,789) 677,953 (3,138,836) Cash paid to employees(1,733,400) (10,404,518) (12,137,918) Other operating receipts(1,352,048) (2,338,863) (3,690,911) Other non-operating receipts(232,432) - (232,432) NET CASH PROVIDED (USED) BYOPERATING ACTIVITIES$1,389,630 $2,103,851 $3,493,481 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESTransfers from other funds$- $(60,000) $(60,000) NET CASH PROVIDED (USED) BYNONCAPITAL FINANCING ACTIVITIES$- $(60,000) $(60,000) CASH FLOWS FROM CAPITALFINANCING ACTIVITIES:Acquisition & construction of capital assets$ (4,100,399) $- $ (4,100,399) NET CASH PROVIDED (USED) BYCAPITAL FINANCING ACTIVITIES$ (4,100,399) $- $ (4,100,399) CASH FLOWS FROM INVESTING ACTIVITIES:Payments for investments$1,853,828 $1,586,898 $3,440,726 Interest on investments80,953 232,004 312,957 NET CASH PROVIDED (USED) BYINVESTING ACTIVITIES$1,934,781 $1,818,902 $3,753,683 NET INCREASE (DECREASE) IN CASH &CASH EQUIVALENTS$(775,988) $3,862,753 $ 3,086,765 CASH & CASH EQUIVALENTS, JANUARY 1$3,087,611 $3,292,042 $6,379,653 CASH & CASH EQUIVALENTS, DECEMBER 31 $2,311,623 $7,154,795 $9,466,418 COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDSFor the Year Ended December 31, 2008Page 1 of 2Combining Statements & Schedules, 6-37 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTAL EQUIPMENT INSURANCEINTERNALRENTALFUNDSERVICE FUNDSRECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED (USED)BY OPERATING ACTIVITIES:Operating income (loss)$ 875,022 $ 1,840,508 $2,715,530 Adjustments to reconcile operating income(loss) to net cash provided (used)by operating activities:Depreciation & amortization ofdeferred charges517,357 - 517,357 Other non-operating revenue358,700 597,343 956,043 (Increase) decrease inaccounts receivable(1,393) 17,567 16,174 (Increase) decrease in due fromother funds/governmental units4,953 - 4,953 (Increase) decrease in inventory& prepaid items(11,509) (209,650) (221,159) Increase (decrease) in vouchersretainage payable(410,080) (406,848) (816,928) Increase (decrease) in payables& other short-term liabilities(4,740) 923 (3,817) Increase (decrease) in accruedemployee leave benefits61,320 264,008 325,328 Total adjustments$ 514,608 $ 263,343 $777,951 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES$ 1,389,630 $ 2,103,851 $3,493,481 NONCASH INVESTING, CAPITAL, ANDFINANCING ACTIVITIESDepreciation & amortization 517,357 - 517,357 For the Year Ended December 31, 2008COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDSPage 2 of 2Combining Statements & Schedules, 6-38 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonBEGINNINGENDING BALANCEDEBITS CREDITSBALANCEASSETSCash$ 728,049 $592,653 480,236 $840,466 TOTAL ASSETS$ 728,049 $592,653 $480,236 $840,466 LIABILITIESVouchers & contacts payable$62,166 $453,863 423,633 $31,936 Deposits payable665,883 442,518 585,165 808,530 TOTAL LIABILITIES$ 728,049 $896,381 $ 1,008,798 $840,466 STATEMENT OF CHANGES IN ASSETS AND LIABILITIESAGENCY FUND - SPECIAL DEPOSITFor the Year Ended December 31, 2008Page 1 of 1Combining Statements & Schedules, 6-39 2008 Comprehensive Annual Financial Report City of Renton, Washington , - This page intentionally left blank. 2007 Comprehensive Annual Financial Report City of Renton, Washington Statistical Section, 7-1 STATISTICAL SECTION December 31, 2008 Presentations included in the Statistical Section of the Comprehensive Annual Financial Report (CAFR) provide users detailed information as a context for understanding what the information in the financial statements, note disclosures and the supporting schedules say about the government’s overall financial health. The section is divided into five categories based on the following: FINANCIAL TRENDS These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time. REVENUE CAPACITY These schedules present information to help the reader assess the government’s most significant local revenue source – property tax. DEBT CAPACITY These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. DEMOGRAPHIC AND ECONOMIC INFORMATION These schedules offer demographic and economic indicators to help the reader understand the environment within which the government’s financial activities take place. OPERATING INFORMATION These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs. City of Renton, Washington 200 Comprehensive Annual Financial Report This page intentionally left blank. 2008 Comprehensive Annual Financial ReportCity of Renton, Washington 2004 2005 200620072008Governmental activitiesInvested in capital assets, net of related debt 195,282,055$ 203,297,293$ 209,964,556$ 232,714,563$ 353,197,782$ Restricted21,460,395 28,578,305 42,748,022 32,648,993 33,294,987 Unrestricted25,746,196 29,272,573 29,340,290 32,075,613 34,160,010 Total governmental activities net assets242,488,646$ 261,148,171$ 282,052,868$ 297,439,169$ 420,652,779$ Business-type activitiesInvested in capital assets, net of related debt 163,891,546$ 171,827,746$ 181,515,939$ 188,518,151$ 202,255,997$ Restricted3,555,690 3,555,690 25,097,253 3,586,667 4,171,525 Unrestricted21,612,156 21,541,563 19,357,695 17,973,237 17,430,207 Total business-type activities net assets189,059,392$ 196,924,999$ 225,970,887$ 210,078,055$ 223,857,729$ Primary governmentInvested in capital assets, net of related debt 359,173,601$ 375,125,039$ 391,480,495$ 421,232,714$ 555,453,779$ Restricted25,016,085 32,133,995 67,845,275 36,235,660 37,466,512$ Unrestricted47,358,352 50,814,136 48,697,985 50,048,850 51,590,217$ Total primary government net assets431,548,038$ 458,073,170$ 508,023,755$ 507,517,224$ 644,510,508$ 1First Year of Net Assets by ComponentSource : City of Renton, Finance and IS DepartmentTABLE 1NET ASSETS BY COMPONENTLAST FIVE FISCAL YEARS(Accrual basis of accounting)FISCAL YEARStatistical Section, 7-3 2008 Comprehensive Annual Financial ReportCity of Renton, Washington 2004 2005 20062007 2008 EXPENSESGovernment activities:General government 22,144,567$ 21,137,856$ 19,977,086$ 29,112,970$ 12,010,422$ Judicial1,340,655 1,380,816 1,434,134 1,845,031 1,761,665 Security of persons and property28,647,443 29,496,791 30,749,762 36,213,120 46,289,454 Physical environment2,278,445 2,208,340 2,618,832 2,749,417 3,333,471 Transportation6,797,356 4,183,880 15,798,138 11,237,287 13,675,581 Economic development5,519,929 5,899,796 6,372,118 6,880,687 6,823,426 Mental and physical health228,966 300,171 295,072 301,495 325,066 Culture and recreation10,303,074 9,744,692 9,695,924 11,036,931 17,025,800 Interest on long-term debt1,627,581 1,710,346 1,772,370 2,594,784 2,663,436 Total governmental activities expenses78,888,016$ 76,062,688$ 88,713,436$ 101,971,722$ 103,908,321$ Business-type activities:Water23,347,678$ 25,884,227$ 27,220,132$ 28,657,468$ 32,738,366$ Airport936,305 1,226,810 1,196,363 1,396,054 1,733,894 Solid Waste8,558,441 9,327,525 9,706,016 10,606,560 11,518,047 Golf1,933,113 2,132,077 2,056,874 2,277,454 2,334,838 Total business-type activities net assets34,775,537$ 38,570,639$ 40,179,385$ 42,937,536$ 48,325,145$ Total primary government expenses113,663,553$ 114,633,327$ 128,892,821$ 144,909,258$ 152,233,466$ PROGRAM REVENUESSource : City of Renton, Finance & IS DepartmentCharges for services:General government charges15,579,366$ 17,525,244$ 21,852,465$ 23,163,645$ 5,614,638$ Judicial 1,531,773 697,883 831,485 1,169,581 2,420,913 Security of persons and property200,149 247,235 517,151 591,586 550,773 Physical environment837,027894,750400,798999,484864,581TABLE 2CHANGES IN NET ASSETS LAST FIVE FISCAL YEARS (Accrual basis of accounting)Page 1 of 2FISCAL YEARPhysical environment 837,027 894,750 400,798 999,484 864,581 Transportation 1,916,862 1,660,698 1,628,154 1,432,215 2,165,538 Economic environment4,236,596 4,516,899 4,368,399 7,857,186 4,236,983 Culture and recreation 1,507,387 1,558,458 1,742,071 1,649,960 1,739,055 Operating grants and contributions6,213,791 4,979,601 4,596,836 5,265,737 9,570,931 Capital grants and contributions1,745,718 1,227,503 5,909,870 4,940,471 18,109,124 Total governmental activities program revenues33,768,669$ 33,308,271$ 41,847,229$ 47,069,865$ 45,272,536$ Business-type activities:Charges for services:Business-type charges38,917,114$ 40,029,830$ 40,056,079$ 45,403,349$ 44,651,684$ Operating grants and contributions112,616 196,974 77,688 243,537 264,784 Capital grants and contributions6,583,241 5,101,699 6,317,203 1,761,802 6,888,975 Total business-type activities program revenues45,612,971$ 45,328,503$ 46,450,970$ 47,408,688$ 51,805,443$ Total primary government program revenues79,381,640$ 78,636,774$ 88,298,199$ 94,478,553$ 97,077,979$ Net (expense)/revenueGovernmental activities(45,119,347)$ (42,754,417)$ (46,866,207)$ (54,901,857)$ (58,635,785)$ Business-type activities10,837,434 6,757,864 6,271,585 4,471,152 3,480,298 Total primary government net expense(34,281,913)$ (35,996,553)$ (40,594,622)$ (50,430,705)$ (55,155,487)$ Statistical Section, 7-4 2008 Comprehensive Annual Financial ReportCity of Renton, Washington 2004 2005 200620072008GENERAL REVENUES AND OTHER CHANGESIN NET ASSETSGovernmental activities:TaxesProperty taxes 19,578,390$ 21,523,818$ 23,600,131$ 23,106,578$ 29,381,036$ Timber taxes- Retail sales taxes18,281,949 18,910,823 20,869,595 22,749,831 23,190,076 Business taxes9,957,129 10,643,068 11,219,303 11,962,879 14,945,173 Excise taxes6,751,264 6,938,265 7,718,945 8,236,876 4,362,945 Penalties and interest6,048 49 3,799 33,949 6,477 Investment earnings1,291,669 1,449,001 3,251,975 3,465,517 2,419,260 Miscellaneous4,346,619 1,958,217 689,243 1,218,889 2,104,133 Transfers(10,304) (9,300) (68,446) - 110,000 Total governmental activities60,202,764$ 61,413,941$ 67,284,545$ 70,774,519$ 76,519,100$ Business-type activities:Investment earnings270,605$ 458,797$ 881,486$ 1,041,576$ 1,120,342$ Miscellaneous119,455 639,646 282,808 135,986 85,493 Transfers10,304 9,300 68,446 - (110,000) Total business-type activities400,364$ 1,107,743$ 1,232,740$ 1,177,562$ 1,095,835$ Total primary government60,603,128$ 62,521,684$ 68,517,285$ 71,952,081$ 77,614,935$ CHANGES IN NET ASSETSGovernmental activities15,083,417$ 18,659,524$ 20,418,338$ 15,872,662$ 17,883,315$ Business-type activities11,237,798 7,865,607 7,504,325 5,648,714 4,576,133 Total primary government26,321,215$ 26,525,131$ 27,922,663$ 21,521,376$ 22,459,448$ FISCAL YEARTABLE 2CHANGES IN NET ASSETS LAST FIVE FISCAL YEARS (Accrual basis of accounting)Page 2 of 21First Year of Changes in Net AssetsSource: City of Renton, Finance and IS DepartmentStatistical Section, 7-5 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003Reserved83,000$ 311,673$ 318,053$ 83,000$ 83,000$ TABLE 3FUND BALANCE OF GOVERNMENT FUNDSLAST TEN FISCAL YEARS(Accrual basis of accounting)Page 1 of 2FISCAL YEAR$-$2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Unreserved5,381,222 8,025,332 6,428,315 3,920,136 6,758,364 Total general fund5,464,222$ 8,337,005$ 6,746,368$ 4,003,136$ 6,841,364$ All other governmental fundsReserved-$ -$ 920,000$ 1,260,000$ 880,000$ Unreserved, reported in:Special revenue funds2,890,947 3,898,265 4,938,021 3,361,529 3,985,917 Debt service funds2,987,015 2,653,495 2,546,129 2,030,335 1,916,243 Capital project funds21,682,591 23,570,741 29,133,681 33,742,638 22,628,512 Total all other governmental funds 27,560,553$ 30,122,501$ 37,537,831$ 40,394,502$ 29,410,672$ Source : City of Renton, Finance and IS Department$-$2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Statistical Section, 7-6 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008General fundReserved 108,742$ 8,000$ 8,000$ 8,000$ 8,000$ TABLE 3FUND BALANCE OF GOVERNMENT FUNDSLAST TEN FISCAL YEARS(Accrual basis of accounting)Page 2 of 2FISCAL YEAR$-$10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008All other governmental fundsAll other governmental fundsUnreserved8,603,003 9,189,871 10,737,097 16,474,384 13,509,097 Total general fund8,711,745$ 9,197,871$ 10,745,097$ 16,482,384$ 13,517,097$ All other governmental fundsReserved500,000$ 240,000$ 63,900$ 975,000$ 1,000,000$ Unreserved, reported in:Special revenue funds3,238,246 2,929,692 4,243,189 2,616,596 2,806,667 Debt service funds1,486,894 2,752,445 3,068,587 1,392,915 1,270,936 Capital project funds26,202,437 27,890,457 42,152,437 29,057,397 29,217,384 Total all other governmental funds 31,427,577$ 33,812,594$ 49,528,113$ 34,041,908$ 34,294,987$ $-$10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008All other governmental fundsAll other governmental fundsStatistical Section, 7-7 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003REVENUESTaxes 44,397,793$ 47,827,013$ 50,218,530$ 49,901,849$ 53,722,322$ Licenses and permits3,780,303 4,562,892 4,065,518 4,229,501 4,226,883 Intergovernmental5,637,817 6,793,084 6,129,103 6,212,359 4,533,544 Charges for services7,157,860 7,805,409 7,301,538 7,777,778 6,016,704 Fines831,327 937,689 993,093 1,043,199 1,055,564 Interfund revenues- - - - 3,482,110 Special assessments689,931 352,648 333,056 312,908 295,673 Contributions91,383 64,092 191,877 118,103 255,102 Interest2,129,455 2,307,978 2,583,931 1,073,538 1,081,420 Miscellaneous682,625 727,465 1,231,574 1,198,846 40,314 Total revenues65,398,494$ 71,378,270$ 73,048,220$ 71,868,081$ 74,709,636$ EXPENDITURESGeneral government10,058,875$ 10,858,538$ 11,193,462$ 12,523,577$ 13,283,955$ Security of persons and property21,300,403 22,889,748 23,569,864 24,924,380 26,029,354 Physical environment1,892,541 1,769,642 1,878,956 1,898,665 2,015,562 Transportation10,706,833 10,330,362 13,885,329 10,622,373 4,461,387 Economic and physical development3,814,967 4,337,239 4,484,526 4,479,582 4,613,587 Mental and physical health8,486 8,599 6,756 11,445 10,368 Source : City of Renton, Finance & IS Depa6,166,358 6,606,662 7,263,056 7,382,069 7,585,936 Capital outlay11,002,950 7,450,837 5,359,801 10,532,479 21,089,534 Debt servicePrincipal2,707,994 2,481,026 2,086,447 1,849,269 1,417,042 Interest1,345,588 1,205,281 882,748 1,382,717 1,833,102 Total expenditures69,004,995$ 67,937,934$ 70,610,945$ 75,606,556$ 82,339,827$ Excess of revenuesover (under) expenditures(3,606,501)$ 3,440,336$ 2,437,275$ (3,738,475)$ (7,630,191)$ OTHER FINANCING SOURCES (USES)Transfers in4,670,101$ 3,694,498$ 6,850,944$ 9,441,451$ 3,511,700$ Transfers out(4,587,778) (3,662,809) (8,873,294) (10,009,962) (3,551,700) Other financing sources (uses)Proceeds of long-term debt38,990 - 6,023,484 3,879,038 - Interfund loan proceeds448,000 823,000 363,800 860,000 - Interfund loan repayments(448,000) (823,000) (363,800) (860,000) - Funds remitted to bond trusteeCapital leases- - - - - Sale of capital assets563,283 1,403,688 61,685 104,825 171,249 Total other financingsources (uses)684,596$ 1,435,377$ 4,062,819$ 3,415,352$ 131,249$ Net change in fund balances(2,921,905)$ 4,875,713$ 6,500,094$ (323,123)$ (7,498,942)$ Debt service as a percentage of noncapitalexpenditures6.99%6.09%4.55%4.97%5.31%Source : City of Renton, Finance and IS DepartmentTABLE 4CHANGES IN FUND BALANCES OF GOVERNMENT FUNDSLAST TEN FISCAL YEARS(Accrual Basis of Accounting)Page 1 of 2FISCAL YEARStatistical Section, 7-8 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008REVENUESTaxes 55,344,506$ $58,794,081 $64,005,567 66,698,876$ 72,514,388$ Licenses and permits4,329,086 4,686,608 4,962,507 5,828,230 4,975,585 Intergovernmental7,570,570 5,687,169 9,769,225 9,791,830 27,549,621 Charges for services6,593,153 5,563,289 6,543,289 10,048,879 7,145,950 Fines1,008,984 731,286 906,685 1,150,079 2,002,854 Interfund revenues3,638,574 3,796,042 2,843,147 3,352,411 3,072,526 Special assessments20,852 23,340 511,932 51,723 - Contributions249,938 317,600 214,387 353,582 135,000 Interest1,059,886 1,060,353 2,570,682 2,486,889 1,740,035 Miscellaneous122,799 569,881 223,908 86,322 1,273,359 Total revenues79,938,348$ 81,229,649$ 92,551,329$ 99,848,821$ 120,409,318$ EXPENDITURESGeneral government13,660,095$ 14,382,634$ 13,972,592$ 14,597,355$ 15,094,140$ Judicial1,761,665 Security of persons and property27,462,613 29,031,626 31,157,303 35,583,500 45,530,208 Physical environment2,201,777 2,190,228 2,609,452 2,764,563 3,123,883 Transportation4,615,345 4,711,924 5,097,449 6,403,358 6,332,006 Economic and physical development 4,947,080 5,123,024 5,519,219 5,896,589 6,673,681 Mental and physical health11,723 12,700 9,231 13,818 16,459 Culture and recreation8,563,967 8,876,250 9,933,854 10,830,224 11,119,073 Capital outlay13,246,669 11,438,104 21,117,525 29,320,023 28,520,453 Debt servicePrincipal1,477,579 1,375,738 1,503,350 1,565,904 2,079,551 Interest1,763,893 1,713,525 2,129,656 2,646,623 2,729,247 Total expenditures77,950,741$ 78,855,753$ 93,049,631$ 109,621,957$ 122,980,366$ Excess of revenuesover (under) expenditures1,987,607$ 2,373,896$ (498,302)$ (9,773,136)$ (2,571,048)$ OTHER FINANCING SOURCES (USES)Transfers in6,563,978$ 5,476,360$ 2,962,895$ 5,782,988$ 4,053,607$ Transfers out(7,764,278) (5,443,660) (3,705,341) (5,782,988) (4,200,607) Other financing sources (uses)Proceeds of long-term debt- - 18,490,029 Interfund loan proceeds- - Interfund loan repayments- - Funds remitted to bond trustee- Capital leases- - Sale of capital assets117,328 464,547 13,464 24,218 20,643 Total other financingsources (uses)(1,082,972)$ 497,247$ 17,761,047$ 24,218$ (126,357)$ Net change in fund balances904,635$ 2,871,143$ 17,262,745$ (9,748,918)$ (2,697,405)$ Debt service as a percentage of noncapitalexpenditures5.01%4.58%5.05%5.25%5.09%TABLE 4CHANGES IN FUND BALANCES OF GOVERNMENT FUNDSLAST TEN FISCAL YEARS(Accrual Basis of Accounting)Page 2 of 2FISCAL YEARStatistical Section, 7-9 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPENALTY /ADMISSION /INTERESTFISCAL PROPERTY TIMBER SALES UTILITY EXCISE DELINQUENTYEARTAXTAXTAXTAXTAXTAXTOTAL1999 15,659,424$ N/A 15,282,981$ 8,289,865$ 4,831,792$ 1,217$ 44,065,280$ 2000 16,397,638 N/A 16,585,478 9,788,167 4,724,682 8,462 47,504,428 2001 16,794,636 N/A 16,724,787 11,105,722 5,066,122 1,939 49,693,206 200218 373 237N/A16 431 4569 798 2604 711 4464 40449 318 803TABLE 5GENERAL GOVERNMENT TAX REVENUE BY SOURCELAST TEN FISCAL YEARS(Modified Accrual Basis of Accounting)$0 $10 $20 $30 $40 $50 $60 $70 $80 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008MillionsTAX REVENUES BY SOURCE1999 - 2008Delinquent TaxExcise TaxAdmission/Utility TaxSales TaxTimber TaxProperty Tax200218,373,237 N/A16,431,456 9,798,260 4,711,446 4,404 49,318,803 2003 19,587,986 N/A 17,334,831 10,895,131 5,449,877 5,415 53,273,240 2004 19,886,805 N/A18,281,949 9,957,130 6,751,265 6,048 54,883,197 2005 21,826,229 N/A18,910,822 10,643,068 6,938,264 49 58,318,433 2006 23,600,131 N/A 20,869,596 11,219,302 7,718,945 3,799 63,411,773 2007 23,106,578 N/A 22,749,831 11,962,879 8,236,876 33,949 66,090,113 2008 29,381,036 - 23,190,076 14,945,173 4,362,945 6,477 71,885,707 Source: City of Renton, Finance and IS Department$0 $10 $20 $30 $40 $50 $60 $70 $80 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008MillionsTAX REVENUES BY SOURCE1999 - 2008Delinquent TaxExcise TaxAdmission/Utility TaxSales TaxTimber TaxProperty TaxStatistical Section, 7-10 2008 Comprehensive Annual Financial ReportCity of Renton, Washington% OF TOTAL% OF TOTALTAXABLE1TAXABLETAXABLETAXABLEASSESSEDASSESSEDASSESSEDASSESSEDTAXPAYERVALUERANKVALUEVALUERANKVALUEBoeing842,430,440$ 1 6.40%761,498,607$ 1 17.88%Paccar111,316,800 2 0.85%99,854,551 2 2.34%Puget Sound Energy-Elec/Gas98,478,828 3 0.75% 87,316,949 3 2.05%AMB Property Corp.61,191,200 4 0.46%Transwestern Harvest Lakeshore55,735,200 5 0.42%Providence Health 53,706,700 6 0.41%Fred Meyer Stores Inc51,138,403 7 0.39% 15,858,400 9 0.37%Axis Grand Holdings44,625,000 8 0.34%(formerly HSC Real Estate Inc.)BRE Properties40,500,000 9 0.31%ECI Two WTC LLC (WTCTPI LLC)37,433,000 10 0.28%University Street Properties 45,485,400 4 1.07%Renton Building 1-743,782,400 5 1.03%US West30,407,479 6 0.71%Renton Village Association17,781,100 7 0.42%Bay Apartment Communities17,500,000 8 0.41%Rosche One Int14,152,000 10 0.33%All Others11,768,638,214 89.39% 3,124,863,864 73.38%Total Assessed Valuation13,165,193,785$ 100.00% 4,258,500,750$ 100.00%Source: 1King County Department of Assessments TABLE 6PRINCIPAL PROPERTY TAX PAYERSDecember 31, 200820081999Statistical Section, 7-11 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonFISCALYEARPERSONAL PROPERTYENDEDRESIDENTIAL COMMERCIALDECEMBER 31PROPERTYPROPERTYOTHER2TABLE 7ASSESSED VALUE OF TAXABLE PROPERTYLAST TEN FISCAL YEARSPage 1 of 2REAL PROPERTY 1-2,000 4,000 6,000 8,000 10,000 12,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Assessed Value (millions)YearTotal Taxable Assessed ValueTaxable Assessed ValueDECEMBER 31PROPERTYPROPERTYOTHER 219993,543,075,457$ $ N/A715,425,293$ 20002,958,443,598 2,368,630,142 714,803,819 20011,703,991,595 2,613,181,185 745,490,732 20022,810,986,787 2,008,043,209 774,850,492 20032,314,794,930 2,921,180,100 747,879,276 20042,598,762,769 3,057,577,700 716,313,413 20052,823,407,473 3,217,655,000 656,709,434 20063,734,771,858 3,415,317,348 636,713,076 20074,201,702,500 3,853,709,290 754,326,325 20084,991,068,500 4,292,739,750 828,746,994 12000 is the first year when breakdown is available. Source is from TaxTools 4.1 Tax Database 2,4Source is from King County Department of Assessments 3The tax exempt real property value is not available for the last ten years-2,000 4,000 6,000 8,000 10,000 12,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Assessed Value (millions)YearTotal Taxable Assessed ValueTaxable Assessed ValueStatistical Section, 7-12 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonFISCALTOTALYEAR PERSONAL PROPERTY TOTALDIRECTENDEDTAX EXEMPT ASSESSEDTAXDECEMBER 31REAL PROPERTY3VALUERATE4TABLE 7ASSESSED VALUE OF TAXABLE PROPERTYLAST TEN FISCAL YEARSPage 2 of 2-0.500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008RateYearDirect Tax RateDirect Tax RateDECEMBER 31REAL PROPERTY 3VALUERATE 41999N/A 4,258,500,750$ 3.747 2000N/A 6,041,877,559 3.684 2001N/A 5,062,663,512 3.375 2002N/A 5,593,880,488 3.354 2003N/A 5,983,854,306 3.277 2004N/A 6,372,653,882 3.327 2005N/A 6,697,771,907 3.227 2006N/A 7,786,802,282 3.116 2007N/A 8,809,738,115 2.884 2008N/A 10,112,555,244 2.624 -0.500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008RateYearDirect Tax RateDirect Tax RateStatistical Section, 7-13 2008 Comprehensive Annual Financial ReportCity of Renton, Washington TABLE 8PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS CITY OF RENTONCOUNTYLAST TEN FISCAL YEARSPage 1 of 2DIRECT RATESOVERLAPPING RATES-0.50000 1.00000 1.50000 2.00000 2.50000 3.00000 3.50000 4.00000 YearDirect Property Tax RatesDebt TotalDebtTotalOperating Service City Operating Service CountyYearMillageMillageMillageMillageMillageMillage1999 3.42726 0.31981 3.74707 1.51957 0.25428 1.77385 2000 3.39877 0.28488 3.68365 1.39802 0.29149 1.68951 2001 3.27385 0.10078 3.37463 1.47266 0.26981 1.74247 2002 3.26036 0.09397 3.35433 1.19751 0.25198 1.44949 2003 3.18871 0.08865 3.27736 1.15386 0.19562 1.34948 2004 3.16022 0.08322 3.24344 1.18279 0.24867 1.43146 2005 3.14843 0.07861 3.22704 1.15665 0.22564 1.38229 2006 3.04482 0.07088 3.11570 1.09915 0.22954 1.32869 2007 2.82148 0.06252 2.88400 1.08814 0.20142 1.28956 2008 2.57052 0.05330 2.62382 1.04278 0.16492 1.20770 Source: King County Codes and Levies* Special Districts include Emergency Medical Services, Port and Hospital Districts-0.50000 1.00000 1.50000 2.00000 2.50000 3.00000 3.50000 4.00000 YearDirect Property Tax RatesStatistical Section, 7-14 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTotalTABLE 8PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS SCHOOL DISTRICTLAST TEN FISCAL YEARSPage 2 of 2OVERLAPPING RATES-1.00000 2.00000 3.00000 4.00000 5.00000 6.00000 7.00000 MillageYearOverlapping Property Tax RatesDebtTotalTotal Direct &Fiscal Special Operating Service School Overlapping OverlappingYearDistricts *MillageMillageMillageRatesRates1999 0.68252 1.87903 1.90387 3.78290 6.23927 9.98634 2000 0.60714 1.85286 1.80111 3.65397 5.95062 9.63427 2001 0.53526 1.74147 1.62522 3.36669 5.64442 9.01905 2002 0.53599 1.63516 1.47772 3.11288 5.09836 8.45269 2003 0.59292 1.62358 1.36333 2.98691 4.92931 8.20667 2004 0.58319 1.60492 1.88086 3.48578 5.50043 8.74387 2005 0.57542 1.62332 2.36918 3.99250 5.95021 9.17725 2006 1.04312 1.53290 2.42680 3.95970 6.33151 9.44721 2007 0.99431 1.40073 2.04586 3.44659 5.73046 8.61446 2008 1.03213 1.26082 1.36572 2.62654 4.86637 7.49019 -1.00000 2.00000 3.00000 4.00000 5.00000 6.00000 7.00000 MillageYearOverlapping Property Tax RatesStatistical Section, 7-15 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonFISCALYEARTOTAL TAXENDEDLEVY FORDECEMBER 31 FISCAL YEAR AMOUNT% OF LEVYTABLE 9PROPERTY TAX LEVIES AND COLLECTIONSLAST TEN FISCAL YEARSPage 1 of 2COLLECTED WITHIN THE1FISCAL YEAR OF THE LEVY$-$5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Levies vs CollectionsTOTAL TAXTOTAL COLLECTIONS TO DATE199915,850,628$ 15,595,427$ 98.4%200016,633,388 16,337,790 98.2%200116,967,683 16,677,882 98.3%200218,581,814 18,285,908 98.4%200319,486,858 19,149,258 98.3%200420,451,011 20,184,238 98.7%200521,654,069 21,358,689 98.6%200622,796,225 22,339,299 98.0%200724,049,060 23,585,143 98.1%200827,188,522 26,722,301 98.3%Sources: 1 Annual Tax Receivable Summary2 2007 Annual Property Tax Reports from King County $-$5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Levies vs CollectionsTOTAL TAXTOTAL COLLECTIONS TO DATEStatistical Section, 7-16 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonFISCALYEARCOLLECTIONS 2 ENDED IN SUBSEQUENT DECEMBER 31YEARSAMOUNT% OF LEVYTABLE 9PROPERTY TAX LEVIES AND COLLECTIONSLAST TEN FISCAL YEARSPage 2 of 2TOTAL COLLECTIONS TO DATE$-$5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Property Tax CollectionsCollections within fiscal yrCollections in subsequent years1999254,790$ 15,850,217$ 100.0%2000291,580 16,629,370 100.0%2001282,509 16,960,391 100.0%2002281,900 18,567,808 99.9%2003332,060 19,481,318 100.0%2004234,434 20,418,671 99.8%2005240,042 21,598,731 99.7%2006367,051 22,706,349 99.6%2007362,339 23,947,482 99.6%200826,722,301 98.3%$-$5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Property Tax CollectionsCollections within fiscal yrCollections in subsequent yearsStatistical Section, 7-17 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003FUNCTIONFurniture $1,245,207 $1,564,002 $1,920,734 $1,623,906 $1,758,082Electronics and AppliancesPage 1 of 2 FISCAL YEARTABLE 10SALES TAX COLLECTIONS BY SECTORLAST TEN FISCAL YEARS$0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,0001999 2000 2001 2002 2003Sales Tax Collections by Sector1999-2003RetailConstruction Manufacturing Transportation WholesaleAutomotive ServicesMiscellaneousElectronics and AppliancesGeneral Merchandise560,413 581,268 643,592 673,164 788,699Misc Retail Trade586,594 713,017 704,420 681,148 763,596Others1,495,038 1,641,879 1,608,082 1,622,166 1,667,483Subtotal Retail $3,887,252$4,500,166$4,876,828$4,600,384$4,977,860OTHER SECTORSConstruction $1,545,886 $1,671,621 $2,060,061 $1,899,005 $2,122,560Manufacturing 411,607 348,439 426,965 547,333 754,501Transportation 614,603 768,421 648,177 621,314 563,863Wholesale 1,692,718 1,643,207 1,535,709 1,451,387 1,442,263Automotive 3,446,262 3,775,582 3,307,794 3,549,973 3,625,878Services 2,063,272 2,128,373 1,913,630 1,835,039 1,953,254Miscellaneous 467,401 428,379 574,268 546,400 567,225Subtotal - Other Sectors $10,241,749$10,764,022$10,466,604$10,450,451$11,029,544Total Sales Tax$14,129,001$15,264,188$15,343,432$15,050,835$16,007,4041 Transportation category has been merged with Miscellaneous. Certain group codes have been shifted around to better reflect the category they truly represent. (The shift will not affect the total sales tax collected.)Source: Finance Department, City of Renton $0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,0001999 2000 2001 2002 2003Sales Tax Collections by Sector1999-2003RetailConstruction Manufacturing Transportation WholesaleAutomotive ServicesMiscellaneousStatistical Section, 7-18 2008 Comprehensive Annual Financial ReportCity of Renton, Washington2004200520062007 12008FUNCTIONRETAIL TRADE SECTORFurniture $2,205,114 $1,203,942 $1,276,644 $1,245,901 $1,199,045Electronics and Appliances1 065 4161 130 6211 143 1881 137 586Page 2 of 2 FISCAL YEARTABLE 10SALES TAX COLLECTIONS BY SECTORLAST TEN FISCAL YEARS$0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,000$8,000,0002004200520062007 12008Sales Tax Collections by Sector2004-2008RetailConstruction Manufacturing Transportation WholesaleAutomotive ServicesMiscellaneousElectronics and Appliances1,065,4161,130,6211,143,1881,137,586General Merchandise1,013,876 1,073,144 1,100,217 1,169,225 1,462,858Misc Retail Trade862,919 848,834 928,083 658,429 756,662Others1,651,782 2,227,721 2,464,896 1,378,094 1,574,482Subtotal Retail $5,733,691$6,419,057$6,900,461$5,594,837$6,130,633OTHER SECTORSConstruction $2,641,907 $2,495,684 $2,688,902 $3,898,202 $4,725,533Manufacturing 556,555 569,269 797,166 983,110 1,050,789Transportation 628,918 494,866 567,401Wholesale 1,416,559 1,025,132 1,016,468 1,083,059 1,131,445Automotive 3,538,502 3,946,163 4,303,221 4,176,747 3,575,928Services 1,677,315 1,736,569 2,039,090 4,103,240 3,939,201Miscellaneous 460,372 421,715 378,233 503,000 402,360Subtotal - Other Sectors $10,920,128$10,689,398$11,790,482$14,747,358$14,825,256Total Sales Tax$16,653,819$17,108,455$18,690,943$20,342,195$20,955,889$0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,000$8,000,0002004200520062007 12008Sales Tax Collections by Sector2004-2008RetailConstruction Manufacturing Transportation WholesaleAutomotive ServicesMiscellaneousStatistical Section, 7-19 2008 Comprehensive Annual Financial ReportCity of Renton, Washington BUSINESS-TYPE ACTIVITIESGENERAL SPECIALFISCAL OBLIGATION ASSESSMENT ENTERPRISE PWTFYEARBONDSBONDSBONDSLOANSPage 1 of 2 GOVERNMENTAL ACTIVITIESTABLE 11 RATIOS OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS GO Bonds38%Enterprise Bonds47%PWTF Loans15%2008Primary Government Debt1999 26,466,763$ 680,000$ 26,860,000$ 9,024,460$ 2000 24,345,738 320,000 25,020,000 8,645,788 2001 29,289,290 135,000 23,070,000 7,894,357 2002 33,797,023 - 31,230,000 8,222,135 2003 32,245,982 - 29,070,000 7,579,447 2004 30,629,403 - 37,680,000 8,350,304 2005 29,107,664 - 35,790,000 11,581,168 2006 45,584,314 - 33,840,000 10,692,020 2007 44,017,551 - 33,405,000 9,802,877 2008 41,938,000 - 43,310,000 8,913,739 Source: City of Renton, Finance and IS Department 1The percentage of personal Income column is based on personal income of King County. (See Table 16)GO Bonds38%Enterprise Bonds47%PWTF Loans15%2008Primary Government DebtStatistical Section, 7-20 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonBUSINESS-TYPEACTIVITIESPERCENTAGE1TOTAL PRIMARY OFFISCAL CAPITAL GOVERNMENT PERSONAL DEBT PERYEARLEASESDEBTINCOMEPOPULATIONCAPITAPage 2 of 2 TABLE 11RATIOS OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS $-$20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008YearsPrimary Government DebtTotal Debt199942,276$ 63,075,498$ 8.64% 47,620 1,325$ 200086,609 58,420,135 7.56% 50,052 1,167 200145,656 60,436,304 7.86% 51,140 1,182 20027,238 73,258,398 9.40% 53,840 1,361 200358,105 68,955,537 8.71% 54,900 1,256 200433,834 76,695,545 8.68% 55,360 1,385 20058,621 76,489,458 8.59% 56,840 1,346 200624,500 90,140,834 9.22% 58,360 1,545 200776,074 87,301,502 8.17% 60,290 1,448 200855,155 94,216,894 N/A 78,780 1,196 $-$20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008YearsPrimary Government DebtTotal DebtStatistical Section, 7-21 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003Debt Limit319,387,556$ 340,899,076$ 379,698,131$ 419,541,037$ 448,787,441$ Total net debt applicable to limit24,462,390 22,248,983 27,586,389 32,258,499 28,173,327 Legal debt margin294,925,166$ 318,650,093$ 352,111,742$ 387,282,538$ 420,614,114$ Total net debt applicable to the limitas a percentage of debt limit7.66%6.53%7.27%7.69%6.28%Source: City of Renton, Finance and IS Department TABLE 12LEGAL DEBT MARGIN INFORMATIONLAST TEN FISCAL YEARSPage 1 of 2FISCAL YEARStatistical Section, 7-22 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008Debt Limit477,947,409$ 502,332,893$ 550,085,741$ 627,810,135$ 724,475,824$ Total net debt applicable to limit28,137,536 26,423,667 42,515,728$ 42,624,636 40,667,064 Legal debt margin449,809,873$ 475,909,226$ 507,570,013$ 585,185,499$ 683,808,760$ Total net debt applicable to the limitas a percentage of debt limit5.89%5.26%7.73%6.79%5.61%LEGAL DEBT MARGIN CALCULATION FOR FISCAL YEAR 2008Assessed Value9,659,677,654$ Add back: exempt real property- Total assessed value9,659,677,654$ Debt Limit 2.5% of general purpose limit, voted and non-voted241,491,941$ 2.5% Utility purpose limit, voted241,491,941 2.5% Open Space, Park and Capital facilities, voted241,491,941 Total Debt Limit 724,475,824$ Debt applicable to limit:General obligation bonds41,938,000$ Contracts Payable- 41,938,000$ Less: Amount set aside for repayment ofgeneral obligation debt and contracts payable(1,270,936) Total net debt applicable to limit40,667,064$ Legal Debt Margin683,808,760$ TABLE 12LEGAL DEBT MARGIN INFORMATIONLAST TEN FISCAL YEARSPage 2 of 2FISCAL YEARStatistical Section, 7-23 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonLESS:NET% OF GOGENERAL 1AMOUNTS1GENERALDEBT TOFISCAL OBLIGATION AVAILABLE OBLIGATIONASSESSED2ASSESSED PERYEARBONDSIN DEBTDEBTVALUEVALUECAPITA1999 26,466,763$ 2,345,570$ 24,121,193$ 4,258,500,750$ 0.57% 507$ 2000 24,345,738 2,096,755 22,248,983 4,514,205,078 0.49% 4452001 29,289,290 1,770,724 27,518,566 4,988,126,362 0.55% 538200233 797 0231 540 20332 256 8205 549 470 8950 58%599TABLE 13 RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS$-$10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 1999200020012002200320042005200620072008General Obligation DebtGO Bond Debt2002 33,797,023 1,540,203 32,256,820 5,549,470,895 0.58% 5992003 32,245,982 1,879,654 30,366,328 5,959,258,370 0.51%5532004 30,629,403 1,440,509 29,188,894 6,333,995,426 0.46%5272005 29,107,664 2,683,999 26,423,665 6,697,750,147 0.39%4652006 45,584,314 3,068,587 42,515,727 7,334,476,542 0.58%7292007 44,017,551 1,392,915 42,624,636 8,370,801,805 0.51%7072008 41,938,000 1,270,936 40,667,064 9,659,677,654 0.42%516Source: 1 Finance Department, City of Renton 2 King County Department of Assessments $-$10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 1999200020012002200320042005200620072008General Obligation DebtGO Bond DebtStatistical Section, 7-24 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonESTIMATEDESTIMATED 2SHARE OFDEBT 1%OVERLAPPINGGOVERNMENTAL UNITOUTSTANDINGAPPLICABLEDEBTCity of Renton Direct Debt41 938 000$100%41 938 000$TABLE 14 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBTRenton-$41.9County-$35.9Schools-$158.5Port- $12.9Others - $4.7$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 $260 Millions of DollarsCity of Renton Direct and Overlapping DebtCity of Renton Direct Debt41,938,000$ 100%41,938,000$ City of Renton Overlapping Debt King County 1,048,574,0003.42%35,861,231 Port of Seattle378,065,0003.42%12,929,823 Renton School District #403219,706,51668.29%150,037,580 Issaquah School District #411312,553,9972.13%6,657,400 Kent School District #415251,179,0430.7089%1,780,608 Fire District 10-100.6355%- Fire District 40-19,381,82639.6918%3,723,816 King County Library66,359,3551.50%995,390 City of Renton Overlapping Debt211,985,848$ Total Direct and Overlapping Debt253,923,848$ Sources: 1 King County Department of Executive Services2 King County Department of AssessmentsRenton-$41.9County-$35.9Schools-$158.5Port- $12.9Others - $4.7$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 $260 Millions of DollarsCity of Renton Direct and Overlapping DebtStatistical Section, 7-25 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTABLE 15EXPENSES NET REVENUEFISCAL(a)W/O AVAILABLE FOR(b)YEAR REVENUE DEPRECIATION DEBT SERVICE PRINCIPAL INTEREST COVERAGEWATER AND SEWER REVENUE BONDS:199921,784,310$ 16,407,442$ 5,376,868$ 1,810,000$ 1,333,452$ 1.71200023,682,511 15,653,774 8,028,737 1,630,000 1,112,778 2.93200121,994,245 16,051,720 5,942,525 1,730,000 1,019,923 2.16200224,045,660 17,495,472 6,550,188 1,805,000 928,303 2.40200325,934,120 16,990,519 8,943,601 1,635,000 1,282,115 3.07200427,301,230 18,325,863 8,975,367 1,475,000 1,010,268 3.61200527,889,360 18,892,824 8,996,536 1,630,000 1,477,124 2.90200627,750,508 18,850,225 8,900,283 1,680,000 1,430,199 2.86200732 887 27222 020 64210 866 6301 740 0001 373 036349PLEDGED-REVENUE COVERAGELAST TEN FISCAL YEARSDEBT SERVICE1.712.932.162.403.073.612.902.863.493.012.232.302.041.981.381.671.251.391.281.290.000.501.001.502.002.503.003.504.001999 2000 2001 2002 2003 2004 2005 2006 2007 2008COVERAGE RATIOYEARSWATER/SEWER & GOLF COURSE REVENUE BONDSWATER/SEWER GOLF COURSE200732,887,272 22,020,642 10,866,630 1,740,000 1,373,036 3.49200832,887,264 22,020,637 10,866,627 1,810,000 1,803,687 3.01GOLF COURSE REVENUE BONDS (c):19992,252,217$ 1,278,489$ 973,728$ 280,000$ 157,548$ 2.2320002,328,044 1,320,681 1,007,363 210,000 227,222 2.3020012,375,997 1,480,024 895,973 220,000 219,348 2.0420022,279,361 1,415,674 863,687 225,000 210,548 1.9820032,177,122 1,573,296 603,826 235,000 201,210 1.3820042,198,597 1,460,445 738,152 250,000 191,223 1.6720052,208,335 1,657,294 551,041 260,000 180,348 1.2520062,337,672 1,725,854 611,818 270,000 168,778 1.3920072,333,955 1,770,684 563,271 285,000 156,358 1.2820082,333,952 1,770,682 563,270 295,000 142,820 1.29Notes:(a) Revenue includes connection charges, system development charges, latecomer fees, and interest revenue.(b) Bond financing requirements are that the average annual coverage is at least 1.3 times the average annual debt service for Water and Sewer revenue bonds. The Golf System revenue bonds coverage requirement is at least 1.25 times that of respective calendar year's annual debt service. (c) 1999 Golf System Refunding Revenue Bonds were issued to refund the 1994 Golf System Revenue Bonds.Source: City of Renton, Finance and IS Department1.712.932.162.403.073.612.902.863.493.012.232.302.041.981.381.671.251.391.281.290.000.501.001.502.002.503.003.504.001999 2000 2001 2002 2003 2004 2005 2006 2007 2008COVERAGE RATIOYEARSWATER/SEWER & GOLF COURSE REVENUE BONDSWATER/SEWER GOLF COURSEStatistical Section, 7-26 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPER CAPITAUN-PERSONALPERSONALSCHOOLEMPLOYMENTTABLE 16DEMOGRAPHIC AND ECONOMIC STATISTICSLAST TEN FISCAL YEARS0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%1999 2000 2001 2002 2003 2004 2005 2006 2007 2008UNEMPLOYMENT RATEUNEMPLOYMENT RATEPERSONAL PERSONALSCHOOL EMPLOYMENTINCOME bINCOMEcENROLLMENT eRATEfFISCAL YEARKING COUNTY RENTONKING COUNTYKING COUNTYMEDIAN AGEd CITY OF RENTON KING COUNTY 1999 1,712,122$ 47,620$ 72,997,198,000$ 42,218$ 35.50 12,557 3.8%2000 1,737,046 50,052 77,271,598,000 44,424 35.70 12,527 4.1%2001 1,758,312 51,140 76,883,017,000 43,764 35.92 12,556 5.1%2002 1,774,312 53,840 77,940,608,000 44,217 36.13 12,892 6.1%2003 1,779,300 54,900 79,199,166,000 44,800 36.38 13,046 6.2%2004 1,788,300 55,360 88,407,884,000 49,670 36.60 13,062 5.2%2005 1,808,300 56,840 89,032,307,000 49,488 36.83 13,192 4.7%2006 1,835,300 58,360 97,750,314,000 53,488 36.93 13,397 4.2%2007 1,861,300 60,290 106,805,239,000 57,710 36.97 13,570 3.7%2008 1,884,200 78,780 N/AN/A 37.00 13,836 4.2%Sources: aWashington State Office of Financial ManagementbU.S. Bureau of Economic AnalysiscU.S. Bureau of Economic AnalysisdWashington State Office of Financial ManagementeRenton Public SchoolsfWashington State Employment Security DepartmentPOPULATION a0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%1999 2000 2001 2002 2003 2004 2005 2006 2007 2008UNEMPLOYMENT RATEUNEMPLOYMENT RATEStatistical Section, 7-27 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonEMPLOYEREMPLOYEES 1RANK% OF TOTAL CITY EMPLOYMENTEMPLOYEES RANK% OF TOTAL CITY EMPLOYMENTBoeing Company12,829 1 28.80%19,193 1 42.26%Renton School District 1,426 2 3.20%720 5 1.59%Federal Aviation Administration1,400 3 3.14%1,127 4 2.48%Valley Medical Center 1,331 4 2.99%1,408 3 3.10%Paccar Inc1,202 5 2.70%1,459 2 3.21%King County886 6 1.99%City of Renton760 7 1.71%655 6 1.44%Providence Health and Services 734 8 1.65%ER Solutions Inc531 9 1.19%Wizards of the Coast472 10 1.06%390 8 0.86%Multiple Zones International557 7 1.23%K & L Distributors273 9 0.60%Wal Mart Stores Inc256 10 0.56%21,571 48.42%26,038 57.33%Source: 1Business license records and individual queries TABLE 17PRINCIPAL EMPLOYERS20081999Source : City of Renton, Finance and IS DepartmentStatistical Section, 7-28 2008 Comprehensive Annual Financial Report City of Renton, Washington , This page intentionally left blank. 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003FUNCTIONGeneral Government 85.1 90.1 93.5 97.5 96.5 Public SafetyPoliceCommissioned Officers85.0 85.0 86.0 88.0 88.0 Non-Commissioned Officers34.2 34.2 36.2 40.2 40.2 FireCommissioned Officers103.0 105.0 105.0 105.0 105.0 Non-Commissioned Officers10.0 11.0 11.0 12.0 12.0 Planning/Building/Public WorksAdministration/Development Services 43.2 42.7 42.7 42.7 42.7 Transportation Systems32.0 33.0 33.0 34.0 33.0 Utility Systems20.2 20.7 20.8 20.8 20.8 Maintenance Services59.5 59.5 61.0 61.0 62.0 Culture and RecreationParks and Recreation77.5 78.5 80.5 77.5 77.5 Library15.0 15.0 15.0 15.0 15.0 Golf Course9.0 9.0 10.0 10.0 10.0 Total573.7 583.7 594.7 603.7 602.7 Source: City of Renton, Finance and IS Department Note: 1 In 2008, Development Services moved from Public Works to Community and Economic Development which is listed under General Government. TABLE 18FULL TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTIONLAST TEN FISCAL YEARS Page 1 of 2FISCAL YEARStatistical Section, 7-30 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008 1FUNCTIONGeneral Government 97.5 94.5 89.5 95.0 155.6 Public SafetyPoliceCommissioned Officers89.0 91.0 97.0 122.0 124.0 Non-Commissioned Officers41.2 43.2 42.2 49.2 51.2 FireCommissioned Officers106.0 106.0 106.0 109.0 118.0 Non-Commissioned Officers13.0 13.0 14.0 16.0 17.0 Planning/Building/Public WorksAdministration/Development Services 42.7 42.5 46.5 49.0 4.0 Transportation Systems34.5 34.5 35.5 40.5 41.0 Utility Systems20.8 20.8 24.8 29.3 36.7 Maintenance Services62.0 62.0 64.1 71.0 88.0 Culture and RecreationParks and Recreation77.5 76.5 76.5 81.0 89.5 Library15.0 14.0 14.0 15.0 15.0 Golf Course10.0 10.0 10.0 10.0 10.0 Total609.2 608.0 620.0 687.0 750.0 TABLE 18FULL TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTIONLAST TEN FISCAL YEARS Page 2 of 2FISCAL YEARStatistical Section, 7-31 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003FUNCTIONPolicePhysical arrests 2,287 2,463 3,411 3,813 3,735 Parking violations3,379 5,955 6,325 4,776 2,742 Traffic violations11,832 12,188 10,936 11,448 11,651 FireNumber of calls answered7,698 7,895 8,273 8,233 8,582 Inspections2,021 2,265 2,269 2,261 2,681 Highways and StreetsStreet resurfacing (miles)4.65 1.76 6.54 6.13 4.85 Recyclables collected (tons/yr)5,045.7 5,493.8 5,793.6 5,119.8 4,389.0 Culture and RecreationAthletic field attendence86,527 87,000 119,422 126,534 137,811 Community Center admissions 148,041 156,500 174,500 162,970 172,911 Library Volume in collections 153,935 147,818 148,758 155,463 158,676 Total volumes borrowed 334,619 352,334 382,443 456,982 499,792 WaterMetered connection 14,279 14,224 13,969 14,583 15,181 Average daily consumption7,426.5 7,457 7,097 7,232 7,581 (thousands of gallons)So Peak daily consumption11,472 13,590 11,960 12,477 14,080 (thousands of gallons)Source: City of Renton DepartmentsPage 1 of 2 FISCAL YEARTABLE 19OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARSStatistical Section, 7-32 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008FUNCTIONPolicePhysical arrests 4,280 4,590 2,489 2,925 3,580Parking violations3,733 3,575 3,520 5,995 5,117Traffic violations10,963 12,866 10,172 9,148 10,705FireNumber of calls answered8,984 9,202 10,096 10,159 12,402Inspections2,539 3,438 3,505 3,197 2,772Highways and StreetsStreet resurfacing (miles)3.67 3.69 3.86 1.59 2.59Recyclables collected (tons/yr)4,920.3 4,934.2 4,843 5,004 5,395Culture and RecreationAthletic field participants 156,707 155,000 155,000 91,053 93,000 Community Center participants 172,537 177,761 177,761 162,476 155,000 Library Volume in collections 165,406 190,011 193,965 188,359 194,497Total volumes borrowed 512,059 491,470 464,333 491,397 554,223WaterMetered connection 15,379 16,585 16,668 16,958 17,172Average daily consumption7,635 7,306 7,999 8,008 7,388(thousands of gallons)Peak daily consumption14,248 13,025 15,271 14,750 12,739(thousands of gallons)Page 2 of 2 FISCAL YEARTABLE 19OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARSStatistical Section, 7-33 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003FUNCTIONPolice safetyPolice:Stations 1.0 1.0 1.0 1.0 1.0 Patrol units7.0 7.0 7.0 7.0 7.0 Fire stations5.0 5.0 5.0 5.0 5.0 Highways and streetsStreet (miles)180.6 195.4 195.6 213.2 213.7 Streetlights (added)46.0 69.0 75.0 53.0 120.0 Culture and recreationParks acreage1,158.0 1,158.0 1,158.0 1,158.0 1,158.0 Parks 28.0 28.0 26.0 26.0 26.0 Swimming pools- - - - - Tennis courts17.0 17.0 17.0 17.0 17.0 Community centers1.0 1.0 1.0 1.0 1.0 WaterWater mains (miles)252.2 278.0 283 289.0 291.0 Fire hydrants2,893 2,993 3,102 3,193 3,240SewerSanitary sewers (miles) 170.9 162.6 168.1 176.7 183.5 Storm sewers (miles) 180.9 183.8 189.7 199.4 204.0 Source: City of Renton DepartmentsPage 1 of 2 FISCAL YEARTABLE 20CAPITAL ASSETS STATISTICS BY FUNCTION LAST TEN FISCAL YEARSStatistical Section, 7-34 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008FUNCTIONPolice safetyPolice:Stations1.0 1.0 1.0 1.0 1.0Patrol units7.0 7.0 7.0 7.0 10.0Fire stations5.0 5.0 5.0 5.0 6.0Highways and streetsStreet (miles)213.7 218.0 224.6 233.7 263.8Streetlights92.0 86.0 134.0 213.0 230.0Culture and recreationParks acreage1,158.0 1,158.0 1,160.0 1,160.0 1,181.0Parks 26.0 26.0 26.0 28.0 29.0Swimming pools1.0 1.0 1.0 1.0 1.0Tennis courts17.0 17.0 17.0 17.0 17.0Community centers1.0 1.0 1.0 1.0 1.0WaterWater mains (miles)291.1 293.0 295.0 300.0 304.0Fire hydrants3,274 3,374 3,440 3,544 3,602SewerSanitary sewers (miles) 189.6 193.3 204.9 206.3 215.7Storm sewers (miles)209.7 214.8 219.7 222.3 267.5Page 2 of 2 FISCAL YEARTABLE 20CAPITAL ASSETS STATISTICS BY FUNCTION LAST TEN FISCAL YEARSStatistical Section, 7-352008 Comprehensive Annual Financial Report City of Renton, Washington , This page intentionally left blank. Renton City Hall1055 South Grady WayRenton, Washington 98057rentonwa.gov                                                 This page left blank intentionally        OFFICIAL STATEMENT DATED APRIL 8, 2010  $6,170,000  City of Renton, Washington  Limited Tax General Obligation Refunding Bonds, 2010    DATED: Date of Delivery DUE: December 1, as shown below  STANDARD & POOR’S RATING—AA (see “Rating” herein).  BANK QUALIFIED—The City of Renton, Washington (the “City”), has designated the Limited Tax General Obligation  Refunding Bonds, 2010 (the “Bonds”) as “qualified tax‐exempt obligations” for purposes of Section 265(b)(3)(B) of the  Internal Revenue Code of 1986, as amended (the “Code”).  BOOK‐ENTRY ONLY—The Bonds will be issued as fully registered bonds in denominations of $5,000, or integral multiples  thereof within a single maturity, and will be registered in the name of Cede & Co., as bond owner and nominee for The  Depository Trust Company (“DTC”).  DTC will act as securities depository for the Bonds.  Purchasers will not receive  certificates representing their interest in the Bonds purchased.    PRINCIPAL AND INTEREST PAYMENTS—Interest on the Bonds will be payable on December 1, 2010 and semiannually  thereafter on June 1 and December 1 of each year to their maturity.  Principal of and interest on the Bonds will be  payable by the fiscal agency of the State of Washington in New York, New York, currently The Bank of New York  Mellon (the “Bond Registrar”), as further described herein.  For so long as the Bonds remain in a “book‐entry only”  transfer system, the Bond Registrar will make such payments only to DTC, which in turn is obligated to remit such  principal and interest to its Participants for subsequent disbursement to Beneficial Owners of the Bonds as described in  Appendix B ‐ “Book‐Entry Transfer System.”   MATURITY SCHEDULE—   Due  Interest Prices or  Due  Interest Prices or   Dec. 1 Amounts Rates Yields CUSIP Dec. 1 Amounts Rates Yields CUSIP   2010 $ 140,000 3.00% 0.60% 760133RH3 2016 $ 10,000 3.00% 3.00% 760133RP5   2011 5,000 3.00 1.00 760133RJ9 2017 10,000 3.25 3.26 760133RQ3   2012 5,000 3.00 1.56 760133RK6 2018 1,395,000 4.50 3.36 760133RR1   2013 5,000 3.00 1.87 760133RL4 2019 1,460,000 4.50 3.53 760133RS9   2014 5,000 3.00 2.22 760133RM2 2020 1,530,000 4.50 3.65* 760133RT7   2015 10,000 3.00 2.57 760133RN0 2021 1,595,000 4.50 3.74* 760133RU4  * Priced to the call date of June 1, 2020.  OPTIONAL REDEMPTION—The Bonds are subject to optional redemption prior to their stated maturities as further  described herein.  See “Description of the Bonds – Redemption Provisions.”  PURPOSE—The proceeds from the sale of the Bonds will be used to refund a portion of the City’s outstanding Limited Tax  General Obligation and Refunding Bonds, 2001 to obtain the benefit of savings in annual and total debt service  requirements and to pay costs of issuance for the Bonds.  SECURITY—The Bonds are limited tax general obligations of the City.  The City has covenanted and agreed irrevocably that  it will include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an  amount that will be sufficient, together with all other revenues and money of the City legally available for such  purposes, to pay the principal of and interest on the Bonds as the same become due.  The City has irrevocably pledged  that such tax will be within and as a part of the tax permitted to cities without a vote of the people.  The full faith, credit and  resources of the City have been pledged irrevocably for the annual levy and collection of such taxes and for the prompt  payment of such principal and interest.  The City’s ability to raise taxes is subject to certain limitations as described  herein.  The Bonds do not constitute a debt or indebtedness of the State of Washington, or any political subdivision  thereof other than the City.  TAX EXEMPTION—In the opinion of K&L Gates LLP of Seattle, Washington (“Bond Counsel”), assuming compliance with certain  covenants of the City, interest on the Bonds is excludable from gross income for federal income tax purposes under existing law.   Interest on the Bonds is not an item of tax preference for purposes of either individual or corporate alternative minimum tax.   Interest on the Bonds may be indirectly subject to corporate alternative minimum tax and certain other taxes imposed on certain  corporations.  See “Tax Matters” herein for a discussion of the opinion of Bond Counsel.  DELIVERY—The Bonds are offered for sale to the original purchaser subject to the final approving legal opinion of Bond  Counsel.  It is expected that the Bonds will be available for delivery to the Bond Registrar on behalf of DTC by Fast  Automated Securities Transfer, on or about May 11, 2010.  This cover page contains certain information for quick reference only. It is not a summary of the issue.  Investors must read the entire  Official Statement to obtain information essential to the making of an informed investment decision.     This is a Preliminary Official Statement, subject to correction and change.  The City has authorized the distribution of the Preliminary Official Statement to prospective purchasers and others.  Upon the sale of the Bonds, the City will complete and deliver an Official Statement substantially in this form.                                                   This page left blank intentionally      City of Renton, Washington  1055 South Grady Way  Renton, Washington 98055  Phone:  (425) 430‐6400  Fax:  (425) 430‐6516  www.rentonwa.gov*    Mayor and City Council   Denis W. Law Mayor   Don Persson President   Terri Briere President Pro Tem   Randy Corman Councilmember   Marcie Palmer Councilmember   King Parker Councilmember   Greg Taylor Councilmember   Rich Zwicker Councilmember    City Officials   Jay Covington Chief Administrative Officer   Iwen Wang Finance and Information Services Administrator   Gina Jarvis Fiscal Services Director   Bonnie Walton City Clerk    Bond Counsel  K&L Gates LLP  Seattle, Washington    Financial Advisor  Piper Jaffray & Co.  Seattle, Washington    Paying Agent  The Bank of New York Mellon  New York, New York  1‐800‐438‐5473   *   The City’s website is not part of this Official Statement, and investors should not rely on information presented in  the City’s website in determining whether to purchase the Bonds.  This inactive textual reference to the City’s  website is not a hyperlink and does not incorporate the City’s website by reference.  This Official Statement does not constitute an offer to sell or a solicitation of an offer to purchase the Bonds in any jurisdiction in  which or to a person to whom it is unlawful to make such an offer or solicitation.  No dealer, salesperson or other person has been  authorized by the City, the Financial Advisor or the Underwriter to give any information or to make any representations, other  than those contained herein, in connection with the offering of the Bonds and, if given or made, such information or  representations must not be relied upon.  The information and expressions of opinion herein are subject to change without notice,  and neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create an  implication that there has been no change in the affairs of the City since the date hereof.  The Underwriter has provided the following sentence for inclusion in this Official Statement.  The Underwriter has reviewed the  information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal  securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy  or completeness of such information.  In connection with this offering, the Underwriter may over‐allot or effect transactions that stabilize or maintain the market price  of the Bonds at levels above those which might otherwise prevail in the open market.  Such stabilizing, if commenced, may be  discontinued at any time.    The CUSIP numbers are included on the cover of this Official Statement for convenience of the holders and potential holders of  the Bonds.  No assurance can be given that the CUSIP numbers for the Bonds will remain the same after the date of issuance and  delivery of the Bonds.                                                  This page left blank intentionally    Table of Contents   Page  Description of the Bonds ............................................................................................................................................................... 1  Authorization for Issuance .................................................................................................................................................. 1  Principal Amount, Date, Interest Rates and Maturities ................................................................................................... 1  Bond Registrar and Registration Features ......................................................................................................................... 1  Redemption Provisions ........................................................................................................................................................ 1  Purchase ................................................................................................................................................................................. 2  Book‐Entry Bonds ................................................................................................................................................................. 2  Purpose and Use of Proceeds ....................................................................................................................................................... 3  Purpose ................................................................................................................................................................................... 3  Plan of Refunding ................................................................................................................................................................. 3  Verification of Mathematical Calculations ........................................................................................................................ 3  Sources and Uses of Funds .................................................................................................................................................. 4  Security for the Bonds ................................................................................................................................................................... 4  General ................................................................................................................................................................................... 4  Defeasance ............................................................................................................................................................................. 4  No Acceleration ..................................................................................................................................................................... 5  Bonded Indebtedness .................................................................................................................................................................... 5  Summary of Limited Tax General Obligation Bonds Debt Service Requirements ....................................................... 7  Net Direct and Overlapping Debt ....................................................................................................................................... 8  Debt Payment Record ........................................................................................................................................................... 8  Future Financings ................................................................................................................................................................. 8  Taxing Authority ........................................................................................................................................................................... 9  Authorized Property Tax Levies ......................................................................................................................................... 9  The City’s Property Tax Levies ........................................................................................................................................... 9  Overlapping Taxing Districts ............................................................................................................................................ 10  General Property Taxes ...................................................................................................................................................... 10  Regular Property Tax Limitations .................................................................................................................................... 11  Assessed Value .................................................................................................................................................................... 12  Tax Collection Procedure ................................................................................................................................................... 12  Tax Collection Record ......................................................................................................................................................... 13  Major Property Taxpayers ................................................................................................................................................. 13  Collection of Other Taxes ................................................................................................................................................... 13  Authorized Investments ............................................................................................................................................................. 16  Local Government Investment Pool ................................................................................................................................. 16  Authorized Investments for Bond Proceeds .................................................................................................................... 16  The City ......................................................................................................................................................................................... 19  City Staff ............................................................................................................................................................................... 19  Labor Relations .................................................................................................................................................................... 19  Pension Funding ................................................................................................................................................................. 20  Other Post‐Employment Benefits...................................................................................................................................... 21  Budgetary Policies .............................................................................................................................................................. 21  Risk Management ............................................................................................................................................................... 22  Auditing of City Finances .................................................................................................................................................. 22  Demographic Information .......................................................................................................................................................... 23  Initiative and Referendum .......................................................................................................................................................... 26  Tax Matters ................................................................................................................................................................................... 27  Qualified Tax‐Exempt Obligations ................................................................................................................................... 27  Premium ............................................................................................................................................................................... 28  Original Issue Discount ...................................................................................................................................................... 28  Rating ............................................................................................................................................................................................ 28  Continuing Disclosure................................................................................................................................................................. 28  Legal and Underwriting.............................................................................................................................................................. 30  Approval of Counsel .......................................................................................................................................................... 30  Litigation .............................................................................................................................................................................. 30  Limitations on Remedies .................................................................................................................................................... 30  Potential Conflicts ............................................................................................................................................................... 30  Underwriting ....................................................................................................................................................................... 30  Financial Advisor ................................................................................................................................................................ 31  Concluding Statement ........................................................................................................................................................ 31  Form of Opinion of Bond Counsel ............................................................................................................................ Appendix A  Book‐Entry Transfer System ...................................................................................................................................... Appendix B  2008 Audited Financial Statements .......................................................................................................................... Appendix C                                                  This page left blank intentionally      OFFICIAL STATEMENT    City of Renton, Washington  $6,170,000  Limited Tax General Obligation Refunding Bonds, 2010      The City of Renton, Washington (the “City”), a municipal corporation duly organized and existing under and  by virtue of the laws of the State of Washington (the “State”), furnishes this Official Statement in connection  with the offering of $6,170,000* aggregate principal amount of its Limited Tax General Obligation Refunding  Bonds, 2010 (the “Bonds”).  This Official Statement provides information concerning the City and the Bonds.        Description of the Bonds  Authorization for Issuance  The Bonds are issued pursuant to Ordinance No. 5534 (the “Ordinance”), adopted by the City Council (the  “Council”) on April 5, 2010 under the terms of the Renton Municipal Code.  The Bonds are also issued  pursuant to the authority of chapters 35.37, 39.36, 39.46 and 39.53 of the Revised Code of Washington  (“RCW”).  The Bonds do not require voter approval.    Principal Amount, Date, Interest Rates and Maturities  The Bonds will be issued in the aggregate principal amount of $6,170,000 and will be dated and bear interest  from the date of their delivery to the Underwriter.  The Bonds will mature on the dates and in the principal  amounts and will bear interest (payable semiannually on each June 1 and December 1, commencing  December 1, 2010) until the maturity of the Bonds at the rates set forth on the cover of this Official Statement.   Interest on the Bonds will be computed on the basis of a 360‐day year consisting of twelve 30‐day months.      Bond Registrar and Registration Features  The Bonds will be issued in fully registered form and, when issued, will be registered in the name of CEDE &  Co., as registered owner and nominee of The Depository Trust Company (“DTC”).  DTC will act as securities  depository for the Bonds.  Individual purchases will initially be made in book‐entry form only in minimum  denominations of $5,000 within a maturity and integral multiples thereof.  Purchasers (“Beneficial Owners”)  will not receive certificates representing their beneficial ownership interest in the Bonds so purchased.    Under the Ordinance, the City adopted the system of registration for the Bonds approved by the State Finance  Committee of the State of Washington (the “Committee”).  Pursuant to chapter 43.80 RCW, the Committee  designates one or more fiscal agencies (the “Fiscal Agency”) for bonds issued within the State of Washington.   The Committee currently is under contract with The Bank of New York Mellon, New York, New York.  The  Fiscal Agency will act as bond registrar (the “Bond Registrar”) under the terms of the Ordinance.    In order to meet payment requirements for interest on and principal of the Bonds as the same becomes due  and payable, the City will remit money from the City of Renton Limited Tax General Obligation Bond Debt  Service Fund (the “Bond Fund”) to the Bond Registrar.  The Bond Registrar will remit payment to DTC in  accordance with the terms of the DTC procedures as then in effect.  Principal of the Bonds will be paid to  registered owners upon presentation and surrender of the Bonds at maturity or upon earlier redemption to the  office of the Bond Registrar in New York, New York.  See “Book‐Entry Bonds” and Appendix B.    Redemption Provisions  Optional Redemption. The Bonds maturing on or prior to December 1, 2019 are not subject to redemption prior  to maturity.  The Bonds maturing on or after December 1, 2020 may be redeemed at the option of the City on  or after June 1, 2020, at par plus accrued interest to the date of redemption.    2  For as long as the Bonds are in book‐entry only form, if fewer than all of the Bonds of a maturity are called for  redemption, the selection of Bonds within a maturity to be redeemed shall be made by DTC, in accordance  with its operational procedures then in effect.  See Appendix B attached hereto.  If the Bonds are no longer  held in book‐entry only form, then the Bond Registrar will select Bonds for redemption as provided in the  Ordinance.    Notice of Redemption.  For so long as the Bonds are held in uncertificated form, notice of redemption (which  notice may be conditional) shall be given in accordance with the operational arrangements of DTC as then in  effect, and neither the City nor the Bond Registrar will provide any notice of redemption to any Beneficial  Owners.  Thereafter (if the Bonds are no longer held in uncertificated form), notice of redemption shall be  given as provided in the Ordinance.  Unless waived by any owner of Bonds to be redeemed, official notice of  any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient  funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a  copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the  date fixed for redemption to the registered owner of the Bond or Bonds to be redeemed at the address shown  on the register maintained by the Bond Registrar or at such other address as is furnished in writing by such  registered owner to the Bond Registrar.     In the case of an optional redemption, the notice of redemption may state that the City retains the right to  rescind that notice on or prior to the scheduled redemption date, and that notice and optional redemption  shall be of no effect to the extent that the City gives notice to the affected registered owners at any time on or  prior to the scheduled redemption date that the City is rescinding the redemption notice in whole or in part.   Any Bonds subject to a rescinded notice of redemption are to remain outstanding, and the rescission will not  constitute a default under the Ordinance.    Purchase  The City reserves the right to purchase any of the Bonds offered to it at any time at a price deemed reasonable  by the City.  Bonds purchased by the City shall be cancelled.    Book‐Entry Bonds  The ownership of one fully registered Bond for each maturity of the Bonds, as set forth on the cover of this  Official Statement, each in the aggregate principal amount of such maturity, will be registered in the name of  Cede & Co., as nominee for DTC.  See Appendix B attached hereto for additional information concerning DTC  and the book‐entry system.      Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the  persons for whom they act as nominees (or any successor depository) with respect to the Bonds in respect of  the accuracy of any records maintained by DTC (or any successor depository) or any DTC participant, the  payment by DTC (or any successor depository) or any DTC participant of any amount in respect of the  principal of or interest on Bonds, any notice which is permitted or required to be given to registered owners  under the Ordinance (except such notices as are required to be given by the City to the Bond Registrar or to  DTC (or any successor depository)), or any consent given or other action taken by DTC (or any successor  depository) as the registered owner.  For so long as any Bonds are held in fully‐immobilized form under the  Ordinance, DTC or its successor depository will be deemed to be the registered owner for all purposes  thereunder, and all references therein to the registered owners will mean DTC (or any successor depository) or  its nominee and will not mean the owners of any beneficial interest in such Bonds.    Procedure in the Event of Discontinuation of Book‐Entry Transfer System. In the event that (i) DTC or its successor  (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository  can be obtained, or (ii) the Finance and Information Services Administrator (referred to herein as the “Finance  Director”) determines that it is in the best interest of the Beneficial Owners of the Bonds that such owners be  able to obtain such Bonds in the form of Bond certificates, the ownership of the Bonds may then be transferred  to any person or entity as provided in the Ordinance, and will no longer be held in fully‐immobilized form.  In  the event that the Bonds are no longer in fully immobilized form, interest on the Bonds will be paid by check  or draft mailed to the registered owners at the addresses for such registered owners appearing on the Bond  Register on the fifteenth day of the month preceding the interest payment date, or upon the written request of  a registered owner of more than $1,000,000 of Bonds (received by the Bond Registrar at least 15 days prior to  3  the applicable payment date), such payment shall be made by the Bond Registrar by wire transfer to the  account within the continental United States designated by the registered owner.  Principal of the Bonds will  be payable upon presentation and surrender of such Bonds by the registered owners at the principal office of  the Bond Registrar.      Purpose and Use of Proceeds  Purpose  The proceeds from the sale of the Bonds will be used to (i) refund a portion of the City’s outstanding general  obligation debt to obtain the benefit of savings in annual and total debt service requirements and (ii) pay costs  of issuance of the Bonds.    Plan of Refunding  A portion of the proceeds from the sale of the Bonds will be used to advance refund $6,000,000 of the City’s  Limited Tax General Obligation and Refunding Bonds, 2001 maturing on December 1 in the years 2018 and  2019 and the term bond maturing on December 1, 2021 (as identified below, the “Refunded Bonds”).  The  proceeds of the Bonds will be escrowed to the redemption date for the Refunded Bonds on December 1, 2011  at which time the Refunded Bonds will be redeemed at a price of par plus accrued interest to the date of  redemption.    From a portion of the proceeds of the Bonds, the City will purchase certain direct non‐callable United States  Government Obligations (as further defined below as “Government Obligations”), including obligations of the  State and Local Government Series (“SLGS”).  These Government Obligations will be deposited in the custody  of U.S. Bank National Association (the “Escrow Agent”).  The maturing principal of the Government  Obligations, interest earned thereon, and necessary cash balance, if any, will provide payment of:     (a) interest on the Refunded Bonds when due up to and including December 1, 2011; and   (b) on December 1, 2011, the redemption price (par) of the Refunded Bonds.    The Government Obligations, interest earned thereon, and necessary cash balance, if any, will irrevocably be  pledged to and held in trust for the benefit of the owners of the Refunded Bonds by the Escrow Agent,  pursuant to an escrow deposit agreement to be executed by the City and the Escrow Agent.      Information on the Refunded Bonds is as follows:    Refunded Bonds   Maturity Years  Principal Interest  CUSIP   (December 1) Amounts Rates Numbers   2018 $ 1,385,000 5.25% 760133PL6   2019 1,460,000 5.25 760133PM4   2021* 3,155,000 5.00 760133PP7  * Term Bonds.    Verification of Mathematical Calculations   Grant Thornton LLP, a firm of independent certified public accountants, will deliver on or before the delivery  date of the Bonds its verification report indicating that it has verified, in accordance with attestation standards  established by the American Institute of Certified Public Accountants, the mathematical accuracy of (a) the  mathematical computations of the adequacy of the cash and the maturing principal of and interest on the  Government Obligations, to pay, when due, the interest on and redemption price of the Refunded Bonds and  (b) the mathematical computations of yield used by Bond Counsel to support its opinion that interest on the  Bonds will be excluded from gross income for federal income tax purposes.    4  Sources and Uses of Funds  The proceeds from the Bonds will be applied as follows:     Sources of Funds   Par Amount $ 6,170,000   Net Original Issue Premium  443,484   Total Sources of Funds $ 6,613,484   Uses of Funds   Escrow Requirements $ 6,542,770   Costs of Issuance (1)  70,424   Additional Proceeds  290   Total Uses of Funds $ 6,613,484  (1) Includes bond counsel fee, rating fees, financial advisor fees, underwriter’s discount, and other costs associated with  the issuance of the Bonds and the refunding of the Refunded Bonds.      Security for the Bonds  General  The Bonds are limited tax general obligation bonds of the City.  The City, as authorized by law and the  Ordinance, has covenanted and agreed irrevocably that it will include in its budget and levy an ad valorem tax  upon all the property within the City subject to taxation an amount that will be sufficient, together with all  other revenues and money of the City legally available for such purposes, to pay the principal of and interest  on the Bonds as the same become due.  The City has irrevocably pledged that such tax will be within and as a  part of the tax levy permitted to cities without a vote of the people. The full faith, credit and resources of the  City have been pledged irrevocably for the annual levy and collection of such taxes and for the prompt  payment of such principal and interest.     The City’s imposition of regular property taxes is subject to various limitations (see “Taxing Authority –  Regular Property Tax Limitations” herein).  The Bonds are expected to be paid from the City’s available  resources, and the City does not anticipate tax increases will be needed to pay debt service on the Bonds.    Subject to applicable laws, the City may apply other funds available to make payments with respect to the  Bonds and thereby reduce the amount of future tax levies for such purpose.      The Bonds do not constitute a debt or indebtedness of the State or any political subdivision thereof other than  the City.      Defeasance  In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in  the Bond Fund or in another special account, cash or noncallable Government Obligations, or any combination  of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the  known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its  terms and to pay when due the interest and redemption premium, if any, thereon, and such cash and/or  noncallable Government Obligations are irrevocably set aside and pledged for such purpose, then no further  payments need be made into the Bond Fund for the payment of the principal of and interest on such Bond.   The owner of a Bond so provided for will cease to be entitled to any lien, benefit or security of the Ordinance  except the right to receive payment of principal, premium, if any, and interest from the Bond Fund or such  special account, and such Bond will be deemed to be not outstanding under the Ordinance.    “Government Obligations” is defined in the Ordinance to have the meaning specified in RCW 39.53.010, as it  may be amended from time to time, which currently means any of the following:  (a) direct obligations of, or  obligations the principal of and interest on which are unconditionally guaranteed by, the United States of  America, and bank certificates of deposit secured by such obligations; (b) bonds, debentures, notes,  participation certificates or other obligations issued by the Banks for Cooperatives, the Federal Intermediate  5  Credit Bank, the Federal Home Loan Bank system, the Export‐Import Bank of the United States, Federal Land  Banks or the Federal National Mortgage Association; (c) public housing bonds and project notes fully secured  by contracts with the United States; and (d) obligations of financial institutions insured by the Federal Deposit  Insurance Corporation or the Federal Savings and Loan Insurance Corporation, to the extent insured or to the  extent guaranteed as permitted under any other provision of State law.    No Acceleration  The Bonds are not subject to acceleration upon the occurrence of a default. The City, therefore, would be liable  only for principal and interest payments as they become due. In the event of multiple defaults in payment of  principal of or interest on the Bonds, the registered owners would be required to bring a separate action for  each such payment not made. This could give rise to a difference in interests between registered owners of  earlier and later maturing Bonds.      Bonded Indebtedness  As prescribed by State statutes, the unlimited tax general obligation indebtedness permitted for cities, subject to  a 60 percent majority vote of registered voters, is limited to 2.5 percent of assessed value for general purposes, 2.5  percent for certain utility purposes and 2.5 percent for open space, park facilities and capital facilities  associated with economic development.  Within the 2.5 percent of assessed value for general purposes, the  City may, without a vote of the electors, incur general obligation indebtedness (such as the Bonds) in an amount  not to exceed 1.5 percent of assessed value.  Additionally, within the 2.5 percent of assessed value for general  purposes, the City may, also without a vote of the electors, enter into leases if the total principal component of  the lease payments, together with the other nonvoted general obligation indebtedness of the City, does not  exceed 1.5 percent of assessed value.  The combination of unlimited tax and limited tax general obligation debt  for general purposes, including leases, cannot exceed 2.5 percent of assessed value and for all purposes cannot  exceed 7.5 percent of assessed value.      Without a vote of the electorate, the City may incur debt as follows:    (1) Pursuant to an ordinance specifying the amount and object of the expenditure of the proceeds,  the City may borrow money for corporate purposes and issue bonds and notes within the  constitutional and statutory limitations on indebtedness.    (2) The City may execute conditional sales contracts for the purchase of real or personal property.    (3) The City may execute leases with or without an option to purchase.    6    Computation of Debt Capacity  (As of May 11, 2010)    2010 Collection Year Assessed Value $ 11,821,131,678  Nonvoted Debt Capacity  1.5% of Assessed Value $ 177,316,975  Less: Outstanding Nonvoted Debt (1)  (69,164,955)  Less: The Bonds  (6,170,000)  Remaining Nonvoted Debt Capacity $ 101,982,020  Voted and Nonvoted Debt Capacity  2.5% of Assessed Value $ 295,528,291  Less: Outstanding Nonvoted Debt (1)  (69,164,955)  Less: The Bonds  (6,170,000)  Less: Outstanding Voted Debt  0  Total Remaining Voted and Nonvoted Debt Capacity $ 220,193,336  (1) Includes limited tax general obligation bonds, other obligations and a promissory note; excludes the Refunded Bonds.    Outstanding Debt  Long Term Borrowing  (As of May 11, 2010)    Non‐Voted Debt    Date of Date of Amount Amount  Limited Tax General Obligations     Issue     Maturity  Issued  Outstanding  Valley Com. Bonds, 2000 (1) 09/15/00 12/01/10 $ 2,551,600 $ 184,000  LTGO & Refunding, 2001 11/01/01 12/01/17 (2)  19,505,000  12,700,000  LTGO, 2002 07/15/02 12/01/22  3,895,000  2,860,000  LTGO, 2006 08/08/06 12/01/28  17,980,000  16,920,000  SCORE Bonds, 2009 (3) 11/04/09 01/01/39  31,044,600  31,044,600  Valley Com. Bonds, 2010 (1) 04/05/10 12/01/15  1,065,000  1,065,000  The Bonds (this issue) 05/11/10 12/01/21  6,170,000  6,170,000  LTGO Bond Total    82,211,200  70,943,600  Promissory Note  Fire Protection District No. 40   (Purchase of Fire Station No. 13) 03/01/09 09/01/28  4,453,731  4,391,355 (4)  Non‐Voted Debt Total   $ 86,664,931 $ 75,334,955  (1) The Valley Communications Center Development Authority issued special obligation bonds on September 15, 2000 in  the total aggregate principal amount of $12,758,000 and refunding bonds on April 5, 2010 in the total aggregate  principal amount of $5,325,000 to refund the callable 2011 through 2015 maturities of the 2000 bond issue.  The bonds  issued in 2000 and the 2010 refunding bonds are referred to herein together as the “Valley Com. Bonds.”  Pursuant to  an interlocal agreement, the City is obligated to pay 20 percent of the debt service on the Valley Com. Bonds.    (2) Excludes the Refunded Bonds.  The December 1, 2010 through 2017 principal payments remain after this refunding.  (3) The South Correctional Entity Facility Public Development Authority issued bonds on November 4, 2009 for a new  correctional facility (the “SCORE Bonds”).  The par amount of the SCORE Bonds was $86,235,000 and pursuant to an  interlocal agreement, the City is obligated to pay 36 percent of the debt service on the SCORE Bonds.    (4) Outstanding as of March 1, 2010.  7    Summary of Limited Tax General Obligation Bonds Debt Service Requirements (1)    Calendar Outstanding LTGO Bonds (2)Total Debt Years Principal Interest Principal Interest Service 2010 2,290,000$       2,563,978$       140,000$         152,681$         5,146,659$          2011 2,356,000         3,412,749         5,000              270,625          6,044,374            2012 2,466,000         3,319,006         5,000              270,475          6,060,481            2013 3,264,400         3,187,544         5,000              270,325          6,727,269            2014 3,394,000         3,040,084         5,000              270,175          6,709,259            2015 3,536,400         2,877,465         10,000            270,025          6,693,890            2016 3,488,400         2,703,859         10,000            269,725          6,471,984            2017 3,642,200         2,535,349         10,000            269,425          6,456,974            2018 1,851,400         2,350,397         1,395,000       269,100          5,865,897            2019 1,931,600         2,257,772         1,460,000       206,325          5,855,697            2020 2,018,600         2,160,885         1,530,000       140,625          5,850,110            2021 2,102,400         2,059,235         1,595,000       71,775             5,828,410            2022 2,217,400         1,951,557         ‐                     ‐                      4,168,957            2023 2,006,600         1,832,536         ‐                     ‐                      3,839,136            2024 2,095,800         1,721,905         ‐                     ‐                      3,817,705            2025 2,193,600         1,602,596         ‐                     ‐                      3,796,196            2026 2,291,800         1,476,824         ‐                     ‐                      3,768,624            2027 2,401,800         1,345,472         ‐                     ‐                      3,747,272            2028 2,508,600         1,207,925         ‐                     ‐                      3,716,525            2029 1,222,200         1,064,318         ‐                     ‐                      2,286,518            2030 1,272,600         983,012           ‐                     ‐                      2,255,612            2031 1,328,400         896,971           ‐                     ‐                      2,225,371            2032 1,384,200         807,238           ‐                     ‐                      2,191,438            2033 1,443,600         713,694           ‐                     ‐                      2,157,294            2034 1,506,600         616,102           ‐                     ‐                      2,122,702            2035 1,571,400         514,282           ‐                     ‐                      2,085,682            2036 1,638,000         408,115           ‐                     ‐                      2,046,115            2037 1,708,200         297,422           ‐                     ‐                      2,005,622            2038 1,782,000         181,966           ‐                     ‐                      1,963,966            2039 1,859,400         61,509             ‐                     ‐                      1,920,909            Total 64,773,600$     50,151,767$     6,170,000$      2,731,281$      123,826,648$      The Bonds   (1) Totals may not foot due to rounding.  (2) Principal and interest payments outstanding as of May 11, 2010.  Includes the City’s portion of the Valley Com Bonds  and the SCORE Bonds; excludes the Refunded Bonds.    8  Summary of Overlapping Debt  (As of March 1, 2010)      Estimated   2010 Assessed Percent Outstanding Overlapping  Overlapping Taxing District   Value  Overlap  GO Debt   Debt   School District No. 403 $ 16,391,368,309 68.95% $ 278,205,000 $ 191,812,036  Fire Protection District No. 40  2,190,425,596 66.92  8,895,000  5,952,608  Hospital District No. 1  36,720,140,397 31.32  39,455,000  12,357,198  King County  341,971,517,465 3.48  1,051,394,000  36,539,687  Port of Seattle  341,971,517,465 3.48  357,315,000  12,417,969  School District No. 411  18,238,509,756 2.51  319,885,000  8,034,686  Rural Library District  206,956,965,411 1.51  129,925,000  1,965,402  School District No. 415  18,187,738,178 0.69  229,965,000  1,585,340  Total      $ 270,664,926  Source: King County Assessor’s and Treasurer’s Offices and individual taxing districts.    Net Direct and Overlapping Debt  The following tables present information regarding the City’s direct debt (including the Bonds) and the  estimated portion of the debt of overlapping taxing districts allocated to the City’s residents.  Regular Assessed Value (2010 Collection Year) $ 11,821,131,678  Estimated 2009 Population 83,650    Debt Information  Net Direct Debt (1) $ 75,334,955  Estimated Net Overlapping Debt (as previously detailed herein)  270,664,926  Total Net Direct and Overlapping Debt $ 345,999,881  (1) Includes the Bonds, limited tax general obligation bonds, the Valley Com. Bonds, the SCORE Bonds and a promissory  note; excludes the Refunded Bonds.    Bonded Debt Ratios  Net Direct Debt to Assessed Value  0.64%  Net Direct and Overlapping Debt   to Assessed Value  2.93%  Per Capita Assessed Value $ 141,317  Per Capita Net Direct Debt $ 901  Per Capita Total Net Direct and Net Overlapping Debt $ 4,136    Debt Payment Record  The City has promptly met all debt service payments on outstanding obligations.  No refunding bonds have  been issued to prevent an impending default.      Future Financings  Other than the Bonds, the City has no authorized but unissued general obligation bonds outstanding, nor does  it anticipate issuing additional long‐term debt within the next 12 months.      9  Taxing Authority  Authorized Property Tax Levies  The City is authorized to impose (1) a regular levy (up to $3.60/$1,000, less the library district levy, not to  exceed $0.50/$1,000 of assessed value) and (2) excess levies (unlimited as to rate or amount).  For the 2010  collection year, the City’s regular levy is $2.71184/$1,000.  The regular levy is imposed without a vote of the  people for general purposes, including payment of debt service on the Bonds, and is subject to limitations (see  “Regular Property Tax Limitations” herein).  Excess levies are imposed, upon voter approval, to pay debt  service on unlimited tax general obligation bonds.  An excess levy also may be imposed without a vote to  prevent the impairment of a contract (RCW 84.52.052).    The City’s Property Tax Levies  The following table shows the City’s levy rates and dollar amounts levied since 2006.  As Valorem Tax Levies  (Dollars Per $1,000 of Assessed Value)   Collection  Levy Rates   Levy Amounts    Year  General   Bond(1)   Total  General  Bond   Total    2010 $ 2.71184 $ ‐‐ $ 2.71184 $ 32,088,465 $ ‐‐ $ 32,088,465   2009(2) 2.36923 ‐‐ 2.36923 31,058,533 ‐‐  31,058,533   2008 2.57052 0.05330 2.62382 26,681,251 506,909  27,188,160   2007 2.82148 0.06252 2.88400 23,454,351 515,451  23,969,802   2006 3.04482 0.07088 3.11570 22,236,688 512,427  22,749,115  (1) Senior Housing bond final payment in February 2009.  (2) 2009 General Property Levy grew by $6.5 million primarily due to the Benson Hill annexation ($4.7 million) activities  in 2008 and new construction ($1.2 million) activities being added to the tax roll.  The remaining is from the 1% growth  and re‐levy of refunds and reductions as allocated by state law.  Sources: King County Assessor’s Office.    10  Overlapping Taxing Districts  The overlapping taxing districts within the City have the statutory power to levy regular property taxes at the  following rates subject to the limitations provided by chapter 84.55 RCW, and levy excess voter approved  property taxes.  For purposes of demonstration, representative levy rates for “levy code 2100” of King County  (the “County”), as well as the statutory levy authority of each type of potential overlapping district, are listed  below.  Levy code 2100 is wholly within the City, however it does not include all of the property within the  City; as a result, additional taxing districts, not listed below, levy taxes within the City.      Representative Levy Rates Statutory Levy Authority    Per $1,000 of Per $1,000 of    Assessed Value Assessed Value   King County $ 1.28499 $1.80 (2)   County (Road Levy) n/a  (1) 2.25   Rural Library District n/a  (1) 0.50   Port of Seattle 0.21597 0.45   Fire Protection District n/a  (1) 1.50   The City 2.71184 3.10 (3)(4)   Hospital District No. 1 0.53290 0.75   State Schools 2.22253 3.60 (5)   School District No. 403 3.74381 ‐‐  (6)   Emergency Medical Services 0.30000 0.50   King County Flood Zone 0.10514 0.50   Ferry District    0.00348 n/a  Total rate for King County levy code 2100: $ 11.12066    (1) King County levy code 2100 is included within the incorporated portion of King County and therefore does not have a  road levy; likewise, it does not contain a rural library district or a fire protection district.  (2) Pursuant to RCW 84.52.043(1), a county may increase its levy from $1.80 per $1,000 of assessed value to a rate not to  exceed $2.475 per $1,000 of assessed value for general county purposes if (i) the total levies for both the county and  any road district within the county do not exceed $4.05 per $1,000 of assessed value and (ii) no other taxing district has  its levy reduced as a result of the increased county levy.    (3) RCW 41.16.060.  $0.225 of the total $3.60 can be used for pension funding purposes, if required; otherwise this tax may  be levied and used for any other municipal purpose.    (4) The City’s levy authority of $3.60 per $1,000 of assessed value is impacted due to its annexation to the King County  Rural Library District.  The library district has the authority to levy up to $0.50 per $1,000 of assessed value thereby  reducing the City’s levy authority to $3.10 per $1,000 of assessed value.  The King County Rural Library District is not  within levy code 2100.  (5) RCW 84.52.043(1).  The levy by the State may not exceed $3.60 per $1,000 of assessed value adjusted to the State  equalized value in accordance with the indicated ratio fixed by the State Department of Revenue to be used  exclusively for the support of the common schools.  (6) Washington school districts do not have nonvoted regular levy authority.  Source: King County Assessor for Levy Code.    General Property Taxes  The following provides a general description of the City’s taxing authority and limitations thereon, the method  of determining the assessed value of real and personal property, tax collection procedures, and tax collection  information.     Authorized Property Taxes. The City is authorized to levy both “regular” property taxes and “excess” property  taxes.  (1) Regular Property Taxes. Regular property taxes are subject to constitutional and statutory limitations  as to rates and amounts and commonly are imposed by taxing districts for general municipal  purposes, including the payment of debt service on limited tax general obligation indebtedness, such  as the Bonds.  Regular property taxes do not require voter approval except as described below.  (2) Excess Property Taxes. Excess property taxes are not subject to limitation as to rates or amounts but  must be authorized by a 60 percent approving popular vote, as provided in Article VII, Section 2, of  the State Constitution and RCW 84.52.052.  To be valid, such popular vote must have a minimum  voter turnout of 40 percent of the number who voted at the last City general election, except that one‐ 11  year excess tax levies also are valid if the turnout is less than 40 percent and the measure receives a  number of affirmative votes equal to or greater than 24 percent of the number who voted at the last  City general election.  Excess levies may be imposed without a popular vote when necessary to  prevent impairment of the obligations of contracts.    Regular Property Tax Limitations  The authority of a city to levy taxes without a vote of the people for general city purposes, including the  payment of debt service on limited tax general obligation indebtedness, such as the Bonds, is subject to the  limitations described below.  Information relating to regular property tax limitations is based on existing  statutes and constitutional provisions.  Changes in such laws could alter the impact of other interrelated tax  limitations on the City.    Regular property tax levies are subject to rate limitations and amount limitations and to the uniformity  requirement of Article VII, Section 1 of the State Constitution, which specifies that a taxing district must levy  the same rate on similarly classified property throughout the district.  Aggregate property taxes vary within  the county because of its different overlapping taxing districts.  In the event that the maximum permissible  levy varies within the City, the lowest permissible rate for any part of the City would be applied to the entire  City.      Maximum Rate Limitation. Title 84 RCW authorizes the imposition of regular tax levies to various statutory  maximums (see “Overlapping Taxing Districts” herein).    The One Percent Aggregate Regular Levy Limitation. Article VII, Section 2 of the 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 value, 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 the 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 tax levy for unlimited tax general obligation bonds is a special excess levy approved by the voters, and as  such, is not subject to the limitations on regular levies described above.    The Levy Limitation. The regular property tax increase limitation (chapter 84.55 RCW) limits the total dollar  amount of regular property taxes levied by an individual local taxing district such as the City to the amount of  such taxes levied in the highest of the three most recent years multiplied by a limit factor, plus an adjustment  to account for taxes on new construction, annexations, improvements and State‐assessed property at the  previous yearʹs rate.  The limit factor is the lesser of 101 percent of the highest levy in the three previous years  (excluding new construction, improvements, and State‐assessed property) or 100 percent plus inflation, unless  a greater amount is approved by a simple majority of the voters.  With a supermajority vote of the Council, the  limit factor is a flat 101 percent.  12    RCW 84.55.092 allows the property tax levy to be set at the amount that would be allowed if the tax levy for  taxes due in each year since 1986 had been set at the full amount allowed under chapter 84.55 RCW.  This is  sometimes referred to as “banked” levy capacity.  The City has $5,724,309 in banked levy capacity.     With a majority vote of its electors, a taxing district may levy, within the rate limitations described above,  more than what otherwise would be allowed by the tax increase limitation indefinitely or for a limited period  or to satisfy a limited purpose, as allowed by RCW 84.55.050.  This is known as a “levy lid lift.”  A newly  created taxing district can initiate its levy at the maximum permitted statutory levy rate, unless that rate would  exceed any of the limitations described above.    Since the regular property tax increase limitation applies to the total dollar amount levied rather than to levy  rates, increases in the assessed value of all property in the taxing district (excluding new construction,  improvements and State‐assessed property) which exceed the rate of growth in taxes allowed by the limit  factor result in decreased regular tax levy rates, unless voters authorize a higher levy or the taxing district uses  banked levy capacity.  Decreases in the assessed value of all property in the taxing district (including new  construction, improvements and State‐assessed property) or increases in such assessed value that are less than  the rate of growth in taxes imposed, among other events, may result in increased regular tax levy rates.    The tax levy for unlimited tax general obligation bonds are special excess levies approved by a 60 percent  majority of the voters, and as such, are not subject to the rate or amount limitations on regular levies described  above.    Assessed Value  The County Assessor, or equivalent thereof (“Assessor”), determines the value of all real and personal  property throughout the County that is subject to ad valorem taxation, except certain utility properties which  are valued by the State Department of Revenue.  The Assessor is an elected official whose duties and methods  of determining value are prescribed and controlled by statute and by detailed regulations promulgated by the  State Department of Revenue.      For tax purposes, the assessed value of property is 100 percent of its market value.  Three approaches may be  used to determine real property value:  market data, replacement cost and income generating capacity.  In the  County, all property is subject to an annual property valuation and an on‐site revaluation at least once every  four years.  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 Tax Appeals.      Tax Collection Procedure  Property taxes are levied in specific amounts and the rate for all taxes levied for all taxing districts in a county  is determined, calculated and fixed by the Assessor based upon the assessed value of the property within the  various taxing districts.  The Assessor extends the taxes to be levied within each taxing district on 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, or equivalent thereof, by January 15, who creates a tax account for each taxpayer and is responsible  for the collection of taxes due to each account.  All such taxes are due and payable on April 30 of each year, but  if the amount due from a taxpayer exceeds $50, one‐half may be paid then and the balance no later than  October 31, of each year.  Delinquent taxes are subject to interest at the rate of 12 percent per year computed on  a monthly basis from the date of delinquency until paid.  In addition, a penalty of three percent will be  assessed on June 1st of the year in which the tax was due and eight percent on December 1st of the year due.   All collections of interest on delinquent taxes are to be credited to the County’s current expense fund.      The method of giving notice of payment of taxes due, the accounting for the money collected, the division of  the taxes among the various taxing districts, notices of delinquency, and collection procedures are all covered  by detailed statutes.  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 the first delinquency.  The State’s courts have not  decided whether the Homestead Law (chapter 6.13 RCW) may give the occupying homeowner a right to retain  the first $125,000 of proceeds of the forced sale of the family residence or other “homestead” property for  13  delinquent general property taxes.  (See Algona v. Sharp, 30 Wn. App. 837, 638 P.2d 627 (1982), holding the  homestead right superior to the improvement district assessments).  The United States Bankruptcy Court for  the Western District of Washington has held that the Homestead Exemption applies to the lien for property  taxes, while the State Attorney General has taken the position that it does not.      Tax Collection Record   Regular  Tax Collection     Collection Assessed Ad Valorem Year As of   Year Valuation(1) Tax Levy  of Levy   02/28/10    2010 $ 11,821,131,678 $ 32,088,465 (2) (2)   2009 (3) 13,173,773,069 31,058,533 97.4% 98.0%   2008 9,617,254,028 27,188,160 98.3 99.5   2007 8,332,572,160 23,969,802 98.4 99.8   2006 7,294,182,435 22,749,115 98.2 100.0   2005 6,673,667,278 21,619,105 98.8 100.0  (1) Assessed value is based upon 100% of estimated actual value.    (2) In process of collection.    (3) 2009 assessed value and ad valorem tax levy grew substantially primarily due to the Benson Hill annexation activities  in 2008 and new construction activities being added to the tax roll.    Source: King County Assessor and Treasurer.      Major Property Taxpayers    Percent of   2010 Collection Year City’s   Taxpayer   Type of Business  Assessed Valuation Total A.V.  Boeing Aerospace $ 816,632,281 6.91%  PACCAR Heavy manufacturing  115,630,722 0.98  Puget Sound Energy/Gas Utility  95,185,071 0.81  Transwestern Harvest Lakeshore Property management  68,455,459 0.58  Renton Properties LLC Property management  56,821,800 0.48  ECI Two WTC LLC Property management  50,835,600 0.43  Providence Health Healthcare  50,395,417 0.43  Fred Meyer Stores Inc. Retail  46,337,192 0.39  Axis Grand Holdings Apartments  41,166,000 0.35  BRE Properties Apartments  38,300,700      0.32   Subtotal – Ten Largest Taxpayers   1,379,760,242   11.67   All Other City Taxpayers    10,441,371,436   88.33   Total City Taxpayers  $ 11,821,131,678 100.00%  Sources:  King County Assessor’s Office.    Collection of Other Taxes  In addition to regular property tax levies, the City is also authorized to impose various other taxes, including  those described below.  Neither the State nor any municipal corporation of the State is authorized under the  State Constitution to impose a tax on net income.    Sales and Use Tax.  The State first levied a retail sales tax and a corresponding use tax on taxable retail sales and  uses of personal property in 1935.  Sales taxes currently are imposed on the purchase by consumers (including  businesses and governmental entities) of a broad base of tangible personal property and selected services,  including construction (labor and materials), machinery and supplies, services and repair of real and personal  property and many other transactions not taxed in other states.  The use tax supplements the sales tax by  taxing the use of certain services and by taxing personal property on which a sales tax has not been paid (such  as items purchased in a state that imposes no sales tax).  The State Legislature, and the voters through the  initiative process, have changed the base of the sales and use tax on occasion.  Among the various items not  14  currently subject to sales and use taxes are most personal services, motor vehicle fuel, most food for off‐ premises consumption, trade‐ins and purchases for resale.    Sales taxes upon applicable retail sales are collected by the seller from the consumer.  Use taxes are payable by  the consumer upon applicable rendering of services or uses of personal property.  Each seller is required to  hold taxes collected in trust until remitted to the State Department of Revenue, which usually occurs on a  monthly basis.  The City’s sales and use tax is collected by the State Department of Revenue and remitted on a  monthly basis under a contract that provides for a deduction of one percent of the tax collected for  administration costs.  Distribution to the City lags approximately two months behind collection.    The State currently imposes a sales and use tax of 6.5 percent.  Cities, counties and certain other municipal  corporations are authorized to levy incremental local sales and use taxes for general governmental purposes.   The City is authorized to impose a local sales and use tax of one percent, of which 0.15 percent is required to  be remitted to the County.  The County also imposes various local sales and use taxes, including 0.1 percent to  support criminal justice purposes.  The first 10 percent of the revenues generated by the 0.1 percent criminal  justice tax is allocated to the County.  The remaining 90 percent of the criminal justice tax revenues is allocated  to the County and cities within the County based on population.  The proceeds of the 0.1 percent criminal  justice tax may not be used to replace pre‐existing funding.  Sales and use taxes currently are imposed in the  County at aggregate rates ranging from 8.6 to 9.5 percent.  The County imposes additional sales and use taxes  on car rentals and the sale of food and beverages at restaurants, taverns and bars.    Sales & Use Tax Streamlining.  In 2003, the State Legislature approved legislation authorizing the State’s  membership in the national Streamlined Sales and Use Tax Agreement (the “SSUTA”), in an effort to make  sales and use taxes in the State more uniform with other states.  Congress has required that state sales taxes be  more uniform before Congress will permit taxation of interstate catalog and internet sales.  In 2007, the State  Legislature adopted legislation fully conforming to the SSUTA.  Effective July 1, 2008, the sales tax system  changed in the State from an origin‐based system to a destination‐based system.  Under destination sourcing,  sales taxes are credited to the taxing jurisdiction where the purchaser takes delivery of the goods (which may  differ from the point of sale with respect to goods delivered to the purchaser).  The rate of the tax is now  determined by the local rate in the destination taxing jurisdiction.    The State Legislature enacted certain provisions to mitigate net losses in sales and use tax collections of local  taxing jurisdictions resulting from the change to a destination‐based system.  To qualify, the local taxing  jurisdiction must be negatively impacted by the legislation and the local sales tax must be in effect before  July 1, 2008, among other requirements.  The State legislation requires the Department of Revenue to  determine each local jurisdiction’s annual losses, and distributions are required to be made quarterly  representing one‐fourth of a jurisdiction’s annual loss less voluntary compliance revenue from the previous  quarter.  Losses in sales tax revenues are based on a business by business comparison of sales patterns in each  jurisdiction before and after the change to destination‐based sales tax.  Mitigation payments are distributed at  the end of each quarter for the net loss experienced in the second preceding quarter.  For example, the first  payments were made on December 31, 2008 for July through September (third quarter) 2008.      Money for mitigation is subject to appropriation by the State Legislature.  The City has not received mitigation  payments as a result of this legislation.  Although the City cannot predict its future sales tax receipts, if the  City is negatively impacted by the legislation in the future, it intends to seek mitigation payments to offset any  losses to long as it is eligible.    When a jurisdiction’s “voluntary compliance revenue” exceeds its loss of local sales tax revenue, the  jurisdiction will cease receiving mitigation payments.  “Voluntary compliance revenue” is the local sales tax  revenue gain to each local taxing jurisdiction reported to the Department by sellers in other states voluntarily  registered through the SSUTA.    Lodging Tax.  The City is authorized to impose a local option tax of one percent on sales of lodging.  This tax is  credited against the State’s 6.5 percent retail sales tax and results in no net increase to the taxpayer.  The uses  of lodging tax proceeds are restricted by State law for tourism promotion purposes only.    15  Real Estate Excise Tax.  The City is authorized to impose a real estate excise tax on each sale of real property at  the rate of 0.50 percent of the selling price.  (This is in addition to the real estate excise tax imposed by the State  at the rate of 1.28 percent.)      The first 0.25 percent tax (ʺREET 1ʺ) is imposed pursuant to RCW 82.46.010 and may be used solely for  financing certain “capital projects” specified in a capital facilities plan element of the City’s a comprehensive  plan.  Eligible “capital projects” for REET 1 include: streets, roads, highways, sidewalks, street and road  lighting systems, traffic signals, bridges, domestic water systems, storm and sanitary sewer systems, parks,  recreational facilities, law enforcement facilities, fire protection facilities, trails, libraries, administrative and  judicial facilities.    The second 0.25 percent tax (“REET 2”) is  imposed pursuant to RCW 82.46.035(2) and may be used solely for  the following capital projects specified in a capital facilities plan element of the City’s a comprehensive plan.   Eligible “capital projects” for REET 2 include: streets, roads, highways, sidewalks, street and road lighting  systems, traffic signals, bridges, domestic water systems, storm and sanitary sewer systems, and planning,  construction, reconstruction, repair, rehabilitation, or improvement of parks.  REET 2 excludes the use of funds  to acquire land for parks.    The City must deposit and account for real estate excise tax proceeds in a separate capital projects fund or  account.  REET 1 and REET 2 revenues must be tracked separately because the uses to which they may be put  are different. RCW 82.46.030(2) and RCW 82.46.035(4).  Real estate excise taxes are collected by the County  Treasurer of the county within which the property is located and distributed to the City periodically.   Distributions may be suspended if the City is in noncompliance under RCW 36.70A.340 (relating to growth  management planning).  The City currently believes it is in compliance with this statute.    Utility Tax.  The City is authorized to impose a utility business and occupation tax on the gross receipts of  utilities providing service within the City, including investor‐owned utilities and utilities owned by the City.   The maximum rate at which the City may levy the utility business and occupation tax without a vote of the  electorate varies by the type of utility.    The following table shows the historical General Fund revenues from these taxes.     General Fund Tax Revenues  Fiscal Year Ended December 31, 2009(1) 2008 2007 2006  2005  Regular property taxes (2) $ 30,763,479  $ 28,702,886  $ 23,628,184  $ 22,248,971  $ 21,312,912   Sales and use taxes (3) 21,778,296 23,261,824 22,506,580 20,644,656 18,703,497  Lodging taxes 200,381 252,233 243,251 224,940 207,325  Utility taxes 14,581,971 13,945,723 10,707,602 10,499,620 9,742,554  Real estate excise taxes 2,418,456 2,738,846 5,448,208 5,375,395 4,527,572  Other taxes (4)        5,043,218        3,435,280        4,592,361        3,559,112        3,786,898  Total Taxes $ 74,785,801  $ 72,336,792  $ 67,126,186  $ 62,552,695  $ 58,280,758               Taxes in General Sub‐Fund (5) $ ‐  $ ‐  $ ‐  $(16,614,567)  $  (14,155,930)  Taxes in Capital/Special  Rev/Debt Service  Funds     (4,964,915)      (5,491,796)      (6,272,699)      (6,677,589)        (5,777,997)   Net General Fund Taxes (6) $ 69,820,886  $ 66,844,997  $ 60,853,487  $ 39,260,540  $ 38,346,831      (1) Preliminary.  (2) 2008 Regular Property Taxes include transfer of levies from County Road Tax, Fire District, Library District from  Benson Hill‐Cascade area annexation.  (3) 2008 includes $789,683 annexation credit for Benson Hill‐Cascade area annexation, which is available for a period of  ten years.  (4) Other taxes include gambling tax, franchise fee and admissions tax.  (5) The City consolidated certain special revenue funds that are primarily supported by tax revenues in 2007 into General  Fund.  Prior to 2007, these funds are excluded from General Fund for reporting purposes.  (6) Totals may not foot due to rounding.  Source:  City of Renton.  16  Authorized Investments  Chapter 35.39 RCW limits the investment by a city of its inactive funds or other funds in excess of current  needs to the following authorized investments: United States bonds; United States certificates of indebtedness;  bonds or warrants of the State and any local government in the State; its own bonds or warrants of a local  improvement district which are within the protection of the local improvement guaranty fund law; and any  other investment authorized by law for any other taxing district or the State Treasurer.  Under chapter 43.84  RCW, the State Treasurer may invest in non‐negotiable certificates of deposit in designated qualified public  depositories; in obligations of the U.S. government, its agencies and wholly owned corporations; in bankers’  acceptances; in commercial paper; in the obligations of the federal home loan bank, federal national mortgage  association and other government corporations subject to statutory provisions and may enter into repurchase  agreements.  Utility revenue bonds and warrants of any city and bonds or warrants of a local improvement  district are also eligible investments (RCW 35.39.030).      Money available for investment may be invested on an individual fund basis or may, unless otherwise  restricted by law, be commingled within one common investment portfolio.  All income derived from such  investment may be either apportioned to and used by the various participating funds or for the benefit of the  general government in accordance with city ordinances or resolutions.  Funds derived from the sale of bonds  or other instruments of indebtedness will be invested or used in such manner as the authorizing ordinances,  resolutions or bond covenants may lawfully prescribe.    Local Government Investment Pool  The State Treasurer’s Office administers the Washington State Local Government Investment Pool (the  “LGIP”), a fund that invests money on behalf of more than 450 cities, counties and special taxing districts.  In  its management of LGIP, the State Treasurer is required to adhere, at all times, to the principles appropriate for  the prudent investment of public finds.  These are, in priority order, (i) the safety of principal; (ii) the assurance  of sufficient liquidity to meet cash flow demands; and (iii) to attain the highest possible yield within the  constraints of the first two goals.  Historically, the LGIP has had sufficient liquidity to meet all cash flow  demands.      The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provides its participants the  opportunity to benefit from the economies of scale inherent in pooling.  It is also intended to offer participants  increased safety of principal and the ability to achieve a higher investment yield than would otherwise be  available to them.  The LGIP is restricted to investments with maturities of one year or less, and the average  life typically is less than 90 days.  Investments permitted under the LGIP’s guidelines include U.S. government  and agency securities, bankers’ acceptances, high quality commercial paper, repurchase and reverse  repurchase agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified  Washington State depositories.    As of December 31, 2009, the City’s investments at market value totaled $74,655,350 of which 51 percent was  invested in the LGIP, 40 percent was invested in certificates of deposit and nine percent was invested in  U.S. government securities.    Authorized Investments for Bond Proceeds  In addition to the eligible investments discussed above, bond proceeds may also be invested in mutual funds  with portfolios consisting of U.S. government and guaranteed agency securities with average maturities of less  than four years; municipal securities rated in one of the four highest categories; and money market funds  consisting of the same, so long as municipal securities held in the fund(s) are in one of the two highest rating  categories of a nationally recognized rating agency.  Bond proceeds may also be invested in shares of money  market funds with portfolios of securities otherwise authorized by law for investment by local governments  (RCW 39.59.030).    17  General Fund  Comparative Statement of Revenues, Expenditures and Changes in Fund Balances  (Years Ending December 31)    Unaudited 2009 2008 2007 2006 2005 Revenues Taxes (1)69,820,886$        66,844,997$        60,853,487$        39,260,540$        38,346,842$         Licenses & permits 2,284,347          2,751,420         4,051,338         3,132,587          3,046,091           Intergovernmental 9,690,130          8,773,933         4,247,212         2,846,753          2,994,718           Charges for services 3,696,606          3,976,920         4,644,129         2,246,722          2,163,442           Fines & forfeitures 3,817,008          2,002,854         1,150,079         860,819             683,045              Interfund revenues 3,225,745          3,072,526         2,904,411         1,791,180          2,718,806           Contributions 150,406             0                       303,582            66,781               66,228                Investment earnings 466,584             587,590            1,142,279         661,481             367,469              Miscellaneous 167,214             64,359              84,822              215,804             90,604                Total Revenues 93,318,925          88,074,599          79,381,339          51,082,667          50,477,245           Expenditures General government 12,193,625          (2)16,149,143          14,332,208          10,698,791          11,541,778           Security of persons & property (3)45,812,488          45,530,208          35,583,500          31,157,303          29,031,626           Physical environment 2,843,916          3,123,883         2,764,563         2,609,452          2,190,228           Transportation 6,949,089          6,332,006         5,508,218         0                        0                         Economic environment 7,109,632          6,232,669         5,536,661         4,709,745          4,266,112           Mental & physical health 19,726               16,459              13,818              9,231                 12,700                Culture & recreation (1)14,856,318          (2)11,119,073          10,701,870          0                         43,453                 Capital outlay 1,956,266          2,017,677         2,401,021         80,343               103,115              Total Expenditures 91,741,060          90,521,118          76,841,859          49,264,865          47,189,012           Excess revenues over (under) expenditures 1,577,865          (2,446,519)        2,539,480         1,817,802          3,288,233           Other Financing Sources (Uses): Operating transfers in 277,004             0                       480,355            0                        0                         Operating transfers out (1,285,446)         (519,503)           (480,355)           (272,000)            (2,881,916)          Sale of capital assets 0                        735                   24,218              1,424                 37,047                Total Other Sources (Uses) (1,008,442)          (518,768)             24,218                (270,576)             (2,844,869)           Excess revenues over (under) expenditures (4)569,423             (2,965,287)        2,563,698         1,547,226          443,364              Beginning Fund Balance (1)(5) 13,517,097          16,482,384          13,918,686          9,197,871           8,754,507            Ending Fund Balance 14,086,520$        13,517,097$        16,482,384$        10,745,097$        9,197,871$           Ending Fund Balance as % of Expenditures 15.35%14.93%21.45%21.81%19.49% Audited   (1) In 2007 the Parks, Street, and Library Funds were combined with the General Fund, instead of reported as separate  special revenue funds.  This change increased the beginning balance of the General Fund by the previous year’s Parks,  Street, and Library Funds’ ending balances in the amount of $1,285,989, $1,698,995 and $188,605, respectively.  In  addition to the change in 2007 beginning fund balance, this consolidation also affected the amount of tax revenues  reported in the General Fund.  See the General Fund Tax Revenues table herein for the portion of taxes accounted for  in the “General Sub‐Fund” prior to 2007.  Expenses related to the Parks, Street and Library Funds were categorized  under “Culture & recreation.”  (2) Decline in “General government” from 2008 to 2009 was due certain funds being reallocated to the City’s Internal  Services Fund (outside of the General Fund).  Charges to the Internal Services Fund were allocated to “Culture &  recreation,” resulting in an increase from 2008 to 2009.  (3) The increase in 2008 “Security of persons and property” expenditures is attributable to the Benson Hill‐Cascade area  annexation that took effect in 2008.  In addition, the City entered into a service contract to provide fire and emergency  medical services to the remainder of King County Fire District 40, whose service area was reduced substantially by  this annexation.  (4) The 2008 operating deficit (and reduction in fund balance) represents primarily startup costs for new equipment  purchases and facility improvements the City incurred for the annexation of the Benson Hill‐Cascade area.  (5) In 2005 the Community Development Block Grant (CDBG) Fund was combined with the General Fund.  The  beginning balance of the General Fund was increased by the previous years CDBG Fund’s ending balance in the  amount of $42,762.  Source:  City of Renton Audited Financial Statements.  18  General Fund  Balance Sheet  (Years Ending December 31)    2008 2007 2006 2005 2004 Assets Cash & cash equivalents 3,731,827$        6,784,804$        5,333,644$        4,650,346$         4,134,322$         Investments 6,418,107          7,533,665         3,000,000         3,000,000           3,000,000          Receivables   Taxes 2,636,311          368,733            414,752            847,713              810,488               Customer accounts 3,092,363          2,773,767         1,294,924         1,197,038           983,869               Accrued interest & penalty 71,661               201,602            99,201              69,793                326,313               Due from other funds 923                    6,905                330                   4,346                  3,999                   Due from other governmental units 4,191,637          4,772,646         4,296,279         3,752,141           3,218,062          Prepayments 8,000                 8,000                8,000                8,000                  33,742               Restricted assets 0                        0                       0                       0                         75,000               Total Assets 20,150,829        22,450,122       14,447,130       13,529,377         12,585,795        Liabilities and Fund Balances Liabilities   Accounts payable 1,654,643          2,134,476         849,363            573,726              347,917               Taxes payable 16,355               23,397              10,567              11,727                15,233                 Due to other funds 184,244             0                       15,000              15,984                994                      Custodial accounts 39,438               56,207              69,707              155,037              104,753               Deposits 34,739               34,739              34,739              34,739                24,739                 Deferred revenue 1,194,583          736,152            803,681            1,021,826           1,198,435            Accrued employee wages & leave payable 3,509,730          2,982,767         1,918,976         2,518,467           2,181,979          Fund Balances   Reserved 8,000                 8,000                8,000                8,000                  108,742               Unreserved 13,509,097        16,474,384       10,737,097       9,189,871           8,603,003          Total Liabilities and Fund Balances 20,150,829$       22,450,122$       14,447,130$       13,529,377$       12,585,795$        Audited   Note:  Unaudited 2009 Balance Sheet is not available.  Source:  City of Renton Audited Financial Statements.      19  The City  The City was incorporated in 1901 and operates under State laws applicable to a non‐charter code city with a  mayor‐council form of government.  The council is comprised of seven members plus the mayor.   Councilmembers are elected to four‐year terms on a staggered schedule through citywide elections.   Councilmembers are part‐time elected officials who exercise legislative authority and determine matters of  policy for the City.        Member   Position  Term Expires   Denis W. Law Mayor December 31, 2011   Don Persson President December 31, 2011   Terri Briere President Pro Tem December 31, 2013   Randy Corman Councilmember December 31, 2013   Marcie Palmer Councilmember December 31, 2011   King Parker Councilmember December 31, 2011   Greg Taylor Councilmember December 31, 2011   Rich Zwicker Councilmember December 31, 2013    The City provides a range of municipal services authorized by State law, including police, fire, ambulance  service, streets, sanitation, health, recreation, library, public improvements, planning and zoning, water  supply treatment and distribution, and sewage collection and treatment services.    City Staff  Jay Covington, Chief Administrative Officer.  Mr. Covington joined City staff in 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.  Mr.  Covington earned a Bachelor’s degree in Business and Masters in Public Administration from Brigham Young  University.  Mr. Covington is a past President and Board Member of the Washington City/County  Management Association as well as a past Board Member of the Association of Washington Cities.  In 2005,  Mr. Covington received the Public Official of the Year Award from the Seattle Municipal League.    Iwen Wang, Finance and Information Services Administrator.  Ms. Wang was originally with the City in 1986 as its  Utility Accounting Supervisor and was promoted to the Deputy Finance Director position in 1988, where she  was responsible for budget, financial planning, and financial operation functions including accounting, cash  management, and coordination of financial audits and banking service contracts.  Ms. Wang rejoined the City  in 2008 as its Finance and Information Services Administrator, and is now responsible for overall management  of the Cityʹs financial and information technology functions.  Prior to her original position with the City, Ms.  Wang was with the City of Redmond as its enterprise fund accountant.  In 1994, Ms. Wang joined the City of  Federal Way as its Management Service Director and was appointed to Assistant City Manager in 2007 until  she left to rejoin the City.  Ms. Wang has a Bachelor of Arts degree in public finance and Master of Business  Administration (MBA) degree in Finance.  In addition, Ms. Wang is a Certified Public Accountant (CPA) and a  Certified Management Accountant (CMA).    Gina Jarvis, Fiscal Services Director.  Ms. Jarvis graduated from Drury University in Springfield, Missouri with a  Bachelor of Arts degree in Business Administration and Accounting.  Ms. Jarvis started her career as an  auditor for the Missouri State Auditor’s Office where she became a licensed CPA.  In 1997, Ms. Jarvis joined  the City as an Accountant and was later promoted to Finance Analyst Supervisor.  In 2003, she joined the City  of Puyallup as a Financial Analyst and in 2006, was promoted to Assistant Finance Director where she served  until February 2010.  In February 2010, Ms. Jarvis returned to the City as the Fiscal Services Director.    Labor Relations  The City currently has approximately 693 full‐time employees and 18 seasonal and part‐time employees.  The  City enters into written bargaining agreements with represented employees.  The agreements contain  provisions regarding salaries, vacation, sick leave, medical and dental insurance, working conditions, and  grievance procedures.  The City strives to complete agreements with all groups in a timely manner, consistent  with all applicable State law, and to promote labor relation policies mutually beneficial to management and  20  employees.  The City considers labor relations with its bargaining units to be good.  There have been no recent  strikes or major labor relations problems.     Number of    Bargaining Unit  Employees  Expiration Date    AFSCME 295 December 31, 2009*   Renton Police Officers’ Guild 112 December 31, 2009*   Renton Police Officers’ Guild Non‐Commissioned 45 December 31, 2009*   Renton Firefighters Local 864 123 December 31, 2009*   Renton Firefighters Local 864 Battalion Chiefs 7 December 31, 2009*  * Currently under negotiation.    Pension Funding  Substantially all of these employees are enrolled in the State of Washington Public Employees Retirement  System (“PERS”) or the Law Enforcement Officers and Fire Fighters Retirement System (“LEOFF”).   Contributions by both employees and employers are based on gross wages.  PERS and LEOFF participants  who joined the system by September 30, 1977 are Plan 1 members.  Those PERS participants who joined on or  after October 1, 1977 and by August 31, 2002 are Plan 2 members, unless they exercise an option to transfer to  Plan 3.  PERS participants joining on or after September 1, 2002 have the irrevocable option of choosing  membership in PERS Plan 2 or PERS Plan 3.  LEOFF participants who joined on or after October 1, 1977 are  Plan 2 members.  The City contributed $2,210,892 to PERS and $1,258,704 to LEOFF in 2009 for all of the City’s  employees that are covered under PERS and LEOFF.      The following tables outline the contribution rates of employees and employers under PERS and LEOFF.    PERS Contribution Rates as of September 1, 2009   Plan 1 Plan 2 Plan 3 Employee  6.00%3.90%Variable (1) Employer (2) 5.31%5.31%5.31% (1) Rates vary from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member.   (2) Includes a 0.16% administration fee.    LEOFF Contribution Rates as of September 1, 2009   Plan 1 Plan 2  Employee 0.00%8.46%  Employer (1) 0.16%5.24%  (1) Includes a 0.16% administration fee.    According to information provided by the Office of the State Actuary, based upon revised demographic and  economic assumptions, the total unfunded actuarial accrued liability of Plan I of the PERS System currently is  $3.99 billion, of which the State share is $1.596 billion and the local government share is $2.394 billion.  In 2005  and 2006, the State Legislature enacted and authorized the State Pension Funding Council to adopt changes in  contribution rates to PERS intended to amortize the PERS I unfunded actuarial liability by 2024.  According to  information provided by the Office of the State Actuary, Plan II and III of PERS currently have no unfunded  actuarial accrued liability.      While the City’s contributions in 2009 represent its full current liability under the systems, any unfunded  pension benefit obligations could be reflected in future years as higher contribution rates.  It is expected that  the contribution rates for employees and employers in the PERS II and III will increase.    21  Information regarding all of these plans is presented in Washington State’s Department of Retirement  Systems’ annual financial report. A copy of this report may be obtained at:  Department of Retirement Systems  Point Plaza West  1025 East Union Street  P.O. Box 48380  Olympia, WA  98504‐8380  Internet Address:  www.drs.wa.gov (which is not incorporated herein by reference)    Other Post‐Employment Benefits  The Governmental Accounting Standards Board (“GASB”) has issued a new standard concerning Accounting  and Financial Reporting by Employers for Post‐Employment Benefits Other than Pensions (GASB 45).  In  addition to pensions, many State and local governmental employers provide other post‐employment benefits  (“OPEB”) as a part of total compensation to attract and retain the services of qualified employees.  OPEB  includes post‐employment health care as well as other forms of post‐employment benefits when provided  separately from a pension plan.  The new standard provides for the measurement, recognition and display of  OPEB expenses/expenditures, related liabilities (assets), note disclosures, and, if applicable, required  supplementary information in the financial reports.    The City’s annual OPEB cost (expense) is calculated based on the annual required contribution of the employer  (“ARC”), an amount actuarially determined in accordance with the parameters of GASB 45.  The ARC  represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year  and to amortize any unfunded actuarial liabilities over a period of 30 years as of January 1, 2008.  The  following table shows the components of the City’s annual OPEB cost for 2008, the amount actually  contributed to the plan and changes in the City’s net OPEB:     Determination of Required Annual Contribution   Annual Normal Costs – Beginning of Year $ 154,545   Amortization of UAAL* – Beginning of Year  1,869,523    Annual Required Contribution (ARC) 2,024,068      Determination of Net OPEB Obligation   Annual Required Contribution (ARC)  2,024,068   Interest on net OPEB Obligation  0   Adjustment to ARC  0    Annual OPEB Cost 2,024,068   Contributions Made  (1,843,574)    Increase in net OPEB Obligation 180,494   Net OPEB Obligation – Beginning of Year  0   Net OPEB Obligation – End of Year $ 180,494  * Unfunded Actuarial Accrued Liability.    The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB  obligation for 2009 were as follows:     Fiscal  Contribution as a   Year Annual Percentage of Net OPEB   Ended OPEB Cost Annual OPEB Cost Obligation   2008 $2,024,068 91.08% $180,494    Budgetary Policies  The City budgets it funds in accordance with chapter 35A.33 RCW.  Annual appropriated budgets are adopted  for the general, special revenue, debt service, and capital projects funds on the cash basis of accounting and  include fund balances.  The City provides a reconciliation of the differences between the budgetary basis and  GAAP each year in its Comprehensive Annual Financial Report.      22  The City Council annually adopts a budget by ordinance establishing appropriations for City funds, and  during the year may authorize supplemental appropriations.  Administrative and legal budgetary control is  established at the fund level, i.e., expenditures for a fund may not exceed the total appropriation amount.  The  Mayor or Chief Administrative Officer may authorize transfers of appropriations within a fund however  interfund transfers must be approved by ordinance of the Council.    Risk Management  The City is a member of the Washington Cities Insurance Authority (WCIA).  Utilizing chapter 48.62 RCW  (self‐insurance regulation) and chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed  WCIA on January 1, 1981.  WCIA was created for the purpose of providing a pooling mechanism for jointly  purchasing insurance, jointly self‐insuring, and/or jointly contracting for risk management services.  WCIA has  a total of 129 members.    New members initially contract for a three‐year term, and thereafter automatically renew on an annual basis.   A one‐year withdrawal notice is required before membership can be terminated.  Termination does not relieve  a former member from its unresolved loss history incurred during membership.    Liability coverage is written on an occurrence basis, without deductibles.  Coverage includes general,  automobile, police, public officials’ errors or omissions, stop gap, and employee benefits liability.  Limits are  $4 million per occurrence self insured layer, and $16 million per occurrence in the re‐insured excess layer.  The  excess layer is insured by the purchase of reinsurance and insurance.  Total limits are $20 million per  occurrence subject to aggregate sublimits in the excess layers.  The WCIA Board of Directors determines the  limits and terms of coverage annually.    Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and  machinery are purchased on a group basis. Various deductibles apply by type of coverage.  Property insurance  and auto physical damage are self‐funded from the members’ deductible to $500,000, for all perils other than  flood and earthquake, and insured above that amount by the purchase of reinsurance.    In‐house services include risk management consultation, loss control field services, claims and litigation  administration, and loss analyses.  WCIA contracts for the claims investigation consultants for personnel  issues and land use problems, insurance brokerage, and lobbyist services.    WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as  determined by an outside, independent actuary.  The assessment covers loss, loss adjustment, and  administrative expenses.  As outlined in the Interlocal Cooperation Act, WCIA retains the right to additionally  assess the membership for any funding shortfall.    An investment committee, using investment brokers, produces additional revenue by investment of WCIAʹs  assets in financial instruments which comply with all State guidelines.  These revenues directly offset portions  of the membershipʹs annual assessment.    A Board of Directors governs WCIA, which is comprised of one designated representative from each member.   The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the  organization.  The WCIA Executive Director reports to the Executive Committee and is responsible for  conducting the day to day operations of WCIA.    Auditing of City Finances  Accounting systems and budgetary controls are prescribed by the Office of the State Auditor in accordance  with RCW 43.09.200 and RCW 43.09.230.  State statutes require audits for cities the size of the City to be  conducted by the Office of the State Auditor.  The City complies with the systems and controls prescribed by  the Office of the State Auditor and establishes procedures and records which reasonably assure safeguarding  of assets and the reliability of financial reporting.      The State Auditor is required to examine the affairs of cities at least once every two years, however the City  requests annual audits.  The examination must include, among other things, the financial condition and  resources of the City, whether the laws and constitution of the State are being complied with, and the methods  23  and accuracy of the accounts and reports of the City.    Reports of the auditor’s examinations are required to be  filed in the office of the State Auditor and in the finance department of the City.  The audited financial  statements of the City for the year ended December 31, 2008, attached as Appendix C, are incorporated by  reference to this Official Statement.      Demographic Information  The City surrounds the southern end of Lake Washington, southeast of Seattle on  Interstate 405.  The City is located approximately 20 miles southeast of the City of  Seattle and approximately 60 miles northeast of the City of Olympia, the State’s  capital.  As of the 2009 population estimates, the City ranked fifth in size among  cities in the County.  The City had a population of 83,650 as estimated in 2009 by the  State Office of Financial Management, an increase of 39 percent since 2007 when the  City annexed the Benson Hill‐Cascade area.  Historical population of the City and  the County are shown below.    Population  The following table shows the historical population for the County and the City:    Population  King County and the City of Renton  Year King County City of Renton 2009 1,909,300 83,650 2008 1,884,200 78,780 (1) 2007 1,861,300 60,290 2006 1,835,300 58,360 2005 1,808,300 56,840 (1) Increase in population due to the annexation of the Benson Hill‐Cascade area.  Source: Washington State Office of Financial Management, March 2010.    Flood Management  In January 2009, record rainfall in southern King County caused rivers to swell and flooding to occur even  with dams and levee systems in place in many areas.  In addition to the heavy rainfall, warmer temperatures  added snowmelt to the run‐off and tributary stream flooding.  The Howard Hanson Dam on the Green River,  which runs through southern King County, received record peak inflows and the reservoir at the dam reached  a record level.  As a result, the dam appears to have been damaged.  Engineers for the Army Corps of  Engineers (the “Corps”), which built and maintains the dam, are assessing a depression in one of the dam’s  abutments to determine the extent and cause of the damage.  Although the Corps has assured that there is no  risk of the dam failing, the Corps has announced that it will store less water behind the dam as a safety  precaution until the issue is resolved.  As a result, the Corps may release rainwater from storms into the lower  Green River earlier and more often than in the past, which could potentially overwhelm levees that protect  low‐lying parts of the southern portion of the City.  It cannot be predicted whether a flood or other natural  disaster will occur or if such event did occur, what the impact would be on the City or its operations.    King County  The County is located on Puget Sound in Washington and covers more than 2,200 square miles.  The County is  the largest metropolitan county in the State in terms of number of cities and employment and includes more  than one quarter of the State’s population.  The tables in the following section include the most recent  information available.  Similar to other municipalities nationwide, the City, the County and the State have  experienced and may continue to experience negative impacts due to current economic conditions.  Major  contributors to the area’s economy are manufacturing, technology‐based business, the Port of Seattle, services  industry, tourism, fishing and agriculture.      King County Washington  24  Income. Historical personal income and per capita income levels for the County and the State are shown  below:    King County and State of Washington  Total Personal and Per Capita Income   King County State of Washington Year  Total Personal   Income (in thousands)  Per Capita Income  Total Personal  Income (in thousands)  Per Capita Income  2008 N/A N/A $280,677,561 $42,857 2007 $106,805,239 $57,710 265,738,395 41,203 2006 97,750,314 53,488 245,764,517 38,639 2005 89,032,307 49,488 226,585,245 36,227 2004 88,407,884 49,670 218,431,726 35,347 2003 79,199,166 44,800 202,942,123 33,214 Source: U.S. Department of Commerce, Bureau of Economic Analysis, February 2009.    Taxable Retail Sales. Taxable retail sales reflect only those sales subject to retail sales tax.  Historical taxable  retail sales for the City and the County are shown below:     Taxable Retail Sales     King County   City of Renton    2009(1) $ 19,102,154,079 $ 957,945,674   2008 45,711,920,389 2,262,469,040   2007 47,766,338,768 2,289,518,889   2006 43,993,478,514 2,093,200,107   2005 40,463,996,808 1,951,188,125   2004 37,253,103,540 1,853,297,141  (1) Through second quarter only; through second quarter 2008 for the County was $22,761,952,403, for the City was  $1,142,865,489.  Source: Washington State Department of Revenue, February 2009.    Building Permits. The number and valuation of new single‐family and multi‐family residential building  permits in the County are listed below:    King County Residential Building Permits     New Single Family Units New Multi Family Units  Total  Year  Number  Construction Cost Number Construction Cost  Construction Cost  2009(1)   1,992  $ 535,129,117 936 $142,237,552  $ 677,366,669  2008   3,029   866,565,304 7,427 1,009,669,531   1,876,234,835  2007   5,206   1,506,180,957 10,212 1,246,804,898   2,752,985,855  2006   5,770   1,622,174,594 8,305 1,023,922,267   2,646,096,861  2005   6,331   1,741,241,527 5,703 556,297,096   2,297,538,623 (1) Through December 2009.  Source:  U.S. Bureau of the Census, February 2010.  25    Employment. State‐wide employment figures (rounded) for major employers located primarily within the  central Puget Sound region (King, Pierce and Snohomish Counties) and employment figures for the City are  shown in the following tables:    Major Employers(1)  Employer  Number of Employees  The Boeing Company 74,277(2) U.S. Army Fort Lewis 40,091 Microsoft 36,405 University of Washington 20,605 Providence Health 14,090 King County Government 12,586 City of Seattle 9,946 Group Health Cooperative 9,135 MultiCare Health System 8,552 Costco 7,475 Weyerhaeuser 6,770 Alaska Air Group, Inc.6,565 Washington Mutual Inc. (3) 6,200 Starbucks Corp.4,884 Safeway 4,673 Nordstrom Inc.4,421 Swedish Medical Center 3,860 Qwest 3,639 (1) Does not include part‐time or seasonal employment figures.  (2) From entity, as of April 30, 2009.  (3) As of September 25, 2008, Washington Mutual Bank merged with financial assistance into JPMorgan Chase Bank,  National Association.  Source:  Puget Sound Business Journal, Book of Lists, 2009.    City of Renton  2009 Major Employers           Number of   Employer   Type of Business  Employees  The Boeing Company Aerospace 13,224  Valley Medical Center Medical services 2,400  Renton School District Public education 1,376  Paccar Inc. Heavy manufacturing 1,268  Federal Aviation Administration Federal government 997  Renton Technical College Technical/trade school 835  City of Renton City government 693  ER Solutions Inc. Professional/technical 524  Young‐Columbia of Washington Wholesale trade 392  IKEA  Retail 356  Source: City of Renton.    26  Civilian Labor Force data is based on household surveys of residents.  North American Industry Classification  System (“NAICS”) data are estimates based on surveys of employers and benchmarked based on covered  employment as reported by all employers.  King County  Nonagricultural Wage & Salary Workers   and Labor Force and Employment Data   Annual Average   2009 (1) 2008 2007 2006 2005  Civilian Labor Force 1,112,490 1,088,440 1,068,490 1,047,740 1,012,940 Total Employment 1,023,040 1,041,450 1,028,850 1,005,240 965,940 Total Unemployment 89,450 47,000 39,650 42,500 47,000 Percentage of Labor Force 8.0 4.3 3.7 4.1 4.6 NAICS Industry 2009 (1) 2008 2007 2006 2005  Total Nonfarm 1,156,742 1,216,442 1,200,583 1,176,575 1,141,950 Total Private 990,050 1,050,208 1,037,408 1,014,558 980,600 Goods Producing 161,767 186,358 188,533 182,975 170,367 Natural Resources and Mining 542 583 667 675 692 Construction 57,950 73,792 74,867 69,933 63,008 Manufacturing 103,300 111,967 112,992 112,400 106,658 Services Providing 994,967 1,030,075 1,012,067 993,575 971,575 Trade, Transportation, and Utilities 211,733 224,733 224,117 224,233 222,092 Financial Activities 70,800 75,883 77,100 77,600 76,183 Professional and Business Services 177,050 194,217 190,650 182,250 172,533 Educational and Health Services 140,158 133,508 127,858 124,758 122,400 Leisure and Hospitality 107,508 113,375 111,833 108,633 105,925 Other Services 41,533 42,442 41,567 41,608 41,100 Government 166,683 166,233 163,200 162,025 161,325 Workers in Labor/Management  Disputes 0 958 0 8 850  _______________  (1) Through December 2009.  Source:  State Employment Security Department.      Initiative and Referendum  Under the State Constitution, the voters of the State have the ability to initiate legislation and require the  Legislature to refer legislation to the voters through the powers of initiative and referendum, respectively.  The  initiative power in Washington  may not be used to amend the State Constitution.  Initiatives and referenda are  submitted to the voters upon receipt of a petition signed by at least eight percent (initiative) and four percent  (referendum) of the number of voters registered and voting for the office of Governor at the preceding regular  gubernatorial election.  Any law approved in this manner by a majority of the voters may not be amended or  repealed by the Legislature within a period of two years following enactment, except by a vote of two‐thirds of  all the members elected to each house of the Legislature.  After two years, the law is subject to amendment or  repeal by the Legislature in the same manner as other laws.     Tax and fee initiative measures have been and may be filed from time to time.  It cannot be predicted whether  any such initiatives might gain sufficient signatures to qualify for submission to the Legislature and/or the  voters or, if submitted, whether they ultimately would be approved.    Under the City Municipal Code, Renton voters may initiate Municipal Code amendments and local legislation,  including modifications to existing legislation and through referendum may prevent legislation passed by the  City Council from becoming law.  27  Tax Matters  In the opinion of Bond Counsel, interest on the Bonds is excludable from gross income for federal income tax  purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on  individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted  current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations.      Federal income tax law contains a number of requirements that apply to the Bonds, including investment  restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the use of  proceeds of the Bonds and the facilities refinanced with proceeds of the Bonds and certain other matters.  The  City has covenanted to comply with all applicable requirements.    Bond Counsel’s opinion is subject to the condition that the City comply with the above‐referenced covenants  and, in addition, will rely on representations by the City and its advisors with respect to matters solely within  the knowledge of the City and its advisors, respectively, which Bond Counsel has not independently verified.   If the City fails to comply with such covenants or if the foregoing representations are determined to be  inaccurate or incomplete, interest on the Bonds could be included in gross income for federal income tax  purposes retroactively to the date of issuance of the Bonds, regardless of the date on which the event causing  taxability occurs.  In rendering its opinion, Bond Counsel will also rely on the report of Grant Thornton LLP  with respect to the accuracy of certain mathematical calculations.    Except as expressly stated above, Bond Counsel expresses no opinion regarding any other federal or state  income tax consequences of acquiring, carrying, owning or disposing of the Bonds.  Owners of the Bonds  should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the  Bonds, which may include original issue discount, original issue premium, purchase at a market discount or at  a premium, taxation upon sale, redemption or other disposition, and various withholding requirements.    Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral  federal income tax consequences to certain taxpayers, including, without limitation, financial institutions,  property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement  benefits, certain S corporations with “excess net passive income,” foreign corporations subject to the branch  profits tax, life insurance companies and taxpayers who may be deemed to have incurred or continued  indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Bonds.  Bond  Counsel expresses no opinion regarding any collateral tax consequences.  Prospective purchasers of the Bonds  should consult their tax advisors regarding collateral federal income tax consequences.    Payments of interest on tax‐exempt obligations such as the Bonds, are in many cases required to be reported to  the Internal Revenue Service (the “IRS”).  Additionally, backup withholding may apply to any such payments  made to any owner who is not an ”exempt recipient” and who fails to provide certain identifying information.   Individuals generally are not exempt recipients, whereas corporations and certain other entities generally are  exempt recipients.    Bond Counsel’s opinion is not a guarantee of result and is not binding on the IRS; rather, the opinion  represents Bond Counsel’s legal judgment based on its review of existing law and in reliance on the  representations made to Bond Counsel and the City’s compliance with its covenants.  The IRS has established  an ongoing program to audit tax‐exempt obligations to determine whether interest on such obligations is  includable in gross income for federal income tax purposes.  Bond Counsel cannot predict whether the IRS will  commence an audit of the Bonds.  Owners of the Bonds are advised that, if the IRS does audit the Bonds,  under current IRS procedures, at least during the early stages of an audit, the IRS will treat the City as the  taxpayer, and the owners of the Bonds may have limited rights to participate in the audit.  The commencement  of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded,  regardless of the ultimate outcome.    Qualified Tax‐Exempt Obligations  The City has designated the Bonds as “qualified tax‐exempt obligations” within the meaning of  Section 265(b)(3)(B) of the Code.    28  Premium  An amount equal to the excess of the purchase price of a Bond over its stated redemption price at maturity  constitutes premium on that Bond.  A purchaser of a Bond must amortize any premium over that Bond’s term  using constant yield principles, based on the Bond’s yield to maturity.  As premium is amortized, the  purchaser’s basis in the Bond and the amount of tax‐exempt interest received will be reduced by the amount of  amortizable premium properly allocable to the purchaser.  This will result in an increase in the gain (or  decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of the Bond prior  to its maturity.  Even though the purchaser’s basis is reduced, no federal income tax deduction is allowed.   Purchasers of Bonds at a premium, whether at the time of initial issuance or subsequent thereto, should  consult their tax advisors with respect to the determination and treatment of premium for federal income tax  purposes and the state and local tax consequences of owning such Bonds.    Original Issue Discount  The initial public offering price of certain Bonds (the ʺOriginal Issue Discount Bondsʺ), is less than the stated  redemption price at maturity.  In such case, the difference between (i) the stated amount payable at the  maturity of an Original Issue Discount Bond and (ii) the initial public offering price of that Original Issue  Discount Bond constitutes original issue discount with respect to that Original Issue Discount Bond in the  hands of the owner who purchased that Original Issue Discount Bond at the initial public offering price in the  initial public offering of the Bonds.  The initial owner is entitled to exclude from gross income (as defined in  Section 61 of the Code) an amount of income with respect to an Original Issue Discount Bond equal to that  portion of the amount of the original issue discount allocable to the period that such Original Issue Discount  Bond continues to be owned by the initial owner.    In the event of the redemption, sale or other taxable disposition of an Original Issue Discount Bond prior to its  stated maturity, however, the amount realized by the initial owner in excess of the basis of the Original Issue  Discount Bond in the hands of its initial owner (adjusted upward by the portion of the original issue discount  allocable to the period for which such Bond was held by the initial owner) is includable in gross income.   Purchasers of Original Issue Discount Bonds should consult their tax advisors regarding the determination  and treatment of original issue discount for federal income tax purposes and the state and local tax  consequences of owning Original Issue Discount Bonds.      Rating  As noted on the cover page of this Official Statement, the City has received a rating for the Bonds from  Standard & Poor’s Rating Services, a division of the McGraw‐Hill Companies, Inc.  Standard & Poor’s has  assigned its rating of “AA” to the Bonds.  The rating reflects only the views of the rating agency and an  explanation of the significance of the rating may be obtained from the rating agency.  There is no assurance  that the rating will be retained for any given period of time or that the rating will not be revised downward or  withdrawn entirely by the rating agency if, in its judgment, circumstances so warrant.  Any such downward  revision or withdrawal of the rating will be likely to have an adverse effect on the market price of the Bonds.      Continuing Disclosure  In accordance with Section (b)(5) of Securities and Exchange Commission (the “Commission”) Rule 15c2‐12  under the Securities Exchange Act of 1934, as the same may be amended from time to time (the “Rule”), the  City has agreed in the Ordinance for the benefit of the Bond Owners or Beneficial Owners of the Bonds (the  “Undertaking”) to provide or cause to be provided to the Municipal Securities Rulemaking Board (“MSRB”),  the following annual financial information and operating data for the prior fiscal year (commencing in 2011 for  the fiscal year ended December 31, 2010):  (i) annual financial statements, which statements may or may not be  audited, showing ending fund balances for the City’s general fund prepared in accordance with the Budgeting  Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or  any successor statute); (ii) the assessed valuation of taxable property in the City; (iii) ad valorem taxes due and  percentage of taxes collected; (iv) property tax levy rate per $1,000 of assessed valuation; and (v) outstanding  general obligation debt of the City.  Items (ii) through (v) will be required only to the extent that such  information is not included in the annual financial statements.  29    The information and data described above will be provided on or before nine months after the end of the  City’s fiscal year.  The City’s current fiscal year ends December 31.  The City may adjust such fiscal year by  providing written notice of the change of fiscal year to the MSRB.  In lieu of providing such annual financial  information and operating data, the City may cross‐reference to other documents available to the public on the  MSRB’s internet website.    If not provided as part of the annual financial information discussed above, the City will provide the City’s  audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting  System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute)  when and if available to the MSRB.    Material Events.  The City agrees to provide or cause to be provided, in a timely manner, to the MSRB notice of  the occurrence 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 draws on debt service reserves reflecting financial difficulties;  (4) Unscheduled draws on credit enhancements reflecting financial difficulties;  (5) Substitution of credit or liquidity providers, or their failure to perform;   (6) Adverse tax opinions or events affecting the tax‐exempt status of the Bonds;  (7) Modifications to the rights of Bond owners;  (8) Bond calls (optional, contingent or unscheduled Bond calls other than scheduled sinking fund  redemptions for which notice is given pursuant to Exchange Act Release 34‐238560);  (9) Defeasances;  (10) Release, substitution or sale of property, securing repayment of the Bonds; and  (11) Rating changes.    Solely for purposes of disclosure, and not intending to modify this undertaking, the City advises that no debt  service reserves, credit enhancement or property secure payment of the Bonds.     Notification Upon Failure to Provide Financial Data.  The City agrees to provide or cause to be provided, in a  timely manner, to the MSRB notice of its failure to provide the annual financial information described above  on or prior to the date set forth above.    Format for Filings with the MSRB.  Until otherwise designated by the MSRB or the Commission, any information  or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB’s  Electronic Municipal Market Access system (“EMMA”), currently located at www.emma.msrb.org (such  website is not incorporated in this Official Statement by reference).  All notices, financial information and  operating data required by this undertaking to be provided to the MSRB must be in an electronic format as  prescribed by the MSRB.  All documents provided to the MSRB pursuant to this undertaking must be  accompanied by identifying information as prescribed by the MSRB.    Termination/Modification.  The City’s obligations to provide notices of material events will terminate upon the  legal defeasance, prior redemption or payment in full of all of the Bonds.  Any provision of this section will be  null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the  portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does  not apply to the Bonds, and (2) notifies the MSRB of such opinion and the cancellation of this section.      The City may amend this section with an opinion of nationally recognized bond counsel in accordance with  the Rule.  In the event of any amendment of this section, the City will describe such amendment in the next  annual report, and will include a narrative explanation of the reason for the amendment and its impact on the  type (or in the case of a change of accounting principles, on the presentation) of financial information or  operating data being presented by the City.  In addition, if the amendment relates to the accounting principles  to be followed in preparing financial statements, (i) notice of such change will be given in the same manner as  30  for a material event under this undertaking and (ii) the annual report for the year in which the change is made  will present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial  statements as prepared on the basis of the new accounting principles and those prepared on the basis of the  former accounting principles.    Bondowner’s Remedies Related to Continuing Disclosure Undertaking.  A Bondowner’s or a Beneficial Owner’s  right to enforce the provisions related to continuing disclosure undertaking will be limited to a right to obtain  specific enforcement of the City’s obligations related thereto, and any failure by the City to comply with the  provisions of this undertaking will not be an event of default with respect to the Bonds under the Ordinance.   For purposes of this section, “Beneficial Owner” means any person who has the power, directly or indirectly,  to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds  through nominees or depositories.    Other Continuing Disclosure Undertakings of the City. The City has entered into undertakings to provide annual  information and the notice of the occurrence of certain events with respect to all bonds issued by the City and  is in compliance with all such undertakings.      Legal and Underwriting  Approval of Counsel  Legal matters incident to the authorization, issuance and sale of the Bonds by the City are subject to the  approving legal opinion of Bond Counsel attached hereto in Appendix A.  The form of the opinion of Bond  Counsel is attached hereto.  Bond Counsel will be compensated only upon the issuance and sale of the Bonds.   Bond Counsel has not been retained to review and has not reviewed this Official Statement for completeness  or accuracy and will not offer an opinion concerning this Official Statement.    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.    Limitations on Remedies  The enforceability of the Ordinance is subject to applicable bankruptcy laws, equitable principles affecting the  enforcement of creditors’ rights generally, the police powers of the State and the City, the exercise of judicial  authority by state or federal courts and the exercise by the United States of the powers delegated to it by the  federal constitution.  All legal opinions with respect to the enforceability of the Ordinance and the Bonds will  be expressly subject to a qualification that enforceability thereof may be limited by bankruptcy, reorganization,  insolvency, fraudulent conveyance, moratorium or other similar laws affecting the rights of creditors  generally, and by general principles of equity.  The form of the opinion of Bond Counsel with respect to the  Bonds is attached as Appendix A.  Prospective investors concerned with the impact of any bankruptcy,  reorganization, insolvency, fraudulent conveyance, moratorium or other similar laws should consult with their  own independent counsel before purchasing any Bonds.    Potential Conflicts  Some or all of the fees of the Underwriter, the Financial Advisor and Bond Counsel are contingent upon the  sale of the Bonds.  K&L Gates LLP is serving as Bond Counsel to the City with respect to the Bonds.  From time  to time Bond Counsel may serve as counsel to the Underwriter and to the Financial Advisor with respect to  transactions other than the issuance of the Bonds.    Underwriting  The Bonds are being purchased by Seattle‐Northwest Securities Corporation (the “Underwriter”).  The  purchase contract between the City and the Underwriter provides that the Underwriter will purchase all of the  Bonds, if any are purchased, at a price of 106.624 percent of the par value of the Bonds.  The Bonds will be  reoffered at an average price of 107.188 percent of the par value of the Bonds.  After the initial public offering,  the public offering prices may be varied from time to time without prior notice to any person.    31    Financial Advisor  In connection with the authorization and issuance of the Bonds, the City has retained Piper Jaffray & Co.,  Seattle, Washington, as its financial advisor (the “Financial Advisor”).  The Financial Advisor is not obligated  to undertake, and has not undertaken, either to make an independent verification of or to assume  responsibility for, the accuracy, completeness, or fairness of the information contained in this Official  Statement.    Concluding Statement  So far as any statement herein includes matters of opinion, or estimates of future expenses and income,  whether or not expressly so stated, they are intended merely as such and not as representations of fact.    The information contained herein should not be construed as representing all conditions affecting the City or  the Bonds.  Additional information may be obtained from the City.  The statements relating to the Ordinance  are in summarized form, and in all respects are subject to and qualified in their entirety by express reference to  the provisions of such document in its complete form.    The agreements of the City are set forth in such documents, and the information assembled herein is not to be  construed as a contract with Owners of the Bonds.  32                                                  This page left blank intentionally                      Appendix A    Form of Opinion of Bond Counsel                                                      This page left blank intentionally    May 11, 2010 City of Renton, Washington Seattle-Northwest Securities Corporation Seattle, Washington Re: City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 — $6,170,000 Ladies and Gentlemen: We have acted as bond counsel to the City of Renton, Washington (the “City”), and have examined a certified transcript of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Refunding Bonds, 2010 (the “Bonds”), dated as of their date of initial delivery, in the aggregate principal amount of $6,170,000, issued for the purpose of refunding certain outstanding limited tax general obligation bonds of the City and paying costs of issuance of the Bonds. The Bonds are issued pursuant to Ordinance No. 5534 passed by the City Council of the City on April 5, 2010 (the “Bond Ordinance”). Capitalized terms used in this opinion which are not otherwise defined shall have the meanings given to such terms in the Bond Ordinance. The Bonds are subject to redemption prior to their stated maturities as provided in the Bond Ordinance and in the Bond Purchase Agreement. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official statement or other offering material related to the Bonds (except to the extent, if any, stated in the official statement), and we express no opinion relating thereto, or relating to the undertaking by the City to provide ongoing disclosure pursuant to Securities and Exchange Commission Rule 15c2-12. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based on the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been legally issued and constitute valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bonds may be limited by laws relating to bankruptcy, City of Renton, Washington Seattle-Northwest Securities Corporation May 11, 2010 Page 2 insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 3. Both principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City within and as part of the tax levy permitted to the City without a vote of the electorate and in amounts which, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such covenants may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. The City has designated the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code. Except as expressly stated above, we express no opinion regarding any other federal or state income tax consequences of acquiring, carrying, owning or disposing of the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds, which may include original issue discount, original issue premium, purchase at a market discount or at a premium, taxation upon sale, redemption or other disposition, and various withholding requirements. City of Renton, Washington Seattle-Northwest Securities Corporation May 11, 2010 Page 3 This opinion is given as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, K&L GATES LLP                                                 This page left blank intentionally                      Appendix B    Book‐Entry Transfer System                                                    This page left blank intentionally      T  H  E       D  E  P  O  S  I  T  O  R  Y        T R  U  S  T        C  O  M  P  A  N  Y    SAMPLE OFFERING DOCUMENT LANGUAGE  DESCRIBING BOOK‐ENTRY‐ONLY ISSUANCE  (Prepared by DTC‐‐bracketed material may apply 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 $500 million, one certificate will be  issued with respect to each $500 million of principal amount, and an additional certificate will be issued  with respect to any remaining principal amount of such issue.]    2. DTC, the world’s largest securities depository, is a limited‐purpose trust company  organized under the New York Banking Law, a “banking organization” within the meaning of the New  York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the  meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the  provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing  for over 3.5 million issues of U.S. and non‐U.S. equity issues, corporate and municipal debt issues, and  money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”)  deposit with DTC. DTC also facilitates the post‐trade settlement among Direct Participants of sales and  other securities transactions in deposited securities, through electronic computerized book‐entry transfers  and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of  securities certificates. Direct Participants include both U.S. and non‐U.S. securities brokers and dealers,  banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly‐owned  subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for  DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are  registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC  system is also available to others such as both U.S. and non‐U.S. securities brokers and dealers, banks,  trust companies, and clearing corporations that clear through or maintain a custodial relationship with a  Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s  highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and  Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.    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. Beneficial Owners are, however, expected to receive written confirmations providing details of  the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant  through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the  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.    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 DTC 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 the 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.  For example, 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. 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.]    [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 any other DTC nominee) will consent or vote with  respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures.  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 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 ti me. Payment of redemption proceeds, distributions, and dividend payments 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 will be the responsibility of DTC, and  disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect  Participants.    [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 are 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 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 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‐only transfers through  DTC (or a successor securities depository). In that event, Security certificates will be printed and  delivered to DTC.    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.    [03/08]                      Appendix C    2008 Audited Financial Statements                                                  This page left blank intentionally    i CITY OF RENTON 2008 COMPREHENSIVE ANNUAL FINANCIAL REPORT For Year Ended December 31, 2008 Iwen Wang, Administrator Michael Bailey, Former Administrator Linda M. Parks, CPA, CGFM, Fiscal Services Director Finance and Information Services City of Renton 1055 South Grady Way Renton, Washington 98057 (425) 430-6858 Website: www.rentonwa.gov ii ACKNOWLEDGEMENTS Prepared by the Finance Division of the Finance and Information Services Department Finance and IS Administrator Iwen Wang Fiscal Services Director Linda M. Parks, CPA, CGFM Accounting Staff Janee Hall, Finance Analyst II Tina Hemphill, Finance Analyst III Jill Masunaga, Senior Finance Analyst Greg Nelson, Finance Intern Hai Nguyen, Finance Analyst II Kristi Rowland, Senior Finance Analyst Tracy Schuld, Accounting Supervisor Vidya Vinod, Finance Analyst III Nancy Violante, Financial Services Manager Cindy Zinck, Financial Services Manager Administrative Assistant Mary Roy Print and Mail Coordinator Karl Hurst Form/Graphic Technician Beth Haglund TABLE OF CONTENTS DECEMBER 31, 2008 ITEM PAGE iii INTRODUCTORY SECTION Letter of Transmittal ..................................................................................................................................... 1-1 2007 Comprehensive Annual Financial Report Award ................................................................................ 1-7 Corporate Organization Structure & Reporting Relations ............................................................................ 1-8 FINANCIAL SECTION Independent Auditor’s Report .................................................................................................................. 2-1 Management Discussion and Analysis ...................................................................................................... 3-1 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets ......................................................................................................................... 4-1 Statement of Activities ........................................................................................................................... 4-2 Fund Statements Government Fund Financial Statements: Balance Sheet .................................................................................................................................. 4-4 Reconciliation of Balance Sheet to the Statement of Net Assets .................................................... 4-6 Statement of Revenues, Expenditures and Changes in Fund Balances ........................................... 4-7 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Government Funds to the Statement of Activities ......................................... 4-8 Proprietary Fund Financial Statements: Statement of Net Assets ................................................................................................................... 4-9 Statement of Revenues, Expenses, and Changes in Fund Balances .............................................. 4-11 Statement of Cash Flows ............................................................................................................... 4-12 Fiduciary Fund Statements: Statement of Fiduciary Net Assets ................................................................................................ 4-14 Statement of Changes in Fiduciary Net Assets ............................................................................. 4-15 Notes to Financial Statements: Note 1: Significant Accounting Policies ......................................................................................... 4-16 Note 2: Compliance and Accountability ......................................................................................... 4-26 Note 3: Deposits and Investments ................................................................................................... 4-28 Note 4: Property Taxes .................................................................................................................... 4-31 Note 5: Capital Assets and Depreciation ......................................................................................... 4-32 Note 6: Pensions .............................................................................................................................. 4-35 Note 7: Other Post Employment Benefits ....................................................................................... 4-45 Note 8: Contingencies ..................................................................................................................... 4-47 Note 9: Risk Management ............................................................................................................... 4-48 Note 10: Interfund Transactions ........................................................................................................ 4-51 Note 11: Net Assets ........................................................................................................................... 4-53 Note 12: Prior Year Restatements ..................................................................................................... 4-54 Note 13: Short Term Debt ................................................................................................................. 4-54 Note 14: Long Term Debt ................................................................................................................. 4-55 Note 15: Deferred Charges in Proprietary Funds .............................................................................. 4-59 Note 16: Segment Information .......................................................................................................... 4-59 Note 17: Joint Ventures ..................................................................................................................... 4-59 Note 18: Subsequent Events .............................................................................................................. 4-60 Required Supplemental Information Other than MD&A Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget to Actual General Fund .......................................................................................................................................... 5-1 Actuarial Valuation of Firefighters’ Pension Fund ................................................................................ 5-2 LEOFF I Retiree Medical Benefits - Schedule of Funding Progress………………………………....5-3 TABLE OF CONTENTS DECEMBER 31, 2008 ITEM PAGE iv Combining Statements Non-Major Fund Descriptions ............................................................................................................... 6-1 Combining Balance Sheet ...................................................................................................................... 6-5 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ............................. 6-11 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual .................................................................................................................................. 6-17 Combining Statement of Net Assets, Non-Major Enterprise Funds .................................................... 6-29 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets, Non-Major Enterprise Funds ......................................................................................................... 6-31 Statement of Cash Flows, Non-Major Enterprise Funds...................................................................... 6-32 Combining Statement of Net Assets, Internal Service Funds .............................................................. 6-34 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets, Internal Service Funds ................................................................................................................... 6-36 Combining Statement of Cash Flows, Internal Service Funds ............................................................. 6-37 Statement of Changes in Assets and Liabilities Agency Fund – Special Deposit ............................... 6-39 STATISTICAL SECTION Statistical Section Description ............................................................................................................... 7-1 Financial Trends: Table 1: Net Assets by Component .................................................................................................... 7-3 Table 2: Changes in Net Assets .......................................................................................................... 7-4 Table 3: Fund Balance of Government Funds .................................................................................... 7-6 Table 4: Changes in Fund Balances of Government Funds ................................................................ 7-8 Table 5: General Government Tax Revenue by Source ................................................................... 7-10 Revenue Capacity: Table 6: Principal Property Tax Payers ............................................................................................ 7-11 Table 7: Assessed Value Taxable Property ...................................................................................... 7-12 Table 8: Property Tax Rates Direct and Overlapping Governments ................................................ 7-14 Table 9: Property Tax Levies and Collections .................................................................................. 7-16 Table 10: Sales Tax Collections by Sector ......................................................................................... 7-18 Debt Capacity: Table 11: Ratios of Outstanding Debt by Type .................................................................................. 7-20 Table 12: Legal Debt Margin Information .......................................................................................... 7-22 Table 13: Ratios of General Bonded Debt Outstanding ..................................................................... 7-24 Table 14: Direct and Overlapping Governmental Activities Debt ..................................................... 7-25 Table 15: Pledged-Revenue Coverage for Water and Sewer and Golf Course Revenue Bonds ........ 7-26 Demographic and Economic Information: Table 16: Demographic and Economic Statistics ............................................................................... 7-27 Table 17: Principal Employers ........................................................................................................... 7-28 Operating Information: Table 18: Full Time Equivalent City Government Employees by Function ...................................... 7-30 Table 19: Operating Indicators by Function ....................................................................................... 7-32 Table 20: Capital Assets Statistics by Function .................................................................................. 7-34 July , 2009 Honorable Denis Law, Mayor Members of the Renton City Council Residents of Renton City of Renton, Washington RE: THE 2008 COMPREHENSIVE ANNUAL FINANCIAL REPORT Dear Mayor Law, City Councilmembers, and Residents of Renton: We are pleased to present the City’s Comprehensive Annual Financial Report for the year ended December 31, 2008. We publish this financial statement in conformity with generally accepted accounting principles (GAAP). It has been audited in accordance with generally accepted auditing standards by the Washington State Auditor’s Office. The report includes our own representations concerning the finances of the City of Renton. Consequently, we assume full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, we have established a comprehensive internal control framework that is designed both to protect the City of Renton’s assets from loss, theft, or misuse and to maintain sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh the benefits, the City’s comprehensive framework of internal controls is designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we attest that to the best of our knowledge and belief that this financial report is complete and reliable in all material aspects. These financial statements have been audited by the Washington State Auditor’s Office. The goal of this independent audit was to provide reasonable assurance that the City’s financial statements for the fiscal year ended December 31, 2008, are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in our financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. Based upon the audit, the independent auditor concluded that there was a reasonable basis for issuing an unqualified opinion that the City of Renton’s financial statements for the fiscal year ended December 31, 2008, are fairly presented in conformity with GAAP. The State Auditor’s report is included as the first component of the financial section of this report. 2008 Comprehensive Annual Financial Report City of Renton, Washington Introduction, 1-2 The independent audit of the City of Renton’s financial statements is part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also the City’s internal controls and compliance to legal requirements with special emphasis on internal controls and legal requirements involving the administration of federal grant programs. The City’s Single Audit Report is issued separately and is available upon request or directly from the Washington State Auditor. Another State mandate requires the Washington State Auditor’s Office to perform additional tests of compliance with State laws and regulations as required by RCW 43.09.260. This statute requires the State Auditor to inquire as to whether the City complied with the laws and the Constitution of the State of Washington, its own ordinances and orders, and the requirements of the State Auditor’s Office. The City’s State compliance report is also available upon request and from the Washington State Auditor. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of the Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the independent auditor’s report. THE CITY OF RENTON AND ITS SERVICES The City of Renton was incorporated on September 6, 1901. Located at the south end of Lake Washington, our city borders the City of Seattle to the north. We currently have a land area of 22.24 square miles. We have over 1,181 acres of parks that includes 29 active parks. As presented by the Washington State Office of Financial Management, our 2008 population was 80,708. The City of Renton has a strong mayor form of government with an appointed Chief Administrative Officer. 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 City Council. The Council establishes policies, appropriates monies through the budget process and adopts local laws through ordinances. Each Councilmember serves a four-year term and they are elected on a staggered two-year cycle. Both the Council and the Mayor are elected on a non-partisan basis. The City is a general-purpose governmental entity and provides the full range of municipal services allowed by statute or charter. These services include police, fire, emergency medical, street construction and maintenance, planning and zoning, libraries, parks and recreation, municipal court, and general administrative services. The City operates four utilities: water, sewer, surface water, and solid waste. These are operated very similar to a private business where the revenues from rates and other direct sources must pay for the operational, capital, and long-term debt costs. The City has its own water rights and does not purchase water from outside sources. The City’s sewage is treated by King County, but 2008 Comprehensive Annual Financial Report City of Renton, Washington Introduction, 1-3 the City is responsible for transferring and maintaining the system to King County. The City bills Renton residents a monthly fee for the cost of sewer treatment performed by King County. The City also operates a golf course. All costs of the Maplewood Golf Course are paid from green fees, driving range fees, revenue from the restaurant vendor, and other miscellaneous revenue. The golf course has short-term operational costs, an active capital maintenance program, and annual debt service payments for the construction of the clubhouse and the driving range. One operation the City has, which is somewhat unusual for cities our size, is its airport. The Renton Municipal Airport is used by small private plane operators, a floatplane tourist company, and Boeing initiates its maiden 737 flights from this airport. The operational costs of the airport are paid from rental fees. Much of the major capital projects are paid by fees or with Federal Aviation Administration grants. The City of Renton complies with the Budgeting, Accounting, and Reporting System (BARS) as delineated by the Office of the State Auditor as authorized under RCW 43.09.200 and 43.09.230. State law also mandates timely submission of annual financial reports to the State Auditor for annual independent audits. The City of Renton’s financial system incorporates financial and administrative controls to ensure the safeguarding of assets and reliability of financial reports. These controls are designed to provide reasonable assurance that transactions are executed in accordance with management authorization and are recorded in conformity with GAAP. They also provide accountability of and control over assets and obligations, and sufficient reporting and review exist to provide adequate information for analysis and comparability of data. The City of Renton maintains budgetary controls to ensure compliance with legal provisions embodied in the annual budget. All activities are appropriated through the annual budget process and published in the City’s Annual Budget document. The City Council must adopt an ordinance to increase or decrease total appropriations in a Fund. The Mayor has the authority to move appropriations within a Fund. A thorough discussion of the City’s accounting policies can be found under the Summary of Significant Accounting Policies in the Notes to the Financial Statements. FACTORS AFFECTING FINANCIAL CONDITION The information presented in the financial statements is a perspective of past activities that influence the City’s financial condition. The following information is presented to place that information in context with the general economy. 2008 Comprehensive Annual Financial Report City of Renton, Washington Introduction, 1-4 Economic Condition and Outlook In Mayor Denis Law’s 2009 State of the City’s address he highlighted: • “Total Renton employment is expected to decline about 3 percent this year. Housing permits have dropped from more than 1,300 units in 2007 to less than 450 units last year and are anticipated to continue to go down.” • “Pull-back in consumer and business spending in our region is expected to continue through this year, resulting in another cycle of falling taxable sales and sales tax collection for the City.” • “Within the first couple weeks of this year, it became very apparent that revenues were dropping at a rate higher than we could have foreseen, requiring that we prepare for deficits that may reach 8% or more this year. • “Despite the negative economy, Renton’s population, housing stock, and retail spending still outpaced comparable measures for King County and the region last year. New construction in the City has been between two and three times the regional average over the past three years. Employment growth for Renton between 2005 and 2008 outpaced that of King County by 4%. We continued to see increased numbers of jobs in wholesale, retail, and business services, and a diversification of our economy and employment base. The growth in Renton’s total taxable retail sales was among the highest in the region, at over 3% in 2008 when most cities were seeing declines. Renton’s assessed valuation has increased almost 100 percent over the last seven years, from $5.0 billion in 2001 to nearly $10 billion in 2008”. UPDATE FROM BUDGET DOCUMENT Outlook “The total 2009 proposed expenditure budget is $252 million, of which $171 million is for City operations, $57 million is for debt service and proposed capital projects, and $24 million represents internal transfers that are offset by revenues. This represents a 2% increase over the 2008 adopted budget. The total revenues equal $245 million. The difference between revenues and expenditures of about $7 million will be covered by prior year fund balances for capital equipment and projects. Of the $171 million operating budget, $101 million is for General Government Operations. These are activities primarily supported by tax revenues. With the slowing economy and a high rate of inflation, our preliminary projections indicate that maintaining current services in General Governmental Operations will result in a deficit of over $5 million in 2009.” 2008 Comprehensive Annual Financial Report City of Renton, Washington Introduction, 1-5 “The proposed budget also reflects cost increases for specific purposes. These include the cost of the Fire District 40 contract, an increase in equipment costs in the police operating budget, a full year’s cost for annexation-related personnel, and a proposed transfer of $1 million to fund capital projects. Funding for these increases will come from the Fire District 40 service contract, a full year of revenues from Annexation Sales Tax Credit, and continued growth in the share of our property taxes that comes from new construction. With these adjustments, we will be able to balance our operating budget with current operating revenues, and use prior year fund balances only for one-time capital purposes.” Source: 2009 Budget Message Letter by: Mayor Denis Law OTHER INFORMATION Cash Management The City has adopted an Investment Policy that states that the primary objectives of investment management, in priority order, are safety, liquidity, and return on investment. The Investment Policy reflects provisions in state statute and authorizes investments in obligations with: the US Government or its agencies; banker’s acceptances; certificates of deposit issued by public depositories in the State of Washington; the Washington State Local Government Investment Pool; and any other investment authorized by law for taxing districts in the State of Washington. The City has a Fire Pension Fund that is managed by an Oversight Board with members including Firefighters, the Mayor and one Councilmember. Their investment policies reflect the long-term obligations of investing these funds, which are invested primarily in US Treasury strips. In 2008, the independent actuarial study estimates a (negative) net pension obligation of ($1,082,280), and is included, as an asset in the City of Renton’s Government-wide Financial Statements. Risk Management The City belongs to the Washington Cities Insurance Authority (WCIA). The WCIA is a consortium of Washington State cities that purchases excess coverage in large blocks, thus leveraging the market and risk across a large base. It has a professional staff, but operates with an Oversight Board comprised of City representatives. This Board meets monthly. In most cases, the City of Renton has a variety of insurance deductibles that range from $5,000 to a maximum of $350,000. The City maintains a self-insurance program for health and dental coverage for City employees and dependents. The City purchases excess medical coverage from Berkley Risk for cases that exceed $350,000. The City also purchases life and disability insurance from various healthcare insurance providers. Awards and Acknowledgements The City has a long history of superior achievements in the preparation of its Comprehensive Annual Financial Reports through the peer review program conducted by the Government Finance Officers Association. The dedicated staff of the Finance Division work hard each day to 2008 Comprehensive Annual Financial Report City of Renton, Washington Introduction, 1-6 ensure that the City’s financial records always displays information in conformance with legal parameters. All members of the division are to be commended for their consistent dedication to excellence in local government finance. Significant contributors are specifically identified in the acknowledgements on page ii of this document. We are pleased with the comprehensive content and quality of this financial report knowing that the citizens of Renton can rely on this report as the definitive assessment of all City financial operations. Sincerely, Iwen Wang Linda M. Parks, CPA Finance & Information Services Administrator Fiscal Services Director H:\FINANCE\BUDGET\2009 Budget\2009 BUDGET DOC\Mary's Prelim Docs - Old Files\2009 Preliminary Budget\Org Charts\City of Renton Corporate Organization StructureRENTON CITIZENSCITY COUNCILRandy Corman, PresidentDon Persson, Marcie PalmerTerri Briere, King ParkerGreg Taylor, Rich Zwicker425-430-6501MAYORDenis Law425-430-6500CHIEF ADMINISTRATIVE OFFICERJay Covington425-430-6500COMMUNICATIONSPreeti Shridhar, Director425-430-6500COMMUNITY SERVICESTerry Higashiyama,Administrator425-430-6600FacilitiesPeter Renner, DirectorParksLeslie Betlach, DirectorRecreationJerry Rerecich, DirectorHuman ServicesKaren Bergsvik, ManagerLibraryBette Anderson, DirectorRenton History MuseumElizabeth Stewart, ManagerCommunity Resourcesand EventsPUBLIC WORKSGregg Zimmerman,Administrator425-430-7394Maintenance ServicesMichael Stenhouse, DirectorTransportation SystemsPeter Hahn, DeputyPW AdministratorUtility SystemsLys Hornsby, DirectorCOMMUNITY ANDECONOMIC DEVELOPMENTAlex Pietsch,Administrator425-430-6580Economic Developmentand NeighborhoodsSuzanne Dale Estey,DirectorDevelopment ServicesNeil Watts, DirectorPlanningADMINISTRATIVESERVICESMarty Wine, Assistant CAO425-430-6500Mayor's OfficeCity Clerk/Cable ManagerBonnie Walton,City ClerkCourt ServicesJoe McGuire, DirectorHearing ExaminerFred Kaufman,Hearing ExaminerPOLICEKevin Milosevich, Chief425-430-7503Support Operations BureauChuck Marsalisi, Deputy ChiefSpecial OperationsInvestigationsAdministrativeServicesStaff and AuxiliaryServicesField Operations BureauTim Troxel, Deputy ChiefPatrol ServicesPatrol OperationsFIRE AND EMERGENCYSERVICESI. David Daniels, Chief /Administrator425-430-7501Response OperationsMark PetersonDeputy Fire ChiefSafety andSupport ServicesRobert Van HorneDeputy Fire ChiefCommunity RiskReductionBill FloraDeputy Fire ChiefEmergency ManagementDeborah NeedhamDirectorHUMAN RESOURCESAND RISK MANAGEMENTNancy Carlson, Administrator425-430-7650Human ResourcesCivil Service CommissionRisk ManagementFINANCE ANDINFORMATION SERVICESIwen Wang, Administrator425-430-6858FinanceLinda Parks,Fiscal Services DirectorInformation ServicesGeorge McBride,IS DirectorPrint and MailServicesCity AttorneyLarry Warren, Administrator(425) 255-8678MUNICIPAL COURTJUDGETerry Jurado425-430-6550 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-1 MANAGEMENT’S DISCUSSION AND ANALYSIS The City of Renton’s discussion and analysis provides a narrative overview of the City’s financial activities for the fiscal year ended December 31, 2008. The intent of the discussion and analysis is to review the City’s financial performance as a whole. This Management’s Discussion and Analysis (MD&A) combined with the Transmittal Letter, the Financial Statements, and the Notes to the Financial Statements represent the complete 2008 financial activities for the City of Renton. These are all intended to help the reader understand the City’s significant financial issues. This MD&A provides an overview of the City’s financial records. The data in this financial report also identifies any material deviations from the financial plan and the adopted annual budget. Finally, the intent of the MD&A and other financial information is to isolate and identify individual fund issues or concerns. FINANCIAL INFORMATION Since 2003, the City of Renton prepared its financial records in accordance to what is known as Government Accounting Standards Board Statement 34 (GASB 34) with a phase in of the infrastructure component in 2004. The City’s general Government-wide Financial Statements were prepared on the full accrual basis of accounting in conformity with Generally Accepted Accounting Principles (GAAP). The City’s Fund Financial Statements for its major and non-major governmental funds were prepared on the modified accrual basis of accounting in conformity with GAAP. The City’s major and non-major enterprise funds, internal service funds, and pension funds were accounted for on the accrual basis. The City of Renton, along with all cities, counties, and other governmental entities in Washington, must comply with the Budgeting, Accounting, and Reporting System (BARS) as defined by the Washington State Office of the Auditor (SAO). SAO audits the financial records of all cities and other governmental units within the State. The City of Renton’s financial system integrates financial and administrative controls that ensure the safeguarding of assets and the reliability of financial reports. These controls are designed to provide: 1. reasonable assurance that transactions are executed in accordance to management understanding and approval; 2. reasonable assurance that transactions are executed in accordance to GAAP principles; 3. accountability for control of assets and obligations; and 4. assurance that sufficient reporting and review exists to provide adequate information for analysis and comparability of data. Internal control is a high priority for the City. SAO reviews the City’s internal controls, and the City receives and takes action on all the recommendations made. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-2 The City maintains strong budgetary controls in order to ensure compliance with legal provisions embodied in the annual appropriated budget as approved by the City Council. The City Council must authorize any budget increase or decrease to any fund. Financial Highlights • The City’s total assets as of December 31, 2008, exceeded liabilities by over $644.5 million. • As of December 31, 2008, the City’s Governmental Activities reported net assets of $420.7 million. Of this total, $34.2 million is defined as unrestricted and can be used for needs the Mayor and Council deem necessary. These monies are intended to provide a cushion against significant economic downturns in revenues and to maintain sufficient working capital and cash flow to meet daily financial needs. • Investments in capital assets comprise $353.2 million of the $420.7 million in Governmental Activities net assets. • The business type activities have total net assets of $223.9 million. Ninety (90.4%) percent of this total, $202.3 million, represents the City’s investments in capital assets. An unrestricted balance of $17.4 million remains and is used to meet day to day cash flow requirements and to ensure we can meet all obligations of the utilities and other funds if the revenues do not meet expectations. • The City’s total outstanding long-term debt as of December 31, 2008, was $101.5million. Of this amount, $50 million are revenue bonds and PWTF loans dedicated to the waterworks projects. Another $505,000 is for outstanding bonds for Senior Housing. These bonds have a special taxing authority. The Golf Course has $2.6 million outstanding in debt service. Employee leave balances total $6.49 million. The balance of $41.9 million of our debt is dedicated for general governmental purposes, including the purchase of City Hall, the construction of the downtown parking garage, and a replacement of a fire station (our share of a regional E-911), Communications Center, and other small projects, including municipal-bonds sold for fire equipment. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis provides an introduction and overview to the City of Renton’s basic financial statements. The basic financial statements are comprised of three components: 1. Government-wide Financial Statements; 2. Fund Financial Statements; and 3. Notes to the Financial Statements. The graphic representation below illustrates the required components of the City’s annual financial report and how the required parts are arranged and relate to one another. This illustration helps explain the City’s financial presentation in 2008. This graphic representation should be used in conjunction with the following explanations to help guide the reader in understanding the financial condition of the City of Renton. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-3 Figure 1 REQUIRED COMPONENTS OF THE ANNUAL FINANCIAL REPORT In addition to the required components shown in Figure 1, the City’s annual report also includes other voluntary supplementary information. The most significant section is the Combining Statements. These provide Balance Sheets, Statement of Revenues, Expenditures, and Changes in Fund Balances with Budget to Actual comparisons, Statement of Net Assets, and Cash Flows for all Non-Major Funds. The next section of information, the Statistical Section, provides a ten-year view of the City’s Revenue, Expenditures, Debt Obligations, and Debt Capacity; the City’s largest taxpayers, and those entities with the largest employment within the City of Renton. This section provides a long-term perspective on the City’s economy. BASIC FINANCIAL STATEMENTS Government-wide Financial Statements provide readers with a broad overview of the City of Renton’s finances in a manner similar to a private sector business. They provide both short-term and long-term information about the City’s overall financial status. The government-wide statements distinguish between functions of the City that are principally supported by taxes and intergovernmental revenues (referred to as “governmental activities”) from functions that are intended to recover all or a significant portion of their costs through user fees and charges (referred to as “business-type activities.”) The governmental activities of the City include a full range of local government services provided to the public such as police and fire protection; road maintenance and construction; community planning and economic development; libraries, parks, and recreational opportunities; and other community services. The business-type activities of the City include waterworks (water, sewer, and surface water), solid waste management and services, golf course, and airport. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-4 The Statement of Net Assets presents information on all of the City’s assets and liabilities with the difference between the two reported as net assets. This statement combines and consolidates governmental funds’ current financial resources (short term available resources) with capital assets and long-term obligations, which is primarily debt. The Statement of Net Assets serves a purpose similar to that of the Balance Sheet of a private-sector business. Over time, increases or decreases in net assets may serve as one indicator of whether the financial position of the City is improving or deteriorating. Other indicators to consider when evaluating the financial position of the City includes changes to the property tax base, general economic conditions as demonstrated through business licenses fees or sales tax revenue, and the condition of the City’s infrastructure (roads, drainage systems, bridges, and water infrastructure). The Statement of Activities focuses upon both the gross and net cost of various activities that are provided by the government’s general tax and other revenues. This is intended to summarize and simplify the user’s analysis of cost to various governmental services and/or subsidy to various business-type activities. By separating program revenue from general revenue, users of the financial statements can identify the extent to which each program relies on taxes for funding. The Governmental Activities reflect the City’s basic functions: General Government, Judicial, Security of Person and Property, Physical Environment, Mental and Physical Health, and Culture and Recreation. Property, sales, and utility taxes finance the majority of these functions. All changes in net assets are reported using accrual basis of accounting, which is similar to the accounting used in the private sector. The accrual basis of accounting requires that revenues are reported when earned and expenses are reported when incurred, no matter when the revenue will actually be received or the obligation will be paid. For example, property taxes are shown as a receivable and revenue even though some amount of these taxes will not be available to the City for several years. All unpaid vendor obligations are illustrated as an accounts payable obligation as of December 31. Fund Financial Statements The City uses funds to ensure and demonstrate fiscal integrity and compliance with finance related legal requirements with a focus on Major Funds. A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities and objectives. There are three types of funds: governmental, proprietary, and fiduciary. A Major Fund has three elements as defined by GASB 34: • Total assets, liabilities, revenues, or expenditures of that individual governmental or enterprise funds are at least ten percent (10%) of the corresponding total (assets, liabilities, etc.) for all funds of that category or type (i.e., governmental, proprietary, or fiduciary); and • Total assets, liabilities, revenues, or expenditures/expenses of the individual government fund or enterprise funds are at least five percent (5%) of the corresponding total for all governmental and enterprise funds combined; or • Any other governmental or enterprise fund that the government’s officials believe is particularly important. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-5 Governmental Funds present most of a government’s tax-supported activities. The Proprietary Funds describe and financially manage the government’s business-type activities where all or part of the activities’ costs are supported by fees and charges that are paid directly by those who benefit from the activities. Fiduciary Funds control resources held by the government as a trustee or agent for parties outside of the government. The resources of Fiduciary Funds cannot be used to support the government’s own programs. Governmental Funds The Governmental Fund Balance Sheet and Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances present separate columns of financial data for the General Fund and Capital Investment Fund. These comprise the City’s major governmental funds. Data from the remaining governmental funds are combined and presented in a single, aggregated column in the fund statements. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements. Governmental Funds are used to account for essentially the same functions reported as governmental activities in the Government-wide Financial Statements. The focus of Governmental Fund Financial Statements is on near-term inflows and outflows of available financial resources and on balances of resources available at the end of the fiscal year. Such information is useful in evaluating whether there are more or less financial resources that can be spent in the near future to finance City services. Because the focus of governmental Fund Financial Statements is a narrower view than that of the Government-wide Financial Statements, it is useful to compare information presented for governmental funds with similar information presented for governmental activities in the Government-wide Financial Statements. This gives the reader a better understanding of the long-term impact of the government’s near-term financing decisions. The Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide reconciliation to the governmental activities column in the government-wide statements to facilitate this comparison. The City maintains budgetary controls over its governmental funds. Budgetary controls ensure compliance with legal provisions embodied in the annual appropriated budget. Governmental fund budgets are established in accordance with state law and are adopted on a fund level. General fund budget variances are specifically addressed later in this discussion and analysis. Proprietary Funds These types of funds consist of two types of funds: Enterprise and Internal Service. They have always been operated as private business activity. Enterprise Funds are used to report the same functions as business-type activities in the Government-wide Financial Statements. Internal Service Funds are used to report activities that provide supplies and services to various City departments and to accumulate and allocate the associated costs of providing these services to the various functions. The revenues and expenses of Internal Service Funds that are duplicated in other funds are eliminated in the government-wide statements. Because the remaining balances primarily benefit governmental, rather than business-type activities, they have been included within Governmental Activities in the Government-wide Statements. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-6 The City of Renton has two major proprietary funds: Waterworks Utility (water, wastewater, and stormwater) and Solid Waste. The Proprietary Fund Balance Sheet and the Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Equity present separate columns of financial data for the Waterworks Utility and Solid Waste. Data from the remaining Enterprise Funds are combined and presented in a single, aggregated column in the fund statements. Governmental Activities Internal Service Funds are reported separately in this section. Proprietary Fund statements provide the same type of information as the Government-wide Financial Statements, only in more detail, since both apply the accrual basis of accounting. In comparing the total assets and total liabilities between the two statements, only slight differences will be noticed. One notable difference is that the “due from other funds” (asset) and the “due to other funds” (liability) in the proprietary fund statements are combined in a single line called “internal balances” in the asset section of the Government-wide Statement of Net Assets. Fiduciary Funds Fiduciary Funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reported in the Government-wide Financial Statements because the resources of those funds are not available to support the City’s own operations. All of the City’s fiduciary activities are reported in a separate Statement of Fiduciary Net Assets and a Statement of Changes in Fiduciary Net Assets. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided, and are an integral part of the Government-wide and Fund Financial Statements. Combining statements for non-major Governmental and Enterprise Funds, as well as Internal Service Funds, are presented immediately following the required supplementary information on pensions. GOVERNMENT-WIDE FINANCIAL ANALYSIS Statement of Net Assets Changes in Net Assets may serve as a useful indicator of a government’s financial position. The overall financial position has improved for the City of Renton over the prior year. Changes in Net Assets from 2007 to 2008 shows an increase in total net assets of $137 million. Table 1 is a condensed version of the Government-wide Statement of Net Assets. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-7 Table 1 NET ASSETS Total TotalGovernmental Governmental Business-type Business-type Primary Primary Activities Activities Activities Activities Government Government2007 2008 2007 2008 2007 2008 Current and other assets $88,100,131 83,713,100 $24,024,920 25,229,239 $112,125,051 108,942,339 Land Construction in process Capital assets (net of 88,947,494 41,893,039 175,559,921 29,912,496 6,976,321 5,699,290 6,976,321 10,014,741 95,923,814 47,592,327 182,536,242 39,927,237 accumulated depreciation) 143,161,082 191,794,358 218,642,046 236,611,238 361,803,128 428,405,596 TOTAL ASSETS $362,101,746 480,979,875 $255,342,577 278,831,539 $617,444,320 759,811,414 Long term liabilities $49,397,374 48,275,566 $43,999,200 53,152,711 93,396,574 101,428,277 Other liabilities 15,265,203 12,051,530 1,265,319 1,821,099 16,530,522 13,872,629 TOTAL LIABILITIES $64,662,577 60,327,096 $45,264,519 54,973,810 $109,927,096 115,300,906 NET ASSETS Invested in capital assets, net of related debt $232,714,563 353,197,782 $188,518,151 202,255,997 $421,232,714 555,453,779 Restricted 32,648,993 33,294,987 3,586,667 4,171,525 36,235,660 37,466,512 Unrestricted 32,075,613 34,160,010 17,973,237 17,430,207 50,048,850 51,590,217 TOTAL NET ASSETS $297,439,169 420,652,779 $210,078,055 223,857,729 $507,517,224 644,510,508 The majority of the City’s net assets (86%) are investments in capital assets (e.g., streets, drainage, construction in progress, buildings, equipment, water and sewer pipes) less any related outstanding debt used to acquire these assets. The City’s capital assets are used to provide services to citizens. It should be noted that although the investment in capital assets is reported net of related debt, resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. Investments in capital assets net of related debt increased from 2007 to 2008 by $134.3 million. Investment in capital assets increased by $120.5 million in the Governmental Funds and $13.7 million in the Business-type activities primarily due to annexations. The largest was Benson Hill adding over 16,000 new residents. This annexation is further discussed in Note 1 and 12 of the financials. Chart 1CATEGORIES OF NET ASSETS$0$100,000,000$200,000,000$300,000,000$400,000,000$500,000,000$600,000,000$700,000,0002007GovernmentalActivities2008GovernmentalActivities2007 BusinessTypeActivities2008 BusinessTypeActivities2007 TotalPrimaryGovernment2008 TotalPrimaryGovernmentUnrestrictedRestrictedInvested in capital assets2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-8 Restricted assets, representing resources that are subject to external restrictions on how they may be used, equate to seven percent (5.8) of total net assets, down from nine percent (7.1%) in 2007. The remaining balance (unrestricted net assets) of $51.6 million may be used to meet the City’s ongoing obligations. Chart 1 provides a graphical comparison of the three categories of net assets for 2007 and 2008. As of December 31, 2008, the City reports positive balances in all three categories of net assets, for the government as a whole, as well as for separate governmental and business-type activities. Statement of Change in Net Assets The City’s total net assets (before prior period adjustments and changes in accounting principles) increased in 2007 by $22.5 million. Governmental activities generated eighty percent (80%) of this total or $17.9 million, while business-type activities generated $4.6 million of this total. Chart 2 below illustrates the various sources and amounts of revenue received by the government as a whole. Table 2 follows the chart. This is a condensed version of the Statement of Activities for the City. Comparable data is available and provided in the 2008 Annual Report. Chart 22008 TOTAL REVENUES BY SOURCEProperty Taxes17%Sales Taxes 13%Excise Taxes2%Interest/Investment earnings2%Operating Grants & Contributions 6%Capital Grants/Contribution14%Charges for Services 36%Business Taxes7%Miscellaneous1% 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-9 Table 2 CHANGE OF NET ASSETS Governmental Activities 2007 Governmental Activities 2008 Business-Type Activities 2007 Business-Type Activities 2008 Total Primary Government 2007 Total Primary Government 2008 REVENUES: Program revenues: Charges for services $36,863,657 $17,592,481 $45,403,349 $44,651,684 $82,267,006 $62,244,165 Operating grants & contributions 5,265,737 9,570,931 243,537 264,784 5,509,274 9,835,715 Capital grants & contributions 4,940,471 18,109,124 1,761,802 6,888,975 6,702,273 24,998,099 GENERAL REVENUES: Property taxes 23,106,578 29,381,036 23,106,578 29,381,036 Sales taxes 22,749,831 23,190,076 22,749,831 23,190,076 Business taxes 11,962,879 14,945,173 11,962,879 14,945,173 Other taxes 8,236,876 4,362,945 8,236,876 4,362,945 Penalties and interest 33,949 6,477 33,949 6,477 Interest and investment earnings 3,465,517 2,419,260 1,041,576 1,120,342 4,507,093 3,539,602 Miscellaneous 1,218,889 2,104,133 135,986 85,493 1,354,875 2,189,626 TOTAL REVENUES $117,844,384 $121,681,636 $48,586,250 $53,011,278 $166,430,634 $174,692,914 PROGRAM EXPENSES GOVERNMENTAL ACTIVITIES: General government services $29,112,970 $12,010,422 $29,112,970 $12,010,422 Judicial 1,845,031 1,761,665 1,845,031 1,761,665 Security of persons and property 36,213,120 46,289,454 36,213,120 46,289,454 Physical environment 2,749,417 3,333,471 2,749,417 3,333,471 Transportation 11,237,287 13,675,581 11,237,287 13,675,581 Economic environment 6,880,687 6,823,426 6,880,687 6,823,426 Mental and physical health 301,495 325,066 301,495 325,066 Culture and recreation 11,036,931 17,025,800 11,036,931 17,025,800 Interest on long-term debt 2,594,784 2,663,436 2,594,784 2,663,436 Business-type activities Water $28,657,468 $32,738,366 28,657,468 32,738,366 Airport 1,396,054 1,733,894 1,396,054 1,733,894 Solid waste 10,606,560 11,518,047 10,606,560 11,518,047 Golf 2,277,454 2,334,838 2,277,454 2,334,838 TOTAL EXPENSES $101,971,722 $103,908,321 $42,937,536 $48,325,145 $144,909,258 $152,233,466 Increase in net assets before transfers $15,872,662 $17,773,315 $5,648,731 $4,686,133 $21,521,391 $22,459,448 Transfers 110,000 (110,000) Increase in net assets 15,872,662 17,883,315 5,648,731 4,576,133 21,521,391 22,459,448 Net assets - beginning 281,566,509 297,439,169 204,429,324 210,078,055 485,995,833 507,517,224 Prior period adjustment 105,330,297 9,203,541 114,533,838 Net Assets –ending $297,439,171 $420,652,781 $210,078,038 $223,857,729 $507,517,224 $644,510,510 Seventy percent (70%) of the City of Renton’s total revenue activities are for general governmental activities such as providing police, fire, parks, libraries, recreational, building safety, and planning services. The largest business type activities include water, sewer, surface water, solid waste, and golf activities. Governmental Activities Analysis Governmental activities cost a total of $103.9 million in 2008, up $1.9 million from 2007. Of this amount, $45.3 million was paid for either by those who directly benefited from the programs or by other governments and organizations that subsidized certain programs with grants Chart 3 2008 COMPARISON OF TOTAL GOVERNMENTAL vs BUSINESS TYPE EXPENSESGovernmental Activities68%Business Type Activities32%2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-10 and contribution. The net expense (total expenses less program revenues) of $58.6 million was the cost of governmental services City taxpayers primarily paid through various taxes. Chart 4 portrays the cost of each of the City’s major governmental programs along with each program’s generated revenues (fees and intergovernmental revenues specifically related to that program). Chart 4 GOVERNMENTAL ACTIVITIES PROGRAM REVENUES AND EXPENSES2007 vs 2008$0$5,000,000$10,000,000$15,000,000$20,000,000$25,000,000$30,000,000$35,000,000$40,000,000$45,000,000$50,000,0002007 General Govt2008 General Govt2007 Judicial2008 Judicial2007 Security of Persons and Property2008 Security of Persons and Property2007 Physical Environment2008 Physical Environment2007 Transportation2008 Transportation2007 Economic Environment2008 Economic Environment2007 Mental and Physical Health2008 Mental and Physical Health2007 Culture and Recreation2008 Culture and Recreation2007 Interest on Debt2008 Interest on DebtExpensesRevenues Chart 5 depicts the sources of revenues that fund governmental activities. Approximately fifty-eight (58%) is from various taxes. Charges for services, grants, and interest earnings generate forty-two percent (42%) of total revenue for general governmental activities. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-11 Chart 5 GOVERNMENTAL ACTIVITIES REVENUES BY SOURCEProperty Taxes23%Capital Grants15%Operating Grants8%Charges for Services14%Excise Taxes4%Interest Earnings3%Miscellaneous2%Business Taxes12%Retail Sales Taxes19% Business-Type Activities Analysis Charts 6 and 7 present the same information on business-type activities as illustrated for general governmental type activities. Chart 6 shows the expense of each of the City’s business-type programs along with each program’s generated revenues (fees and intergovernmental revenues specifically related to that program.) Chart 6 BUSINESS TYPE ACTIVITIES PROGRAM REVENUES AND EXPENSES$0$5,000,000$10,000,000$15,000,000$20,000,000$25,000,000$30,000,000$35,000,0002007Waterworks2008Waterworks2007 Airport 2008 Airport 2007 SolidWaste2008 SolidWaste2007 GolfCourse2008 GolfCourseExpensesRevenues The Waterworks Utility had a positive net change of $5.1 million at the end of 2008 compared to $5.2 million in 2007. The City generated $37.8 million in various fees for services and other sources from waterworks activities above the $32.7 million in expenses. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-12 The Airport’s total expenses were $1.7 million. Grant revenues for 2008 were $179,292 with total revenues of $1.3 million. The Solid Waste Utility’s revenues were $10.5 million generated from fees for services and $264,784 in grants. The total expenses were $11.5 million. The Golf Course generated a total of $2.3 million in green fees, driving range charges, and other user fees. The total expenses for the Golf Course were $2.3 million. The Golf Course had a loss of $71,997 for the year. Business-type activities are supported primarily from charges for services. In the City of Renton, $44.7 million was generated from charges for services in the business-type activities. These comprise eighty-five percent (85%) of the total financial support for these activities. Grant revenues increased $5.2 million from 2007 to 2008. Chart 7 BUSINESS TYPE ACTIVITIES REVENUES BY SOURCESCharges for Services85%Grants13%Interest & Miscellaneous2%FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS Governmental Funds Analysis The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the fiscal year, the City’s governmental funds reported combined ending fund balances of $47.8 million, a decrease of $2.7 million in comparison to last year. Approximately ten percent (10%) constitutes unreserved, undesignated fund balance, which is available for spending at the government’s discretion. The remainder of the fund balance is reserved or designated to indicate that it is not available for new spending because it has already been committed for operating reserves. The decrease resulted from higher actual expenditures (budgeted) over the previous year and shortfalls in actual revenues over projections due to the slowdown of economy. This is further discussed under the General Fund Budgetary Highlights in this document. The General Fund is the chief operating fund of the City. At the end of the current year, unreserved, undesignated fund balance of the general fund was $4.9 million, while total fund balance ended at $13.5 million. The fund balance total decreased $3 million during the fiscal year. Excess of expenditures over revenues, excluding internal transfers was $2.4 million in 2008. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-13 Besides the General Fund, the City has only one other major governmental fund. The Capital Improvement Fund was a new major fund in 2007 and had a net change (increase) in fund balance of $4.1 million. Even with this increase the City was able to spend $18 million on capital improvements and major maintenance. Proprietary Funds Analysis The fund financial statements for the proprietary funds are presented in more detail, but essentially provide the same type of information found in the business-type activities in the government-wide financial statements. Net assets in the Waterworks Utility Fund and the Solid Waste Fund were $203.7 million and $1.4 million respectively. This represents an increase in Waterworks Utility Fund of $15.2 million and a decrease in the Solid Waste Fund of $959,861 in net assets. Of the total net assets increase in the Waterworks Utility Fund, $9.2 million was a prior period adjustment and is discussed further in Note 12 of the financial statements. In addition capital contributions were $5 million over last year. While the Solid Waste fund’s revenues have not changed from the prior year, the amount to operate the fund has increased resulting in a $1.3 million dollar operating loss. Other factors concerning the finances of these two funds have already been addressed in the discussion of business-type activities. GENERAL FUND BUDGETARY HIGHLIGHTS During the year there was a $ 5,453,949 increase (excluding internal transfers) in appropriations between the original and final amended budget. This increase was mainly due to the Fire District #40 contract and Benson Hill annexation. The City however took aggressive action to reduce the level of spending in the General Fund to compensate for expected revenue shortfalls. The General Fund budget did not spend $5,304,891 (excluding internal transfers) of the legally appropriated expenditures. Even with this reduction the City had to use $2,965,287, including a $519,503 transfer out, of its prior years fund balance reducing the $16.5 million balance to $13.5 million. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City of Renton’s investment in capital assets, including construction in progress, for its governmental and business-type activities as of December 31, 2008, amounts to $650.9 million as presented on the following table. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-14 Table 3 CAPITAL ASSETS (Net of Accumulated Depreciation) Governmental Activities Business Type Activities Total Activities 1/1/2008 12/31/2008 1/1/2008 12/31/2008 1/1/2008 12/31/2008 Land $88,947,494 $175,559,920 $6,976,321 $6,976,321 $95,923,815 $182,536,241Construction in progress 41,893,039 29,912,497 5,699,288 10,014,741 47,592,327 39,927,238Buildings and structures 52,356,883 48,596,215 10,799,011 12,130,440 63,155,894 60,726,655Other improvements 78,576,142 127,068,177 206,963,989 223,715,208 285,540,131 350,783,385Machinery and equipment 12,228,057 16,129,966 879,046 765,590 13,107,103 16,895,556 $274,001,615 $397,266,775 $231,317,655 $253,602,300 $505,319,270 $650,869,075 General government infrastructure includes streets, bridges, overlays, and traffic controls. More detail about the City’s Capital Assets can be found in Note 5 to the financial statements. Debt Administration As shown in Table 4, the City’s total outstanding debt at December 31, 2008, was $101.5 million. This was a net increase (new issues less principal payments and refundings) of $8.1 million. Table 4 OUTSTANDING DEBT General Activities Business Type Activities Total Activities 1/1/2008 12/31/2008 1/1/2008 12/31/2008 1/1/2008 12/31/2008 General obligation bonds $44,956,950 $42,397,414$44,956,950 $42,397,414Revenue debt $33,405,000 43,310,00033,405,000 43,310,000Other long term debt 9,878,951 9,226,394 9,878,951 9,226,394Employee benefits 4,440,424 5,878,152 715,249 616,317 5,155,673 6,494,470 $49,397,374 $48,275,566 $43,999,200 $53,152,711 $93,396,574 $101,428,277 The Water and Sewer Revenue Bonds (A and B) were issued January 4, 2008 in the amount of $9,975,000 and $2,035,000, respectfully. The average interest rate is 4.17%. These bonds were issued for the purpose of providing money to pay part of the costs of construction and acquisition of certain improvements to the waterworks utility. The Water & Sewer Revenue Bond underlying ratings remain AA- at both rating agencies. More detailed information about the City’s long-term debt can be found in Note 14 and 18 to the financial statements. FUTURE YEAR’S BUDGETARY IMPACTS The City continues to benefit from progressive economic development activities allowing the City to continue to maintain its level of services during this economic slowdown. • The Landing is a master planning development area on land previously owned by Boeing. The development will add more than 900 residential units and 600,000 square feet of retail, including a major entertainment district to the city’s core. • The City has begun working with developers and the Boeing Company on the second phase of the Landing, which may include high-quality office buildings and a hotel. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysis, 3-15 • The Boeing Company, the largest employer in the City, employs approximately 12,000 employees. • The Federal Reserve Bank of San Francisco Seattle headquarters and the Seattle Seahawks’ Virginia Mason Athletic Center opened in Renton this year. • The City annexed the Benson Hill area that included the Cascade Shopping Center. The City is working with the owner on redevelopment opportunities. For more information regarding the factors affecting the future year’s budgetary impacts, please refer to the Transmittal Letter within this document under: Factors Affecting Financial Condition - Economic Condition. REQUESTS FOR FINANCIAL INFORMATION This financial report is designed to provide our citizens, creditors, investors, and others interested in the City’s finances with a general overview of the City’s finances and to show the City’s accountability for financial resources it receives. If you have any questions about this report or need additional information, please contact Iwen Wang, FIS Administrator, 1055 South Grady Way, Renton, WA 98057 or visit our web site at http://rentonwa.gov/. 2008 Comprehensive Annual Financial Report City of Renton, Washington Management’s Discussion and Analysi, 3-16 This page intentionally left blank. 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTAL BUSINESS-TYPEACTIVITIESACTIVITIESTOTALASSETSCash and cash equivalents$ 23,540,666 $3,978,160 $ 27,518,826 Investments at fair value32,874,707 13,907,872 46,782,579 Receivables (net of allowancefor uncollectibles)21,011,971 5,488,640 26,500,611 Internal balances(5,269) 5,269 - Inventories- 555,337 555,337 Prepayments604,984 - 604,984 Other non-current assets5,686,041 853,808 6,539,849 Restricted assets:Investments at fair value- 440,153 440,153 Land175,559,921 6,976,321 182,536,242 Construction in progress29,912,496 10,014,741 39,927,237 Capital assets (net of accumulateddepreciation)191,794,358 236,611,238 428,405,596 Total assets$ 480,979,875 $ 278,831,539 $ 759,811,414 LIABILITIESAccounts payable andother liabilities11,094,623 1,642,023 12,736,646 Interest payable361,998 292,457 654,455 Unamortized (discount)/premium589,299 (336,283) 253,016 Unearned revenue5,610 222,902 228,512 Non-current liabilities:Due within one year5,633,558 3,277,619 8,911,177 Due in more than one year42,642,008 49,875,092 92,517,100 Total liabilities$ 60,327,096 $ 54,973,810 $ 115,300,906 NET ASSETSInvestment in capital assets, net of related debt$ 353,197,782 $ 202,255,997 $ 555,453,779 Restricted for:Promotional programs2,806,667 - 2,806,667 Construction projects29,217,384 - 29,217,384 Debt service1,270,936 4,171,525 5,442,461 Unrestricted34,160,010 17,430,207 51,590,217 Total net assets$ 420,652,779 $ 223,857,729 $ 644,510,508 PRIMARY GOVERNMENTSTATEMENT OF NET ASSETSDecember 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-1 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonOPERATINGCHARGES FOR GRANTS AND CAPITAL GRANTFUNCTIONS/PROGRAMSEXPENSESSERVICES CONTRIBUTIONS & CONTRIBUTIONSPrimary government:Governmental activities:General government$ 12,010,422 $ 5,614,638 $ 8,250,260 $3,261,380 Judicial1,761,665 2,420,913 - - Security of persons and property46,289,454 550,773 810,227 - Physical environment3,333,471 864,581 305,851 - Transportation13,675,581 2,165,538 12,519 14,207,150 Economic environment6,823,426 4,236,983 15,000 500,000 Mental and physical health325,066 - - 7,500 Culture and recreation17,025,800 1,739,055 177,074 133,094 Interest on long-term debt 2,663,436 - - - Total governmental activities $ 103,908,321 $ 17,592,481 $ 9,570,931 $ 18,109,124 Business-type activities:Waterworks utility$ 32,738,366 $ 31,110,061 $- $6,709,683 Airport1,733,894 1,086,064 - 179,292 Solid waste utility11,518,047 10,192,718 264,784 - Golf course2,334,838 2,262,841 - - Total business-type activities$ 48,325,145 $ 44,651,684 $264,784 $6,888,975 Total primary government$ 152,233,466 $ 62,244,165 $ 9,835,715 $ 24,998,099 Gain on Sales of AssetsPrior Period AdjustmentPROGRAM REVENUESSTATEMENT OF ACTIVITIESFor the Year Ended December 31, 2008Page 1 of 2Net assets - endingGeneral revenues:Taxes:Property taxesRetail sales taxesBusiness taxesExcise taxesPenalties and interestChange in net assetsNet assets - beginningInterest and investment earningsMiscellaneousTransfersTotal general revenues and transfersThe notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-2 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTAL BUSINESS-TYPEACTIVITIESACTIVITIESTOTAL$ 5,115,856 $ 5,115,856 659,248 659,248 (44,928,454) (44,928,454) (2,163,039) (2,163,039) 2,709,626 2,709,626 (2,071,443) (2,071,443) (452,102) (452,102) (14,842,043) (14,842,043) (2,663,436) (2,663,436) $ (58,635,787) $ (58,635,787) $ 5,081,378 $ 5,081,378 (468,538) (468,538) (1,060,545) (1,060,545) (71,997) (71,997) $ 3,480,298 $ 3,480,298 $ (58,635,787) $ 3,480,298 $ (55,155,489) $ 29,381,036 $ - $ 29,381,036 23,190,076 - 23,190,076 14,945,173 - 14,945,173 4,362,945 - 4,362,945 6,477 - 6,477 2,419,260 1,120,342 3,539,602 - - - 2,104,133 85,493 2,189,626 110,000 (110,000) - $ 76,519,100 $ 1,095,835 $ 77,614,935 $ 17,883,313 $ 4,576,133 $ 22,459,446 $ 297,439,169 $ 210,078,055 $ 507,517,224 $ 105,330,297 $ 9,203,541 $ 114,533,838 $ 420,652,779 $ 223,857,729 $ 644,510,508 CHANGES IN NET ASSETSPRIMARY GOVERNMENTNET (EXPENSE) REVENUE ANDPage 2 of 2The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-3 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonOTHER TOTAL CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL INVESTMENTFUNDSFUNDSASSETSCash & cash equivalents$ 3,731,827 $ 2,528,155 $ 7,814,267 $ 14,074,249 Investments6,418,107 196,482 14,965,657 21,580,246 Receivables (net of allowances)Taxes2,636,311 - 265,558 2,901,869 Customer accounts3,092,363 1,156 1,999,506 5,093,025 Accrued interest & penalty71,661 52,808 924,138 1,048,607 Interfund loans receivable- - 1,000,000 1,000,000 Due from other funds923 - 178,975 179,898 Due from other governmental units4,191,637 6,097,410 882,428 11,171,475 Prepayments8,000 - - 8,000 TOTAL ASSETS$ 20,150,829 $ 8,876,011 $ 28,030,529 $ 57,057,369 GOVERNMENTAL FUNDSBALANCE SHEETPage 1 of 2December 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-4 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonOTHER TOTAL CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL INVESTMENTFUNDSFUNDSLIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$ 1,654,643 $ 335,797 $998,840 $ 2,989,280 Taxes payable16,355 - 45,588 61,943 Retainage payable- 48,808 122,927 171,735 Due to other funds184,244 - - 184,244 Interfund loans payable- - 1,000,000 1,000,000 Custodial accounts39,438 - - 39,438 Deposits34,739 - 32,981 67,720 Deferred revenue1,194,583 - 22,292 1,216,875 Accrued employee wages and leave payable3,509,730 - 4,320 3,514,050 Total liabilities$ 6,633,732 $ 384,605 $ 2,226,948 $ 9,245,285 Fund balancesReserved for:Interfund loans receivable$- $- $ 1,000,000 $ 1,000,000 Prepaid items8,000.00- - 8,000.00Unreserved, designated for:General fund contingencies8,615,230 - - 8,615,230 Special revenue fund contingencies- - 2,806,667 2,806,667 Debt service fund contingencies- - 1,270,936 1,270,936 Capital project fund contingencies- 8,491,406 20,725,978 29,217,384 Unreserved reported in:General fund4,893,867 - - 4,893,867 Total fund balances$ 13,517,097 $ 8,491,406 $ 25,803,581 $ 47,812,084 TOTAL LIABILITIES AND FUND BALANCES $ 20,150,829 $ 8,876,011 $ 28,030,529 $ 57,057,369 December 31, 2008GOVERNMENTAL FUNDSBALANCE SHEETPage 2 of 2The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-5 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonFUND BALANCES - TOTAL GOVERNMENTAL FUNDS$ 47,812,084 Amounts reported for governmental activities in the statement of net assets aredifferent because:Capital assets used in governmental activities are not financial resourcesand therefore are not reported in the governmental funds.Capital assets (net) and other non-current assets.$ 391,390,014 The focus of governmental funds is on short-term financing, assets areoffset by deferred revenue and are not included in fund balancesDeferred revenue$ 840,007 Long-term liabilities, including bonds payable are not due and payable in thecurrent period and therefore are not reported in the governmental fundsInterest payable$Long-term liabilities(48,732,008) Internal service funds are used by management to charge the costs ofcertain activities to individual funds.Total assets and liabilities of the internal service funds that are reported with governmental activities, less capital assets reported above.$ 29,342,682 NET ASSETS OF GOVERNMENTAL ACTIVITIES$ 420,652,779 RECONCILIATION OF THE BALANCE SHEETTO THE STATEMENT OF NET ASSETSDecember 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-6 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonOTHER TOTAL CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL IMPROVEMENTFUNDSFUNDSREVENUESTaxes$ 66,844,997 $- $5,669,391 $ 72,514,388 Licenses and permits2,751,420 1,956,165 268,000 4,975,585 Intergovernmental revenues8,773,933 17,358,161 1,417,527 27,549,621 Charges for services3,976,920 - 3,169,030 7,145,950 Fines and forfeits2,002,854 - - 2,002,854 Interfund revenues3,072,526 - - 3,072,526 Contributions- - 135,000 135,000 Investment earnings587,590 - 1,152,445 1,740,035 Miscellaneous revenues64,359 - 1,209,000 1,273,359 TOTAL REVENUES$ 88,074,599 $ 19,314,326 $13,020,393 $ 120,409,318 EXPENDITURESCurrent:General government$ 14,387,478 $- $706,662 $15,094,140 Judicial1,761,665 - - 1,761,665 Security of persons and property45,530,208 - - 45,530,208 Physical environment3,123,883 - - 3,123,883 Transportation6,332,006 - - 6,332,006 Economic environment6,232,669 - 441,012 6,673,681 Mental & physical health16,459 - - 16,459 Culture & recreation11,119,073 - - 11,119,073 Capital outlay2,017,677 17,991,860 8,510,916 28,520,453 Debt service:Principal payment- - 2,079,551 2,079,551 Interest payment- - 2,729,247 2,729,247 TOTAL EXPENDITURES$ 90,521,118 $ 17,991,860 $14,467,388 $ 122,980,366 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (2,446,519) $ 1,322,466 $ (1,446,995) $(2,571,048) OTHER FINANCING SOURCES (USES)Transfer in$- $ 2,868,229 $1,185,378 $4,053,607 Transfer (out)(519,503) (75,000) (3,606,104) (4,200,607) Sale of capital assets735 19,908 - 20,643 TOTAL OTHER FINANCE SOURCES (USES) $ (518,768) $ 2,813,137 $ (2,420,726) $(126,357) NET CHANGE IN FUND BALANCE$ (2,965,287) $ 4,135,603 $ (3,867,721) $(2,697,405) FUND BALANCE JANUARY 1$ 16,482,384 $ 4,355,803 $29,671,302 $50,509,489 FUND BALANCE DECEMBER 31$ 13,517,097 $ 8,491,406 $25,803,581 $47,812,084 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESPage 1 of 1For the Year Ended December 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-7 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonNET CHANGES IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS$ (2,697,405) Amounts reported for governmental activities in the statement of activities are different because:Governmental funds report capital outlays as expenditures;however, in the statement of activities, the cost of thoseassets are depreciated over their estimated useful lives.Capital OutlayExpenditures for capital assets less current year depreciation$ 14,344,797 Repayment of long-term debt is an expenditure in governmen-tal funds, but the repayment reduces long-term liabilitiesin the statement of net assets. Loan or bond proceeds provide current financial resources to governmentalfunds, but the repayment reduces long-term liabilitiesin the statement of net assets.Principal payments$ 1,041,722 Some revenues or expenditures reported in the statement of activities are not yet available or expensed and therefore arenot reported as revenue or expenses in governmental funds$ 362,281 Net Pension Obligation over funded / (under funded)$ 155,079 Internal service funds or activities are used by management tocharge the costs of certain activities to individual funds.The net (expense) of the internal service fund andinternal balances reported with governmental activities.$ 4,676,837 CHANGES IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 17,883,311 For the Year Ended December 31, 2008RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSTO THE STATEMENT OF ACTIVITIESGOVERNMENTAL FUNDSThe notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-8 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTALOTHER TOTAL ACTIVITIESWATERWORKSENTERPRISE ENTERPRISE INTERNAL SERVICE UTILITYSOLID WASTE FUNDSFUNDSFUNDSASSETSCurrent assets:Cash & cash equivalents$ 2,300,930 $ 598,528 $ 1,078,701 $ 3,978,159 $9,466,418 Investments at fair value12,948,026 150,000 808,643 13,906,669 11,294,461 Receivables (net of allowances):Customer accounts3,471,137 869,753 40,394 4,381,284 16,689 Special assessments - current30,492 - - 30,492 - Interest - investments386,775 10,314 70,713 467,802 772,928 Due from other funds- - 5,269 5,269 - Due from other governmental units293,813 264,784 50,468 609,065 7,377 Inventory of materials and supplies408,805 - 146,531 555,336 - Prepayments- - - - 596,985 Total current assets$ 19,839,978 $ 1,893,379 $ 2,200,719 $ 23,934,076 $22,154,858 Noncurrent assets:Restricted Investments at fair value- - 441,358 441,358 - Special assessments deferred65,700 - - 65,700 - Capital assets (net)234,518,291 - 19,084,008 253,602,299 11,574,644 Deferred charges and other assets756,945 - 31,163 788,108 - Total noncurrent assets$ 235,340,936 $- $ 19,556,529 $ 254,897,465 $11,574,644 TOTAL ASSETS$ 255,180,914 $ 1,893,379 $ 21,757,248 $ 278,831,541 $33,729,502 BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF NET ASSETSPROPRIETARY FUNDSDecember 31, 2008Page 1 of 2The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-9 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTALOTHER TOTAL ACTIVITIESWATERWORKSENTERPRISE ENTERPRISE INTERNAL SERVICE UTILITYSOLID WASTE FUNDSFUNDSFUNDSLIABILITIESCurrent liabilities:Accounts payable$ 278,638 $ 414,376 $ 224,894 $ 917,908 $ 482,829 Retainage payable130,463 - - 130,463 - Due to other funds- - - - 923 Accrued interest payable292,458 - - 292,458 - Accrued employee wages and benefits payable247,496 16,832 50,228 314,556 52,871 Accrued taxes payable37,229 48,492 36,050 121,771 (405) Custodial accounts32,159 - 125,149 157,308 - Deferred revenue134,788 - 88,113 222,901 - Revenue bonds payable1,890,000 - 310,000 2,200,000 - Capital leases payable- - 31,187 31,187 - Total current liabilities$ 3,043,231 $ 479,700 $ 865,621 $ 4,388,552 $536,218 Long-term liabilities:Revenue bonds payable$ 38,910,000 $- $ 2,200,000 $ 41,110,000 $- Unamortized premium on revenue bonds675,662 - - 675,662 - Unamortized discount on revenue bonds (799,758) - (212,188) (1,011,946) - Accrued employee wages and benefits payable503,083 23,359 89,874 616,316 923,930 Claims incurred but not reported- - - - 2,926,675 Capital leases payable- - 23,993 23,993 - Public works trust fund loan payable9,171,235 - - 9,171,235 - Total long-term liabilities$ 48,460,222 $ 23,359 $ 2,101,679 $ 50,585,260 $3,850,605 TOTAL LIABILITIES$ 51,503,453 $ 503,059 $ 2,967,300 $ 54,973,812 $4,386,823 NET ASSETSInvestment in capital assets, net of related debt$ 184,671,152 $- $ 16,762,203 $ 201,433,355 $11,574,644 Restricted for waterworks utility debt3,730,167 - - 3,730,167 - Restricted for golf course debt- - 441,358 441,358 - Unrestricted15,276,142 1,390,320 1,586,387 18,252,849 17,768,035 TOTAL NET ASSETS$ 203,677,461 $ 1,390,320 $ 18,789,948 $ 223,857,729 $29,342,679 BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF NET ASSETSPROPRIETARY FUNDSDecember 31, 2008Page 2 of 2The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-10 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTALOTHER TOTAL ACTIVITIESWATERWORKSENTERPRISE ENTERPRISE INTERNAL SERVICE UTILITYSOLID WASTE FUNDSFUNDSFUNDSOPERATING REVENUES:Charges for services$ 30,328,794 $ 10,262,639 $ 3,349,095 $ 43,940,528 $ 11,178,965 Interdepartmental services559,415 4,460 - 563,875 - Other services241,493 - - 241,493 11,498,439 TOTAL OPERATING REVENUES$ 31,129,702 $ 10,267,099 $ 3,349,095 $ 44,745,896 $ 22,677,404 OPERATING EXPENSES:Operations and maintenance$ 6,194,147 $ 1,306,373 $ 1,845,626 $ 9,346,146 $ 3,030,509 Benefit payments1,529,215 113,734 419,684 2,062,633 12,242,087 Professional services156,492 9,337,773 48,452 9,542,717 909,785 Administrative and general13,253,116 137,965 716,990 14,108,071 2,044,990 Insurance62,400 - 60,520 122,920 1,217,146 Taxes2,571,067 622,202 129 3,193,398 - Depreciation6,709,291 - 807,971 7,517,262 517,357 TOTAL OPERATING EXPENSES$ 30,475,728 $ 11,518,047 $ 3,899,372 $ 45,893,147 $ 19,961,874 OPERATING INCOME (LOSS)$ 653,974 $ (1,250,948) $ (550,277) $ (1,147,251) $ 2,715,530 NON-OPERATING REVENUES(EXPENSES):Intergovernmental revenues$- $ 264,784 $- $ 264,784 $19,675 Investment earnings1,022,711 25,113 72,516 1,120,340 748,261 Gain (loss) on sale of capital assets(59,111) - (6,749) (65,860) 45,045 Other non-operating revenues (expenses)18,876 1,190 15,719 35,785 914,023 Interest expense(2,167,177) - (134,594) (2,301,771) (22,700) Amortization of debt discount and expense(95,461) - (34,764) (130,225) - NON-OPERATING REVENUE NET OF EXPENSE $ (1,280,162) $ 291,087 $ (87,872) $ (1,076,947) $ 1,704,304 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS$ (626,188) $ (959,861) $ (638,149) $ (2,224,198) $ 4,419,834 Capital contributions$ 6,731,040 $ - $ 179,292 $ 6,910,332 $- Transfers in (out)(110,000) - - (110,000) 257,000 CHANGE IN NET ASSETS$ 5,994,852 $ (959,861) $ (458,857) $ 4,576,134 $ 4,676,834 NET ASSETS, JANUARY 1$ 188,479,068 $ 2,350,181 $ 19,248,805 $ 210,078,054 $ 24,665,845 Prior Year Adjustment9,203,541 - - 9,203,541 - NET ASSETS, JANUARY 1 RESTATED197,682,609 2,350,181 19,248,805 219,281,595 24,665,845 NET ASSETS, DECEMBER 31$ 203,677,461 $ 1,390,320 $ 18,789,948 $ 223,857,729 $ 29,342,679 BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSPROPRIETARY FUNDSFor the Year Ended December 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-11 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTALOTHER TOTAL ACTIVITIESWATERWORKSENTERPRISE ENTERPRISE INTERNAL SERVICE UTILITY SOLID WASTE FUNDSFUNDSFUNDSCASH FLOWS FROM OPERATING ACTIVITIES:Cash received for services$ 30,367,387 $ 10,566,802 $ 3,421,904 $ 44,356,093 $ 22,693,578 Cash received from other funds for services696,315 - - 696,315 - Cash paid to suppliers for goods & services(22,512,091) (12,499,433) (2,595,575) (37,607,099) (3,138,836) Cash paid to other funds for goods & services(6,905) - - (6,905) - Cash paid to employees(1,377,182) (105,971) (407,348) (1,890,501) (12,137,918) Other operating receipts- 1,225,835 (38,684) 1,187,151 (3,690,911) Other non-operating receipts(40,235) - (125,624) (165,859) (232,432) NET CASH PROVIDED (USED) BYOPERATING ACTIVITIES$ 7,127,289 $ (812,767) $ 254,673 $ 6,569,195 $ 3,493,481 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESTransfers from other funds$ (110,000) $- $- $ (110,000) $(60,000) NET CASH PROVIDED (USED) BYNONCAPITAL FINANCING ACTIVITIES $ (110,000) $- $- $ (110,000) $(60,000) CASH FLOWS FROM CAPITALFINANCING ACTIVITIES:Acquisition & construction of capital assets $ (13,393,040) $- $ (294,994) $ (13,688,034) $ (4,100,399) Principal payments on debt9,568,358 - (310,000) 9,258,358 - Interest payments on debt(2,263,300) - 3,098 (2,260,202) - NET CASH PROVIDED (USED) BYCAPITAL FINANCING ACTIVITIES$ (6,087,982) $- $ (601,896) $ (6,689,878) $ (4,100,399) CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sale of investments$ (3,835,500) $- $- $ (3,835,500) $- BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF CASH FLOWSPROPRIETARY FUNDSPage 1 of 2For the Year Ended December 31, 2008Payments for investments- 502,379 - 502,379 3,440,726 Interest on investments1,014,125 29,287 22,143 1,065,555 312,957 NET CASH PROVIDED (USED) BYINVESTING ACTIVITIES$ (2,821,375) $ 531,666 $ 22,143 $ (2,267,566) $ 3,753,683 NET INCREASE (DECREASE) IN CASH &CASH EQUIVALENTS$ (1,892,068) $ (281,101) $ (325,080) $ (2,498,249) $ 3,086,765 - CASH & CASH EQUIVALENTS, JANUARY 12,797,689 879,629 1,403,781 5,081,099 6,379,653 RESTRICTED CASH, JANUARY 11,395,309 - - 1,395,309 - CASH , RESTRICTED CASH ,& CASH EQUIVALENTS, DECEMBER 31$ 2,300,930 $ 598,528 $ 1,078,701 $ 3,978,159 $ 9,466,418 The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-12 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGOVERNMENTALACTIVITIESOTHER TOTAL INTERNALWATERWORKS SOLID ENTERPRISE ENTERPRISESERVICE UTILITYWASTEFUNDSFUNDSFUNDSRECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED (USED)BY OPERATING ACTIVITIES:Operating income (loss)$ 653,974 $ (1,250,948) $ (550,277) $ (1,147,251) $ 2,715,530 Adjustments to reconcile operating income(loss) to net cash provided (used)by operating activities:Depreciation & amortization ofdeferred charges$ 6,709,291 $- $ 807,971 $ 7,517,262 $517,357 Other non-operating revenue(40,235) 265,974 (125,624) 100,115 956,043 (Increase) decrease inaccounts receivable(202,900) 299,703 18,552 115,355 16,174 (Increase) decrease in due fromother funds/governmental units136,900 (121,301) (38,684) (23,085) 4,953 (Increase) decrease in inventory& prepaid items(57,412) - (54,463) (111,875) (221,159) Increase (decrease) in vouchersretainage payable34,616 - 14,636 49,252 (816,928) Increase (decrease) in due toother funds/governmental units(6,905) - - (6,905) - Increase (decrease) in payables& other short-term liabilities(191,592) (13,958) 114,636 (90,914) (3,817) Increase (decrease) in customer deposits- - 12 12 - Increase (decrease) in deferred revenues(60,481) - 55,578 (4,903) - Increase (decrease) in accruedemployee leave benefits152,033 7,763 12,336 172,132 325,328 Total adjustments$ 6,473,315 $ 438,181 $ 804,950 $ 7,716,446 $ 777,951 BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF CASH FLOWSPROPRIETARY FUNDSPage 2 of 2For the Year Ended December 31, 2008NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES$ 7,127,289 $ (812,767) $ 254,673 $ 6,569,195 $ 3,493,481 NONCASH INVESTING, CAPITAL, ANDFINANCING ACTIVITIESPrior Period Adjustment9,203,541 - - 9,203,541 - Contributions of capital assets6,731,040 - 179,292 6,910,332 - Net amort. bond prem. discount & bond issue costs95,461 - 34,764 130,225 - Depreciation6,709,291 - 807,971 7,517,262 517,357 The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-13 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPENSION TRUST AGENCYFIREFIGHTER'S SPECIAL PENSIONDEPOSITSASSETSCash & cash equivalents$ 1,182,339 $ 840,466 Investments at fair value:Federal National Mortgage Association134,821 - US Treasury Strips4,744,087 - Receivables (net of allowances)Interest on investments2,879,530 - TOTAL ASSETS$ 8,940,777 $ 840,466 LIABILITIESVouchers & contracts payable$- $31,935 Deposits payable- 808,531 TOTAL LIABILITIES$- $ 840,466 NET ASSETSHeld in trust for pension benefits& other purposes$ 8,940,777 $- STATEMENT OF FIDUCIARY NET ASSETSFIDUCIARY FUNDSDecember 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-14 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPENSION TRUSTFIREMEN'S PENSIONADDITIONS:Other contributions:Fire insurance premiums transferred in$85,950 Investment incomeInvestment earnings1,218,067 TOTAL ADDITIONS$ 1,304,017 DEDUCTIONS:Benefit payments$ 512,263 Medical benefit payments9,573 Administrative and general10,321 TOTAL DEDUCTIONS$ 532,157 NET INCREASE (DECREASE)$ 771,860 NET ASSETS - JANUARY 1$ 8,168,917 NET ASSETS - DECEMBER 31$ 8,940,777 STATEMENT OF CHANGES IN FIDUCIARY NET ASSETSFIREMEN'S PENSION FUNDFor the Year Ended December 31, 2008The notes to the financial statements are an integral part of this statement.Basic Financial Statements, 4-152008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-16 NOTES TO THE FINANCIAL STATEMENTS January 1, 2008 through December 31, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Renton was incorporated on September 6, 1901, and operates under the laws of the State of Washington applicable to a Non-Charter code city with a Mayor/Council form of government. A full-time Mayor and seven part-time Council members serve the City, all elected at large to four-year terms. The City provides the full range of municipal services authorized by state statues, together with a Municipal Airport, a Waterworks Utility, a Solid Waste Utility, and a Municipal Golf Course. The accounting and reporting policies of the City related to the funds included in the accompanying financial statements conform to generally accepted accounting principles (GAAP) applicable to state and local governments. GAAP for local governments include those principles prescribed by the Governmental Accounting Standards Board (GASB), the Financial Accounting Standards Board (FASB), when applicable, and the American Institute of Certified Public Accountants (AICPA) pronouncements that have been made applicable by GASB Statements or Interpretations. In accordance with GASB Statement 20 the City has not applied to its enterprise activities FASB Statements and Interpretations, Accounting Principles Board opinions, and Accounting Research Bulletins of the Committee of Accounting Procedure issued after November 30, 1989. The City had implemented all applicable GASB Statements through Statement No. 53, with the exception of GASB Statement No. 51. The City is required to implement Statement No. 51: Accounting and Financial Reporting for Intangible Assets by 2010. All other applicable statements were implemented prior to 2008. A. REPORTING ENTITY As required by GAAP the City’s financial statements present the City of Renton – the primary government. The City of Renton’s Mayor appoints the Governing Board for the Renton Housing Authority, which is not considered a component unit of the City. The City is under no obligation to subsidize, nor does it exercise any other prerequisite for inclusion. The City of Renton has no component units (either blended or discretely presented) included in these statements. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-17 During 2008 the City of Renton annexed several communities that were identified as Potential Annexation Areas (PAA). These annexations increased the City’s capital assets by $110,945,752. See Capital Assets and Depreciation (Note 5) for details. B. BASIC FINANCIAL STATEMENTS – GASB 34 PRESENTATION The City’s basic financial statements include both Government-wide (reporting the City as a whole) and fund financial statements (reporting the City’s major funds). Both the Government-wide and fund financial statements categorize primary activities as either government or business-type. GOVERNMENT-WIDE STATEMENTS In the Government-wide Statement of Net Assets, both the governmental and business-type activities columns (a) are presented on a consolidated basis by column, and (b) are reported on a full accrual, economic resource basis, which recognized all long-term assets and receivables as well as long-term debt and obligations. The City’s net assets are reported in three parts – investment in capital assets, net of related debt; restricted net assets; and unrestricted net assets. The City first utilizes restricted resources to finance qualifying activities. The Government-wide Statement of Activities reports both the gross and net cost of each of the City’s functions and business-type activities (general government, judicial, security of persons and property, physical environment, transportation, economic environment, mental and physical health, culture and recreation, waterworks utility, airport, solid waste utility, and golf course). General government revenues (property taxes, timber taxes, retail sales and use taxes, business taxes, excise taxes, and other taxes) also support the functions. The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants and contributions. Program revenues must be directly associated with the function or a business-type activity. Operating grants include operating specific and discretionary (either operating or capital) grants while the capital grants column reflects capital specific grants. General revenues normally cover the net cost, by function or business-type activity. The Government-wide focus is more on the sustainability of the City as an entity and the change in the City’s net assets resulting from the current year’s activities. The City’s fiduciary funds are presented in the fund financial statements. Since the assets are being held for the benefit of a third party and cannot be used for obligations of the City, they are not included in the Government-wide statements. FUND FINANCIAL STATEMENTS In the fund financial statements, the financial transactions are recorded in individual funds, each accounted for by a separate set of self-balancing accounts that comprise assets, liabilities, reserves, fund equity, revenues, and expenditures or expenses. The presentation is by major funds in either the governmental or business-type categories. GASB Statement 34 sets forth the 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-18 minimum criteria for the determination of a major fund. The non-major funds are combined in the fund financial statements and are detailed in the combining section. The governmental major fund statements in the fund financial statement are presented on current financial resources and modified accrual basis of accounting. Since governmental fund statements are presented on a different measurement focus and basis of accounting than the Government-wide statements’ governmental column, reconciliation is presented at the end of the statement, which briefly explains the adjustments necessary to transform the fund statements into the Government-wide presentation. Internal service funds of a government are presented in summary form as part of the proprietary fund financial statements. Since the principal users of the internal services are the City’s governmental activities, financial statements for internal service funds are consolidated into the governmental column when presented at the governmental level. These services are reflected in the appropriate functional activity (general government, judicial, security of persons and property, physical environment, transportation, economic environment, mental and physical health, culture and recreation). Interfund fund activity has been eliminated from the Government-wide financial statements. Exceptions are payments in lieu of taxes, external type transactions within the internal service funds (revenue and expenses for interest or services provided to other governmental organizations), and other charges for utilities. Elimination of these charges would distort the direct cost and program revenues for these functions. The following describes each fund as presented in the fund financial statements. MAJOR FUNDS GOVERNMENTAL FUNDS GENERAL FUND The General Fund is the primary operating fund of the City. It is used to account for the resources and disbursements of ordinary City operations that are not required to be accounted for in another fund. These include the costs of legislative and executive departments, court services, finance and legal departments, development services, police and fire departments, human resources and technical services, community services, parks, economic development, streets, library and museum, parking garage maintenance, fire memorial, and fire department’s health and wellness programs. The major sources of revenue are property taxes, utility taxes, and sales taxes. Licenses and permits, charges for services, and fines and forfeits provide additional support. Community development block grant activities are accounted for within this fund, which is federally funded. CAPITAL INVESTMENT FUND This fund supports the City of Renton transportation projects and projects linked with various State and Federal funding programs. Many of the projects depend on grants, LIDs, and mitigation revenue. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-19 ENTERPRISE FUNDS WATERWORKS UTILITY The Waterworks Utility Fund accounts for all operation and capital improvement programs for water, wastewater, and storm water services within the City. The activities primarily supported by user fees include: administration, billings and collections, debt service, engineering and operation, maintenance and repairs. The primary resources for the capital improvement programs are revenue bond proceeds, grants (as available), and utility collection charges. SOLID WASTE Solid waste, recycling, and yard waste collection services for the City are accounted for in this fund, supported entirely by service fees. The expenses include payment to the City’s garbage contractor and other service charges. NON-MAJOR FUNDS SPECIAL REVENUE FUNDS ARTERIAL STREET FUND The Arterial Street Fund was established pursuant to state law allocating the one-half cent State Gasoline Tax revenue to cities and towns for construction, improvements, and major repair of streets. LEASED CITY PROPERTY FUND Accounts for revenue and expenditures related to City property leased to outside entities. HOTEL/MOTEL TAX FUND Accounts for monies collected through an increase of one percent in hotel/motel taxes for the purpose of increasing tourism in the City of Renton. PATHS AND TRAILS RESERVE FUND The Paths and Trails Reserve Fund was created for the purpose of planning, accommodating, and establishing and maintaining certain paths and trails within the City of Renton. SPRINGBROOK WETLANDS BANK FUND The City of Renton established this fund in 2007 for the purpose of providing accounting for the Springbrook Creek Wetland and Habitat Mitigation Bank project. The fund will receive revenue by selling Wetlands Credits to third parties and to the City’s internal departments. 1% FOR ART FUND The City of Renton established this fund by contributing one percent of general governmental capital project funding for art projects. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-20 CABLE COMMUNICATIONS DEVELOPMENT FUND The Cable Communications Development Fund accounts for funding for promotion and development of cable communications as established by City ordinance. DEBT SERVICE FUNDS GENERAL GOVERNMENTAL MISCELLANEOUS DEBT SERVICE FUND Accounts for debt service on installment contracts for equipment, City Shop land purchase, the 1984 and 1985 Limited General Obligation Bond issue for equipment and the 1986 Limited Bond issue to finance a community center, library improvements, permanent financing for purchase of a golf course, acquisition of wetland property, and equipment. This fund also includes the 1978 Limited General Obligation Bond Redemption issue to account for debt service on a Council-approved bond, which provided partial funding for construction of the Renton Senior Activity Center and the 1978 Limited General Obligation Bond Redemption issue to account for debt service on a Council-approved bond, which provided partial funding for construction of the Renton Senior Activity Center. 1989 UNLIMITED GENERAL OBLIGATION BOND REDEMPTION FUND Accounts for debt service on a voter-approved bond issue, which provided financing to: acquire, construct, rehabilitate, equip, and develop low-income housing for the elderly. CAPITAL PROJECT FUNDS COMMUNITY DEVELOPMENT IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. FIRE IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. TRANSPORTATION IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities MUNICIPAL FACILITIES CONSTRUCTION FUND The Municipal Facilities Construction Fund accounts for the acquisition and development of municipal facilities. Resources included general and special revenue taxes and Council-approved general obligation bonds. SOUTH LAKE WASHINGTON INFRASTRUCTURE PROJECT FUND The South Lake Washington Infrastructure Project Fund accounts for the infrastructure improvements at the south end of Lake Washington. Primary resources include: REET, sales tax, grants, and GO Bonds that will provide for the design, construction, labor wages and benefits, and equipment required to implement the project. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-21 ENTERPRISE FUNDS AIRPORT FUND Provides accounting for revenues and expenses, which provides administration, debt services, operation, capital improvements, and maintenance of the Renton Municipal Airport and Will Rodger-Wily Post Memorial Seaplane Base. Sources of support to the fund are leases, fuel charges, investment interest, and grant funding as available. GOLF COURSE FUND The Golf Course Fund was created after the City acquired the Maplewood Golf Course. It accounts for the operation, maintenance, debt service, and capital improvements of the facility. OTHER FUND TYPES INTERNAL SERVICE FUNDS EQUIPMENT RENTAL The Equipment Rental Fund accounts for the costs of maintaining and replacing all City vehicles, computers, and auxiliary equipment except for fire apparatus and replacement of police patrol vehicles. The fund also accounts for communication, data support, and printing services provided to City employees. All equipment costs, including depreciation, are factors in calculating the rates, which are charged to each user department. INSURANCE FUND The Insurance Fund provides accounting for self-insurance services to all City departments, including provisions for losses on property, liability, worker’s compensation, unemployment compensation, and the health care program. The Insurance Fund pays expenses and rates are charged to departments based on use and/or coverage requirements. FIDUCIARY FUNDS Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governmental units and/or other funds. The City has one Pension Trust Fund and one Agency Fund. PENSION TRUST FUND FIREMEN’S PENSION FUND The Firemen’s Pension Fund accounts for the payment of administrative costs and benefits for retired firefighters and their beneficiaries, who were employed prior to March 1, 1970. Primary revenues sources are general property tax allocations in accordance with actuarial calculations, the fire premium tax, and investment income. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-22 AGENCY FUND SPECIAL DEPOSIT FUND The Special Deposit Fund was established for the purpose of holding or retaining cash deposits or other securities pending fulfillment of certain conditions and/or requirements by the depositor. Refunds are made when all obligations have been met and only upon authorization from the transmitting department. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING Basis of Accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurement made regardless of the measurement focus applied: 1. Accrual Both governmental and business-type activities in the Government-wide financial statements and the proprietary and fiduciary fund financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. Substantially all government fund revenues are accrued. Property taxes are billed and collected within the same period in which taxes are levied. Subsidies and grants to proprietary funds, which finance either capital or current operations, are reported as non-operating revenue based on GASB Statement 33. In applying GASB Statement 33 to grant revenues, the provider recognizes liabilities and expenses and the recipient recognizes receivables and revenue when the eligibility requirements, including time requirements, are met. Resources transmitted before the eligibility requirements are met, are reported as advances by the provider and deferred revenue by the recipient. 2. Modified Accrual The governmental funds financial statements are presented on the modified basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual: i.e., both measurable and available. “Available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers all revenue reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt, if any, is recognized when due. D. ASSETS, LIABILITIES, AND FUND EQUITY 1. Cash and Cash Equivalents The City has defined cash and cash equivalents as cash on hand, demand deposits, and all highly liquid investments (including restricted assets) with maturity of three months or less when purchased. These amounts are classified on the balance sheet or in the statement of net assets as cash and cash equivalents or investments in the various funds. The interest on these investments is prorated to the applicable funds. Included in this category are all funds invested in the Local 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-23 Government Investment Pool and Municipal Investor Account. Excluded from this category are cash balances held by Fiscal Agents since the City does not have discretionary use of these funds. 2. Investments (refer to Note 3B.) 3. Receivables and Payables – Amounts owed/payable to/by the City at year-end. Taxes receivable consists of property taxes and related interest and penalties (refer to Note 4). Accrued interest receivable consists of amounts earned on investments, notes, and contracts. Accrued interest payable consists of amounts owed on notes, loans, and contracts. Customer accounts receivable/payable consists of amounts owed from/to private individuals or organizations for goods and services. If the transactions are with another governmental unit, it is accounted for within “due from/to other governments.” Special assessments are recorded when levied and are liens against the property benefited. Special assessments receivable consist of current and delinquent assessments and related interest and penalties. Deferred assessments consist of special assessments not due within one year. Receivables have been reported net of estimated uncollectible accounts. Because property taxes, special assessments, and utility billings are considered liens on property, no estimated uncollectible amounts are established. Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between the governmental activities and business-type activities are reported in the Government-wide financial statements as “internal balances” (Refer to Note 10). Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. In the Government-wide financial statements, and proprietary fund types in the fund financial statements, long-term liabilities are reported in applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Unamortized Premium is the unamortized portion of the excess of bonds proceeds over their face value (excluding accrued interest and issuance costs). Deferred Amount-Refunding is the difference between the carrying amount of redeemed/defeased debt and its reacquisition price. This amount is deferred and amortized over the remaining life of the debt, or the life of the new debt, whichever is shorter. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-24 4. Inventories and prepaid items All City inventories are maintained on a consumption basis of accounting where items are purchased for inventory and charged to the budgetary accounts as the items are consumed. Any material inventories at year-end are included in the balance sheet of the appropriate fund. Inventories are carried at cost on the first in, first out – FIFO basis. Certain payments to vendors reflect costs applicable to future accounting periods and are reported as prepaid items in both the Government-wide and fund statements. 5. Capital Assets and Depreciation (refer to Note 5). 6. Deferred Revenues This account includes amounts recognized as receivables but not revenues in the governmental funds because the revenue recognition criterion has not been met. 7. Custodial Accounts This account reflects the liability for net monetary assets being held by the City in its agency capacity. 8. Compensated Absences The City accrues accumulated unpaid vacation and other leave and associated employee-related costs when earned (or estimated to be earned) by the employee. The non-current portion (the amount estimated to be used in subsequent fiscal years) for governmental funds is maintained separately and represents a reconciling item between the fund and Government-wide presentations. 9. Fund Balance Designations and Reservations In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. The City has the following reserved or designated fund balances. Fund Reserved Purpose of Reservation Amount General Fund Prepaid Postage $ 8,000 Municipal Facilities CIP Interfund loan receivable 1,000,000 TOTAL $ 1,008,000 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-25 Fund Designated Purpose of Designation Amount Totals General Fund Operating cash reserves $6,184,384 General Fund Operating reserves for Community Services 1,060,647 General Fund Operating reserves for Streets 805,407 General Fund Designated for CDBG projects 44,981 General Fund Operating reserves for Library/Museum 202,721 General Fund Designated for Farmers Market 53,632 General fund Designated for Fire Memorial 55,852 General Fund Designated for Fire Wellness 34,153 General Fund Designated for Park Memorial 173,453 $8,615,230 Arterial Street Fund Construction and improvements of streets 552,576 Leased City Properties Fund Leased Property1,239,206 Hotel/Motel Tax Fund Increase Tourism321,093 Paths and Trails Fund Acquisition and maintenance of paths and trails3,243 1% For Art Fund Funding for art projects121,678 Cable Communications Development Fund Promotion and development of cable communications112,369 Springbrook Wetlands Bank Sale of Wetland Credits 456,502 2,806,667 General Governmental Miscellaneous Debt Service Parking Garage Construction673,529 1989 Unlimited General Obligation Bond Redemption Fund Low income housing597,407 1,270,936 Community Development Impact Mitigation Fund Offset impact created by new development1,688,926 Fire Impact Mitigation Fund Offset impact created by new development2,483,647 Transportation Mitigation Fund Offset impact created by new development3,576,947 Municipal Facilities Fund Acquisition and development of City facilities 12,774,100 Capital Improvement Fund City infrastructure 8,491,406 South Lake Washington 202,358 29,217,384 TOTAL $41,910,217 $41,910,217 10. Net Assets (refer to Note 11). 11. Encumbrances An encumbrance system is maintained to account for commitments resulting from approved purchase orders, contracts, and other commitments. Encumbrances remaining at year-end lapse and are canceled. Upon request by the department and approval of the City Council, encumbrances may be re-appropriated in the following year. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-26 E. REVENUES, EXPENDITURES, AND EXPENSES 1. Program Revenues Program revenues include charges for services to customers for goods and services provided, operating grants and contributions, and non-operating grants and contributions within the Government-wide Statement of Activities. Charges for services include business licenses, construction permits, and weapon permits. 2. General Revenues Property taxes, timber taxes, retail taxes, business taxes, excise taxes, and associated penalties and interest, and interest and investment earnings are classified as general revenues within the Government-wide Statement of Activities. 3. Interfund Transfers Permanent reallocation of resources between funds of the reporting entity are classified as interfund transfers. For purposes of the Government-wide Statement of Activities, all interfund transfers between individual governmental funds have been eliminated. 4. Expenditures/Expenses Expenses in the Government-wide Statement of Activities are reported by function as a governmental activity (general government, judicial, security of persons and property, physical environment, transportation, economic environment, culture and recreation, or interest on long-term debt) or business-type activity (waterworks utility, airport, solid waste utility, or golf course). In the fund financial statements, expenditures of governmental funds are classified by: function, debt service principal and interest payments, or purchases of capital items. Proprietary expenditures are classified as operating or non-operating . 5. Operating and Non-operating Revenues and Expenses Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and/or services in connection to the proprietary fund’s principle ongoing operations. It includes all revenue and expenses not related to capital and related financing, non-capital financing, or investing activities. All revenues and expenses not meeting this definition are non-operating revenues and expenses. NOTE 2. COMPLIANCE AND ACCOUNTABILITY The City of Renton budgets its funds under Generally Accepted Accounting Principles (GAAP) at the fund level. Annual appropriated budgets are adopted for governmental funds. Budgets for proprietary funds are “management budgets” and are not legally required to be reported. Included in the Required Supplemental and Combining sections of the CAFR are Schedules of Revenues, Expenditures, and Changes in Fund Balances (Budget to Actual) reporting the Actual Budgetary GAAP Basis verses Actual GAAP Basis of Accounting for all legally adopted budgets. There have been no material violations of finance-related legal or contractual provisions, and there have been no expenditures exceeding legal appropriations in any of the funds of the City. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-27 A. PROCEDURES FOR ADOPTING THE ORIGINAL BUDGET The City of Renton’s budget procedures are mandated by the Chapter 35A.33 of the Revised Code of Washington (RCW). The steps in the budget process are as follows: 1. Prior to November 1, the Mayor submits a proposed budget to the City Council. This budget is based on priorities established by the Council; estimates provided by the City departments during the preceding months; balanced by revenue estimates made by the Mayor. 2. The City Council conducts public hearings on the proposed budget in November and December. 3. The Council makes their adjustments to the proposed budget and adopts, by ordinance, a final balanced budget no later than December 31. 4. The final operating budget, as adopted, is published and distributed within the first four months of the following year. B. AMENDING THE BUDGET The budget, as adopted, constitutes the legal authority for expenditures. Budgets are adopted on the GAAP basis of accounting. Any comparisons between budget and actual revenues and expenditures are reported under the GAAP basis. The annual budget is adopted with budgetary control at the fund level, so expenditures may not legally exceed appropriations at that level of detail. Transfers or revisions within funds are allowed, but only the City Council has the legal authority to increase or decrease a given fund’s annual budget. This is accomplished by City ordinance. The budget was amended twenty-seven times during 2008. Original budgeted inflows as compared to the final budgeted inflows are as follows: IncreaseOriginal Final (Decrease)Budgeted Budgeted BudgetedFundInflows Inflows InflowsGeneral Fund$90,046,254 $94,206,787 $4,160,533Arterial Street Fund585,000 585,000- Leased City Properties Fund1,237,703 1,237,703- Hotel/Motel Tax Fund307,000 307,000- 1% for Art Fund77,505 77,505- Cable Communications Development Fund38,900 38,900- General Government Miscellaneous Debt Service Fund4,269,400 4,269,400- 1989 UGO Bond Redemption Fund555,000 555,000- Community Development Impact Mitigation Fund255,000 255,000- Fire Impact Mitigation Fund540,000 540,000- Transportation Impact Mitigation Fund750,000 750,000- Municipal Facilities Construction Fund3,679,723 6,413,418 2,733,695General Government Capital Investment Program Fund27,235,324 43,565,800 16,330,476South Lake Washington Infrastructure Project Fund- 3,321,211 3,321,211Airport Fund2,708,713 2,708,713- Solid Waste Utility Fund10,097,267 10,097,267- Golf Course Fund2,681,420 2,681,420- Waterworks Utility Fund36,867,722 62,928,116 26,060,394Equipment Repair and Replacement / IS / Facilities Fund11,285,713 10,735,713 (550,000)Insurance Fund13,883,116 13,883,116- TOTAL$207,100,760 $259,157,069 $52,056,3092008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-28 Original budgeted outflows as compared to the final budgeted outflows are as follows: IncreaseOriginal Final (Decrease)Budgeted Budgeted BudgetedFundOutflows Outflows OutflowsGeneral Fund$90,822,783 $96,560,335 $5,737,552Arterial Street Fund585,000 585,000- Leased City Properties Fund1,146,836 1,181,680 34,844Hotel/Motel Tax Fund267,000 347,000 80,0001% for Art Fund77,505 141,698 64,193Cable Communications Development Fund74,778 88,004 13,226General Government Miscellaneous Debt Service Fund4,269,400 4,269,400- 1989 UGO Bond Redemption Fund548,750 548,750- Community Development Impact Mitigation Fund- 111,875 111,875Fire Impact Mitigation Fund300,000 300,000- Transportation Impact Mitigation Fund1,873,229 5,300,000 3,426,771Municipal Facilities Construction Fund13,708,000 19,057,785 5,349,785General Government Capital Investment Program Fund29,928,671 46,428,715 16,500,044South Lake Washington Infrastructure Project Fund50,000 2,296,000 2,246,000Airport Fund3,258,192 4,213,971 955,779Solid Waste Utility Fund11,184,614 11,279,614 95,000Golf Course Fund2,738,431 2,885,721 147,290Waterworks Utility Fund47,496,939 70,885,454 23,388,515Equipment Repair and Replacement / IS / Facilities Fund11,939,283 13,734,966 1,795,683Insurance Fund13,861,706 13,921,706 60,000TOTAL$234,131,117 $294,137,674 $60,006,557 At year-end 2008, the City of Renton noted the Solid Waste Utility Fund exceeded its final adopted budget by approximately $238,433. NOTE 3. DEPOSITS AND INVESTMENTS A. Deposits The City’s deposits and certificates of deposit are insured by the Federal Depository Insurance Corporation (FDIC) and the State of Washington Public Deposit Protection Commission (WPDPC) Act of 1969. B. Investments The City invests excess and inactive funds in accordance with the City’s Investment Policy (updated and approved on June 5, 2006), which complies with the guidelines within Chapter 35A.40.050 RCW. This allows for investment of excess cash and inactive cash, directs that the responsibility for determining available cash for investment is placed upon the department administering the funds, and allows for pooling of the cash provided that the allocation of income is proportionate to the investment of each fund. Currently, the City invests in obligations of the U.S. Government, U.S. agency issues, Certificates of Deposit with Washington State banks and savings and loan institutions, the State 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-29 of Washington Local Government Investment Pool (LGIP), and general obligations of Washington State municipalities. The LGIP, managed by the Washington State Office of the Treasurer, is comparable to a Rule 2a7-pools recognized by the Securities and Exchange Commission. A 2a7-like-pool is an external investment pool that is not registered with the SEC as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940. Rule 2a7 allows SEC-registered mutual funds to use amortized cost rather than market value to report net assets and compute share prices. Investments are shown on the entity-wide Statement of Net Assets at fair value or for 2a7-like pools at amortized cost, which approximates fair value. Investments are reported within Cash and Investments of Governmental Activities and within Cash and Cash Equivalents or Investments of Business-type Activities. C. Deposit and Investment Schedule As of December 31, 2008, the City of Renton had the following investments: Security Type Cost Fair Value Weighted Average Maturity (in years) US Agencies $14,049,463 $14,177,850 0.2544 Certificates of Deposit (within WPDPC) 33,044,882 33,044,882 0.4016 Local Governmental Investment Pool (LGIP) 13,480,100 13,480,100 0.0008 TOTAL $60,574,445 $60,702,832 0.6567 Fireman’s Pension Portion of LGIP excluded from above 454,767 454,767 Total LGIP reported as Cash & Cash Equivalents in Statement of Net Assets 13,934,867 13,934,867 Total Investments $61,029,211 $61,157,599 Reconciliation of Cash and Investments to Statements of Net AssetsPrimary GovernmentStatement of Net AssetsFiduciary FundsStatement of Net AssetsVariance Total Note (plus Cash)Cash 14,038,726$ 1,568,038$ 180$ 15,606,944$ 15,606,944$ Cash Equivalents13,480,100$ 454,767$ -$ 13,934,867$ 13,934,867$ Total Cash27,518,826$ 2,022,805$ 180$ 29,541,811$ 29,541,811$ Investments46,782,579$ -$ -$ 46,782,579$ 14,177,850$ Restricted investments440,153$ -$ -$ 440,153$ 33,044,882$ Total Investments 47,222,732$ -$ -$ 47,222,732$ 47,222,732$ Grand Total74,741,558$ 2,022,805$ 180$ 76,764,543$ 76,764,543$ Fair Value Total:60,702,832$ Items in bold may be found in "Security Types" table, above 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-30 Credit risk. Credit Risk is the risk that an issuer or other counter party to an investment will not fulfill its obligations. All Agency securities in the City’s portfolio are rated “Aaa” by Moody’s Investors Service and “AAA” by Standard & Poor – each rating is the highest possible. Certificates of Deposit are insured by the FDIC up to $250,000 and, additionally, by collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (WPDPC). The Washington State Local Government Investment Pool (LGIP) is a 2a7-like-pool and is operated in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940. Security Type Cost Fair Value Moody's S&P Federal National Mortgage Association $7,032,445 $7,006,580 Aaa AAA Federal Home Loan Bank 2,019,368 2,043,120 Aaa AAA Federal Farm Credit Bank 4,997,650 5,128,150 Aaa AAA Local Governmental Investment Pool (LGIP) 7,738,375 7,738,375 unrated unrated Municipal Investor Account (MIA) 5,741,725 5,741,725 unrated unrated Certificates of Deposit (within WPDPC) 33,044,882 33,044,882 unrated unrated TOTAL $60,574,445 $60,702,832 The City’s Investment Policy directs that the standard of prudence for investment activities shall be the Prudent Investor Standard that states: “Investments shall be made with judgment and care, under circumstances then prevailing, which person of prudence, discretion, and intelligence would use in the management of their own affairs, not for speculation, but for investment purposes, considering the probable safety of their capital as well as the probable income to be derived.” Custodial credit risk. Custodial credit risk for investments is the risk that, in the event of the failure of the counter party to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. All security transactions, including collateral for repurchase agreements, entered into by the City are conducted on a delivery-versus-payment (DVP) basis. Securities held by a third-party custodian are designated by the City’s Finance and Information Services Administrator. Certificates of Deposit are delivered to and held by the Finance Division. Concentration of credit risk. Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The City diversifies its investment instruments to avoid incurring unreasonable risk inherent with the over-investment of instruments and issuers as follows: Maximum’s per Policy Instrument Maximum Issuer Maximum U.S. Treasuries 100% 100% U.S. Agencies 75% 50% Certificates of Deposit (within WPDPC) 50% 25% Local Governmental Investment Pool (LGIP) 50% 50% Commercial Paper 25% 5% 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-31 Interest Rate Risk. Interest rate risk is the risk that changes in interest rates over time, adversely affecting the fair value of an investment. The City’s portfolio is managed within the parameters established by the Investment Policy, which limits the weighted average maturity of the portfolio to five years. Security Type 0-6 months 6 months – 1 year 1-3 years 3+ years Totals US Agencies $ - $4,997,650 $9,051,813 $ - $14,049,463 Certificates of Deposit (within WPDPC) 17,000,000 7,044,882 9,000,000 - 33,044,882 Local Governmental Investment Pool (LGIP) 13,480,100 - - - 13,480,100 TOTAL $30,480,100 $12,042,532 $18,051,813 $ - $60,574,445 NOTE 4. PROPERTY TAXES The King County Finance Director acts as an agent to collect property taxes levied in the county for all taxing authorities. Taxes are levied annually, January 1, on property value listed as of the prior August 31. Assessed values are established by the King County Assessor at 100 percent of fair market value. A revaluation of all property is required every two years; however, King County has the ability to revalue annually. Property taxes levied by the King County Assessor and collected by the King County Finance Director become a lien on the first day of the levy year and may be paid in two equal installments if the total amount exceeds $30. The first half of real property taxes is due on April 30 and the balance is due October 31. Delinquent taxes bear interest at the rate of 12 percent and are subject to additional penalties if not paid as scheduled. No allowance for uncollectible taxes is established because delinquent taxes are considered fully collectible. At year-end, property taxes are recorded as a receivable with the portion not expected to be collected within 60 days offset by deferred revenue. During the year, property tax revenues are recognized when cash is received. The tax rate for general City operations is limited to $3.375 per $1,000 of assessed value (RCW 84.52.043). Of this amount, up to .45 cents per thousand dollars may be designated for contribution to the Firemen’s Pension Fund. If a report by a qualified actuary on the condition of the Firemen’s Pension Fund establishes that this amount (or portion of) is not necessary to maintain the actuarial soundness of the fund, the amount can be used for any other municipal purpose (RCW 41.16.060). The tax rate limit may be reduced for any of the following reasons: 1. The Levy Limit: the levy limit calculation applies to a taxing district’s budget, and not to increases in the assessed value or tax bill of individual properties. Initiative 747 which restricted individual taxing districts from collecting, in any year, more than a one percent increase in their regular, non-voted, levy over the highest levy amount since 1985 was overturned by the courts. However during 2007, the state legislature reinstated this limit with the passage of HB2416. New construction, annexations, and excess levies approved by the 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-32 voters are not included in the levy limit calculation. If the assessed valuation increases by more than one percent due to revaluation, the levy rate will be decreased. 2. The One Percent Constitution Limit: The Washington State Constitution limits the regular (non-voted) combined property tax rate applied to an individual’s property to one percent ($10 per $1,000) on the market valuation. Voters may approve special levies that are added to this figure. If the taxes of all districts exceed this amount, each is proportionately reduced until the total is at or below the one percent limit. 3. The City may voluntarily levy taxes below the legal limit. Special levies approved by the voters are not subject to the above limitations. There is currently no excess levy for General Obligation Bond debt. The City’s regular levy per the King County Assessor’s 2009 Annual Report is $2.36923. NOTE 5. CAPITAL ASSETS AND DEPRECIATION A. GENERAL POLICES Major expenditures for capital assets, including capital leases and major repairs that increase the useful life, are capitalized. The capitalization threshold applied to the City’s assets is $5,000. Maintenance, repairs, and minor renewals are accounted for as expenditures or expenses when incurred. All capital assets are valued at historical cost (or estimated cost, where historical cost is not known/or estimated market value for donated assets/or the original historical cost when transferred between proprietary and governmental funds.) The City has acquired certain assets with funding provided by federal financial assistance programs. Depending on the terms of the agreements involved, the federal government could retain an interest in these assets. However, the City has sufficient legal interest to accomplish the purposes for which the assets were acquired, and has included such assets within the applicable statements. The City capitalizes art and historical treasures. Art and historical treasures are expected to be maintained or enhanced over time and thus, are not depreciated. B. GOVERNMENTAL CAPITAL ASSETS Governmental long-lived assets of the City purchased, leased, or constructed are recorded as expenditures in the governmental funds and are capitalized, net of depreciation, in the Government-wide statements. The infrastructure component of GASB 34 for assets acquired after January 1, 1980 was implemented retroactively in 2004. Any gain on the sale of capital assets is recorded in the Statement of Activities as General revenues, Miscellaneous. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-33 C. PROPRIETARY FUND CAPITAL ASSETS Capital assets of proprietary funds are capitalized in their respective statement of net assets, net of depreciation. Any gain on the sale of capital assets is recorded in the Statement of Activities as General revenues, Miscellaneous. D. DEPRECIATION Depreciation on all depreciable assets is provided on the straight-line basis over the following useful lives: Type of Asset Estimated Service Life Buildings and structures, except utility plant 10-50 years Other improvements 10-80 years Utility plant 25-75 years Machinery and equipment 3-40 years Infrastructure 25-50 years Depreciation Expense was charged to governmental and business-type activities as follows: Governmental Activities Amount General government $2,317,396 Judicial - Security of persons and property 755,905 Physical environment 9,588 Transportation 3,663,590 Economic development 47,540 Culture and recreation 1,398,149 Health and human services Fleet 308,607 452,065 TOTAL Governmental Activities Depreciation Expense $8,952,840 Business-type Activities Amount Waterworks $6,709,291 Airport 470,301 Solid waste - Golf course 337,670 TOTAL Business-type Activities Depreciation Expense $7,517,262 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-34 E. SUMMARY OF CHANGES Description Beginning Balance Reclassification Adjustments during System Conversion Additions for Change in Reporting Entity (Annexations) Adjusted Beginning Balance Increases Adjustments Decreases Ending Balance GOVERNMENTAL ACTIVITIES Capital assets not being depreciated: Land and land improvements $ 88,947,494 $ - $ 84,439,578 $173,387,072 $2,172,848 $ - $175,559,920 Construction in progress 41,893,039 - - 41,893,039 18,495,058 30,475,600 29,912,497 TOTAL capital not being depreciated $130,840,533 $ - $ 84,439,578 $215,280,111 $20,667,906 $30,475,600 $205,472,417 Other capital assets: Buildings and structures $74,351,604 ($2,976,098) $ - $71,375,506 $1,222,187 $ - $72,597,693 Other improvements 116,506,866 2,701,281 20,891,389 140,099,536 29,784,300 - 169,883,836 Machinery and equipment 29,106,354 274,817 - 29,381,171 5,687,572 - 35,068,743 TOTAL other capital assets at capitalized cost $219,964,824 $ - $ 20,891,389 $240,856,213 $36,694,059 $ - $277,550,272 Less accumulated depreciation for: Buildings and structures $21,994,722 $121,677 $ - $22,116,399 $1,885,079 $ - $ 24,001,478 Other improvements 37,930,725 -210,867 - 37,719,858 5,095,801 - 42,815,659 Machinery and equipment 16,878,297 89,190 -670 16,966,817 1,971,960 - 18,938,777 TOTAL accumulated depreciation $76,803,744 $ - $ -670 $ 76,803,074 $ 8,952,840 $ - $ 85,755,914 Governmental activities capital assets, net of depreciation $274,001,613 $ - $105,331,637 $379,333,250 $48,409,125 $30,475,600 $397,266,775 BUSINESS-TYPE ACTIVITIES Capital assets not being depreciated: Land and land improvements $ 6,976,321 $ - $ - $ 6,976,321 $ - $ - $ 6,976,321 Construction in progress 5,699,290 - - 5,699,290 6,464,495 2,149,014 10,014,741 TOTAL capital assets not being depreciated $12,675,611 $ - $ - $12,675,611 $ 6,464,465 $2,149,014 $16,991,062 Other capital assets Buildings and structures $15,032,621 $ 1,044,463 $- $ 16,077,084 $ 727,971 $ - $ 16,805,055 Other improvements 280,522,813 -1,044,463 8,151,248 287,629,598 19,456,835 326,795 306,759,638 Machinery and equipment 5,938,255 - - 5,938,255 58,912 6,746 5,990,421 TOTAL other capital assets at capitalized cost $30 1,493,689 $ - $8,151,248 $309,644,937 $20,243,718 $333,541 $329,555,114 Less accumulated depreciation for: Buildings and structures $4,233,610 $18,512 $-40 $4,252,082 $422,533 $ - $4,674,615 Other improvements 73,558,825 -18,512 2,537,173 76,077,486 6,966,944 - 83,044,430 Machinery and equipment 5,059,209 - - 5,059,209 165,622 - 5,224,831 TOTAL accumulated depreciation $82,851,644 $ - $2,537,133 $85,388,777 $7,555,099 $ - $92,943,876 Business-type capital assets, net of depreciation $231,317,656 $ - $5,614,115 $236,931,771 $19,646,576 $2,976,047 $253,602,300 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-35 At the end of 2008, 50 projects comprise the Construction in Progress. Upon completion, the projects will be capitalized in the Government-wide statements in their appropriate categories and in the fund statements for proprietary funds, if applicable. Construction commitments at December 31, 2008, are as follows: Fund – Funding Source Cost to Date Estimated RemainingCost Estimated Total Cost Future Funding Required Waterworks – charges for services $9,031,341 62,210,000 71,241,341 None Airport – charges for services 805,389 11,730,000 12,535,389 None General governmental – taxes, charges for services, grants 69,360,223 190,513,335 259,873,558 None Golf course – charges for services 51,202 2,272,000 2,326,202 None NOTE 6. PENSION PLANS With the exception of firefighters employed prior to March 1, 1970, substantially all City’s full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing multiple-employer public employee defined benefit and defined contribution retirement plans. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA 98504-8380. The City is the administrator of the Firefighter Pension Plan for all firefighters employed prior to March 1, 1970. The Firefighter Pension Plan is included within the City of Renton’s statements as a pension trust fund. There is no separate GAAP-based audited report. A schedule of employer contributions for six years, prepared by Milliman, Consultants and Actuaries, is included in the Required Supplemental Information section. Additional information from the actuarial report prepared for the Firefighter Pension Plan, by Milliman, Consultants and Actuaries, may be obtained by contacting the City of Renton, Finance Division, 1055 South Grady Way, Renton, WA 98057. The following disclosures are made pursuant to GASB Statements No. 27, Accounting for Pensions by State and Local Government Employers and No. 50, Pension Disclosures, an Amendment of GASB Statements No. 25 and No. 27. Public Employees’ Retirement System (PERS) Plans 1, 2, and 3 Plan Description PERS is a cost-sharing multiple-employer retirement system comprised of three separate plans for membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a defined benefit plan with a defined contribution component. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-36 Membership in the system includes: elected officials; state employees; employees of the Supreme, Appeals, and Superior courts (other than judges currently in a judicial retirement system); employees of legislative committees; community and technical colleges, college and university employees not participating in national higher education retirement programs; judges of district and municipal courts; and employees of local governments. PERS participants, who joined the PERS system by September 30, 1977, are Plan 1 members. Those who joined on or after October 1, 1977; and by either, February 28, 2002 for state and higher education employees, or August 31, 2002 for local government employees, are Plan 2 members unless they exercise an option to transfer their membership to Plan 3. PERS participants joining the system on or after March 1, 2002 for state and higher education employees, or September 1, 2002 for local government employees, have the irrevocable option of choosing membership in either PERS Plan 2 or PERS Plan 3. The option must be exercised within 90 days of employment. An employee is reported in Plan 2 until a choice is made. Employees who fail to choose within 90 days default to PERS Plan 3. Notwithstanding, PERS Plan 2 and Plan 3 members may opt out of plan membership if terminally ill, with less than five years to live. PERS defined benefit retirement benefits are financed from a combination of investment earnings and employer and employee contributions. PERS retirement benefit provisions are established in state statute and may be amended only by the State Legislature. PERS Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are eligible for retirement at any age after 30 years of service, or at age 60 with five years of service, or at age 55 with 25 years of service. The annual benefit is two percent of the average final compensation (AFC) per year of service, capped at 60 percent. (The AFC is based on the greatest compensation during any 24 eligible consecutive compensation months.) Plan 1 members who retire from inactive status prior to the age of 65 may receive actuarially reduced benefits. The benefit is actuarially reduced to reflect the choice of a survivor option. A cost-of-living allowance (COLA) is granted at age 66 based on years of service credit times the COLA amount, increased by three percent annually. Plan 1 members may also elect to receive an additional COLA amount that provides an automatic annual adjustment based on the Consumer Price Index. To offset the cost of this annual adjustment, the benefit is reduced. PERS Plan 2 members are vested after completion of five years of eligible service. Plan 2 members may retire at age 65 with five years of service with an allowance of two percent of the AFC per year of service. (The AFC is based on the greatest compensation during any eligible consecutive 60-month period.) Plan 2 members who retire prior to the age of 65 receive reduced benefits. If retirement is at 55 or older with at least 30 years of service, a three percent per year reduction applies; otherwise an actuarial reduction will apply. The benefit is also actuarially reduced to reflect the choice of a survivor option. The benefit is also actuarially reduced to reflect the choice of a survivor option. There is no cap on years of service credit; and a cost-of-living allowance is granted (based on the Consumer Price Index), capped at three percent annually. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-37 Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component, and member contributions finance a defined contribution component. The defined benefit portion provides a benefit calculation at one percent of the AFC per year of service. (The AFC is based on the greatest compensation during any eligible consecutive 60-month period.) Effective June 7, 2006, Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years if twelve months were earned after age 44; or after five service credit years earned in PERS 2 prior to June 1, 2003. Plan 3 members are immediately vested in the defined contribution portion of their plan. Vested Plan 3 members are eligible to retire with full benefits at age 65, or at age 55 with 10 years of service. Plan 3 members who retire prior to age 65 receive reduced benefits. If retirement is at age 55 or older with at least 30 years of service, a three percent per year reduction applies; otherwise an actuarial reduction will apply. The benefit is also actuarially reduced to reflect the choice of a survivor option. There is no cap on years of service credit; and Plan 3 provides the same cost-of-living allowance as Plan 2. The defined contribution portion can be distributed in accordance with an option selected by the member, either as a lump sum or pursuant to other options authorized by the Employee Retirement Benefits Board. Judicial Benefit Multiplier Beginning January 1, 2007 through December 31, 2007 judicial members of PERS were given the choice to participate in the Judicial Benefit Program (JBM). Justices and judges in PERS 1 and 2 may make a one-time irrevocable election to pay increased contributions that would fund a retirement benefit with a 3.5% multiplier. The benefit would be capped at 75% of AFC. Judges in PERS Plan 3 can elect a 1.6% of pay per year of service benefit, capped at 37.5% of average compensation. Members who choose to participate in JBM will accrue service credit at a higher multiplier beginning with the date of their election, be subject to the benefit cap of 75% of AFC, pay higher contributions, stop contributing to the Judicial Retirement Account (JRA), and be given the option to increase the multiplier on past judicial service. Members who do not choose to participate will: continue to accrue service credit at the regular multiplier; continue to participate in JRA, if applicable; never be a participant in the JBM Program; and continue to pay contributions at the regular PERS rate. Newly elected or appointed justices and judges who chose to become PERS members on or after January 1, 2007, or who have not previously opted into PERS membership, were required to participate in the JBM Program. Members required into the JBM program would: return to prior PERS Plan if membership had previously been established; be mandated into Plan 2 and not have a Plan 3 transfer choice, if a new PERS member; accrue the higher multiplier for all judicial service; not contribute to JRA; and not have the option to increase the multiplier for past judicial service. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-38 Membership in PERS consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2007: Retirees and beneficiaries receiving benefits 71,244 Terminated plan members entitled to but not yet receiving benefits 26,583 Active plan members vested 105,447 Active plan members non-vested 52,575 TOTAL 255,849 There are 2,310 participating employers in PERS as of June 30, 2008. Funding Policy Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates, Plan 2 employer and employee contributions rates, and Plan 3 employer contribution rates. Employee contribution rates for Plan 1 are established by statute at 6 percent for state agencies and local government unit employees, and 7.5 percent for state government elected officials. The employer and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. All employers are required to contribute at the level established by the Legislature. Under PERS 3, employer contributions finance the defined benefit portion of the plan, and member contributions finance the defined contribution portion. The Employee Retirement Benefits Board sets Plan 3 employee contribution rates. Six rate options are available ranging from 5 to 15 percent; two of the options are graduated rates dependent on the employee’s age. As a result of the implementation of the Judicial Benefit Multiplier Program in January 2007, a second tier of employer and employee rates was developed to fund, along with investment earnings, the increased retirement benefits of those justices and judges that participate in the program. The methods used to determine the contribution requirements are established under state statute in accordance with Chapters 41.40 and 41.45 RCW. The required contribution rates expressed as a percentage of current-year covered payroll, as of December 31, 2008, were as follows: Members not participating in JBM: Contributor PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer* 8.31%** 8.31%** 8.31*** Employee 6.00%**** 5.45%**** ***** * The employer rates include the employer administrative expense fee currently at 0.16%. ** The employer rate for state elected officials is 12.39% for Plan 1 and 8.31% for Plan 2 & 3. *** Plan 3 defined benefit portion only. **** The employee rate for state elected officials in 7.5% for Plan 1 and 5.45% for Plan 2. ***** Variable from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-39 Members participating in JBM: Contributor PERS Plan 1 PERS Plan 2 PERS Plan 3 Employer-State Agency* 10.81% 10.81% 10.81%** Employer-Local Govt.* 8.31% 8.31% 8.31** Employee-State Agency 9.76% 11.13% 7.50%*** Employee-Local Govt. 12.26% 13.63% 7.50%*** * The employer rates include the employer administrative expense fee currently at .16%. ** Plan 3 defined benefit portion only. *** Minimum rate. Both the City and the employees made the required contributions. The City’s required contributions for years ended December 31, were as follows: Year PERS Plan 1 PERS Plan 2 PERS Plan 3 2008 $75,956 $1,692,603 $287,302 2007 $85,411 $1,229,641 $196,584 2006 $50,609 $616,903 $92,216 Law Enforcement Officers’ and Firefighters’ Retirement System (LEOFF) Plans 1 and 2 Plan Description LEOFF is a cost-sharing multiple-employer retirement system comprised of two separate defined benefit plans. LEOFF participants who joined the system by September 30, 1977, are Plan 1 members. Those who joined on or after October 1, 1977, are Plan 2 members. Membership in the system includes all full-time, fully compensated; local law enforcement officers, firefighters and as of July 24, 2005, those emergency medical technicians who were given the option and chose LEOFF Plan 2 membership. LEOFF membership is comprised primarily of non-state employees, with the Department of Fish and Wildlife enforcement officers, who were first included prospectively effective July 27, 2003, being an exception. Effective July 1, 2003, the LEOFF Plan 2 Retirement Board was established by Initiative 790 to provide governance of LEOFF Plan 2. The Board’s duties include adopting contribution rates and recommending policy changes to the Legislature for the LEOFF Plan 2 retirement plan. LEOFF defined benefits retirement benefits are financed from a combination of investment earnings, employer and employee contributions, and a special funding situation in which the state pays through state legislative appropriations. LEOFF retirement benefit provisions are established in state statute and may be amended by the State Legislature. LEOFF Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are eligible for retirement with five years of service at the age of 50. The benefit per year of service calculated as a percent of final average salary (FAS) is as follows: Term of Service Percent of FinalAverage Salary 20 or more years 2.0% 10 but less than 20 years 1.5% 5 but less than 10 years 1.0% 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-40 The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months’ salary within the last ten years of service. A cost-of-living allowance is granted (indexed to the Consumer Price Index). LEOFF Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members may retire at the age of 50 with 20 years of service, or at age 53 with five years of service, with an allowance of two percent of the FAS per year of service. The FAS is based on the highest consecutive 60 months. Plan 2 members who prior to age 53 receive reduced benefits. Benefits are actuarially reduced for each year that the benefit commences prior to age 53 and to reflect the choice of a survivor option. If the member has at least 20 years of service credit and is age 50, the reduction is three percent for each year prior to age 53. There is no cap on years of service credit; and a cost-of-living allowance is granted (indexed to the Consumer Price Index), capped at three percent annually. Membership in LEOFF consisted of the following as of the latest actuarial valuation date for the plans of June 30, 2007: Retirees and beneficiaries receiving benefits 9,085 Terminated plan members entitled to but not yet receiving benefits 633 Active plan members vested 12,904 Active plan members non-vested 3,708 TOTAL 26,330 There are 461 participating employers in LEOFF as of June 30, 2008. Funding Policy Starting on July 1, 2000, LEOFF Plan 1 employers and employees will contribute zero percent as long as the plan remains fully funded. Employer and employee contribution rates are developed by the Office of the State Actuary to fully fund the plan. LEOFF Plan 2 employer and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. All employers are required to contribute at the level required by state law. The Legislature, by means of a special funding arrangement, appropriated money from the state General Fund to supplement the current service liability and fund the prior service cost of LEOFF Plan 2 in accordance with the requirements of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. However, this special funding situation is not mandated by the state constitution and this funding requirement could be returned to the employers by a change in statute. The required contribution rates expressed as a percentage of current-year covered payroll, as of December 31, 2008, were as follows: Contributor LEOFF Plan 1 LEOFF Plan 2 Employer* .16% 5.46%** Employee .00% 8.83% State N/A 3.53% * The employer rates include the employer administration expense fee currently at .16%. ** The employer rate for ports and universities is 8.99%. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-41 Both the City and the employees made the required contributions. The City’s required contributions for years ended December 31, were as follows: Year LEOFF Plan 1 LEOFF Plan 2 2008 $1,348 $1,200,963 2007 $1,676 $891,932 2006 $2,050 $716,583 Public Safety Employee’s Retirement System (PSERS) Plan 2 Plan Description PSERS is a cost-sharing multiple-employer retirement system comprised of a single defined benefit plan, PSERS Plan 2. PSERS was created by the 2004 legislature and became effective July 1, 2006. PSERS Plan 2 membership includes full-time employees of a covered employer on or before July 1, 2006, who met at least one of the PSERS eligibility criteria, and elected membership during the election period of July 1, 2006 to September 30, 2006; and those full-time employees, hired on or after July 1, 2006 by a covered employer, that meet at least one of the PSERS eligibility criteria. A “covered employer” is one that participates in PSERS. Covered employers include: State of Washington agencies: Department of Corrections, Department of Natural Resources, Parks and Recreation Commission, Gambling Commission, Washington State Patrol, Liquor Control Board; Washington state counties; and Washington state cities except for Seattle, Tacoma, and Spokane. To be eligible for PSERS, an employee must work on a full-time basis and: • have completed a certified criminal justice training course with authority to arrest, conduct criminal investigations, enforce that criminal laws of Washington, and carry a firearm as part of the job: or • have primary responsibility to ensure the custody and security or incarcerated or probationary individuals; or • function as a limited authority Washington peace officer, as defined in RCW 10.93.020; or • have primary responsibility to supervise eligible members who meet the above criteria. PSERS defined benefit retirement benefits are financed from a combination of investment earnings and employer and employee contributions. PSERS retirement benefit provisions are established in state statue and may be amended only by the State Legislature. Plan 2 members are vested after the completion of five years of eligible service. PSERS Plan 2 members may retire at the age of 65 with five years of service, or at the age of 60 with at least ten years of PSERS service credit, with an allowance of two percent of the average final compensation (AFC) per year of service. The AFC is the monthly average of the member’s 60 consecutive highest-paid service credit months, excluding any severance pay such as lump-sum payments for deferred sick leave, vacation, or annual leave. Plan 2 retirees prior to the age of 60 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-42 receive reduced benefits. If retirement is at age 53 or older with at least 20 years of service, a three percent per year reduction for each year between the age at retirement and age 60 applies. There is no cap on years of service credit; and a cost-of-living allowance is granted (based on the Consumer Price Index), capped at three percent annually. Membership is PSERS consisted of the following as of the latest actuarial valuation date for the plan of June 30, 2007: Retirees and beneficiaries receiving benefits 0 Terminated plan members entitled to but not yet receiving benefits 0 Active plan members vested 0 Active plan members non-vested 2,755 TOTAL 2,755 There are 71 participating employers in PSERS as of June 30, 2008. Funding Policy Each biennium, the state Pension Funding Council adopts PSERS Plan 2 employer and employee contribution rates. The employer and employee contribution rates for Plan 2 are developed by the Office of the State Actuary to fully fund Plan 2. All employers are required to contribute at the level established by the Legislature. The methods used to determine the contribution requirements are established under state statute in accordance with Chapters 41.37 and 41.45 RCW. The required contribution rates expressed as a percentage of current year covered payroll, as of December 31, 2008 were as follows: Contributor PSERS Plan 2 Employer* 9.43% Employee 6.57% * The employer rates include the employer administrative expense fee currently at .16%. Both the City and the employees made the required contributions. The City’s required contributions for years ended December 31, were as follows: Year PSERS Plan 2 2008 $63,747 2007 $41,424 2006 $8,006 Firefighter’s Pension Plan Description The Firefighter’s Pension Plan is a closed, single-employer, defined benefit pension plan established in accordance with RCW 41.18 and Renton Municipal Code. This plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. This system was established for firefighters employed prior to 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-43 March 1, 1970, when the LEOFF retirement system was established. The retirement benefits vest after 20 years of service. Members may retire after 25 years of service regardless of age, and after age 50 with 20 or more years of service. At December 31, 2008, there were 40 members in the System: Retirees and beneficiaries receiving benefits 38 Retirees and beneficiaries currently receiving full retirement through LEOFF 2 Active plan members vested 0 Active plan members non-vested 0 TOTAL 40 Funding Policy Under state law, the Firefighter’s Pension Plan is provided an allocation of all monies received by the state from taxes on fire insurance premiums; interest earnings; member contributions made prior to the inception of LEOFF; and City contributions required to meet projected future pension obligations. Costs of administering the Firefighter’s Pension Plan are paid by the Plan. For 2008, this cost was $10,321. An actuarial valuation is done every two years and was completed as of January 1, 2009. The Actuarial Valuation of Firefighters’ Pension Fund table is reported in the Required Supplemental Information section, and a recap of the Schedule of Funding Progress for the last five valuations is as follows: Valuation Date January 1 Actuarial Value of Assets (rounded to thousands) Actuarial Accrued Liabilities Entry Age (rounded to thousands) Unfunded Actuarial Accrued Liabilities (UAAL) (rounded to Funded Ratio Covered Payroll (rounded to thousands) UAAL as a % of Covered Payroll 1997 $5,238 $6,444 $1,206 81% $260 464% 2001 7,067 6,780 (287) 104% - - 2003 9,189 6,472 (2,717) 142% - - 2005 7,777 6,254 *(1,523) 124% - - 2007 7,847 6,364 (1,483) 123% - - * A $29 decrease in the actuarial accrued liabilities was made after the City’s financial report was published and before the valuation was released. Significant actuarial assumptions used in the January 1, 2009, valuation include: Valuation date: January 1, 2009 Actuarial cost method: entry age normal Amortization method: 30-year, closed as of January 1, 2000 Remaining amortization period: 21 years Asset valuation method: fair value Actuarial assumptions: 1) investment rate of return – 4%; 2) projected salary increases – 3.5%; 3) inflation – 2.5%; and, 4) cost-of-living adjustments – based upon salary increase assumption for FPF benefits, inflation assumption for LEOFF benefits. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-44 The Annual Required Contribution (ARC) was computed using the Entry Age Normal Cost Method. Under this method the projected benefits are allocated on a level basis as a percentage of salary over the earnings of each individual between entry age and assumed exit age. The amount allocated to each year is called the Normal Cost and the portion of the Actuarial Present Value of all benefits not provided for by future Normal Cost payments is called the Actuarial Accrued Liability. Since all members have already retired, the amount of the Normal Cost is zero. The Unfunded Actuarial Accrued Liability (UAAL) is the Actuarial Accrued Liability minus the actuarial value of the Fund’s assets. The following Annual Pension Cost and Net Pension Obligation table presents the annual Normal Cost and the ARC as of January 1, 2009, assuming the UAAL is amortized over a closed 30-year period beginning January 1, 2000. Annual required contribution (ARC) Fiscal YearEnding 12/31/2006 Fiscal YearEnding 12/31/2007 Fiscal Year Ending 12/31/2008 Annual normal cost (BOY) $ - $ - $ - Amortization of UAAL (BOY) (107,622) (104,731) (104,731) Interest to end of year (EOY)* (5,919) (5,237) (5,237) ARC at EOY ($113,541) ($109,968) ($109,968) Interest on NPO ($33,604) ($38,658) ($46,349) Adjustment to ARC (44,035) (54,591) (67,070) Annual pension cost (APC) ($103,110) ($94,035) ($89,247) Employer contributions** $59,068 $59,777 $66,055 Change in NPO (162,178) (153,812) (155,302) NPO at BOY prior year ($610,988) ($773,166) ($926,978) NPO at EOY ($773,166) ($926,978) ($1,082,280) * Assumed interest rate: 5.5% in 2006 and 5.0% in 2007and 2008. ** Employer contributions are total contributions to the fund net of disbursements for medical and administrative expenses. The Annual Development of Pension Cost is recapped as follows: Fiscal Year Ending 12/31 ARC @ EOY Interest onNPO ARC Adjustment Annual Pension Cost (APC) Total Employer Contributions Changein NPO 2003 $ - $ (7,088) $ (8,433) $ 1,347 $ 63,088 $(61,741)2004 (205,680) (10,790) (13,047) (203,423) 63,151 (266,574) 2005 (113,541) (24,553) (31,545) (106,549) 58,029 (164,578) 2006 (113,541) (33,604) (44,035) (103,110) 59,068 (162,178) 2007 (109,968) (38,658) (54,591) (94,035) 59,777 (153,812) 2008 (109,968) (46,349) (67,070) (89,247) 66,055 (155,302) Fiscal Year Ending December 31 NPO Balance (Gain)/ Loss Amort. Factor** Amort. of (Gain)/ LossEnding Balance 2003 $(179,836) $ (63,088) 14.0032 $ (8,433) $ (179,836) 2004 (446,410) (268,831) 13.7834 (13,047) (446,410) 2005 (610,988) (171,570) 14.1517 (31,545) (610,988) 2006 (733,166) (172,609) 13.8750 (44,035) (773,166) 2007 (926,978) (169,745) 14.1630 (54,591) (926,978) 2008 (1,082,280 (176,023) 13.8212 (67,070) (1,082,280) 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-45 Three year trend information is recapped as follows: Fiscal Year Ending December 31 Annual Pension Cost (APC) Contribution as a Percentage of APC Net Pension Obligation (NPO) 2006 $ (103,110) N/A $ (773,166) 2007 (94,035) N/A (926,978) 2008 (89,247) N/A (1,082,280) Employees are not required to make contributions. The contributions to the System for 2008 include $85,949 from fire insurance premiums and $1,218,067 of investment income. Benefits and refunds of the defined benefit pension plan are recognized when due and payable in accordance with the terms of the plan. For 2008, $512,263 was paid for benefit payments and $9,573 for medical payments. The Net Pension Obligation moves from ($926,978) to ($1,082,280) and is included, as a non-current asset, in the City of Renton’s Governmental-wide Statement of Net Assets. NOTE 7. OTHER POST EMPLOYMENT BENEFITS Plan Description As required by the Revised Code of Washington (RCW) Chapter 41.26, the City provides lifetime medical care for members of the Law Enforcement Officers and Firefighters (LEOFF) retirement system hired before October 1, 1977 under a defined benefit healthcare plan administered by the City. The City is required to pay all healthcare expenses incurred by LEOFF 1 retirees. The City’s cost is reduced by any amounts retirees receive from Medicare or other health plans. LEOFF 1 retirees may request reimbursement for healthcare expenses that are not paid by their primary healthcare plan. The City pays the Medicare Part B premium. In addition, LEOFF 1 retirees are eligible for long term care, dental, and vision benefits and coverage continues throughout the lifetime of the retiree. Dependents do not receive LEOFF 1 postemployment healthcare benefits. Under the authorization of the LEOFF Disability Board, direct payment is made for other retiree medical expenses not covered by standard medical plan benefit provisions. Coverage continues throughout the lifetime of the retiree. Financial reporting for the LEOFF retiree healthcare plan is included in the City’s Comprehensive Annual Financial Report. Membership Membership in this program includes Plan 1 participants of LEOFF who joined the system by September 30, 1977. As of December 31, 2008, 103 retirees met those eligibility requirements. This is considered a closed group with no new members, with the exception of 3 active employees who have not retired. Funding Policy Funding for LEOFF retiree healthcare costs is provided entirely by the City as required by RCW. The City’s funding policy is based upon pay-as-you-go financing requirements. Retirees are not required to contribute any portion of the cost coverage. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-46 Annual OPEB Cost and Net OPEB Obligation The City’s annual other postemployment benefit (OPEB) cost is calculated based upon the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities over a period of 30 years as of January 1, 2008. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB. Fiscal Year Ending 12/31/2008 Determination of Required Annual Contribution: Normal Cost $154,545 Amortization of UAAL* $1,869,523 Annual Required Contribution (ARC) $2,024,068 Determination of Net OPEB Obligation: Annual Required Contribution (ARC) $2,024,068 Interest on net OPEB Obligation - Adjustment to ARC - Annual OPEB Cost $2,024,068 Contributions Made ($1,266,192) Increase in net OPEB Obligation $757,876 Net OPEB Obligation – Beginning of Year $ - Net OPEB Obligation – End of Year $757,876 *Unfunded Actuarial Accrued Liability (UAAL) The net OPEB obligation of $757,876 is included as a noncurrent liability on the Statement of Net Assets. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2008 were as follows: Annual OPEB Cost Employer Contribution Percentage of OPEB Cost Contributed Net OPEB Obligation 2008 $2,024,068 $1,266,192 59.85% $757,876 Funded Status and Funding Progress As of January 1, 2008, the most recent actuarial valuation date, the plan was 0% funded. The accrued liability for benefits was $32,327,794 and the actuarial value of the assets was $0 resulting in a UAAL of $32,327,794. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-47 Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation. Employer contributions are financed on a pay-as-you-go basis. During the fiscal year ended December 31, 2008, expenditures of $1,266,192 were recognized for post-retirement health care. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents the results of the OPEB valuations as of December 31, 2008. In future years, the schedule of funding progress will provide multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial liabilities for benefits Actuarial Methods and Assumptions Nicolay Consulting prepared for the City an actuarial valuation report dated January 1, 2008. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the long-term perspective of the calculations. The actuarial valuation report was prepared using the projected unit credit method. The projected unit credit method is an actuarial cost method under which the projected benefits of each individual included in an Actuarial Valuation are separately calculated and allocated to each year of service by a consistent formula. The actuarial assumptions used included a 4.00% discount rate, which is based upon the long-term investment yield on the investments that are expected to be used to finance payment of benefits. Additionally, the following health care trend rate assumptions were used: Expected Annual Increase in Health Care Cost Medical Medicare -Part B Nursing Home Dental and Vision Initial 8.50% 0.00% 4.00% 2.00% Ultimate 5.50% 5.50% 4.00% 2.00% The UAAL is being amortized based on a level dollar amortization over a closed 30 year-period at the assumed discount rate. The remaining amortization period at December 31, 2008 was 29 years. NOTE 8. CONTINGENCIES Litigation The City has recorded in its financial statements all material liabilities, including an estimate for situations that are not yet resolved but where, based on available information, management believes it is probable that the City will have to make payment. In the opinion of management, the City’s insurance policies and/or self-insurance reserves are adequate to pay all known or pending claims. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-48 Contingencies under Grant Provisions The City participates in a number of federal and state assisted programs. These grants are subject to audit by the grantors of their representatives. Such audits could result in requests for reimbursement to grantor agencies for expenditures disallowed under the terms of the grants. The City’s management believes that such disallowances, if any, will be immaterial. Bond Indentures The City is in compliance with all significant bond indenture and restrictions, with the following exception. Golf Course net revenues in 2007 and 2008 were severely impacted by inclement weather and general economic conditions, causing it to be temporarily out of compliance with the bond debt service coverage covenant of 125% of annual debt service at the end of 2007 and 2008. The City continues to review rates and the business plan and strategy that aims to adjust and maintain coverage. Construction Commitments Refer to Note 5. NOTE 9. RISK MANAGEMENT The City of Renton is exposed to various risks of loss related to tort; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City of Renton protects itself against unforeseen losses by utilizing a three-pronged risk management approach. First, the City self-funds first level losses through its Insurance Fund. Second, excess insurance is purchased to cover medium and large losses. Third, the City reserves the right to utilize the provisions of Chapter 35A.31.060 RCW to fund catastrophic or uninsured losses. This State statute allows cities to levy a non-voted property tax increase to pay for uninsured claims. An analysis of the self-insurance retention levels, limits of insurance, and claims administrator for the major types of coverage are as follows: 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-49 Type of Coverage Risk Retention Occurrence Claims Administrator Aggregate Amount Carrier Property – Expires 01/01/2010 $ 25,000 WA Cities Ins Authority $500,000,000 (per occurrence subject to annual aggregate & sub-limits) WA Cities Ins Authority Liability – Expires 01/01/2010 250,000 WA Cities Ins Authority 20,000,000 (per occurrence) WA Cities Ins Authority Auto Liability – Expires 01/01/2010 25,000 WA Cities Ins Authority ACV or Replacement Cost; per Occurrence WA Cities Ins Authority Public Officials (E&O) – Expires 01/01/2010 250,000 WA Cities Ins Authority 15,000,000 WA Cities Ins Authority Jail (Police Professional Liability) - Expires 01/01/2010 10,000 WA Cities Ins Authority 30,000,000 WA Cities Ins Authority Equipment breakdown – Expires 1/1/2010 5,000* Arthur J. Gallagher 50,000,000 Zurich Crime – Expires 12/31/2009 10,000 WA Cities Ins Authority 2,500,000 National Union Fire Airport liability – Expires 1/1/2010 - Arthur J. Gallagher 100,000,000 Ace Property & Casualty Underground storage tank – Expires 1/1/2010 25,000 Arthur J. Gallagher 2,000,000 Commerce & Industry Worker’s comp – Expires 1/1/2010 350,000 Berkley Risk 1,000,000 Midwest Casualty Employee health – Expires 1/1/2009 150,000 HMA, Inc N/A SunLife * There is a 4-hour utility interruption clause, prior to the deductible becoming applicable. For policy term January 1, 2009 to January 1, 2010, there were no reductions in insurance coverage and an increase in premiums; however, settlements for the last three years have not exceeded insurance coverage. The City of Renton is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self-insuring, and/or jointly contracting for risk management services. WCIA has a total of 126 members. New members initially contract for a three-year term and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, public officials’ errors or omissions, stop gap, and employee benefits liability. Limits are $3 million per occurrence self insured layer, and $12 million per occurrence in the re-insured excess layer. The excess layer is insured by the purchase of reinsurance and 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-50 insurance and is subject to aggregate limits. Total limits are $15 million per occurrence subject to aggregate sublimits in the excess layers. The Board of Directors determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and machinery are purchased on a group basis. Various deductibles apply by type of coverage. Property insurance and auto physical damage are self-funded from the members’ deductible to $500,000 for all perils other than flood and earthquake, and insured above that amount by the purchase of reinsurance. In-house services include risk management consultation, loss control field services, claims and litigation administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance brokerage, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal agreement, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA’s assets in financial instruments, which comply with all State guidelines. These revenues directly offset portions of the membership’s annual assessment. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day-to-day operations of WCIA. The City's Risk Management Program is administered by the Human Resources and Risk Management Administrator, with claims being processed by the independent claims administrators noted above. As of December 31, 2008, the City had accrued the following amounts for outstanding claims: Coverage Total Claims Payable 12/31/2008 Property & liability $591,502 Worker’s compensation 590,708 Employee health 1,722,915 TOTAL $2,904,675 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-51 2008 Property & Liability Worker’s Compensation Employee Health Totals IBNR claims at beginning of the year $792,487 $794,043 $1,399,425 $2,985,955 Current year and changes in estimates 764,281 (139,458) 9,275,803 9,900,626 Claims payments (965,716) (63,877) (8,952,313) (9,981,906) IBNR claims at end of the year $591,052 $590,708 $1,722,915 $2,904,675 2007 Property & Liability Worker’s Compensation Employee Health Totals IBNR claims at beginning of the year $537,693 $765,089 $1,325,000 $2,627,782 Current year and changes in estimates 1,662,228 863,439 1,739,459 4,265,126 Claims payments (1,407,434) (834,485) (1,665,034) (3,906,953) IBNR claims at end of the year $792,487 $794,043 $1,399,425 $2,985,955 NOTE 10. INTERFUND TRANSACTIONS Interfund transactions are classified as follows: 1. Services Provided – Transactions that would be treated as revenues, expenditures, or expenses if they involve external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City of Renton. 2. Transfers – Transactions to support the operations of other funds are recorded as “Transfers” and classified with “Other Financing Sources or Uses” in the fund statements. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the Government-wide financial statements. 3. Contributions – Contributions to the capital of enterprise or internal service funds, transfers of capital assets between proprietary and governmental funds, transfers to establish or reduce working capital in other funds, and transfers remaining balances when funds are closed are classified non-operating revenue. 4. Loans/Advances – Loans between funds are classified as interfund loans receivable and payable or as advances to and from other funds in the fund statements. Interfund loans do not affect total fund equity, but advances to other funds are offset by a reservation of fund equity. Loans and advances are subject to elimination upon consolidation. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-52 As of December 31, 2008, outstanding interfund balances (resulting from various interfund transactions) were as follows: Fund Receivables Due From Other Funds Payables Due To Other Funds Purpose General fund $ 922 $184,244 Reclassification of expenditures between funds after 12/31/2008 Reclassification of revenues between funds after 12/31/2008 Municipal Facilities CIP 48,189 Reclassification of revenues between funds after 12/31/2008 1989 Unlimit GO Bonds Sr Housing 94,249 Reclassification of revenues between funds after 12/31/2008 Airport Operations 5,269Reclassification of expenditures between funds after 12/31/2008 Insurance 922Reclassification of expenditures between funds after 12/31/2008 Special Hotel/ Motel Tax 36,537Reclassification of expenditures between funds after 12/31/2008 TOTAL* $185,166$185,166 *Difference is the result of rounding individual fund numbers in the aggregate. The following is a recap of interfund loans: Fund Interfund loans Receivable Interfund loans Payable Purpose Municipal facilities CIP $1,000,000 $ - Interfund Loan to South lake WA infrastructure fund South Lake WA infrastructure - 1,000,000 Interfund Loan from Municipal facilities CIP fund TOTAL* $1,000,000 $ 1,000,000 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-53 Transfers for 2008 were as follows: TransferInGeneral$317,000 Contribution for Capital Equipment$579,503 Contribution for Capital Improvements and Establish Housing Opportunity FundArterial street Contribution for CIP Overlay Projects$585,000 Contribution for Capital ImprovementsLeased City Properties$386,000 Contribution for Capital ImprovementsGeneral debt$300,000 Contribution from Fire Impact for Debt PaymentsFire Impact Mitigation$300,000 Contribution for Fire Impact Debt PaymentsTransportation Impact Mitigation$2,223,229 Contribution to Transportation CIPTransportation CIP$2,868,229 Contribution for Capital Improvements$75,000 Contribution to Municipal CIP Fund for Capital ImprovementsCommunity Development Impact Mitigation$111,875 Municipal CIP$685,378 Contribution for Capital ImprovementsHousing Opportunity$200,000 Contribution from General Fund to Establish FundWaterworks$110,000 Contribution for Capital EquipmentTOTAL$4,370,607 $4,370,607 FundTransfer OutPurpose NOTE 11. NET ASSETS The Government-wide and business type fund financial statements utilize a net asset presentation. Net assets are the difference between assets and liabilities. Net assets are categorized as investments in capital assets (net of related debt), restricted, and unrestricted. A. Investment in Capital Assets (net of related debt) is intended to reflect the portion of net assets that are associated with non-liquid, capital assets less outstanding capital asset related debt. The net related debt is the debt less the outstanding liquid assets and any associated unamortized costs. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-54 B. Restricted assets are liquid assets (generated from revenues and not bond proceeds), which have third party (statutory, bond covenant, or granting agency) limitations on their use. The City would typically use restricted assets first, as appropriated opportunities arise, but reserve the right to selectively defer the use thereof to a future project or replacement equipment acquisition. Restricted assets are as follows: FundPurposeAmountHotel / Motel TaxTourism$321,093 Arterial StreetRoad construction552,576Cable CommunicationsCable development112,369Paths and TrailsAcquire and maintain city trails3,243Springbrook Wetlands Bank Accounting for wetlands management456,5021% for ArtFunding for art projects121,678Leased City PropertiesLeased to outside source1,239,206Community Development Impact Mitigation for park development1,688,926Municipal FacilitiesCapital projects13,774,100Capital Projects General governmental capital projects8,491,406South Lake WashingtonConstruction infrastructure for SLW202,358Fire ImpactMitigation for fire improvements2,483,647Transportation ImpactMitigation for transportation projects3,576,947WaterworksDebt service reserves3,730,167Golf CourseDebt service reserves441,358TOTAL$37,195,576 Unrestricted assets represent unrestricted liquid assets. The City’s management may have plans or tentative commitments to expend resources certain purposes in future periods. Further legal action will be required to authorize the actual expenses or expenditures. NOTE 12. PRIOR YEAR RESTATEMENTS In 2008, the City of Renton annexed several communities identified as Potential Annexation Areas (PAA), transferring capital assets to the City from King County. The annexations resulted in a restatement of $105,330,297 in the General Governmental Funds and $5,613,984 in the Waterworks Utility Fund. In addition, there was restatement of $3,589,557 within the Waterworks Utility Fund for surface water infrastructure located at The Landing. NOTE 13. SHORT TERM DEBT The City of Renton’s short-term debt consists of one interfund loan from the Municipal Facilities CIP Fund to the South Lake Washington Infrastructure Fund, as a means to temporarily fund the project prior to the receipt of contractual project revenues. This loan of an amount no greater than $2,000,000 is payable prior to September 15, 2009, and has an annual interest rate equal to the current rate of interest as established by the State of Washington Investment Pool at the time that each loan advance is made. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-55 Short-term activities for the year ended December 31, 2008 was as follows: Debt Beginning Balance 01/01/2007 Issued Redeemed Ending Balance 12/31/2007 $2,000,000 $975,000 $1,391,000 $1,366,000 $1,000,000 NOTE 14. LONG TERM DEBT The City of Renton's long-term debt consists of General Obligation Debt, repaid mainly from general governmental revenue sources and Proprietary Debt, repaid from proprietary revenues. These debts are accounted for in the following areas: 1) The outstanding general obligation debt is reported in the government-wide financial statements; 2) The repayment, or debt service of the same, is recorded in the Debt Service Funds; and, 3) The proprietary debt liability and repayment of the same are reported in individual Proprietary Funds. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-56 Outstanding debt issues as of December 31, 2008, are as follows: Type of Debt Interest Rates Issued Date Maturity Date Original Issued Amount GOVERNMENTAL DEBT: General Obligation Bonds: Limited 1997 GO Bonds 5.55%-5.75% 05/01/97 12/01/17 $14,697,744 2000 GO Valley Comm Bonds 4.30%-5.38% 09/15/00 12/01/15 2,551,600 2001 GO Refunding Bonds 2.10%-5.25% 11/01/01 12/01/17 13,505,000 2001 GO Bonds 5.0%-5.25% 11/01/01 12/01/21 6,000,000 2002 GO Bonds 2.50%-5.00% 7/15/02 12/01/22 3,895,000 2006 GO Bonds 4.25%-5.00% 8/08/06 12/01/28 17,980,000 SUBTOTAL LIMITED GO $58,629,344 Unlimited 1993 GO Refunding Bonds - Senior Housing 5.20%-6.10% 09/01/93 02/01/09 4,270,000 SUBTOTAL UNLIMITED GO 4,270,000 TOTAL GENERAL OBLIGATION BONDS $62,899,344 TOTAL GOVERNMENTAL-TYPE DEBT ISSUANCE $62,899,344 BUSINESS-TYPE DEBT: Revenue Bonds: 1998 Water/Sewer Refunding 4.46% 03/01/98 06/01/13 $6,120,000 1999 Golf System Refunding 4.96% 04/01/99 12/01/15 5,040,000 2002 Water/Sewer 4.80% 07/01/02 12/01/22 3,660,000 2003 Water/Sewer Refunding 3.20% 09/15/03 06/01/13 8,035,000 2004 Water/Sewer 4.33% 11/01/04 12/01/27 10,335,000 2007 Water/Sewer 4.00%-5.00% 11/06/07 12/01/22 1,430,000 2007 Water/Sewer Refunding 2008 Water/Sewer (a) 2008 Water/Sewer (b) 4.00%-5.00% 4.17% 4.17% 11/06/07 01/04/08 01/04/08 12/01/22 12/01/27 12/01/16 8,320,000 9.975,000 2,035,000 TOTAL REVENUE BONDS $54,950,000 Public Works Trust Fund Loans: Sierra Heights Sewer Improvements 2.00% 01/20/92 07/01/12 $888,462 Central Renton Sewer Replacement 1.00% 05/04/93 07/01/15 1,631,800 East Renton Interceptor 1.00% 06/07/93 07/01/13 2,542,704 Dayton Avenue NE 2.00% 05/12/94 07/01/14 96,958 NE 27th/Aberdeen Drainage Improvements 1.00% 05/15/95 07/01/15 731,000 East Kennydale Interceptor 2.00% 01/24/98 07/01/16 2,093,740 Honeycreek Interceptor 2.00% 12/04/95 07/01/16 1,840,568 Corrosion Control Treatment Facilities 1.00% 01/06/97 07/01/17 1,106,000 Maplewood Water Treatment Improvement 0.50% 1/22/02 07/01/21 567,831 Construct CT Pipeline for Wells 0.50% 11/5/02 7/1/22 814,527 Maplewood Water Treatment Improvement 0.50% 06/03/04 07/01/24 4,892,500 TOTAL PUBLIC WORKS TRUST FUND LOANS $17,206,090 Leases: Golf Course Operating Lease 5.25 6/15/07 5/15/11 87,800 TOTAL BUSINESS-TYPE DEBT ISSUANCE $72,243,890 TOTAL AMOUNT ISSUED ON OUTSTANDING DEBT AS OF DECEMBER 31, 2008 $135,143,234 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-57 For outstanding debt additions and retirements are summarized as follows: GOVERNMENTAL DEBT Balance 1/1/2008Additions Deductions Balance 12/31/2008 Due Within One Year Limited General Obligation Debt 1997 GO Bonds $1,145,575 $ - $655,575 $490,000 $490,000 1997 GO Bonds - CAB Long Term Interest 939,399 52,264 532,249 459,414 510,000 2000 GO Valley Comm. Bonds 1,595,000 - 167,000 1,428,000 175,000 2001 GO Refunding Bonds 13,120,000 - 85,000 13,035,000 335,000 2001 GO Bonds 6,000,000 - - 6,000,000 - 2002 GO Bonds 3,175,000 - 155,000 3,020,000 160,000 2006 GO Bonds 17,980,000 - 520,000 17,460,000 540,000 Total Limited GO Bonds $43,954,974 $52,264 $2,114,824 $41,892,414 $2,210,000 Unlimited General Obligation Debt 1993 GO Refunding Bonds- Senior Housing 985,000 - 480,000 505,000 505,000 Total General Obligation Bonds $44,939,974 $52,264 $2,594,824 $42,397,414 $2,715,000 Installment Contracts: Certificated of participation 16,976 - 16,976 - - Employee Leave Benefits (Comp. Absences) 4,440,424 3,210,894 2,531,042 5,120,276 2,918,558 Other post-employment benefits payable - 2,024,068 1,266,192 757,876 - Total General Obligation Debt $49,397,374 $5,287,226 $6,409,034 $48,275,566 $5,633,558 BUSINESS-TYPE DEBT Revenue Bonds: 1998 Water/Sewer Refunding 3,485,000 - 570,000 2,915,000 595,000 1999 Golf System Refunding 2,805,000 - 295,000 2,510,000 310,000 2002 Water/Sewer Bond 3,230,000 - 110,000 3,120,000 455,000 2003 Water/Sewer Refunding 3,800,000 - 1,130,000 2,670,000 825,000 2004 Water/Sewer Bond 10,335,000 - - 10,335,000 - 2007 Water/Sewer Bond 1,430,000 - - 1,430,000 - 2007 Water/Sewer Bond (02) 8,320,000 - - 8,320,000 15,000 2008 Water/Sewer Bond (a) - 9,975,000 - 9,975,000 - 2008 Water/Sewer Bond (b) - 2,035,000 - 2,035,000 - Total Revenue Bonds $33,405,000 $12,010,000 $2,105,000 $43,310,000 $2,200,000 Public Works Trust Fund Loans: Sierra Heights Sewer Improvements 128,210 - 25,642 102,568 25,642 Central Renton Sewer Replacement 628,934 - 87,483 541,451 87,483 East Renton Interceptor 807,420 - 134,570 672,850 134,570 Dayton Avenue NE 35,721 - 5,103 30,618 5,103 NE 27th/Aberdeen Drainage Improvement 340,720 - 42,590 298,130 42,590 East Kennydale Interceptor 1,051,695 - 116,855 934,840 116,855 Honeycreek Interceptor 871,848 - 96,872 774,976 96,872 Corrosion Control Treatment Facilities 493,570 - 49,357 444,213 49,357 Maplewood Water Improvement 424,214 - 30,301 393,913 30,301 Const. CT Pipeline for Wells 643,050 - 42,870 600,180 42,870 Maplewood Water Improvements 4,377,500 257,500 257,500 4,377,500 272,647 Total Public Work Trust Fund Loan 9,802,882 257,500 889,143 9,171,239 904,290 Golf Course Cart Operating Lease 76,074 - 20,919 55,155 21,995 Employee Leave Benefits (Comp. Absences) 715,249 235,514 334,446 616,317 151,334 Total Business-Type Debt $43,999,205 $12,503,014 $3,349,508 $53,152,711 $3,277,619 GRAND TOTALS $93,396,578 $17,790,240 $9,758,542 $101,428,277 $8,911,177 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-58 DEEP DISCOUNT DEBT The 1997 Limited General Obligation Bond issue included capital appreciation bonds that are issued at a deep discount. The deep-discount debt will mature in the year 2009 with an accreted value of $1,000,000. The deep-discount debt is reported in the Government-wide financial statements in the amount of $490,000, net of the remaining unamortized discount. SPECIAL ASSESSMENT DEBT WITH GOVERNMENTAL COMMITMENT As of December 31, 2008, the City of Renton has no special assessment debt outstanding. DEBT LIMIT CAPACITIES State law provides that debt cannot be incurred in excess of the following percentages of the value of the taxable property of the City: 1.5 percent without a vote of the people provided the indebtedness with a vote is 1 percent or less; 2.5 percent with a vote of the people; 5.0 percent with a vote of the people, provided the indebtedness in excess of 2.5 percent is for utilities; and 7.5 percent with a vote of the people provided the indebtedness in excess of 5.0 percent is for open space development and parks facilities. Table 12 in the Statistical Section shows the computation of legal debt margin for general and special purpose capacities for the City of Renton. ARBITRAGE The City engages an outside agency to calculate its’ arbitrage rebate liability on outstanding tax-exempt bonds and certificates of participation under Section 148(f) of the Internal Revenue Code. For bonds that have reached their installment computation dates (bonds outstanding for five years initially and every five years thereafter until the last of the bond issue matures) the City paid an arbitrage rebate in the amount of $9,594 on the City’s 2003 Water and Sewer Revenue Refunding Bonds. No additional rebate was found due for other revenue or general obligation bonds for 2008. NEWLY ISSUED DEBT The Water and Sewer Revenue Bonds (A and B) were issued January 4, 2008 in the amount of $9,975,000 and $2,035,000, respectively. The average interest rate is 4.17%. These bonds were issued for the purpose of providing money to pay part of the costs of construction and acquisition of certain improvements to the waterworks utility. The Series A (tax exempt) bonds are payable semiannually with interest-only payments until December 1, 2016 when annual principal payments will also be required. The final payment will be December 1, 2027. The Series B (taxable) bonds are payable semi-annually with interest-only payments until December 1, 2013 when annual principal payment will also be required. The final payment will be December 1, 2016. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-59 ANNUAL DEBT SERVICE REQUIREMENTS The annual debt service requirements to maturity, including principal and interest, for long-term debt as of December 31, 2008, are as follows: Governmental Activities Business-Type Activities Year Principal Interest Principal Interest 2009 $2,205,000 $2,549,448 $3,141,433 $1,963,233 2010 2,269,000 1,975,553 3,207,417 1,869,186 2011 2,353,000 1,883,688 3,284,324 1,770,243 2012 2,467,000 1,786,176 3,374,290 1,657,422 2013 2,580,000 1,660,989 2,863,648 1,547,100 2014-2018 13,579,000 6,232,638 12,642,018 6,354,836 2019-2023 10,415,000 2,896,971 12,850,618 4,074,204 2024-2028 6,070,000 943,238 11,172,647 1,312,281 Subtotal $ 41,938,000 $ 19,928,699 $ 52,536,394 $ 20,548,504 CAB Interest 459,414 - - - Totals $ 42,397,414 $ 19,928,699 $ 52,536,394 $ 20,548,504 AMOUNT AVAILABLE FOR DEBT SERVICE Fund balances that have been reserved for debt repayment are $1,270,936 in the debt service funds. NOTE 15 - DEFERRED CHARGES IN PROPRIETARY FUNDS As of December 31, 2008, the total amount of deferred charges and other assets reported in the proprietary funds is $788,108. The Waterworks Utility Fund had deferred charges and other assets in the amount of $756,945 for debt issuance costs related to the 2002-2008 Revenue Bonds. This amount will be fully amortized by 2027. The Golf Course Fund had deferred charges and other assets amounting to $31,163 for debt issuance costs related to the 1999 Refunding Revenue Bond. This amount will be fully amortized by 2016. NOTE 16. SEGMENT INFORMATION An identifiable activity (or grouping of activities) required to be accounted for separately, which (a) is reported as or within an enterprise fund; (b) for which one or more revenue bonds are outstanding; and, (c) where the revenue stream is pledged for payment of, are required to disclose segment information. The City of Renton has no required segment information to disclose for 2008. NOTE 17. JOINT VENTURES A joint venture is a legal entity or other organization that results from a contractual agreement and that is owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on-going financial interest or (b) an on-going financial responsibility. The City participates in one joint venture. 2008 Comprehensive Annual Financial Report City of Renton, Washington The notes to the financial statements are an integral part of this statement. Basic Financial Statements, 4-60 VALLEY COMMUNICATIONS CENTER The “Valley Communications Center” was established August 20, 1976, when an Interlocal Agreement was entered into by four original participating municipal corporations, including the cities of Renton, Kent, Auburn, and Tukwila. Federal Way was formally admitted in 2000. The agreement is sanctioned by the provisions and terms of the Interlocal Cooperation Act pursuant to Chapter 39.34 RCW. The initial duration of the agreement was five years, and thereafter is automatically extended for consecutive five-year periods. The purpose of the joint operation, hereafter referred to as Valley Comm, is to provide improved consolidated emergency communications (dispatch) services for police, fire, and medical aid, to the five participating cities and to several subscribing agencies that include: King County Fire Districts 2, 17 (Black Diamond), 20, 26, 40, 43, 44, 47; City of Pacific Police and Fire Departments; City of Black Diamond Police Department; City of Des Moines Police Department; SeaTac Fire Department; North Highline Fire Department; King County EMS Units; and Vashon Island Fire Department. Separate agreements between Valley Comm and the subscribing agencies have been executed, which set forth conditions of services and rates charged. The City of Renton reports its share of equity interest in the Governmental Activities column within the Government-wide financial statements under non-current assets. The following is condensed (unaudited) financial information as of December 31, 2008, on Valley Comm: Valley Comm Renton Interest Assets $25,107,535 21.92%* Liabilities 744,100 TOTAL Equity $24,363,434 $4,454,176 *After removing $4,042,221 in assets not subject to the equity interest calculations. Completed Financial Statements for Valley Comm can be obtained from the Valley Communications Center, 23807 – 98th Avenue South, Kent, WA 98031. NOTE 18. SUBSEQUENT EVENTS On April 7, 2008 the City of Renton passed Ordinance 3938 stating the intend of the City of Renton to build a Facilities Maintenance Shop with General Obligation Bonds issued in 2008 to a maximum of $12.5 million. The City postponed the project and did not issue bonds for this purpose. The City of Renton established a public corporation, the South Correctional Entity Facility Public Development Authority (SCORE) on February 25, 2009. The Authority is issuing bonds to pay a portion of the costs of acquiring, constructing, and equipping a correctional facility to be located in Des Moines. Payment for the bonds, estimated to be $100 million, would be secured by the full faith and credit of “member” cities under interlocal agreements with the cities of Auburn, Burien, Des Moines, Federal Way, Renton, SeaTac, and Tukwila. On May 11, 2009 Fitch Rating Service “Fitch” downgraded the insurer’s financial strength rating on FSA to "AA-" from "AAA". FSA’s rating outlook is negative. The City of Renton, Washington’s underlying rating is “AA-“. 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARYDIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 70,602,536 $ 70,602,536 $ 66,844,997 $ (3,757,539) Licenses and permits4,005,050 4,005,050 2,751,420 (1,253,630) Intergovernmental revenues4,614,140 8,555,562 8,773,933 218,371 Charges for services4,885,250 4,956,932 3,976,920 (980,012) Fines and forfeits1,585,000 1,585,000 2,002,854 417,854 Interfund revenues3,065,778 3,065,778 3,072,526 6,748 Contributions98,000 164,065 - (164,065) Interest1,026,800 1,026,800 587,590 (439,210) Miscellaneous revenues163,700 163,700 64,359 (99,341) TOTAL REVENUES$ 90,046,254 $ 94,125,423 $ 88,074,599 $ (6,050,824) EXPENDITURESCurrent:General government$ 15,112,327 $ 15,456,188 $ 14,387,478 $ (1,068,710) Judicial1,804,091 1,804,091 1,761,665 (42,426) Security of persons and property42,164,497 46,529,020 45,530,208 (998,812) Physical environment3,578,057 3,777,678 3,123,883 (653,795) Transportation6,761,824 6,857,404 6,332,006 (525,398) Economic environment7,068,014 7,178,308 6,232,669 (945,639) Mental & physical health10,600 10,600 16,459 5,859 Culture & recreation11,899,559 12,025,076 11,119,073 (906,003) Capital outlay1,973,091 2,187,644 2,017,677 (169,967) TOTAL EXPENDITURES$ 90,372,060 $ 95,826,009 $ 90,521,118 $ (5,304,891) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (325,806) $ (1,700,586) $ (2,446,519) $ (745,933) OTHER FINANCING SOURCES (USES)Transfer in$- $ 81,364 $- $ (81,364) Transfer (out)(450,723) (734,326) (519,503) 214,823 Sale of capital assets- - 735 735 TOTAL OTHER FINANCE SOURCES (USES)$ (450,723) $ (652,962) $ (518,768) $ 134,194 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - GENERAL FUNDFor the Year Ended December 31, 2008NET CHANGE IN FUND BALANCE$ (776,529) $ (2,353,548) $ (2,965,287) $ (611,739) FUND BALANCE JANUARY 1$ 16,471,966 $ 16,482,384 $ 16,482,384 $- FUND BALANCE DECEMBER 31$ 15,695,437 $ 14,128,836 $ 13,517,097 $ (611,739) Required Supplemental Information, 5-1 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonANNUALFIRETOTALREQUIRED PERCENTAGEEMPLOYERINSURANCE EMPLOYERCONTRIBUTION OF ARCFISCAL YEAR ENDINGCONTRIBUTIONS* PREMIUMS CONTRIBUTIONS (ARC)**CONTRIBUTEDDecember 31, 2003$- $63,088 $63,088 $- N/A %December 31, 2004(7,099) 70,250 63,151 (205,680) N/A December 31, 2005(14,375) 72,404 58,029 (113,541) N/A December 31, 2006(18,753) 77,821 59,068 (113,541) N/A December 31, 2007(25,285) 85,062 59,777 (109,968) N/A December 31, 2008(19,894) 85,949 66,055 (109,968) N/A *** The ARC is documented as 0 for negative amounts prior to 2004.Employer contributions for pension are total contributions to the Fund net of disbursements from the Fund for medical expenses under RCW 41.26.150 andadministrative expenses.ACTUARIAL VALUATION OF FIREFIGHTERS' PENSION FUNDEMPLOYER CONTRIBUTIONSDecember 31, 2008Required Supplemental Information, 5-2 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUARIAL ACCRUED UAAL AS A ACTUARIAL LIABILITY (AAL)-PERCENTAGE OF ACTUARIALVALUE OF PROJECTED UNIT UNFUNDED FUNDED COVERED COVERED VALUATION ASSETSCREDITUAALRATIOPAYROLLPAYROLLDATE(a)(b)(b-a)(a/b)( c)((b-a) /c)January 1, 2008 $- $ 32,327,794 $ 32,327,794 $0%842,500 3837%LEOFF 1 RETIREE MEDICAL BENEFITSSCHEDULE OF FUNDING PROGRESSDecember 31, 2008Required Supplemental Information, 5-32008 Comprehensive Annual Financial Report City of Renton, Washington , This page intentionally left blank. 2008 Comprehensive Annual Financial Report City of Renton, Washington Combining Statements & Schedules, 6-1 Non-Major Governmental Fund Special Revenue Funds ARTERIAL STREET FUND The Arterial Street Fund was established pursuant to state law allocating the one-half cent State Gasoline Tax revenue to cities and towns for construction, improvements, and major repair of streets. LEASED CITY PROPERTIES Accounts for revenue and expenditures related to City property leased to outside entities. HOTEL/MOTEL TAX FUND Accounts for monies collected through an increase of 1% in hotel/motel taxes for the purpose of increasing tourism in the City of Renton. SPRINGBROOK WETLANDS BANK FUND The City of Renton established this fund in 2007 for the purpose of providing accounting for the Springbrook Creek Wetland and Habitat Mitigation Bank project. The fund will receive revenue by selling Wetlands Credits to third parties and to the City’s internal departments. PATHS AND TRAILS RESERVE FUND The Paths and Trails Reserve Fund was created for the purpose of planning, accommodating, and establishing and maintaining certain paths and trails within the City of Renton. 1% FOR ART FUND The City of Renton established this fund by contributing 1% of general governmental capital project funding for art projects. CABLE COMMUNICATIONS DEVELOPMENT FUND The Cable Communications Development Fund accounts for funding for promotion and development of cable communications as established by City ordinance. 2008 Comprehensive Annual Financial Report City of Renton, Washington Combining Statements & Schedules, 6-2 Debt Service Funds GENERAL GOVERNMENTAL MISCELLANEOUS DEBT Accounts for 1997 limited general obligation bond redemption on a Council-approved bond issue, which provided funding for the purchase of Renton City Hall (2001 GO Refund Bonds) and for 1978 limited general obligation bond redemption on a Council-approved bond issue, which provided partial funding for construction of the Renton Senior Activity Center (1997 GO Refunding Bonds). 1989 UNLIMITED GENERAL OBLIGATION BOND REDEMPTION FUND Accounts for debt service on a voter-approved bond issue, which provided financing to acquire, construct, rehabilitate, equip, and develop low-income housing for the elderly. 2008 Comprehensive Annual Financial Report City of Renton, Washington Combining Statements & Schedules, 6-3 Capital Project Funds COMMUNITY DEVELOPMENT IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. FIRE IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. TRANSPORTATION IMPACT MITIGATION FUND Accounts for monies collected from developers to offset impacts created by their developments to City facilities. MUNICIPAL FACILITIES CONSTRUCTION FUND The Municipal Facilities Construction Fund accounts for the acquisition and development of municipal facilities. Resources included general and special revenue taxes and Council-approved general obligation bonds. SOUTH LAKE WASHINGTON INFRASTRUCTURE PROJECT FUND The South Lake Washington Infrastructure Project Fund accounts for the infrastructure improvements at the south end of Lake Washington. Primary resources include: REET, sales tax, grants, and GO Bonds that will provide for the design, construction, labor wages and benefits, and equipment required to implement the project. 2008 Comprehensive Annual Financial Report City of Renton, Washington Combining Statements & Schedules, 6-4 Non-Major Proprietary Funds Enterprise Funds AIRPORT FUND Accounts for revenues and expenses for administration, debt services, operation, capital improvements, and maintenance of the Renton Municipal Airport and Will Rodger-Wily Post Memorial Seaplane Base. Sources of support to the fund are leases, fuel charges, investment interest, and grant funding as available. GOLF COURSE FUND The Golf Course Fund was created after the City acquired the Maplewood Golf Course. It accounts for the operation, maintenance, debt service, and capital improvements of the facility. Internal Service Funds EQUIPMENT RENTAL The Equipment Rental Fund accounts for the costs of maintaining and replacing all City vehicles and auxiliary equipment, except for fire apparatus and replacement of police patrol vehicles. All equipment costs, including depreciation, are factors in calculating the rates that are charged to each user department. INSURANCE FUND The Insurance Fund provides accounting for self-insurance services to all City departments, including provisions for losses on property, liability, worker’s compensation, unemployment compensation, and the health care program. Expenses are paid from the Insurance Fund and rates are charged to departments based on use and/or coverage requirements. 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonARTERIAL LEASED CITY HOTEL/ SPRINGBROOKASSETSSTREET PROPERTIES MOTEL TAXWETLANDSCash & cash equivalents$ 372,729 $ 1,221,941 $ 250,779 $ 456,502 Receivables (net of allowances):Customer accounts- 122,220 - - Due from other funds- - 36,537 - Due from other governmental units179,847 - 33,809 - TOTAL ASSETS$ 552,576 $ 1,344,161 $ 321,125 $ 456,502 LIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$- $ 4,726 $32 $- Taxes payable- 45,588 - - Retainage payable- 1,739 - - Deposits- 32,981 - - Deferred revenue- 15,601 - - Accrued employee wages and leave payable- 4,320 - - Total liabilities$- $ 104,955 $32 $- Fund balancesUnreserved, designated for:Special revenue fund contingencies552,576 1,239,206 321,093 456,502 Total fund balances$ 552,576 $ 1,239,206 $ 321,093 $ 456,502 TOTAL LIABILITIES AND FUND BALANCES $ 552,576 $ 1,344,161 $ 321,125 $ 456,502 SPECIAL REVENUE FUNDSCOMBINING BALANCE SHEETOTHER GOVERNMENTAL FUNDSDecember 31, 2008Page 1 of 6Combining Statements & Schedules, 6-5 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPATHS &1% FOR CABLE COMM. TOTALASSETSTRAILSART & DEVELOPMENT SRFCash & cash equivalents$3,243 $ 121,678 $ 113,873 $ 2,540,745 Receivables (net of allowances):Customer accounts- - - 122,220 Due from other funds- - - 36,537 Due from other governmental units- - - 213,656 TOTAL ASSETS$3,243 $ 121,678 $ 113,873 $ 2,913,158 LIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$- $- $1,504 $6,262 Taxes payable- - - 45,588 Retainage payable- - - 1,739 Deposits- - - 32,981 Deferred revenue- - - 15,601 Accrued employee wages and leave payable- - - 4,320 Total liabilities$- $- $1,504 $ 106,491 Fund balancesUnreserved, designated for:Special revenue funds contingencies3,243 121,678 112,369 2,806,667 Total fund balances$3,243 $ 121,678 $ 112,369 $ 2,806,667 TOTAL LIABILITIES AND FUND BALANCES $3,243 $ 121,678 $ 113,873 $ 2,913,158 SPECIAL REVENUE FUNDSCOMBINING BALANCE SHEETOTHER GOVERNMENTAL FUNDSDecember 31, 2008Page 2 of 6Combining Statements & Schedules, 6-6 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGENERAL 1989 UGO BONDTOTALASSETSDEBTREDEMPTIONDSFCash & cash equivalents$146,493 $496,153 $642,646 Investments350,000 - 350,000 Receivables (net of allowances):Taxes126,217 13,124 139,341 Accrued interest & penalty50,819 572 51,391 Due from other funds- 94,249 94,249 TOTAL ASSETS$673,529 $604,098 $ 1,277,627 LIABILITIES AND FUND BALANCESLiabilitiesDeferred revenue$- $6,691 $6,691 Total liabilities$- $6,691 $6,691 Fund balancesUnreserved. Designated for:Debt service funds$673,529 $597,407 $ 1,270,936 Total fund balances$673,529 $597,407 $ 1,270,936 $673,529 $604,098 $ 1,277,627 COMBINING BALANCE SHEETOTHER GOVERNMENTAL FUNDSDecember 31, 2008Page 3 of 6Combining Statements & Schedules, 6-7 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonC.D. IMPACTFIRE IMPACTTRANS. IMPACT MUNICIPALASSETSMITIGATION MITIGATION MITIGATION FACILITIES CIPCash & cash equivalents$ 1,425,709 $ 915,771 $ 1,399,103 $ 889,771 Investments250,000 1,500,000 1,943,852 10,921,805 Receivables (net of allowances):Taxes- - - 126,217 Customer accounts- - 173,102 - Accrued interest & penalty13,217 107,880 60,890 690,760 Interfund loans receivable- - - 1,000,000 Due from other funds- - - 48,189 Due from other governmental units- - - 320,922 TOTAL ASSETS$ 1,688,926 $ 2,523,651 $ 3,576,947 $ 13,997,664 LIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$- $- $- $ 142,380 Retainage payable- 40,004 - 81,184 Interfund loans payable- - - - Total liabilities$- $40,004 $- $ 223,564 Fund balancesReserved for:Interfund loans receivable1,000,000 Unreserved, designated for:Capital projects funds$ 1,688,926 $ 2,483,647 $ 3,576,947 $ 12,774,100 Total fund balances$ 1,688,926 $ 2,483,647 $ 3,576,947 $ 13,774,100 TOTAL LIABILITIES AND FUND BALANCES $ 1,688,926 $ 2,523,651 $ 3,576,947 $ 13,997,664 Page 4 of 6December 31, 2008OTHER GOVERNMENTAL FUNDSCOMBINING BALANCE SHEETCombining Statements & Schedules, 6-8 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonSO LK WA INFRA- TOTALASSETSSTRUCTURECPFCash & cash equivalents$522 $ 4,630,876 Investments- 14,615,657 Receivables (net of allowances):- Taxes- 126,217 Customer accounts1,704,184 1,877,286 Accrued interest & penalty- 872,747 Interfund loans receivable- 1,000,000 Due from other funds- 48,189 Due from other governmental units347,850 668,772 TOTAL ASSETS$ 2,052,556 $ 23,839,744 LIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$ 850,198 $ 992,578 Retainage payable- 121,188 Interfund loans payable1,000,000 1,000,000 Total liabilities$ 1,850,198 $ 2,113,766 Fund balancesReserved for:Interfund loans receivable- 1,000,000 Unreserved, designated for:- Capital projects funds$ 202,358 $ 20,725,978 Total fund balances$ 202,358 $ 21,725,978 TOTAL LIABILITIES AND FUND BALANCES $ 2,052,556 $ 23,839,744 Page 5 of 6December 31, 2008OTHER GOVERNMENTAL FUNDSCOMBINING BALANCE SHEETCombining Statements & Schedules, 6-9 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTAL OTHERTOTALTOTALTOTAL GOVERNMENTALASSETSSRFDSFCPFFUNDSCash & cash equivalents$ 2,540,745 $ 642,646 $ 4,630,876 $ 7,814,267 Investments- 350,000 14,615,657 14,965,657 Receivables (net of allowances):Taxes- 139,341 126,217 265,558 Customer accounts122,220 - 1,877,286 1,999,506 Accrued interest & penalty- 51,391 872,747 924,138 Interfund loans receivable- - 1,000,000 1,000,000 Due from other funds36,537 94,249 48,189 178,975 Due from other governmental units213,656 - 668,772 882,428 TOTAL ASSETS$ 2,913,158 $ 1,277,627 $ 23,839,744 $ 28,030,529 LIABILITIES AND FUND BALANCESLiabilitiesAccounts payable$6,262 $- $ 992,578 $ 998,840 Taxes payable45,588 - - 45,588 Retainage payable1,739 - 121,188 122,927 Interfund loans payable- - 1,000,000 1,000,000 Deposits32,981 - - 32,981 Deferred revenue15,601 6,691 - 22,292 Accrued employee wages and leave payable4,320 - - 4,320 Total liabilities$ 106,491 $6,691 $ 2,113,766 $ 2,226,948 Fund balancesReserved for:Interfund loans receivable- - 1,000,000 1,000,000 Unreserved, designated for:Special revenue funds contingency2,806,667 - - 2,806,667 Unreserved reported in:Debt service funds- 1,270,936 - 1,270,936 Capital projects funds- - 20,725,978 20,725,978 $ 2,806,667 $ 1,270,936 $ 21,725,978 $ 25,803,581 TOTAL LIABILITIES AND FUND BALANCES $ 2,913,158 $ 1,277,627 $ 23,839,744 $ 28,030,529 Page 6 of 6COMBINING BALANCE SHEETOTHER GOVERNMENTAL FUNDSDecember 31, 2008Combining Statements & Schedules, 6-10 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonARTERIALLEASED CITYHOTEL/SPRINGBROOKSTREETPROPERTIES MOTEL TAXWETLANDSREVENUESTaxes$- $84,564 $252,233 $- Intergovernmental revenues650,721 - - - Charges for services- 1,072,669 - - Contributions- - 60,000 - Interest10,528 18,700 7,276 8,502 TOTAL REVENUES$661,249 $ 1,175,933 $319,509 $8,502 EXPENDITURESCurrent:General government$- $ 706,662 $ - $ - Economic environment- - 346,432 - Capital outlay- - - - TOTAL EXPENDITURES$- $ 706,662 $346,432 $- EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$661,249 $ 469,271 $(26,923) $8,502 OTHER FINANCING SOURCES (USES)Transfer (out)$(585,000) $ (386,000) $- $- TOTAL OTHER FINANCE SOURCES (USES)$(585,000) $ (386,000) $- $- NET CHANGE IN FUND BALANCE$76,249 $83,271 $(26,923) $8,502 FUND BALANCE JANUARY 1$476,327 $ 1,155,935 $348,016 $ 448,000 FUND BALANCE DECEMBER 31$552,576 $ 1,239,206 $321,093 $ 456,502 SPECIAL REVENUE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESOTHER GOVERNMENTAL FUNDSFor the Year Ended December 31, 2008Page 1 of 6Combining Statements & Schedules, 6-11 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPATHS &1% FOR CABLE COMM. TOTALTRAILSART & DEVELOPMENT SRFREVENUESTaxes$- $- $ 70,000 $ 406,797 Intergovernmental revenues- - - 650,721 Charges for services- - - 1,072,669 Contributions- - - 60,000 Interest60 2,300 1,705 49,071 TOTAL REVENUES$60 $2,300 $ 71,705 $ 2,239,258 EXPENDITURESCurrent:General government$- $- $- $ 706,662 Economic environment- - 23,114 369,546 Capital outlay- 1,979 - 1,979 TOTAL EXPENDITURES$- $1,979 $ 23,114 $ 1,078,187 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$60 $321 $ 48,591 $ 1,161,071 OTHER FINANCING SOURCES (USES)Transfer (out)$- $- $- $ (971,000) TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $ (971,000) NET CHANGE IN FUND BALANCE$60 $321 $ 48,591 $ 190,071 FUND BALANCE JANUARY 1$3,183 $ 121,357 $ 63,778 $ 2,616,596 FUND BALANCE DECEMBER 31$3,243 $ 121,678 $ 112,369 $ 2,806,667 SPECIAL REVENUE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESOTHER GOVERNMENTAL FUNDSFor the Year Ended December 31, 2008Page 2 of 6Combining Statements & Schedules, 6-12 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonGENERAL 1989 UGO BOND TOTALDEBTREDEMPTIONDSFREVENUESTaxes$3,805,277 $ 501,576 $ 4,306,853 Interest52,637 5,756 58,393 TOTAL REVENUES$3,857,914 $ 507,332 $ 4,365,246 EXPENDITURESDebt service:Debt service:$1,599,551 $ 480,000 $ 2,079,551 Interest payment2,664,188 43,485 2,707,673 TOTAL EXPENDITURES$4,263,739 $ 523,485 $ 4,787,224 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$(405,825) $ (16,153) $ (421,978) OTHER FINANCING SOURCES (USES)Transfer in$300,000 $- $ 300,000 TOTAL OTHER FINANCE SOURCES (USES) $300,000 $- $ 300,000 NET CHANGE IN FUND BALANCE$(105,825) $ (16,153) $ (121,978) FUND BALANCE JANUARY 1$779,354 $ 613,560 $ 1,392,914 FUND BALANCE DECEMBER 31$673,529 $ 597,407 $ 1,270,936 Page 3 of 6COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEOTHER GOVERNMENTAL FUNDSFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-13 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonC.D. IMPACTFIRE IMPACTTRANS. IMPACT MUNICIPALMITIGATION MITIGATION MITIGATION FACILITIES CIPREVENUESTaxes$- $- $- $ 824,707 Licenses and permits- - - - Intergovernmental revenues- - - 266,806 Charges for services273,952 339,623 782,584 - Contributions- - - 75,000 Interest28,662 99,736 260,618 655,931 Miscellaneous revenues- - - 1,209,000 TOTAL REVENUES$ 302,614 $ 439,359 $ 1,043,202 $ 3,031,444 EXPENDITURESCurrent:Economic environment$- $- $- $67,248 Capital outlay- - - 6,596,162 Debt service:Interest payment- - - - TOTAL EXPENDITURES$- $- $- $ 6,663,410 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 302,614 $ 439,359 $ 1,043,202 $ (3,631,966) OTHER FINANCING SOURCES (USES)Transfer in$- $- $- $ 885,378 Transfer (out)(111,875) (300,000) (2,223,229) - TOTAL OTHER FINANCE SOURCES (USES)$ (111,875) $ (300,000) $ (2,223,229) $ 885,378 NET CHANGE IN FUND BALANCE$ 190,739 $ 139,359 $ (1,180,027) $ (2,746,588) FUND BALANCE JANUARY 1$ 1,498,187 $ 2,344,288 $ 4,756,974 $ 16,520,688 FUND BALANCE DECEMBER 31$ 1,688,926 $ 2,483,647 $ 3,576,947 $ 13,774,100 For the Year Ended December 31, 2008OTHER GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESPage 4 of 6Combining Statements & Schedules, 6-14 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonSO LK WA INFRA- TOTALSTRUCTURECPFREVENUESTaxes$ 131,034 $ 955,741 Licenses and permits268,000 268,000 Intergovernmental revenues500,000 766,806 Charges for services700,202 2,096,361 Contributions- 75,000 Interest34 1,044,981 Miscellaneous revenues- 1,209,000 TOTAL REVENUES$ 1,599,270 $ 6,415,889 EXPENDITURESCurrent:Economic environment$4,218 $ 71,466 Capital outlay1,912,775 8,508,937 Debt service:- Interest payment21,574 21,574 TOTAL EXPENDITURES$ 1,938,567 $ 8,601,977 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (339,297) $ (2,186,088) OTHER FINANCING SOURCES (USES)Transfer in$- $ 885,378 Transfer (out)- (2,635,104) TOTAL OTHER FINANCE SOURCES (USES)$- $ (1,749,726) NET CHANGE IN FUND BALANCE$ (339,297) $ (3,935,814) FUND BALANCE JANUARY 1$ 541,655 $ 25,661,792 FUND BALANCE DECEMBER 31$ 202,358 $ 21,725,978 Page 5 of 6For the Year Ended December 31, 2008OTHER GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESCombining Statements & Schedules, 6-15 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTAL OTHERTOTALTOTALTOTAL GOVERNMENTALSRFDSFCPFFUNDSREVENUESTaxes$406,797 $ 4,306,853 $955,741 $ 5,669,391 Licenses and permits- - 268,000 268,000 Intergovernmental revenues650,721 - 766,806 1,417,527 Charges for services1,072,669 - 2,096,361 3,169,030 Contributions60,000 - 75,000 135,000 Interest49,071 58,393 1,044,981 1,152,445 Miscellaneous revenues- - 1,209,000 1,209,000 TOTAL REVENUES$ 2,239,258 $ 4,365,246 $ 6,415,889 $ 13,020,393 EXPENDITURESCurrent:General government$706,662 $- $- $706,662 Economic environment369,546 - 71,466 441,012 Capital outlay1,979 - 8,508,937 8,510,916 Debt service:Principal payment- 2,079,551 - 2,079,551 Interest payment- 2,707,673 21,574 2,729,247 TOTAL EXPENDITURES$ 1,078,187 $ 4,787,224 $ 8,601,977 $ 14,467,388 EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 1,161,071 $(421,978) $ (2,186,088) $ (1,446,995) OTHER FINANCING SOURCES (USES)Transfer in$- $300,000 $885,378 $ 1,185,378 Transfer (out)(971,000) - (2,635,104) (3,606,104) TOTAL OTHER FINANCE SOURCES (USES) $(971,000) $300,000 $ (1,749,726) $ (2,420,726) NET CHANGE IN FUND BALANCE$190,071 $(121,978) $ (3,935,814) $ (3,867,721) FUND BALANCE JANUARY 1$ 2,616,596 $ 1,392,914 $ 25,661,792 $ 29,671,302 FUND BALANCE DECEMBER 31$ 2,806,667 $ 1,270,936 $ 21,725,978 $ 25,803,581 Page 6 of 6COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESOTHER GOVERNMENTAL FUNDSFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-16 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESIntergovernmental revenues$ 580,000 $ 580,000 $ 650,721 $70,721 Interest5,000 5,000 10,528 5,528 TOTAL REVENUES$ 585,000 $ 585,000 $ 661,249 $76,249 TOTAL EXPENDITURES$- $- $- $- EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 585,000 $ 585,000 $ 661,249 $76,249 OTHER FINANCING SOURCES (USES)Transfer (out)(585,000) (585,000) (585,000) - TOTAL OTHER FINANCE SOURCES (USES) $ (585,000) $ (585,000) $ (585,000) $- NET CHANGE IN FUND BALANCE$- $- $ 76,249 $76,249 FUND BALANCE JANUARY 1$ 476,327 $ 476,327 $ 476,327 $- FUND BALANCE DECEMBER 31$ 476,327 $ 476,327 $ 552,576 $76,249 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - ARTERIAL STREET FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-17 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 84,564 $ 84,564 $ 84,564 $- Charges for services1,153,139 1,153,139 1,072,669 (80,470) Interest- - 18,700 18,700 TOTAL REVENUES$ 1,237,703 $ 1,237,703 $ 1,175,933 $(61,770) EXPENDITURESCurrent:General government$ 760,836 $ 732,080 $ 706,662 $ (25,418) Debt service:Principal payment- 60,000 - (60,000) Interest payment- 3,600 - (3,600) TOTAL EXPENDITURES$ 760,836 $ 795,680 $ 706,662 $(89,018) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 476,867 $ 442,023 $ 469,271 $27,248 OTHER FINANCING SOURCES (USES)Transfer (out)$ (386,000) $ (386,000) $ (386,000) $- TOTAL OTHER FINANCE SOURCES (USES) $ (386,000) $ (386,000) $ (386,000) $- NET CHANGE IN FUND BALANCE$ 90,867 $ 56,023 $ 83,271 $27,248 FUND BALANCE JANUARY 1$ 1,155,935 $ 1,155,935 $ 1,155,935 $- FUND BALANCE DECEMBER 31$ 1,246,802 $ 1,211,958 $ 1,239,206 $27,248 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - LEASED CITY PROPERTIESFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-18 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 232,000 $ 232,000 $ 252,233 $20,233 Contributions65,000 65,000 60,000 (5,000) Interest10,000 10,000 7,276 (2,724) TOTAL REVENUES$ 307,000 $ 307,000 $ 319,509 $12,509 EXPENDITURESCurrent:Economic environment$ 267,000 $ 347,000 $ 346,432 $(568) TOTAL EXPENDITURES$ 267,000 $ 347,000 $ 346,432 $(568) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 40,000 $ (40,000) $ (26,923) $13,077 TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $- NET CHANGE IN FUND BALANCE$ 40,000 $ (40,000) $ (26,923) $13,077 FUND BALANCE JANUARY 1$ 348,016 $ 348,016 $ 348,016 $- FUND BALANCE DECEMBER 31$ 388,016 $ 308,016 $ 321,093 $13,077 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - HOTEL/MOTEL TAX FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-19 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESInterest$- $- $60 $60 TOTAL REVENUES$- $- $60 $60 TOTAL EXPENDITURES$- $- $- $- EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$- $- $60 $60 TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $- NET CHANGE IN FUND BALANCE$- $- $60 $60 FUND BALANCE JANUARY 1$ 3,183 $ 3,183 $ 3,183 $- FUND BALANCE DECEMBER 31$ 3,183 $ 3,183 $ 3,243 $60 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - PATHS AND TRAILS FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-20 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESInterest$- $- $ 8,502 $8,502 TOTAL REVENUES$- $- $ 8,502 $8,502 TOTAL EXPENDITURES$- $- $- $- EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$- $- $ 8,502 $8,502 TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $- NET CHANGE IN FUND BALANCE$- $- $ 8,502 $8,502 FUND BALANCE JANUARY 1$ 448,000 $ 448,000 $ 448,000 $- FUND BALANCE DECEMBER 31$ 448,000 $ 448,000 $ 456,502 $8,502 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - SPRINGBROOK WETLANDS BANK FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-21 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESInterest$- $- $ 2,300 $2,300 TOTAL REVENUES$- $- $ 2,300 $2,300 EXPENDITURESCurrent:Economic environment$- $ 141,698 $- $ (141,698) Capital outlay77,505 - 1,979 1,979 TOTAL EXPENDITURES$ 77,505 $ 141,698 $ 1,979 $ (139,719) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (77,505) $ (141,698) $321 $ 142,019 OTHER FINANCING SOURCES (USES)Transfer in$ 77,505 $ 77,505 $- $ (77,505) TOTAL OTHER FINANCE SOURCES (USES) $ 77,505 $ 77,505 $- $ (77,505) NET CHANGE IN FUND BALANCE$- $ (64,193) $321 $64,514 FUND BALANCE JANUARY 1$ 121,357 $ 121,357 $ 121,357 $- FUND BALANCE DECEMBER 31$ 121,357 $ 57,164 $ 121,678 $64,514 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - 1% FOR ART FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-22 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 35,000 $ 35,000 $ 70,000 $35,000 Interest2,400 2,400 1,705 (695) Miscellaneous revenues1,500 1,500 - (1,500) TOTAL REVENUES$ 38,900 $ 38,900 $ 71,705 $32,805 EXPENDITURESCurrent:Economic environment$ 74,778 $ 88,004 $ 23,114 $ (64,890) TOTAL EXPENDITURES$ 74,778 $ 88,004 $ 23,114 $ (64,890) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (35,878) $ (49,104) $ 48,591 $97,695 TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $- NET CHANGE IN FUND BALANCE$ (35,878) $ (49,104) $ 48,591 $97,695 FUND BALANCE JANUARY 1$ 63,778 $ 63,778 $ 63,778 $- FUND BALANCE DECEMBER 31$ 27,900 $ 14,674 $ 112,369 $97,695 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - CABLE COMMUNICATIONS DEVELOPMENT FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-23 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASISOVER (UNDER)REVENUESTaxes$ 3,868,600 $ 3,868,600 $ 3,805,277 $(63,323) Interest100,800 100,800 52,637 (48,163) TOTAL REVENUES$ 3,969,400 $ 3,969,400 $ 3,857,914 $(111,486) EXPENDITURESDebt service:- Principal payment$ 1,600,000 $ 1,600,000 $ 1,599,551 $(449) Interest payment2,669,400 2,669,400 2,664,188 (5,212) TOTAL EXPENDITURES$ 4,269,400 $ 4,269,400 $ 4,263,739 $(5,661) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES $ (300,000) $ (300,000) $ (405,825) $(105,825) OTHER FINANCING SOURCES (USES)Transfer in$ 300,000 $ 300,000 $ 300,000 $- TOTAL OTHER FINANCE SOURCES (USES) $ 300,000 $ 300,000 $ 300,000 $- NET CHANGE IN FUND BALANCE$- $- $ (105,825) $(105,825) FUND BALANCE JANUARY 1$ 774,772 $ 779,354 $ 779,354 $- FUND BALANCE DECEMBER 31$ 774,772 $ 779,354 $ 673,529 $(105,825) SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - GENERAL GOVERNMENTAL MISCELLANEOUS DEBT SERVICE FUNDFor the Year Ended December 31, 2008BUDGETED AMOUNTSCombining Statements & Schedules, 6-24 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 550,000 $ 550,000 $ 501,576 $ (48,424) Interest5,000 5,000 5,756 756 TOTAL REVENUES$ 555,000 $ 555,000 $ 507,332 $ (47,668) EXPENDITURESCurrent:Economic environment$ 488,250 $- $- $ - Debt service:Principal payment- 480,000 480,000 - Interest payment60,500 68,750 43,485 (25,265) TOTAL EXPENDITURES$ 548,750 $ 548,750 $ 523,485 $ (25,265) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ 6,250 $ 6,250 $ (16,153) $ (22,403) TOTAL OTHER FINANCE SOURCES (USES) $- $- $- $- NET CHANGE IN FUND BALANCE$ 6,250 $ 6,250 $ (16,153) $ (22,403) FUND BALANCE JANUARY 1$ 613,560 $ 613,560 $ 613,560 $- FUND BALANCE DECEMBER 31$ 619,810 $ 619,810 $ 597,407 $ (22,403) BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - 1989 UNLIMITED GENERAL OBLIGATION BOND REDEMPTION FUND (Coulon Park)For the Year Ended December 31, 2008Combining Statements & Schedules, 6-25 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARYDIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$ 2,150,000 $ 2,700,000 $ 824,707 $ (1,875,293) Intergovernmental revenues300,000 300,000 266,806 (33,194) Contributions- 75,000 75,000 - Interest750,000 750,000 655,931 (94,069) Miscellaneous revenues- 1,209,000 1,209,000 - TOTAL REVENUES$ 3,200,000 $ 5,034,000 $ 3,031,444 $ (2,002,556) EXPENDITURESCurrent:Economic environment$ 60,000 $ 78,780 $ 67,248 $ (11,532) Capital outlay13,648,000 18,979,005 6,596,162 (12,382,843) TOTAL EXPENDITURES$ 13,708,000 $ 19,057,785 $ 6,663,410 $ (12,394,375) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (10,508,000) $ (14,023,785) $ (3,631,966) $ 10,391,819 OTHER FINANCING SOURCES (USES)Transfer in$ 479,723 $ 1,379,418 $ 885,378 $ (494,040) TOTAL OTHER FINANCE SOURCES (USES)$ 479,723 $ 1,379,418 $ 885,378 $ (494,040) NET CHANGE IN FUND BALANCE$ (10,028,277) $ (12,644,367) $ (2,746,588) $ 9,897,779 FUND BALANCE JANUARY 1$ 16,520,688 $ 16,520,688 $ 16,520,688 $- FUND BALANCE DECEMBER 31$ 6,492,411 $ 3,876,321 $ 13,774,100 $ 9,897,779 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - MUNICIPAL FACILITIES CAPITAL IMPROVEMENT FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-26 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESLicenses and permits$ 1,800,000 $ 1,800,000 $ 1,956,165 $ 156,165 Intergovernmental revenues22,827,095 35,730,800 17,358,161 (18,372,639) TOTAL REVENUES$ 24,627,095 $ 37,530,800 $ 19,314,326 $ (18,216,474) EXPENDITURESCapital outlay$ 29,928,671 $ 46,353,715 $ 17,991,860 $ (28,361,855) TOTAL EXPENDITURES$ 29,928,671 $ 46,353,715 $ 17,991,860 $ (28,361,855) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (5,301,576) $ (8,822,915) $ 1,322,466 $ 10,145,381 OTHER FINANCING SOURCES (USES)Transfer in$ 2,608,229 $ 6,035,000 $ 2,868,229 $ (3,166,771) Transfer (out)- (75,000) (75,000) - Sale of capital assets - 19,908 19,908 TOTAL OTHER FINANCE SOURCES (USES) $ 2,608,229 $ 5,960,000 $ 2,813,137 $ (3,146,863) NET CHANGE IN FUND BALANCE$ (2,693,347) $ (2,862,915) $ 4,135,603 $ 6,998,518 FUND BALANCE JANUARY 1$ 4,355,803 $ 4,355,803 $ 4,355,803 $- FUND BALANCE DECEMBER 31$ 1,662,456 $ 1,492,888 $ 8,491,406 $ 6,998,518 BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - GENERAL GOVERNMENT CAPITAL IMPROVEMENT FUNDFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-27 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonACTUAL BUDGET TO GAAPBUDGETARY DIFFERENCES ORIGINALFINALBASIS OVER (UNDER)REVENUESTaxes$- $ 1,227,210 $ 131,034 $ (1,096,176) Licenses and permits- 268,000 268,000 - Intergovernmental revenues- 847,849 500,000 (347,849) Charges for services- 978,152 700,202 (277,950) Interest- - 34 34 TOTAL REVENUES$- $ 3,321,211 $ 1,599,270 $ (1,721,941) EXPENDITURESCurrent:Economic environment$- $ 56,000 $ 4,218 $ (51,782) Capital outlay- 2,166,000 1,912,775 (253,225) Debt service:Interest payment50,000 50,000 21,574 (28,426) TOTAL EXPENDITURES$ 50,000 $ 2,272,000 $ 1,938,567 $ (333,433) EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES$ (50,000) $ 1,049,211 $ (339,297) $ (1,388,508) OTHER FINANCING SOURCES (USES)Transfer (out)$- $ (24,000) $- $ (24,000) TOTAL OTHER FINANCE SOURCES (USES) $- $ (24,000) $- $24,000 NET CHANGE IN FUND BALANCE$ (50,000) $ 1,025,211 $ (339,297) $ (1,364,508) FUND BALANCE JANUARY 1$ 541,655 $ 541,655 $ 541,655 $- FUND BALANCE DECEMBER 31$ 491,655 $ 1,566,866 $ 202,358 $ (1,364,508) BUDGETED AMOUNTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESBUDGET TO ACTUAL - SOUTH LAKE WASHINGTON INFRASTRUCTUREFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-28 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonT0TALNON-MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDSASSETSCurrent assets:Cash & cash equivalents$ 545,204 $ 533,497 $1,078,701 Investments at fair value500,000 308,643 808,643 Receivables (net of allowances):Customer accounts9,694 30,700 40,394 Interest - investments17,978 52,735 70,713 Due from other funds5,269 - 5,269 Due from other governmental units50,468 - 50,468 Inventory of materials and supplies- 146,531 146,531 Total current assets$ 1,128,613 $ 1,072,106 $ 2,200,719 Restricted assets:Investments at fair value$- $ 441,358 $ 441,358 Total restricted assets$- $ 441,358 $ 441,358 Capital assets (net)$ 10,024,768 $ 9,059,240 $ 19,084,008 Deferred charges and other assets- 31,163 31,163 TOTAL ASSETS$ 11,153,381 $ 10,603,867 $21,757,248 COMBINING STATEMENT OF NET ASSETSNON-MAJOR ENTERPRISE FUNDSDecember 31, 2008Page 1 of 2Combining Statements & Schedules, 6-29 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonT0TALNON-MAJORAIRPORT GOLF COURSE ENTERPRISE FUNDSLIABILITIESCurrent liabilities:Accounts payable$ 160,974 $63,920 $224,894 Accrued employee benefits payable19,241 30,987 50,228 Accrued taxes payable24,663 11,387 36,050 Custodial Accounts- 125,149 125,149 Deferred revenue88,113 - 88,113 Operating leases payable- 31,187 31,187 Total current liabilities$ 292,991 $ 262,630 $555,621 Liabilities payable from restricted assets:Revenue bonds payable - current$- $ 310,000 $310,000 Total liabilities payable from restricted assets$- $ 310,000 $310,000 Long-term liabilities:Revenue bonds payable$- $ 2,200,000 $2,200,000 Unamortized discounts on revenue bonds- (212,188) (212,188) Accrued employee wages and benefits payable26,199 63,675 89,874 Operating leases payable- 23,993 23,993 Total long-term liabilities$26,199 $ 2,075,480 $2,101,679 TOTAL LIABILITIES$ 319,190 $ 2,648,110 $2,967,300 NET ASSETSInvestment in capital assets, net of related debt$ 10,024,768 $ 6,737,435 $ 16,762,203 Restricted441,358 441,358 Unrestricted809,423 776,964 1,586,387 TOTAL NET ASSETS$ 10,834,191 $ 7,955,757 $ 18,789,948 NON-MAJOR ENTERPRISE FUNDSCOMBINING STATEMENT OF NET ASSETSDecember 31, 2008Page 2 of 2Combining Statements & Schedules, 6-30 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonT0TALNON-MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDSOPERATING REVENUES:Charges for services$ 1,086,254 $ 2,262,841 $3,349,095 TOTAL OPERATING REVENUES$ 1,086,254 $ 2,262,841 $3,349,095 OPERATING EXPENSES:Operations and maintenance$ 671,011 $ 1,174,615 $1,845,626 Benefit payments135,813 283,871 419,684 Professional services48,452 - 48,452 Administrative and general356,166 360,824 716,990 Insurance52,020 8,500 60,520 Taxes129 - 129 Depreciation470,301 337,670 807,971 TOTAL OPERATING EXPENSES$ 1,733,892 $ 2,165,480 $3,899,372 OPERATING INCOME (LOSS)$ (647,638) $97,361 $(550,277) NON-OPERATING REVENUES(EXPENSES):Interest revenues$24,488 $48,028 $72,516 Gain (loss) on sale of capital assets- (6,749) (6,749) Other non-operating revenues(expenses)14,215 1,504 15,719 Interest expense- (134,594) (134,594) Amortization of debt discount and expense- (34,764) (34,764) NON-OPERATING REVENUE NET OF EXPENSES $38,703 $ (126,575) $(87,872) INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS$ (608,935) $ (29,214) $(638,149) Capital Contributions$ 179,292 $- $ 179,292 CHANGE IN NET ASSETS$ (429,643) $ (29,214) $(458,857) NET ASSETS, JANUARY 1$ 11,263,834 $ 7,984,971 $19,248,805 NET ASSETS, DECEMBER 31$ 10,834,191 $ 7,955,757 $18,789,948 ENTERPRISE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSNON - MAJOR ENTERPRISE FUNDSFor the Year Ended December 31, 2008BUSINESS-TYPE ACTIVITIESCombining Statements & Schedules, 6-31 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonT0TALNON-MAJOR AIRPORT GOLF COURSE ENTERPRISE FUNDSCASH FLOWS FROM OPERATING ACTIVITIES:Cash received for services$ 1,134,361 $ 2,287,543 $3,421,904 Cash paid to suppliers for goods & services(990,916) (1,604,659) (2,595,575) Cash paid to employees(131,755) (275,593) (407,348) Other operating receipts(38,684) - (38,684) Other non-operating receipts14,215 (139,839) (125,624) NET CASH PROVIDED (USED) BYOPERATING ACTIVITIES$ (12,779) $ 267,452 $254,673 NONCAPITAL FINANCING ACTIVITIES$- $- $- CASH FLOWS FROM CAPITALFINANCING ACTIVITIES:Acquisition & construction of capital assets$ (228,759) $(66,235) $(294,994) Principal payments on debt- (310,000) (310,000) Interest payments on debt- 3,098 3,098 NET CASH PROVIDED (USED) BYCAPITAL FINANCING ACTIVITIES$ (228,759) $ (373,137) $(601,896) CASH FLOWS FROM INVESTING ACTIVITIES:Interest on investments$12,955 $9,188 $22,143 NET CASH PROVIDED (USED) BYINVESTING ACTIVITIES$12,955 $9,188 $22,143 BUSINESS-TYPE ACTIVITIESENTERPRISE FUNDSSTATEMENT OF CASH FLOWSNON-MAJOR ENTERPRISE FUNDSFor the Year Ended December 31, 2008Page 1 of 2NET INCREASE (DECREASE) IN CASH &CASH EQUIVALENTS$ (228,583) $(96,497) $(325,080) CASH & CASH EQUIVALENTS, JANUARY 1$ 773,787 $ 629,994 $1,403,781 CASH , RESTRICTED CASH ,& CASH EQUIVALENTS, DECEMBER 31$ 545,204 $ 533,497 $1,078,701 Combining Statements & Schedules, 6-32 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTAL NON-MAJORAIRPORT GOLF COURSE ENTERPRISE FUNDSRECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED (USED)BY OPERATING ACTIVITIES:Operating income (loss)$ (647,638) $97,361 $(550,277) Adjustments to reconcile operating income(loss) to net cash provided (used)by operating activities:Depreciation & amortization ofdeferred charges$ 470,301 $ 337,670 $807,971 Other non-operating revenue14,215 (139,839) (125,624) (Increase) decrease inaccounts receivable(7,471) 26,023 18,552 (Increase) decrease in due fromother funds/governmental units(38,684) - (38,684) (Increase) decrease in inventory& prepaid items- (54,463) (54,463) Increase (decrease) in vouchersretainage payable- 14,636 14,636 Increase (decrease) in payables& other short-term liabilities136,862 (22,226) 114,636 Increase (decrease) in customer deposits- 12 12 Increase (decrease) in deferred revenues55,578 - 55,578 Increase (decrease) in accruedemployee leave benefits4,058 8,278 12,336 Total adjustments$ 634,859 $ 170,091 $804,950 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES$ (12,779) $ 267,452 $254,673 NONCASH INVESTING, CAPITAL, ANDFINANCING ACTIVITIESDepreciation $ 470,301 $ 337,670 $807,971 Net amort. bond prem. discount & bond issue costs- 34,764 34,764 Contributions of capital assets179,292 - 179,292 ENTERPRISE FUNDSBUSINESS-TYPE ACTIVITIESSTATEMENT OF CASH FLOWSNON-MAJOR ENTERPRISE FUNDSFor the Year Ended December 31, 2008Page 2 of 2Combining Statements & Schedules, 6-33 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTALEQUIPMENT INSURANCEINTERNAL RENTALFUNDSERVICE FUNDSASSETSCurrent assets:Cash & cash equivalents$ 2,311,623 $ 7,154,795 $9,466,418 Investments at fair value1,650,000 9,644,461 11,294,461 Receivables (net of allowances):Customer accounts3,286 13,403 16,689 Interest - investments172,474 600,454 772,928 Due from other governmental units7,377 - 7,377 Prepayments139,911 457,074 596,985 Total current assets$ 4,284,671 $ 17,870,187 $ 22,154,858 Property, plant, and equipment:Capital assets (net)$ 11,574,644 $- $ 11,574,644 Total property, plant, and equipment$ 11,574,644 $- $ 11,574,644 TOTAL ASSETS$ 15,859,315 $ 17,870,187 $ 33,729,502 COMBINING STATEMENT OF NET ASSETSINTERNAL SERVICE FUNDSDecember 31, 2008Page 1 of 2Combining Statements & Schedules, 6-34 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTALEQUIPMENT INSURANCEINTERNALRENTALFUNDSERVICE FUNDSLIABILITIESCurrent liabilities:Accounts payable$145,741 $337,088 $482,829 Due to other funds- 923 923 Accrued employee benefits payable32,925 19,946 52,871 Accrued taxes payable(405) - (405) Total current liabilities$178,261 $357,957 $536,218 Long-term liabilities:Accrued employee wages and benefits payable$192,682 $731,248 $923,930 Claims incurred but not reported- 2,926,675 2,926,675 Total long-term liabilities$192,682 $ 3,657,923 $3,850,605 TOTAL LIABILITIES$370,943 $ 4,015,880 $4,386,823 NET ASSETSInvestment in capital assets, Net of related debt$ 11,574,644 $- $11,574,644 Unrestricted3,913,728 13,854,307 17,768,035 TOTAL NET ASSETS$ 15,488,372 $ 13,854,307 $29,342,679 COMBINING STATEMENT OF NET ASSETSINTERNAL SERVICE FUNDSDecember 31, 2008Page 2 of 2Combining Statements & Schedules, 6-35 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTALEQUIPMENT INSURANCEINTERNAL RENTALFUNDSERVICE FUNDSOPERATING REVENUES:Charges for services$ 8,525,692 $ 2,653,273 $ 11,178,965 Other operating revenues- 11,498,439 11,498,439 TOTAL OPERATING REVENUES$8,525,692 $ 14,151,712 $22,677,404 OPERATING EXPENSES:Operations and maintenance$2,790,860 $239,649 $3,030,509 Benefit payments1,783,211 10,458,876 12,242,087 Professional services400,419 509,366 909,785 Administrative and general1,907,393 137,597 2,044,990 Insurance251,430 965,716 1,217,146 Depreciation517,357 - 517,357 TOTAL OPERATING EXPENSES$7,650,670 $ 12,311,204 $19,961,874 OPERATING INCOME (LOSS)$875,022 $1,840,508 $2,715,530 NON-OPERATING REVENUES (EXPENSES):Intergovernmental revenues$- $19,675 $19,675 Interest revenues182,726 565,535 748,261 Gain (loss) on sale of capital assets45,045 - 45,045 Other non-operating revenues (expenses)336,355 577,668 914,023 Interest expense(22,700) - (22,700) NON-OPERATING REVENUE NET OF EXPENSE$541,426 $1,162,878 $1,704,304 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS$1,416,448 $3,003,386 $4,419,834 Transfers in (out)$317,000 $(60,000) $257,000 CHANGE IN NET ASSETS$1,733,448 $2,943,386 $4,676,834 NET ASSETS, JANUARY 1$ 13,754,924 $ 10,910,921 $24,665,845 NET ASSETS, DECEMBER 31$ 15,488,372 $ 13,854,307 $29,342,679 COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSINTERNAL SERVICE FUNDSFor the Year Ended December 31, 2008Combining Statements & Schedules, 6-36 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTALEQUIPMENT INSURANCEINTERNAL RENTALFUNDSERVICE FUNDSCASH FLOWS FROM OPERATING ACTIVITIES:Cash received for services$ 8,524,299 $ 14,169,279 $ 22,693,578 Cash paid to suppliers for goods & services(3,816,789) 677,953 (3,138,836) Cash paid to employees(1,733,400) (10,404,518) (12,137,918) Other operating receipts(1,352,048) (2,338,863) (3,690,911) Other non-operating receipts(232,432) - (232,432) NET CASH PROVIDED (USED) BYOPERATING ACTIVITIES$1,389,630 $2,103,851 $3,493,481 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESTransfers from other funds$- $(60,000) $(60,000) NET CASH PROVIDED (USED) BYNONCAPITAL FINANCING ACTIVITIES$- $(60,000) $(60,000) CASH FLOWS FROM CAPITALFINANCING ACTIVITIES:Acquisition & construction of capital assets$ (4,100,399) $- $ (4,100,399) NET CASH PROVIDED (USED) BYCAPITAL FINANCING ACTIVITIES$ (4,100,399) $- $ (4,100,399) CASH FLOWS FROM INVESTING ACTIVITIES:Payments for investments$1,853,828 $1,586,898 $3,440,726 Interest on investments80,953 232,004 312,957 NET CASH PROVIDED (USED) BYINVESTING ACTIVITIES$1,934,781 $1,818,902 $3,753,683 NET INCREASE (DECREASE) IN CASH &CASH EQUIVALENTS$(775,988) $3,862,753 $ 3,086,765 CASH & CASH EQUIVALENTS, JANUARY 1$3,087,611 $3,292,042 $6,379,653 CASH & CASH EQUIVALENTS, DECEMBER 31 $2,311,623 $7,154,795 $9,466,418 COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDSFor the Year Ended December 31, 2008Page 1 of 2Combining Statements & Schedules, 6-37 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTOTAL EQUIPMENT INSURANCEINTERNALRENTALFUNDSERVICE FUNDSRECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED (USED)BY OPERATING ACTIVITIES:Operating income (loss)$ 875,022 $ 1,840,508 $2,715,530 Adjustments to reconcile operating income(loss) to net cash provided (used)by operating activities:Depreciation & amortization ofdeferred charges517,357 - 517,357 Other non-operating revenue358,700 597,343 956,043 (Increase) decrease inaccounts receivable(1,393) 17,567 16,174 (Increase) decrease in due fromother funds/governmental units4,953 - 4,953 (Increase) decrease in inventory& prepaid items(11,509) (209,650) (221,159) Increase (decrease) in vouchersretainage payable(410,080) (406,848) (816,928) Increase (decrease) in payables& other short-term liabilities(4,740) 923 (3,817) Increase (decrease) in accruedemployee leave benefits61,320 264,008 325,328 Total adjustments$ 514,608 $ 263,343 $777,951 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES$ 1,389,630 $ 2,103,851 $3,493,481 NONCASH INVESTING, CAPITAL, ANDFINANCING ACTIVITIESDepreciation & amortization 517,357 - 517,357 For the Year Ended December 31, 2008COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDSPage 2 of 2Combining Statements & Schedules, 6-38 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonBEGINNINGENDING BALANCEDEBITS CREDITSBALANCEASSETSCash$ 728,049 $592,653 480,236 $840,466 TOTAL ASSETS$ 728,049 $592,653 $480,236 $840,466 LIABILITIESVouchers & contacts payable$62,166 $453,863 423,633 $31,936 Deposits payable665,883 442,518 585,165 808,530 TOTAL LIABILITIES$ 728,049 $896,381 $ 1,008,798 $840,466 STATEMENT OF CHANGES IN ASSETS AND LIABILITIESAGENCY FUND - SPECIAL DEPOSITFor the Year Ended December 31, 2008Page 1 of 1Combining Statements & Schedules, 6-39 2008 Comprehensive Annual Financial Report City of Renton, Washington , - This page intentionally left blank. 2007 Comprehensive Annual Financial Report City of Renton, Washington Statistical Section, 7-1 STATISTICAL SECTION December 31, 2008 Presentations included in the Statistical Section of the Comprehensive Annual Financial Report (CAFR) provide users detailed information as a context for understanding what the information in the financial statements, note disclosures and the supporting schedules say about the government’s overall financial health. The section is divided into five categories based on the following: FINANCIAL TRENDS These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time. REVENUE CAPACITY These schedules present information to help the reader assess the government’s most significant local revenue source – property tax. DEBT CAPACITY These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. DEMOGRAPHIC AND ECONOMIC INFORMATION These schedules offer demographic and economic indicators to help the reader understand the environment within which the government’s financial activities take place. OPERATING INFORMATION These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs. City of Renton, Washington 200 Comprehensive Annual Financial Report This page intentionally left blank. 2008 Comprehensive Annual Financial ReportCity of Renton, Washington 2004 2005 200620072008Governmental activitiesInvested in capital assets, net of related debt 195,282,055$ 203,297,293$ 209,964,556$ 232,714,563$ 353,197,782$ Restricted21,460,395 28,578,305 42,748,022 32,648,993 33,294,987 Unrestricted25,746,196 29,272,573 29,340,290 32,075,613 34,160,010 Total governmental activities net assets242,488,646$ 261,148,171$ 282,052,868$ 297,439,169$ 420,652,779$ Business-type activitiesInvested in capital assets, net of related debt 163,891,546$ 171,827,746$ 181,515,939$ 188,518,151$ 202,255,997$ Restricted3,555,690 3,555,690 25,097,253 3,586,667 4,171,525 Unrestricted21,612,156 21,541,563 19,357,695 17,973,237 17,430,207 Total business-type activities net assets189,059,392$ 196,924,999$ 225,970,887$ 210,078,055$ 223,857,729$ Primary governmentInvested in capital assets, net of related debt 359,173,601$ 375,125,039$ 391,480,495$ 421,232,714$ 555,453,779$ Restricted25,016,085 32,133,995 67,845,275 36,235,660 37,466,512$ Unrestricted47,358,352 50,814,136 48,697,985 50,048,850 51,590,217$ Total primary government net assets431,548,038$ 458,073,170$ 508,023,755$ 507,517,224$ 644,510,508$ 1First Year of Net Assets by ComponentSource : City of Renton, Finance and IS DepartmentTABLE 1NET ASSETS BY COMPONENTLAST FIVE FISCAL YEARS(Accrual basis of accounting)FISCAL YEARStatistical Section, 7-3 2008 Comprehensive Annual Financial ReportCity of Renton, Washington 2004 2005 20062007 2008 EXPENSESGovernment activities:General government 22,144,567$ 21,137,856$ 19,977,086$ 29,112,970$ 12,010,422$ Judicial1,340,655 1,380,816 1,434,134 1,845,031 1,761,665 Security of persons and property28,647,443 29,496,791 30,749,762 36,213,120 46,289,454 Physical environment2,278,445 2,208,340 2,618,832 2,749,417 3,333,471 Transportation6,797,356 4,183,880 15,798,138 11,237,287 13,675,581 Economic development5,519,929 5,899,796 6,372,118 6,880,687 6,823,426 Mental and physical health228,966 300,171 295,072 301,495 325,066 Culture and recreation10,303,074 9,744,692 9,695,924 11,036,931 17,025,800 Interest on long-term debt1,627,581 1,710,346 1,772,370 2,594,784 2,663,436 Total governmental activities expenses78,888,016$ 76,062,688$ 88,713,436$ 101,971,722$ 103,908,321$ Business-type activities:Water23,347,678$ 25,884,227$ 27,220,132$ 28,657,468$ 32,738,366$ Airport936,305 1,226,810 1,196,363 1,396,054 1,733,894 Solid Waste8,558,441 9,327,525 9,706,016 10,606,560 11,518,047 Golf1,933,113 2,132,077 2,056,874 2,277,454 2,334,838 Total business-type activities net assets34,775,537$ 38,570,639$ 40,179,385$ 42,937,536$ 48,325,145$ Total primary government expenses113,663,553$ 114,633,327$ 128,892,821$ 144,909,258$ 152,233,466$ PROGRAM REVENUESSource : City of Renton, Finance & IS DepartmentCharges for services:General government charges15,579,366$ 17,525,244$ 21,852,465$ 23,163,645$ 5,614,638$ Judicial 1,531,773 697,883 831,485 1,169,581 2,420,913 Security of persons and property200,149 247,235 517,151 591,586 550,773 Physical environment837,027894,750400,798999,484864,581TABLE 2CHANGES IN NET ASSETS LAST FIVE FISCAL YEARS (Accrual basis of accounting)Page 1 of 2FISCAL YEARPhysical environment 837,027 894,750 400,798 999,484 864,581 Transportation 1,916,862 1,660,698 1,628,154 1,432,215 2,165,538 Economic environment4,236,596 4,516,899 4,368,399 7,857,186 4,236,983 Culture and recreation 1,507,387 1,558,458 1,742,071 1,649,960 1,739,055 Operating grants and contributions6,213,791 4,979,601 4,596,836 5,265,737 9,570,931 Capital grants and contributions1,745,718 1,227,503 5,909,870 4,940,471 18,109,124 Total governmental activities program revenues33,768,669$ 33,308,271$ 41,847,229$ 47,069,865$ 45,272,536$ Business-type activities:Charges for services:Business-type charges38,917,114$ 40,029,830$ 40,056,079$ 45,403,349$ 44,651,684$ Operating grants and contributions112,616 196,974 77,688 243,537 264,784 Capital grants and contributions6,583,241 5,101,699 6,317,203 1,761,802 6,888,975 Total business-type activities program revenues45,612,971$ 45,328,503$ 46,450,970$ 47,408,688$ 51,805,443$ Total primary government program revenues79,381,640$ 78,636,774$ 88,298,199$ 94,478,553$ 97,077,979$ Net (expense)/revenueGovernmental activities(45,119,347)$ (42,754,417)$ (46,866,207)$ (54,901,857)$ (58,635,785)$ Business-type activities10,837,434 6,757,864 6,271,585 4,471,152 3,480,298 Total primary government net expense(34,281,913)$ (35,996,553)$ (40,594,622)$ (50,430,705)$ (55,155,487)$ Statistical Section, 7-4 2008 Comprehensive Annual Financial ReportCity of Renton, Washington 2004 2005 200620072008GENERAL REVENUES AND OTHER CHANGESIN NET ASSETSGovernmental activities:TaxesProperty taxes 19,578,390$ 21,523,818$ 23,600,131$ 23,106,578$ 29,381,036$ Timber taxes- Retail sales taxes18,281,949 18,910,823 20,869,595 22,749,831 23,190,076 Business taxes9,957,129 10,643,068 11,219,303 11,962,879 14,945,173 Excise taxes6,751,264 6,938,265 7,718,945 8,236,876 4,362,945 Penalties and interest6,048 49 3,799 33,949 6,477 Investment earnings1,291,669 1,449,001 3,251,975 3,465,517 2,419,260 Miscellaneous4,346,619 1,958,217 689,243 1,218,889 2,104,133 Transfers(10,304) (9,300) (68,446) - 110,000 Total governmental activities60,202,764$ 61,413,941$ 67,284,545$ 70,774,519$ 76,519,100$ Business-type activities:Investment earnings270,605$ 458,797$ 881,486$ 1,041,576$ 1,120,342$ Miscellaneous119,455 639,646 282,808 135,986 85,493 Transfers10,304 9,300 68,446 - (110,000) Total business-type activities400,364$ 1,107,743$ 1,232,740$ 1,177,562$ 1,095,835$ Total primary government60,603,128$ 62,521,684$ 68,517,285$ 71,952,081$ 77,614,935$ CHANGES IN NET ASSETSGovernmental activities15,083,417$ 18,659,524$ 20,418,338$ 15,872,662$ 17,883,315$ Business-type activities11,237,798 7,865,607 7,504,325 5,648,714 4,576,133 Total primary government26,321,215$ 26,525,131$ 27,922,663$ 21,521,376$ 22,459,448$ FISCAL YEARTABLE 2CHANGES IN NET ASSETS LAST FIVE FISCAL YEARS (Accrual basis of accounting)Page 2 of 21First Year of Changes in Net AssetsSource: City of Renton, Finance and IS DepartmentStatistical Section, 7-5 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003Reserved83,000$ 311,673$ 318,053$ 83,000$ 83,000$ TABLE 3FUND BALANCE OF GOVERNMENT FUNDSLAST TEN FISCAL YEARS(Accrual basis of accounting)Page 1 of 2FISCAL YEAR$-$2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Unreserved5,381,222 8,025,332 6,428,315 3,920,136 6,758,364 Total general fund5,464,222$ 8,337,005$ 6,746,368$ 4,003,136$ 6,841,364$ All other governmental fundsReserved-$ -$ 920,000$ 1,260,000$ 880,000$ Unreserved, reported in:Special revenue funds2,890,947 3,898,265 4,938,021 3,361,529 3,985,917 Debt service funds2,987,015 2,653,495 2,546,129 2,030,335 1,916,243 Capital project funds21,682,591 23,570,741 29,133,681 33,742,638 22,628,512 Total all other governmental funds 27,560,553$ 30,122,501$ 37,537,831$ 40,394,502$ 29,410,672$ Source : City of Renton, Finance and IS Department$-$2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Statistical Section, 7-6 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008General fundReserved 108,742$ 8,000$ 8,000$ 8,000$ 8,000$ TABLE 3FUND BALANCE OF GOVERNMENT FUNDSLAST TEN FISCAL YEARS(Accrual basis of accounting)Page 2 of 2FISCAL YEAR$-$10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008All other governmental fundsAll other governmental fundsUnreserved8,603,003 9,189,871 10,737,097 16,474,384 13,509,097 Total general fund8,711,745$ 9,197,871$ 10,745,097$ 16,482,384$ 13,517,097$ All other governmental fundsReserved500,000$ 240,000$ 63,900$ 975,000$ 1,000,000$ Unreserved, reported in:Special revenue funds3,238,246 2,929,692 4,243,189 2,616,596 2,806,667 Debt service funds1,486,894 2,752,445 3,068,587 1,392,915 1,270,936 Capital project funds26,202,437 27,890,457 42,152,437 29,057,397 29,217,384 Total all other governmental funds 31,427,577$ 33,812,594$ 49,528,113$ 34,041,908$ 34,294,987$ $-$10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008All other governmental fundsAll other governmental fundsStatistical Section, 7-7 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003REVENUESTaxes 44,397,793$ 47,827,013$ 50,218,530$ 49,901,849$ 53,722,322$ Licenses and permits3,780,303 4,562,892 4,065,518 4,229,501 4,226,883 Intergovernmental5,637,817 6,793,084 6,129,103 6,212,359 4,533,544 Charges for services7,157,860 7,805,409 7,301,538 7,777,778 6,016,704 Fines831,327 937,689 993,093 1,043,199 1,055,564 Interfund revenues- - - - 3,482,110 Special assessments689,931 352,648 333,056 312,908 295,673 Contributions91,383 64,092 191,877 118,103 255,102 Interest2,129,455 2,307,978 2,583,931 1,073,538 1,081,420 Miscellaneous682,625 727,465 1,231,574 1,198,846 40,314 Total revenues65,398,494$ 71,378,270$ 73,048,220$ 71,868,081$ 74,709,636$ EXPENDITURESGeneral government10,058,875$ 10,858,538$ 11,193,462$ 12,523,577$ 13,283,955$ Security of persons and property21,300,403 22,889,748 23,569,864 24,924,380 26,029,354 Physical environment1,892,541 1,769,642 1,878,956 1,898,665 2,015,562 Transportation10,706,833 10,330,362 13,885,329 10,622,373 4,461,387 Economic and physical development3,814,967 4,337,239 4,484,526 4,479,582 4,613,587 Mental and physical health8,486 8,599 6,756 11,445 10,368 Source : City of Renton, Finance & IS Depa6,166,358 6,606,662 7,263,056 7,382,069 7,585,936 Capital outlay11,002,950 7,450,837 5,359,801 10,532,479 21,089,534 Debt servicePrincipal2,707,994 2,481,026 2,086,447 1,849,269 1,417,042 Interest1,345,588 1,205,281 882,748 1,382,717 1,833,102 Total expenditures69,004,995$ 67,937,934$ 70,610,945$ 75,606,556$ 82,339,827$ Excess of revenuesover (under) expenditures(3,606,501)$ 3,440,336$ 2,437,275$ (3,738,475)$ (7,630,191)$ OTHER FINANCING SOURCES (USES)Transfers in4,670,101$ 3,694,498$ 6,850,944$ 9,441,451$ 3,511,700$ Transfers out(4,587,778) (3,662,809) (8,873,294) (10,009,962) (3,551,700) Other financing sources (uses)Proceeds of long-term debt38,990 - 6,023,484 3,879,038 - Interfund loan proceeds448,000 823,000 363,800 860,000 - Interfund loan repayments(448,000) (823,000) (363,800) (860,000) - Funds remitted to bond trusteeCapital leases- - - - - Sale of capital assets563,283 1,403,688 61,685 104,825 171,249 Total other financingsources (uses)684,596$ 1,435,377$ 4,062,819$ 3,415,352$ 131,249$ Net change in fund balances(2,921,905)$ 4,875,713$ 6,500,094$ (323,123)$ (7,498,942)$ Debt service as a percentage of noncapitalexpenditures6.99%6.09%4.55%4.97%5.31%Source : City of Renton, Finance and IS DepartmentTABLE 4CHANGES IN FUND BALANCES OF GOVERNMENT FUNDSLAST TEN FISCAL YEARS(Accrual Basis of Accounting)Page 1 of 2FISCAL YEARStatistical Section, 7-8 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008REVENUESTaxes 55,344,506$ $58,794,081 $64,005,567 66,698,876$ 72,514,388$ Licenses and permits4,329,086 4,686,608 4,962,507 5,828,230 4,975,585 Intergovernmental7,570,570 5,687,169 9,769,225 9,791,830 27,549,621 Charges for services6,593,153 5,563,289 6,543,289 10,048,879 7,145,950 Fines1,008,984 731,286 906,685 1,150,079 2,002,854 Interfund revenues3,638,574 3,796,042 2,843,147 3,352,411 3,072,526 Special assessments20,852 23,340 511,932 51,723 - Contributions249,938 317,600 214,387 353,582 135,000 Interest1,059,886 1,060,353 2,570,682 2,486,889 1,740,035 Miscellaneous122,799 569,881 223,908 86,322 1,273,359 Total revenues79,938,348$ 81,229,649$ 92,551,329$ 99,848,821$ 120,409,318$ EXPENDITURESGeneral government13,660,095$ 14,382,634$ 13,972,592$ 14,597,355$ 15,094,140$ Judicial1,761,665 Security of persons and property27,462,613 29,031,626 31,157,303 35,583,500 45,530,208 Physical environment2,201,777 2,190,228 2,609,452 2,764,563 3,123,883 Transportation4,615,345 4,711,924 5,097,449 6,403,358 6,332,006 Economic and physical development 4,947,080 5,123,024 5,519,219 5,896,589 6,673,681 Mental and physical health11,723 12,700 9,231 13,818 16,459 Culture and recreation8,563,967 8,876,250 9,933,854 10,830,224 11,119,073 Capital outlay13,246,669 11,438,104 21,117,525 29,320,023 28,520,453 Debt servicePrincipal1,477,579 1,375,738 1,503,350 1,565,904 2,079,551 Interest1,763,893 1,713,525 2,129,656 2,646,623 2,729,247 Total expenditures77,950,741$ 78,855,753$ 93,049,631$ 109,621,957$ 122,980,366$ Excess of revenuesover (under) expenditures1,987,607$ 2,373,896$ (498,302)$ (9,773,136)$ (2,571,048)$ OTHER FINANCING SOURCES (USES)Transfers in6,563,978$ 5,476,360$ 2,962,895$ 5,782,988$ 4,053,607$ Transfers out(7,764,278) (5,443,660) (3,705,341) (5,782,988) (4,200,607) Other financing sources (uses)Proceeds of long-term debt- - 18,490,029 Interfund loan proceeds- - Interfund loan repayments- - Funds remitted to bond trustee- Capital leases- - Sale of capital assets117,328 464,547 13,464 24,218 20,643 Total other financingsources (uses)(1,082,972)$ 497,247$ 17,761,047$ 24,218$ (126,357)$ Net change in fund balances904,635$ 2,871,143$ 17,262,745$ (9,748,918)$ (2,697,405)$ Debt service as a percentage of noncapitalexpenditures5.01%4.58%5.05%5.25%5.09%TABLE 4CHANGES IN FUND BALANCES OF GOVERNMENT FUNDSLAST TEN FISCAL YEARS(Accrual Basis of Accounting)Page 2 of 2FISCAL YEARStatistical Section, 7-9 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPENALTY /ADMISSION /INTERESTFISCAL PROPERTY TIMBER SALES UTILITY EXCISE DELINQUENTYEARTAXTAXTAXTAXTAXTAXTOTAL1999 15,659,424$ N/A 15,282,981$ 8,289,865$ 4,831,792$ 1,217$ 44,065,280$ 2000 16,397,638 N/A 16,585,478 9,788,167 4,724,682 8,462 47,504,428 2001 16,794,636 N/A 16,724,787 11,105,722 5,066,122 1,939 49,693,206 200218 373 237N/A16 431 4569 798 2604 711 4464 40449 318 803TABLE 5GENERAL GOVERNMENT TAX REVENUE BY SOURCELAST TEN FISCAL YEARS(Modified Accrual Basis of Accounting)$0 $10 $20 $30 $40 $50 $60 $70 $80 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008MillionsTAX REVENUES BY SOURCE1999 - 2008Delinquent TaxExcise TaxAdmission/Utility TaxSales TaxTimber TaxProperty Tax200218,373,237 N/A16,431,456 9,798,260 4,711,446 4,404 49,318,803 2003 19,587,986 N/A 17,334,831 10,895,131 5,449,877 5,415 53,273,240 2004 19,886,805 N/A18,281,949 9,957,130 6,751,265 6,048 54,883,197 2005 21,826,229 N/A18,910,822 10,643,068 6,938,264 49 58,318,433 2006 23,600,131 N/A 20,869,596 11,219,302 7,718,945 3,799 63,411,773 2007 23,106,578 N/A 22,749,831 11,962,879 8,236,876 33,949 66,090,113 2008 29,381,036 - 23,190,076 14,945,173 4,362,945 6,477 71,885,707 Source: City of Renton, Finance and IS Department$0 $10 $20 $30 $40 $50 $60 $70 $80 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008MillionsTAX REVENUES BY SOURCE1999 - 2008Delinquent TaxExcise TaxAdmission/Utility TaxSales TaxTimber TaxProperty TaxStatistical Section, 7-10 2008 Comprehensive Annual Financial ReportCity of Renton, Washington% OF TOTAL% OF TOTALTAXABLE1TAXABLETAXABLETAXABLEASSESSEDASSESSEDASSESSEDASSESSEDTAXPAYERVALUERANKVALUEVALUERANKVALUEBoeing842,430,440$ 1 6.40%761,498,607$ 1 17.88%Paccar111,316,800 2 0.85%99,854,551 2 2.34%Puget Sound Energy-Elec/Gas98,478,828 3 0.75% 87,316,949 3 2.05%AMB Property Corp.61,191,200 4 0.46%Transwestern Harvest Lakeshore55,735,200 5 0.42%Providence Health 53,706,700 6 0.41%Fred Meyer Stores Inc51,138,403 7 0.39% 15,858,400 9 0.37%Axis Grand Holdings44,625,000 8 0.34%(formerly HSC Real Estate Inc.)BRE Properties40,500,000 9 0.31%ECI Two WTC LLC (WTCTPI LLC)37,433,000 10 0.28%University Street Properties 45,485,400 4 1.07%Renton Building 1-743,782,400 5 1.03%US West30,407,479 6 0.71%Renton Village Association17,781,100 7 0.42%Bay Apartment Communities17,500,000 8 0.41%Rosche One Int14,152,000 10 0.33%All Others11,768,638,214 89.39% 3,124,863,864 73.38%Total Assessed Valuation13,165,193,785$ 100.00% 4,258,500,750$ 100.00%Source: 1King County Department of Assessments TABLE 6PRINCIPAL PROPERTY TAX PAYERSDecember 31, 200820081999Statistical Section, 7-11 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonFISCALYEARPERSONAL PROPERTYENDEDRESIDENTIAL COMMERCIALDECEMBER 31PROPERTYPROPERTYOTHER2TABLE 7ASSESSED VALUE OF TAXABLE PROPERTYLAST TEN FISCAL YEARSPage 1 of 2REAL PROPERTY 1-2,000 4,000 6,000 8,000 10,000 12,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Assessed Value (millions)YearTotal Taxable Assessed ValueTaxable Assessed ValueDECEMBER 31PROPERTYPROPERTYOTHER 219993,543,075,457$ $ N/A715,425,293$ 20002,958,443,598 2,368,630,142 714,803,819 20011,703,991,595 2,613,181,185 745,490,732 20022,810,986,787 2,008,043,209 774,850,492 20032,314,794,930 2,921,180,100 747,879,276 20042,598,762,769 3,057,577,700 716,313,413 20052,823,407,473 3,217,655,000 656,709,434 20063,734,771,858 3,415,317,348 636,713,076 20074,201,702,500 3,853,709,290 754,326,325 20084,991,068,500 4,292,739,750 828,746,994 12000 is the first year when breakdown is available. Source is from TaxTools 4.1 Tax Database 2,4Source is from King County Department of Assessments 3The tax exempt real property value is not available for the last ten years-2,000 4,000 6,000 8,000 10,000 12,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Assessed Value (millions)YearTotal Taxable Assessed ValueTaxable Assessed ValueStatistical Section, 7-12 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonFISCALTOTALYEAR PERSONAL PROPERTY TOTALDIRECTENDEDTAX EXEMPT ASSESSEDTAXDECEMBER 31REAL PROPERTY3VALUERATE4TABLE 7ASSESSED VALUE OF TAXABLE PROPERTYLAST TEN FISCAL YEARSPage 2 of 2-0.500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008RateYearDirect Tax RateDirect Tax RateDECEMBER 31REAL PROPERTY 3VALUERATE 41999N/A 4,258,500,750$ 3.747 2000N/A 6,041,877,559 3.684 2001N/A 5,062,663,512 3.375 2002N/A 5,593,880,488 3.354 2003N/A 5,983,854,306 3.277 2004N/A 6,372,653,882 3.327 2005N/A 6,697,771,907 3.227 2006N/A 7,786,802,282 3.116 2007N/A 8,809,738,115 2.884 2008N/A 10,112,555,244 2.624 -0.500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008RateYearDirect Tax RateDirect Tax RateStatistical Section, 7-13 2008 Comprehensive Annual Financial ReportCity of Renton, Washington TABLE 8PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS CITY OF RENTONCOUNTYLAST TEN FISCAL YEARSPage 1 of 2DIRECT RATESOVERLAPPING RATES-0.50000 1.00000 1.50000 2.00000 2.50000 3.00000 3.50000 4.00000 YearDirect Property Tax RatesDebt TotalDebtTotalOperating Service City Operating Service CountyYearMillageMillageMillageMillageMillageMillage1999 3.42726 0.31981 3.74707 1.51957 0.25428 1.77385 2000 3.39877 0.28488 3.68365 1.39802 0.29149 1.68951 2001 3.27385 0.10078 3.37463 1.47266 0.26981 1.74247 2002 3.26036 0.09397 3.35433 1.19751 0.25198 1.44949 2003 3.18871 0.08865 3.27736 1.15386 0.19562 1.34948 2004 3.16022 0.08322 3.24344 1.18279 0.24867 1.43146 2005 3.14843 0.07861 3.22704 1.15665 0.22564 1.38229 2006 3.04482 0.07088 3.11570 1.09915 0.22954 1.32869 2007 2.82148 0.06252 2.88400 1.08814 0.20142 1.28956 2008 2.57052 0.05330 2.62382 1.04278 0.16492 1.20770 Source: King County Codes and Levies* Special Districts include Emergency Medical Services, Port and Hospital Districts-0.50000 1.00000 1.50000 2.00000 2.50000 3.00000 3.50000 4.00000 YearDirect Property Tax RatesStatistical Section, 7-14 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTotalTABLE 8PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS SCHOOL DISTRICTLAST TEN FISCAL YEARSPage 2 of 2OVERLAPPING RATES-1.00000 2.00000 3.00000 4.00000 5.00000 6.00000 7.00000 MillageYearOverlapping Property Tax RatesDebtTotalTotal Direct &Fiscal Special Operating Service School Overlapping OverlappingYearDistricts *MillageMillageMillageRatesRates1999 0.68252 1.87903 1.90387 3.78290 6.23927 9.98634 2000 0.60714 1.85286 1.80111 3.65397 5.95062 9.63427 2001 0.53526 1.74147 1.62522 3.36669 5.64442 9.01905 2002 0.53599 1.63516 1.47772 3.11288 5.09836 8.45269 2003 0.59292 1.62358 1.36333 2.98691 4.92931 8.20667 2004 0.58319 1.60492 1.88086 3.48578 5.50043 8.74387 2005 0.57542 1.62332 2.36918 3.99250 5.95021 9.17725 2006 1.04312 1.53290 2.42680 3.95970 6.33151 9.44721 2007 0.99431 1.40073 2.04586 3.44659 5.73046 8.61446 2008 1.03213 1.26082 1.36572 2.62654 4.86637 7.49019 -1.00000 2.00000 3.00000 4.00000 5.00000 6.00000 7.00000 MillageYearOverlapping Property Tax RatesStatistical Section, 7-15 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonFISCALYEARTOTAL TAXENDEDLEVY FORDECEMBER 31 FISCAL YEAR AMOUNT% OF LEVYTABLE 9PROPERTY TAX LEVIES AND COLLECTIONSLAST TEN FISCAL YEARSPage 1 of 2COLLECTED WITHIN THE1FISCAL YEAR OF THE LEVY$-$5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Levies vs CollectionsTOTAL TAXTOTAL COLLECTIONS TO DATE199915,850,628$ 15,595,427$ 98.4%200016,633,388 16,337,790 98.2%200116,967,683 16,677,882 98.3%200218,581,814 18,285,908 98.4%200319,486,858 19,149,258 98.3%200420,451,011 20,184,238 98.7%200521,654,069 21,358,689 98.6%200622,796,225 22,339,299 98.0%200724,049,060 23,585,143 98.1%200827,188,522 26,722,301 98.3%Sources: 1 Annual Tax Receivable Summary2 2007 Annual Property Tax Reports from King County $-$5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Levies vs CollectionsTOTAL TAXTOTAL COLLECTIONS TO DATEStatistical Section, 7-16 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonFISCALYEARCOLLECTIONS 2 ENDED IN SUBSEQUENT DECEMBER 31YEARSAMOUNT% OF LEVYTABLE 9PROPERTY TAX LEVIES AND COLLECTIONSLAST TEN FISCAL YEARSPage 2 of 2TOTAL COLLECTIONS TO DATE$-$5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Property Tax CollectionsCollections within fiscal yrCollections in subsequent years1999254,790$ 15,850,217$ 100.0%2000291,580 16,629,370 100.0%2001282,509 16,960,391 100.0%2002281,900 18,567,808 99.9%2003332,060 19,481,318 100.0%2004234,434 20,418,671 99.8%2005240,042 21,598,731 99.7%2006367,051 22,706,349 99.6%2007362,339 23,947,482 99.6%200826,722,301 98.3%$-$5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Property Tax CollectionsCollections within fiscal yrCollections in subsequent yearsStatistical Section, 7-17 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003FUNCTIONFurniture $1,245,207 $1,564,002 $1,920,734 $1,623,906 $1,758,082Electronics and AppliancesPage 1 of 2 FISCAL YEARTABLE 10SALES TAX COLLECTIONS BY SECTORLAST TEN FISCAL YEARS$0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,0001999 2000 2001 2002 2003Sales Tax Collections by Sector1999-2003RetailConstruction Manufacturing Transportation WholesaleAutomotive ServicesMiscellaneousElectronics and AppliancesGeneral Merchandise560,413 581,268 643,592 673,164 788,699Misc Retail Trade586,594 713,017 704,420 681,148 763,596Others1,495,038 1,641,879 1,608,082 1,622,166 1,667,483Subtotal Retail $3,887,252$4,500,166$4,876,828$4,600,384$4,977,860OTHER SECTORSConstruction $1,545,886 $1,671,621 $2,060,061 $1,899,005 $2,122,560Manufacturing 411,607 348,439 426,965 547,333 754,501Transportation 614,603 768,421 648,177 621,314 563,863Wholesale 1,692,718 1,643,207 1,535,709 1,451,387 1,442,263Automotive 3,446,262 3,775,582 3,307,794 3,549,973 3,625,878Services 2,063,272 2,128,373 1,913,630 1,835,039 1,953,254Miscellaneous 467,401 428,379 574,268 546,400 567,225Subtotal - Other Sectors $10,241,749$10,764,022$10,466,604$10,450,451$11,029,544Total Sales Tax$14,129,001$15,264,188$15,343,432$15,050,835$16,007,4041 Transportation category has been merged with Miscellaneous. Certain group codes have been shifted around to better reflect the category they truly represent. (The shift will not affect the total sales tax collected.)Source: Finance Department, City of Renton $0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,0001999 2000 2001 2002 2003Sales Tax Collections by Sector1999-2003RetailConstruction Manufacturing Transportation WholesaleAutomotive ServicesMiscellaneousStatistical Section, 7-18 2008 Comprehensive Annual Financial ReportCity of Renton, Washington2004200520062007 12008FUNCTIONRETAIL TRADE SECTORFurniture $2,205,114 $1,203,942 $1,276,644 $1,245,901 $1,199,045Electronics and Appliances1 065 4161 130 6211 143 1881 137 586Page 2 of 2 FISCAL YEARTABLE 10SALES TAX COLLECTIONS BY SECTORLAST TEN FISCAL YEARS$0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,000$8,000,0002004200520062007 12008Sales Tax Collections by Sector2004-2008RetailConstruction Manufacturing Transportation WholesaleAutomotive ServicesMiscellaneousElectronics and Appliances1,065,4161,130,6211,143,1881,137,586General Merchandise1,013,876 1,073,144 1,100,217 1,169,225 1,462,858Misc Retail Trade862,919 848,834 928,083 658,429 756,662Others1,651,782 2,227,721 2,464,896 1,378,094 1,574,482Subtotal Retail $5,733,691$6,419,057$6,900,461$5,594,837$6,130,633OTHER SECTORSConstruction $2,641,907 $2,495,684 $2,688,902 $3,898,202 $4,725,533Manufacturing 556,555 569,269 797,166 983,110 1,050,789Transportation 628,918 494,866 567,401Wholesale 1,416,559 1,025,132 1,016,468 1,083,059 1,131,445Automotive 3,538,502 3,946,163 4,303,221 4,176,747 3,575,928Services 1,677,315 1,736,569 2,039,090 4,103,240 3,939,201Miscellaneous 460,372 421,715 378,233 503,000 402,360Subtotal - Other Sectors $10,920,128$10,689,398$11,790,482$14,747,358$14,825,256Total Sales Tax$16,653,819$17,108,455$18,690,943$20,342,195$20,955,889$0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,000$8,000,0002004200520062007 12008Sales Tax Collections by Sector2004-2008RetailConstruction Manufacturing Transportation WholesaleAutomotive ServicesMiscellaneousStatistical Section, 7-19 2008 Comprehensive Annual Financial ReportCity of Renton, Washington BUSINESS-TYPE ACTIVITIESGENERAL SPECIALFISCAL OBLIGATION ASSESSMENT ENTERPRISE PWTFYEARBONDSBONDSBONDSLOANSPage 1 of 2 GOVERNMENTAL ACTIVITIESTABLE 11 RATIOS OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS GO Bonds38%Enterprise Bonds47%PWTF Loans15%2008Primary Government Debt1999 26,466,763$ 680,000$ 26,860,000$ 9,024,460$ 2000 24,345,738 320,000 25,020,000 8,645,788 2001 29,289,290 135,000 23,070,000 7,894,357 2002 33,797,023 - 31,230,000 8,222,135 2003 32,245,982 - 29,070,000 7,579,447 2004 30,629,403 - 37,680,000 8,350,304 2005 29,107,664 - 35,790,000 11,581,168 2006 45,584,314 - 33,840,000 10,692,020 2007 44,017,551 - 33,405,000 9,802,877 2008 41,938,000 - 43,310,000 8,913,739 Source: City of Renton, Finance and IS Department 1The percentage of personal Income column is based on personal income of King County. (See Table 16)GO Bonds38%Enterprise Bonds47%PWTF Loans15%2008Primary Government DebtStatistical Section, 7-20 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonBUSINESS-TYPEACTIVITIESPERCENTAGE1TOTAL PRIMARY OFFISCAL CAPITAL GOVERNMENT PERSONAL DEBT PERYEARLEASESDEBTINCOMEPOPULATIONCAPITAPage 2 of 2 TABLE 11RATIOS OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS $-$20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008YearsPrimary Government DebtTotal Debt199942,276$ 63,075,498$ 8.64% 47,620 1,325$ 200086,609 58,420,135 7.56% 50,052 1,167 200145,656 60,436,304 7.86% 51,140 1,182 20027,238 73,258,398 9.40% 53,840 1,361 200358,105 68,955,537 8.71% 54,900 1,256 200433,834 76,695,545 8.68% 55,360 1,385 20058,621 76,489,458 8.59% 56,840 1,346 200624,500 90,140,834 9.22% 58,360 1,545 200776,074 87,301,502 8.17% 60,290 1,448 200855,155 94,216,894 N/A 78,780 1,196 $-$20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008YearsPrimary Government DebtTotal DebtStatistical Section, 7-21 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003Debt Limit319,387,556$ 340,899,076$ 379,698,131$ 419,541,037$ 448,787,441$ Total net debt applicable to limit24,462,390 22,248,983 27,586,389 32,258,499 28,173,327 Legal debt margin294,925,166$ 318,650,093$ 352,111,742$ 387,282,538$ 420,614,114$ Total net debt applicable to the limitas a percentage of debt limit7.66%6.53%7.27%7.69%6.28%Source: City of Renton, Finance and IS Department TABLE 12LEGAL DEBT MARGIN INFORMATIONLAST TEN FISCAL YEARSPage 1 of 2FISCAL YEARStatistical Section, 7-22 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008Debt Limit477,947,409$ 502,332,893$ 550,085,741$ 627,810,135$ 724,475,824$ Total net debt applicable to limit28,137,536 26,423,667 42,515,728$ 42,624,636 40,667,064 Legal debt margin449,809,873$ 475,909,226$ 507,570,013$ 585,185,499$ 683,808,760$ Total net debt applicable to the limitas a percentage of debt limit5.89%5.26%7.73%6.79%5.61%LEGAL DEBT MARGIN CALCULATION FOR FISCAL YEAR 2008Assessed Value9,659,677,654$ Add back: exempt real property- Total assessed value9,659,677,654$ Debt Limit 2.5% of general purpose limit, voted and non-voted241,491,941$ 2.5% Utility purpose limit, voted241,491,941 2.5% Open Space, Park and Capital facilities, voted241,491,941 Total Debt Limit 724,475,824$ Debt applicable to limit:General obligation bonds41,938,000$ Contracts Payable- 41,938,000$ Less: Amount set aside for repayment ofgeneral obligation debt and contracts payable(1,270,936) Total net debt applicable to limit40,667,064$ Legal Debt Margin683,808,760$ TABLE 12LEGAL DEBT MARGIN INFORMATIONLAST TEN FISCAL YEARSPage 2 of 2FISCAL YEARStatistical Section, 7-23 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonLESS:NET% OF GOGENERAL 1AMOUNTS1GENERALDEBT TOFISCAL OBLIGATION AVAILABLE OBLIGATIONASSESSED2ASSESSED PERYEARBONDSIN DEBTDEBTVALUEVALUECAPITA1999 26,466,763$ 2,345,570$ 24,121,193$ 4,258,500,750$ 0.57% 507$ 2000 24,345,738 2,096,755 22,248,983 4,514,205,078 0.49% 4452001 29,289,290 1,770,724 27,518,566 4,988,126,362 0.55% 538200233 797 0231 540 20332 256 8205 549 470 8950 58%599TABLE 13 RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS$-$10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 1999200020012002200320042005200620072008General Obligation DebtGO Bond Debt2002 33,797,023 1,540,203 32,256,820 5,549,470,895 0.58% 5992003 32,245,982 1,879,654 30,366,328 5,959,258,370 0.51%5532004 30,629,403 1,440,509 29,188,894 6,333,995,426 0.46%5272005 29,107,664 2,683,999 26,423,665 6,697,750,147 0.39%4652006 45,584,314 3,068,587 42,515,727 7,334,476,542 0.58%7292007 44,017,551 1,392,915 42,624,636 8,370,801,805 0.51%7072008 41,938,000 1,270,936 40,667,064 9,659,677,654 0.42%516Source: 1 Finance Department, City of Renton 2 King County Department of Assessments $-$10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 1999200020012002200320042005200620072008General Obligation DebtGO Bond DebtStatistical Section, 7-24 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonESTIMATEDESTIMATED 2SHARE OFDEBT 1%OVERLAPPINGGOVERNMENTAL UNITOUTSTANDINGAPPLICABLEDEBTCity of Renton Direct Debt41 938 000$100%41 938 000$TABLE 14 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBTRenton-$41.9County-$35.9Schools-$158.5Port- $12.9Others - $4.7$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 $260 Millions of DollarsCity of Renton Direct and Overlapping DebtCity of Renton Direct Debt41,938,000$ 100%41,938,000$ City of Renton Overlapping Debt King County 1,048,574,0003.42%35,861,231 Port of Seattle378,065,0003.42%12,929,823 Renton School District #403219,706,51668.29%150,037,580 Issaquah School District #411312,553,9972.13%6,657,400 Kent School District #415251,179,0430.7089%1,780,608 Fire District 10-100.6355%- Fire District 40-19,381,82639.6918%3,723,816 King County Library66,359,3551.50%995,390 City of Renton Overlapping Debt211,985,848$ Total Direct and Overlapping Debt253,923,848$ Sources: 1 King County Department of Executive Services2 King County Department of AssessmentsRenton-$41.9County-$35.9Schools-$158.5Port- $12.9Others - $4.7$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 $260 Millions of DollarsCity of Renton Direct and Overlapping DebtStatistical Section, 7-25 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonTABLE 15EXPENSES NET REVENUEFISCAL(a)W/O AVAILABLE FOR(b)YEAR REVENUE DEPRECIATION DEBT SERVICE PRINCIPAL INTEREST COVERAGEWATER AND SEWER REVENUE BONDS:199921,784,310$ 16,407,442$ 5,376,868$ 1,810,000$ 1,333,452$ 1.71200023,682,511 15,653,774 8,028,737 1,630,000 1,112,778 2.93200121,994,245 16,051,720 5,942,525 1,730,000 1,019,923 2.16200224,045,660 17,495,472 6,550,188 1,805,000 928,303 2.40200325,934,120 16,990,519 8,943,601 1,635,000 1,282,115 3.07200427,301,230 18,325,863 8,975,367 1,475,000 1,010,268 3.61200527,889,360 18,892,824 8,996,536 1,630,000 1,477,124 2.90200627,750,508 18,850,225 8,900,283 1,680,000 1,430,199 2.86200732 887 27222 020 64210 866 6301 740 0001 373 036349PLEDGED-REVENUE COVERAGELAST TEN FISCAL YEARSDEBT SERVICE1.712.932.162.403.073.612.902.863.493.012.232.302.041.981.381.671.251.391.281.290.000.501.001.502.002.503.003.504.001999 2000 2001 2002 2003 2004 2005 2006 2007 2008COVERAGE RATIOYEARSWATER/SEWER & GOLF COURSE REVENUE BONDSWATER/SEWER GOLF COURSE200732,887,272 22,020,642 10,866,630 1,740,000 1,373,036 3.49200832,887,264 22,020,637 10,866,627 1,810,000 1,803,687 3.01GOLF COURSE REVENUE BONDS (c):19992,252,217$ 1,278,489$ 973,728$ 280,000$ 157,548$ 2.2320002,328,044 1,320,681 1,007,363 210,000 227,222 2.3020012,375,997 1,480,024 895,973 220,000 219,348 2.0420022,279,361 1,415,674 863,687 225,000 210,548 1.9820032,177,122 1,573,296 603,826 235,000 201,210 1.3820042,198,597 1,460,445 738,152 250,000 191,223 1.6720052,208,335 1,657,294 551,041 260,000 180,348 1.2520062,337,672 1,725,854 611,818 270,000 168,778 1.3920072,333,955 1,770,684 563,271 285,000 156,358 1.2820082,333,952 1,770,682 563,270 295,000 142,820 1.29Notes:(a) Revenue includes connection charges, system development charges, latecomer fees, and interest revenue.(b) Bond financing requirements are that the average annual coverage is at least 1.3 times the average annual debt service for Water and Sewer revenue bonds. The Golf System revenue bonds coverage requirement is at least 1.25 times that of respective calendar year's annual debt service. (c) 1999 Golf System Refunding Revenue Bonds were issued to refund the 1994 Golf System Revenue Bonds.Source: City of Renton, Finance and IS Department1.712.932.162.403.073.612.902.863.493.012.232.302.041.981.381.671.251.391.281.290.000.501.001.502.002.503.003.504.001999 2000 2001 2002 2003 2004 2005 2006 2007 2008COVERAGE RATIOYEARSWATER/SEWER & GOLF COURSE REVENUE BONDSWATER/SEWER GOLF COURSEStatistical Section, 7-26 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonPER CAPITAUN-PERSONALPERSONALSCHOOLEMPLOYMENTTABLE 16DEMOGRAPHIC AND ECONOMIC STATISTICSLAST TEN FISCAL YEARS0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%1999 2000 2001 2002 2003 2004 2005 2006 2007 2008UNEMPLOYMENT RATEUNEMPLOYMENT RATEPERSONAL PERSONALSCHOOL EMPLOYMENTINCOME bINCOMEcENROLLMENT eRATEfFISCAL YEARKING COUNTY RENTONKING COUNTYKING COUNTYMEDIAN AGEd CITY OF RENTON KING COUNTY 1999 1,712,122$ 47,620$ 72,997,198,000$ 42,218$ 35.50 12,557 3.8%2000 1,737,046 50,052 77,271,598,000 44,424 35.70 12,527 4.1%2001 1,758,312 51,140 76,883,017,000 43,764 35.92 12,556 5.1%2002 1,774,312 53,840 77,940,608,000 44,217 36.13 12,892 6.1%2003 1,779,300 54,900 79,199,166,000 44,800 36.38 13,046 6.2%2004 1,788,300 55,360 88,407,884,000 49,670 36.60 13,062 5.2%2005 1,808,300 56,840 89,032,307,000 49,488 36.83 13,192 4.7%2006 1,835,300 58,360 97,750,314,000 53,488 36.93 13,397 4.2%2007 1,861,300 60,290 106,805,239,000 57,710 36.97 13,570 3.7%2008 1,884,200 78,780 N/AN/A 37.00 13,836 4.2%Sources: aWashington State Office of Financial ManagementbU.S. Bureau of Economic AnalysiscU.S. Bureau of Economic AnalysisdWashington State Office of Financial ManagementeRenton Public SchoolsfWashington State Employment Security DepartmentPOPULATION a0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%1999 2000 2001 2002 2003 2004 2005 2006 2007 2008UNEMPLOYMENT RATEUNEMPLOYMENT RATEStatistical Section, 7-27 2008 Comprehensive Annual Financial ReportCity of Renton, WashingtonEMPLOYEREMPLOYEES 1RANK% OF TOTAL CITY EMPLOYMENTEMPLOYEES RANK% OF TOTAL CITY EMPLOYMENTBoeing Company12,829 1 28.80%19,193 1 42.26%Renton School District 1,426 2 3.20%720 5 1.59%Federal Aviation Administration1,400 3 3.14%1,127 4 2.48%Valley Medical Center 1,331 4 2.99%1,408 3 3.10%Paccar Inc1,202 5 2.70%1,459 2 3.21%King County886 6 1.99%City of Renton760 7 1.71%655 6 1.44%Providence Health and Services 734 8 1.65%ER Solutions Inc531 9 1.19%Wizards of the Coast472 10 1.06%390 8 0.86%Multiple Zones International557 7 1.23%K & L Distributors273 9 0.60%Wal Mart Stores Inc256 10 0.56%21,571 48.42%26,038 57.33%Source: 1Business license records and individual queries TABLE 17PRINCIPAL EMPLOYERS20081999Source : City of Renton, Finance and IS DepartmentStatistical Section, 7-28 2008 Comprehensive Annual Financial Report City of Renton, Washington , This page intentionally left blank. 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003FUNCTIONGeneral Government 85.1 90.1 93.5 97.5 96.5 Public SafetyPoliceCommissioned Officers85.0 85.0 86.0 88.0 88.0 Non-Commissioned Officers34.2 34.2 36.2 40.2 40.2 FireCommissioned Officers103.0 105.0 105.0 105.0 105.0 Non-Commissioned Officers10.0 11.0 11.0 12.0 12.0 Planning/Building/Public WorksAdministration/Development Services 43.2 42.7 42.7 42.7 42.7 Transportation Systems32.0 33.0 33.0 34.0 33.0 Utility Systems20.2 20.7 20.8 20.8 20.8 Maintenance Services59.5 59.5 61.0 61.0 62.0 Culture and RecreationParks and Recreation77.5 78.5 80.5 77.5 77.5 Library15.0 15.0 15.0 15.0 15.0 Golf Course9.0 9.0 10.0 10.0 10.0 Total573.7 583.7 594.7 603.7 602.7 Source: City of Renton, Finance and IS Department Note: 1 In 2008, Development Services moved from Public Works to Community and Economic Development which is listed under General Government. TABLE 18FULL TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTIONLAST TEN FISCAL YEARS Page 1 of 2FISCAL YEARStatistical Section, 7-30 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008 1FUNCTIONGeneral Government 97.5 94.5 89.5 95.0 155.6 Public SafetyPoliceCommissioned Officers89.0 91.0 97.0 122.0 124.0 Non-Commissioned Officers41.2 43.2 42.2 49.2 51.2 FireCommissioned Officers106.0 106.0 106.0 109.0 118.0 Non-Commissioned Officers13.0 13.0 14.0 16.0 17.0 Planning/Building/Public WorksAdministration/Development Services 42.7 42.5 46.5 49.0 4.0 Transportation Systems34.5 34.5 35.5 40.5 41.0 Utility Systems20.8 20.8 24.8 29.3 36.7 Maintenance Services62.0 62.0 64.1 71.0 88.0 Culture and RecreationParks and Recreation77.5 76.5 76.5 81.0 89.5 Library15.0 14.0 14.0 15.0 15.0 Golf Course10.0 10.0 10.0 10.0 10.0 Total609.2 608.0 620.0 687.0 750.0 TABLE 18FULL TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTIONLAST TEN FISCAL YEARS Page 2 of 2FISCAL YEARStatistical Section, 7-31 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003FUNCTIONPolicePhysical arrests 2,287 2,463 3,411 3,813 3,735 Parking violations3,379 5,955 6,325 4,776 2,742 Traffic violations11,832 12,188 10,936 11,448 11,651 FireNumber of calls answered7,698 7,895 8,273 8,233 8,582 Inspections2,021 2,265 2,269 2,261 2,681 Highways and StreetsStreet resurfacing (miles)4.65 1.76 6.54 6.13 4.85 Recyclables collected (tons/yr)5,045.7 5,493.8 5,793.6 5,119.8 4,389.0 Culture and RecreationAthletic field attendence86,527 87,000 119,422 126,534 137,811 Community Center admissions 148,041 156,500 174,500 162,970 172,911 Library Volume in collections 153,935 147,818 148,758 155,463 158,676 Total volumes borrowed 334,619 352,334 382,443 456,982 499,792 WaterMetered connection 14,279 14,224 13,969 14,583 15,181 Average daily consumption7,426.5 7,457 7,097 7,232 7,581 (thousands of gallons)So Peak daily consumption11,472 13,590 11,960 12,477 14,080 (thousands of gallons)Source: City of Renton DepartmentsPage 1 of 2 FISCAL YEARTABLE 19OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARSStatistical Section, 7-32 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008FUNCTIONPolicePhysical arrests 4,280 4,590 2,489 2,925 3,580Parking violations3,733 3,575 3,520 5,995 5,117Traffic violations10,963 12,866 10,172 9,148 10,705FireNumber of calls answered8,984 9,202 10,096 10,159 12,402Inspections2,539 3,438 3,505 3,197 2,772Highways and StreetsStreet resurfacing (miles)3.67 3.69 3.86 1.59 2.59Recyclables collected (tons/yr)4,920.3 4,934.2 4,843 5,004 5,395Culture and RecreationAthletic field participants 156,707 155,000 155,000 91,053 93,000 Community Center participants 172,537 177,761 177,761 162,476 155,000 Library Volume in collections 165,406 190,011 193,965 188,359 194,497Total volumes borrowed 512,059 491,470 464,333 491,397 554,223WaterMetered connection 15,379 16,585 16,668 16,958 17,172Average daily consumption7,635 7,306 7,999 8,008 7,388(thousands of gallons)Peak daily consumption14,248 13,025 15,271 14,750 12,739(thousands of gallons)Page 2 of 2 FISCAL YEARTABLE 19OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARSStatistical Section, 7-33 2008 Comprehensive Annual Financial ReportCity of Renton, Washington19992000200120022003FUNCTIONPolice safetyPolice:Stations 1.0 1.0 1.0 1.0 1.0 Patrol units7.0 7.0 7.0 7.0 7.0 Fire stations5.0 5.0 5.0 5.0 5.0 Highways and streetsStreet (miles)180.6 195.4 195.6 213.2 213.7 Streetlights (added)46.0 69.0 75.0 53.0 120.0 Culture and recreationParks acreage1,158.0 1,158.0 1,158.0 1,158.0 1,158.0 Parks 28.0 28.0 26.0 26.0 26.0 Swimming pools- - - - - Tennis courts17.0 17.0 17.0 17.0 17.0 Community centers1.0 1.0 1.0 1.0 1.0 WaterWater mains (miles)252.2 278.0 283 289.0 291.0 Fire hydrants2,893 2,993 3,102 3,193 3,240SewerSanitary sewers (miles) 170.9 162.6 168.1 176.7 183.5 Storm sewers (miles) 180.9 183.8 189.7 199.4 204.0 Source: City of Renton DepartmentsPage 1 of 2 FISCAL YEARTABLE 20CAPITAL ASSETS STATISTICS BY FUNCTION LAST TEN FISCAL YEARSStatistical Section, 7-34 2008 Comprehensive Annual Financial ReportCity of Renton, Washington20042005200620072008FUNCTIONPolice safetyPolice:Stations1.0 1.0 1.0 1.0 1.0Patrol units7.0 7.0 7.0 7.0 10.0Fire stations5.0 5.0 5.0 5.0 6.0Highways and streetsStreet (miles)213.7 218.0 224.6 233.7 263.8Streetlights92.0 86.0 134.0 213.0 230.0Culture and recreationParks acreage1,158.0 1,158.0 1,160.0 1,160.0 1,181.0Parks 26.0 26.0 26.0 28.0 29.0Swimming pools1.0 1.0 1.0 1.0 1.0Tennis courts17.0 17.0 17.0 17.0 17.0Community centers1.0 1.0 1.0 1.0 1.0WaterWater mains (miles)291.1 293.0 295.0 300.0 304.0Fire hydrants3,274 3,374 3,440 3,544 3,602SewerSanitary sewers (miles) 189.6 193.3 204.9 206.3 215.7Storm sewers (miles)209.7 214.8 219.7 222.3 267.5Page 2 of 2 FISCAL YEARTABLE 20CAPITAL ASSETS STATISTICS BY FUNCTION LAST TEN FISCAL YEARSStatistical Section, 7-352008 Comprehensive Annual Financial Report City of Renton, Washington , This page intentionally left blank. Renton City Hall1055 South Grady WayRenton, Washington 98057rentonwa.gov                                                 This page left blank intentionally        Finance and Information Technology March 31,2010 Lindsay Sovde Seattle-Northwest Securities Corporation 1420 FiRh Avenue, Suite 4300 Seattle, washington 98101 Re: City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 Preliminary Official Statement Dear Ms. Sovde: Seattle-Northwest Securities Corporation is scrving as underwriter on the above captioned issue. As Finance and Information Services Administrator for the City of Renton, Washington (the "Issucr"), I hereby certify as follows: a) To the best of my knowledge and belief, after due review, the Preliminary Official Statement, except for matters relating to DTC, as of the date hereof does not contain any untrue statement of a material fact or omit any statement or information which is necessary to make the statements therein, in the light of the circumstances under which made, not misleading; b) The copy of the Preliminary Official Statement attached hereto is hereby "deemed final" (except for the on~ission of the following information: offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings, other terms of the securities depending on such matters), for purposes of Securities and Exchange Commission Rule 15~2-12(b)(l); and c) Seattle-Northwest Securities Corporation is authorized to distribute and otherwise utilize the Preliminary Official Statement in connection with the marketing of the Bonds. Sincerely, , Renton City Hall . 1055 South Grady Way s Renton.Washington 98057 . rentonwa.gov Q*w Sknr( Torn. lM Floor h Fmch CA Ml&lWO Y415SlldaY) retemnce no.: 1112943 April 6.2010 City of Renton Renton City Hall - 5th Floor 1055 South Gndy Way Renton, WA 98057 Attention: Ms. Iwen Wang, Administrator - Finance Division Re: US$6,100,000 City of Renton, Washington, Refunding Limited Tax General Obligation Bonds, dated: Date of Delivery, due: December 1,2026 Dear Ms. Wang: Pursuant to your request for a Standard & Poor's rating on the above-referenced obligations, we have reviewed the information submitted to us and, subject to the enclosed Terms and Conditions, have assigned a rating of "AA". Standard & Poor's views the outlook for this rating as stable. A copy of the rationale supporting the rating is enclosed. The rating is not investment, financial, or other advice and you should not and cannot rely upon the rating as such. The rating is based on information supplied to us by you or by your agents but does not represent an audit. We undertake no duty of due diligence or independent verification of any information. The assignment of a rating does not create a fiduciary relationship between us and you or between us and other recipients of the rating. We have not consented to and will not consent to being named an "expert" under the applicable securities laws, including without limitation, Section 7 of the Securities Act of 1933. The rating is not a "market rating" nor is it a recommendation to buy, hold, or sell the obligations. This letter constitutes Standard & Poor's permission to you to disseminate the above-assigned rating to interested parties. Standard & Poor's reserves the right to inform its own clients, subscribers, and the public of the rating. Standard & Poor's relies on the issuerlobligor and its counsel, accountants, and other experts for the accuracy and completeness of the information submitted in connection with the rating. This rating is based on financial information and documents we received prior to the issuance of this letter. Standard & Poor's assumes that the documents you have provided to us are final. If any subsequent changes were made in the final documents, you must notify us of such changes by sending us the revised final documents with the changes clearly marked. To maintain the rating, Standard & Poor's must receive all relevant financial information as soon as such information is available. Placing us on a distribution list for this information would facilitate the process. You must promptly notify us of all material changes in the financial Ms. Iwen Wang Page 2 April 6,2010 information and the documents. Standard & Poor's may change, suspend, withdraw, or place on Creditwatch the rating as a result of changes in, or unavailability of, such information. Standard & Poor's reserves the right to request additional information if necessary to maintain the rating. Please send all information to: Standard & Poor's Ratings Services Public Finance Department 55 Water Street New York, NY 10041-0003 Standard & Poor's is pleased to be of service to you. For more information on Standard & Poor's, please visit our website at www.standardand~oors.com If we can be of help in any other way, please call or contact us at nwublicfinance@standardand~rs.com. Thank you for choosing Standard &Poor's and we look forward to working with you again. Sincerely yours, Standard & Poor's Ratings Services a Standard & Poor's Financial Services LLC business cc: Ms. Jane D. Towery, Managing Director Piper Jaffray & Co. Standard & Poor's Ratings Services Terms and Conditions Applicable To U.S. Public Finance Ratings Reouest for a ratin& Standard & Poor's issues public finance ratings for a fee upon request from an issuer, or from an underwriter, financial advisor, investor, insurance company, or other entity, provided that the obligor and issuer (if different from the obligor) each has knowledge of the request. The term "issuerlobligor" in these Terms and Conditions means the issuer and the obligor if the obligor is different from the issuer. Aereement to Acce~t Terms and Conditions. Standard & Poor's assigns Public Finance ratings subject to the terms and conditions stated herein and in the rating letter. The issucrlohligor's use of a Standard & Poor's public finance ratine constitutes ameement to comolv in all resoecrs with the terms and conditions contained herein and in the ratine - - . , - letter and acknowledges the issuerlobligor's understanding of the scope and limitations of the Standard & Poor's rating as stated herein and in the rating letter. Fees and exoenses. In consideration of our analytic review and issuance of the rating, the issuerlobligor agrees to pay Standard & Poor's a rating fee. Payment of the fee is not conditioned on Standard & Poor's issuance of any particular rating. In most caies an annual surveillance fee will be charged for so long as we maintain the rating. The issuerlobligor will reimburse Standard & Poor's for reasonable travel and legal expenses if such expenses are not included in the fee. 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Standard & Poor's reserves the right to publish, disseminate, or license others to publish or disseminate the rating and the rationale for the rating unless the issuerlobligor specifically requests that the rating be assigned and maintained on a confidential basis. If a confidential rating subsequently becomes public through disclosure by the issuerlobligor or a third pany other than Standard & Poor's, Standard &Poor's reserves the right to publish it. Standard & Poor's may publish explanations of Standard & Poor's ratings criteria from time lo time and nothing in this Agreement shall be construed as limiting Standard & Poor's ability to modify or refine Standard &Poor's criteria at any time as Standard & Poor's deems appropriate. Information to be Provided bv the Issuwloblinor. The issuerlobligor shall meet with Standard & Poor's for an analytic review at any reasonable time Standard & Poor's requests. The issuerlobligor also agrees to provide Standard & Poor's promptly with all information relevant to the rating and surveillance of the rating including information on material changes to information previously supplied to Standard & Poor's. The rating may be affected by Standard & Poor's opinion of the accuracy, completeness, timeliness, and reliability of information received from the issuerlobligor or its agents. Standard & Poor's undertakes no duty of due diligence or independent verification of -- 5l.~,.~~<.I It;! -- '4, I! information provided by the issuer/obligor or its agents. Standard & Poor's reserves the right to withdraw the rating if the issuerlobligor or its agents fails to provide Standard & Ponr's with accurate, complete. timely, or reliable information. Standard &Poor's Not an Advisor. Fiduciarv. or Ex~ert. The issuerlobligor understands and agrees that Standard & Poor's is not acting as an investment, financial, or other advisor to the issuerlobligor and that the issuerlobligor should not and cannot rely upon the rating or any other information provided by Standard & Poor's as investment or financial advice. Nothing in this Agreement is intended to or should be consuued as creating a fiduciary relationship between Standard & Poor's and the issuerlobligor or between Standard & Poor's and recipients of the rating. The issuerlobligor understands and agrees that Standard & Poor's has not consented to and will not consent to being named an "expen" under the applicable securities laws, including without limitation. Section 7 of the U.S. Securities Act of 1933. Limitation on Damages. 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In furtherance and not in limitation of the foregoing, Standard & Poor's will not be liable in respect of any decisions made by the issuerlobligor or any other person as a result of the issuance of the rating or the related analytic services provided by Standard & Poor's hereunder or based on anything that appears to be advice or recommendations. The provisions of this paragraph shall apply regardless of the form of action, damage, claim, liability, cost, expense, or loss, whether in contract, statute, ton (including, without limitation, negligence), or otherwise. The issuerlobligor acknowledges and agrees that Standard & Poor's does not waive any protections, privileges, or defenses it may have under law, including but not limited to, the First Amendment of the Constitution of the United States of America. m. This Agreement shall terminate when the ratings are withdrawn. Notwithstanding the foregoing. the paragraphs above, "Standard & Poor's Not an Advisor. Fiduciq, or Expert" and "Limitation on Damages", shall survive the termination of this Agreement or any withdrawal of a rating. Third Parties. Nothing in this Agreement, or the rating when issued, is inwnded or should be construed as creating any rights on behalf of any third parties, including, without limitation, any recipient of the rating. No person is intended as a third party beneficiary to this Agreement or to the rating when issued. Bindinc! Effect. This Agreement shall be binding on, and inure to the benefit of, the parties hereto and their successors and assigns. Severability. In the event that any term or provision of this Agreement shall be held to be invalid, void, or unenforceable, then the remainder of this Agreement shall not be affected, impaired, or invalidated, and each such term and provision shall be valid and enforceable to the fullest extent permitted by law. comolete Aereement. This Agreement constitutes the complete agreement between the panics with respect to its subject matter. This Agreement may not be modified except in a writing signed by authorized representatives of both parties. Governine Law. This Agreement and the rating letter shall be governed by the internal laws of the State of New York. The parties agree that the state and federal courts of New York shall be the exclusive forums for any dispute arising out of this Agreement and the parties hereby consent to the personal jurisdiction of such courts. ESCROW DEPOSIT AGREEMENT CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 THIS ESCROW AGREEMENT, dated as of May 11, 2010 (herein, together with any amendments or supplements hereto, called the "Agreement") is entered into by and between the City of Renton, Washington (herein called the "City") and U.S. Bank National Association, Seattle, Washington, as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent"). The notice addresses of the City and the Escrow Agent are shown on Exhibit A attached hereto and made a part hereof. WITNESSETH: WHEREAS, the City heretofore has issued and there presently remain outstanding the obligations described in Exhibit B attached hereto (the "Refunded Bonds"); and WHEREAS, pursuant to Ordinance No. 5534 passed on April 5, 2010 (the "Bond Ordinance"), the City has determined to issue its Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"); and WHEREAS, a portion of the proceeds of the Bonds are being used for the purpose of providing funds to pay the costs of refunding the Refunded Bonds; and WHEREAS, Grant Thomton LLP, certified public accountants, has prepared a verification report which is dated May 11, 2010 (the "Verification Report") relating to the source and use of funds available to accomplish the refunding of the Refunded Bonds, the investment of such funds and the adequacy of such funds and investments to provide for the payment of the debt service due on the Refunded Bonds; and WHEREAS, pursuant to the Bond Ordinance, the Refunded Bonds have been designated for redemption prior to their scheduled maturity dates and, after provision is made for such redemption, the Refunded Bonds will come due in such years, bear interest at such rates, and be payable at such times and in such amounts as are set forth in Exhibit C attached hereto and made a part hereof; and WHEREAS, when Escrowed Securities have been deposited with the Escrow Agent for the payment of all principal and interest of the Refunded Bonds when due, then the Refunded Bonds shall no longer be regarded as outstanding except for the purpose of receiving payment from the funds provided for such purpose; and WHEREAS, the issuance, sale, and delivery of the Refunding Bonds have been duly authorized to be issued, sold, and delivered for the purpose of obtaining the funds required to provide for the payment of the principal of, interest on and redemption premium (if any) on the Refunded Bonds when due as shown on Exhibit C attached hereto; NOW, THEREFORE, in consideration of the mutual undertakings, promises and agreements herein contained, the sufficiency of which hereby are acknowledged, and to secure the full and timely payment of principal of and the interest on the Refunded Bonds, the City and the Escrow Agent mutually undertake, promise and agree for themselves and their respective representatives and successors, as follows: Article 1. Definitions Section 1.1. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Agreement: Escrow Fund means the fund created by this Agreement to be established, held and administered by the Escrow Agent pursuant to the provisions of this Agreement. Escrowed Securities means the noncallable Government Obligations described in Exhibit D attached to this Agreement, or cash or other noncallable obligations substituted therefor pursuant to Section 4.2 of this Agreement. Government Obligations means direct, noncallable (a) United States Treasury Obligations, (b) United States Treasury Obligations - State and Local Government Series, (c) non-prepayable obligations which are unconditionally guaranteed as to full and timely payment of principal and interest by the United States of America or (d) REFCOW debt obligations unconditionally guaranteed by the United States. Paying Agent means the fiscal agency of the State of Washington, as the paying agent for the Refunded Bonds. Refunding Bonds means that portion of the Bonds authorized under the Bond Ordinance for the purpose of refunding the Refunded Bonds. Section 1.2. Other Definitions. The terms "Agreement," "City," "Escrow Agent," "Bond Ordinance," "Verification Report," "Refunded Bonds," and "Bonds" when they are used in this Agreement, shall have the meanings assigned to them in the preamble to this Agreement. Section 1.3. Interpretations. The titles and headings of the articles and sections of this Agreement have been inserted for convenience and reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the intended purpose of providing for the refunding of the Refunded Bonds in accordance with applicable law. Article 2. Deposit of Funds and Escrowed Securities Section 2.1. Deposits in the Escrow Fund. Concurrently with the sale and delivery of the Refunding Bonds the City shall deposit, or cause to be deposited, with the Escrow Agent, for deposit in the Escrow Fund, the funds (from the proceeds of the Refunding Bonds and a cash contribution by the City) sufficient to purchase the Escrowed Securities and pay costs of issuance described in Exhibit D, and the Escrow Agent shall, upon the receipt thereof, acknowledge such receipt to the City in writing. Article 3. Creation and Operation of Escrow Fund Section 3.1. Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as the Refunding Account (the "Escrow Fund"). The Escrow Agent hereby agrees that upon receipt thereof it will deposit to the credit of the Escrow Fund the funds and the Escrowed Securities described in Exhibit D attached hereto. Such deposit, all proceeds therefrom, and all cash balances from time to time on deposit therein (a) shall be the property of the Escrow Fund, (b) shall be applied only in strict conformity with the terms and conditions of this Agreement, and (c) are hereby irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds, which payment shall be made by timely transfers of such amounts at such times as are provided for in Section 3.2 hereof. When the final transfers have been made for the payment of such principal of and interest on the Refunded Bonds, any balance then remaining in the Escrow Fund shall be transferred to the City, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section 3.2. Payment of Principal and Interest. The Escrow Agent is hereby irrevocably instructed to transfer to the Paying Agent from the cash balances from time to time on deposit in the Escrow Fund, the amounts required to pay the principal of the Refunded Bonds at their respective redemption dates and interest thereon to such redemption dates in the amounts and at the times shown in Exhibit C attached hereto. Section 3.3. Sufficiency of Escrow Fund. The City represents that, based upon the information provided in the Verification Reporf the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balance on deposit from time to time in the Escrow Fund will be at all times sufficient to provide moneys for transfer to the Paying Agent at the times and in the amounts required to pay the interest on the Refunded Bonds as such interest comes due and the principal of the Refunded Bonds as the Refunded Bonds are paid on an optional redemption date prior to maturity, all as more fully set forth in Exhibit E attached hereto. If, for any reason, at any time, the cash balances on deposit or scheduled to be on deposit in the Escrow Fund shall be insufficient to transfer the amounts required by the Paying Agent to make the payments set forth in Section 3.2. hereof, the City shall timely deposit in the Escrow Fund, from any funds that are lawfully available therefor, additional funds in the amounts required to make such payments. Notice of any such insufficiency shall be given promptly as hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the City's failure to make additional deposits thereto. Section 3.4. Trust Fund. The Escrow Agent or its affiliate, shall hold at all times the Escrow Fund, the Escrowed Securities and all other assets of the Escrow Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow Agent as trust hnds for the benefit of the owners of the Refunded Bonds; and a special account thereof shall at all times be maintained on the books of the Escrow Agent. The owners of the Refunded Bonds shall be entitled to the same preferred claim and first lien upon the Escrowed Securities, the proceeds thereof, and all other assets of the Escrow Fund to which they are entitled as owners of the Refunded Bonds. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the City, and the Escrow Agent shall have no right to title with respect thereto except as a trustee and Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject to warrants, drafts or checks drawn by the City or, except to the extent expressly herein provided, by the Paying Agent. Article 4. Limitation on Investments Section 4.1. Investments. Except for the initial investment in the Escrowed Securities, and except as provided in Section 4.2 hereof, the Escrow Agent shall not have any power or duty to invest or reinvest any money held hereunder, or to make substitutions of the Escrowed Securities, or to sell, transfer, or otherwise dispose of the Escrowed Securities. Section 4.2. Substitution of Securities. At the written request of the City, and upon compliance with the conditions hereinafter stated, the Escrow Agent shall utilize cash balances in the Escrow Fund, or sell, transfer, otherwise dispose of or request the redemption of the Escrowed Securities and apply the proceeds therefrom to purchase Refunded Bonds or Government Obligations which do not permit the redemption thereof at the option of the obligor. Any such transaction may be effected by the Escrow Agent only if (a) the Escrow Agent shall have received a written opinion kom a fm of certified public accountants that such transaction will not cause the amount of money and securities in the Escrow Fund to be reduced below an amount sufficient to provide for the full and timely payment of principal of and interest on all of the remaining Refunded Bonds as they become due, taking into account any optional redemption thereof exercised by the City in connection with such transaction; and (b) the Escrow Agent shall have received the unqualified written legal opinion of its bond counsel or tax counsel to the effect that such transaction will not cause any of the Refunding Bonds or Refunded Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. Article 5. Application of Cash Balances Section 5.1. In General. Except as provided in Section 2.1, 3.2 and 4.2 hereof, no withdrawals, transfers or reinvestment shall be made of cash balances in the Escrow Fund. Cash balances shall be held by the Escrow Agent in United States currency as cash balances as shown on the books and records of the Escrow Agent and, except as provided herein, shall not be reinvested by the Escrow Agent; provided, however, a conversion to currency shall not be required (i) for so long as the Escrow Agent's internal rate of return does not exceed 20%, or (ii) if the Escrow Agent's internal rate of return exceeds 20%, the Escrow Agent receives a letter of instructions, accompanied by the opinion of nationally recognized bond counsel, approving the assumed reinvestment of such proceeds at such higher yield. Article 6. Redemption of Refunded Bonds Section 6.1. Call for Redemption. The City hereby irrevocably calls the Refunded Bonds for redemption on their earliest redemption dates, as shown in the Verification Report and on Appendix A attached hereto. Section 6.2. Notice of RedemptionNotice of Defeasance. The Escrow Agent agrees to give a notice of defeasance and a notice of the redemption of the Refunded Bonds pursuant to the terms of the Refunded Bonds and in substantially the forms attached hereto as Appendices A and B attached hereto and as described on said Appendices A and B to the Paying Agent for distribution as described therein. The notice of defeasance shall be given immediately following the execution of this Agreement, and the notice of redemption shall be given in accordance with the ordinance authorizing the Refunded Bonds. The Escrow Agent hereby certifies that provision satisfactory and acceptable to the Escrow Agent has been made for the giving of notice of redemption of the Refunded Bonds. Article 7. Records and Reports Section 7.1. Records. The Escrow Agent will keep books of record and account in which complete and accurate entries shall be made of all transactions relating to the receipts, disbursements, allocations and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such books shall be available for inspection during business hours and after reasonable notice. Section 7.2. Reports. Whlle this Agreement remains in effect, the Escrow Agent quarterly shall prepare and send to the City a written report summarizing all transactions relating to the Escrow Fund during the preceding financial quarter, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities and transfers from the Escrow Fund for payments on the Refunded Bonds or otherwise, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. Article 8. Concerning the Paying Agents and Escrow Agent Section 8.1. Representations. The Escrow Agent hereby represents that it has all necessary power and authority to enter into this Agreement and undertake the obligations and responsibilities imposed upon it herein, and that it will cany out all of its obligations hereunder. Section 8.2. Limitation on Liability. The liability of the Escrow Agent to transfer funds for the payment of the principal of and interest on the Refunded Bonds shall be limited to the proceeds of the Escrowed Securities and the cash balances from time to time on deposit in the Escrow Fund. Notwithstanding any provision contained herein to the contrary, the Escrow Agent shall have no liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund or any failure of the obligors of the Escrowed Securities to make timely payment thereon, except for the obligation to notify the City promptly of any such occurrence. The recitals herein and in the proceedings authorizing the Refunding Bonds shall be taken as the statements of the City and shall not be considered as made by, or imposing any obligation or liability upon, the Escrow Agent. The Escrow Agent is not a party to the proceedings authorizing the Refunding Bonds or the Refunded Bonds and is not responsible for nor bound by any of the provisions thereof (except to the extent that the Escrow Agent may be a place of payment and paying agent andlor a paying agentlregistrar therefor). In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms and provisions of this Agreement. The Escrow Agent makes no representations as to the value, conditions or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the City thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to any of such maiters. It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable except for its own neglect or willful misconduct, nor for any loss unless the same shall have been through its negligence or bad faith. Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the City with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund, to dispose of and deliver the same in accordance with this Agreement. If, however, the Escrow Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determination the Escrow Agent shall be liable only for its own willful misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the City or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and in this connection may make inquiries of, and consult with, among others, the City at any time. Section 8.3. Compensation. The City shall pay to the Escrow Agent fees for performing the services hereunder and for the expenses incurred or to be incurred by the Escrow Agent in the administration of this Agreement pursuant to the terms of the Fee Schedule attached hereto as Appendix C. The Escrow Agent hereby agrees that in no event shall it ever assert any claim or lien against the Escrow Fund for any fees for its services, whether regular or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its expenses as Escrow Agent or in any other capacity. Section 8.4. Successor Escrow Agents. Any corporation, association or other entity into which the Escrow, Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or otherwise transfer all or substantially all of its corporate trust assets and business or any corporation, association or other entity resulting from any such conversion, sale, merger, consolidation or other transfer to which it is a party, ipso facto, shall be and become successor escrow agent hereunder, vested with all other matters as was its predecessor, without the execution or filing of any instrument or any Wer act on the part of the parties hereto, notwithstanding anythlng herein to the contrary. If at any time the Escrow Agent or its legal successor or successors should become unable, through operation or law or otherwise, to act as escrow agent hereunder, or if its property and affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith exist in the office of Escrow Agent hereunder. In such event the City, by appropriate action, promptly shall appoint an Escrow Agent to fill such vacancy. If no successor Escrow Agent shall have been appointed by the City within 60 days, a successor may be appointed by the owners of a majority in principal amount of the Refunded Bonds then outstanding by an instrument or instruments in writing filed with the City, signed by such owners or by their duly authorized attorneys-in-fact. If, in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred, the owner of any Refunded Bond may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent. Any successor Escrow Agent shall be a corporation organized and doing business under the laws of the United States or the State of Washington, authorized under such laws to exercise corporate trust powers, having its principal office and place of business in the State of Washington, having a combined capital and surplus of at least $100,000,000 and subject to the supervision or examination by federal or state authority. Any successor Escrow Agent shall execute, acknowledge and deliver to the City and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to the terms of this Agreement, all the rights, powers Ad trusts of the Escrow Agent hereunder. Upon the request of any such successor Escrow Agent, the City shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights, powers and duties. The obligations assumed by the Escrow Agent pursuant to this Agreement may be transferred by the Escrow Agent to a successor Escrow Agent if (a) the requirements of this Section 8.4 are satisfied; (b) the successor Escrow Agent has assumed all the obligations of the Escrow Agent under this Agreement; and (c) all of the Escrowed Securities and money held by the Escrow Agent pursuant to this Agreement have been duly transferred to such successor Escrow Agent. Article 9. Miscellaneous Section 9.1. Notice. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid addressed to the City or the Escrow Agent at the address shown on Exhibit A attached hereto. The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten days prior notice thereof. Section 9.2. Termination of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow Agent shall have no further obligations or responsibilities hereunder to the City, the owners of the Refunded Bonds or to any other person or persons in connection with this Agreement. Section 9.3. Binding Agreement. This Agreement shall be binding upon the City and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the owners of the Refunded Bonds, the City, the Escrow Agent and their respective successors and legal representatives. Section 9.4. Severability. In case any one or more of the provisions contained in this 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 Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 9.5. Washington Law Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Washington. Section 9.6. Time of the Essence. Time shall be of the essence in the performance of obligations fiom time to time imposed upon the Escrow Agent by this Agreement. Section 9.7. Notice to S&P and Fitch. In the event that this Agreement or any provision thereof is severed, amended or revoked, the City shall provide written notice of such severance, amendment or revocation to Standard & Poor's Ratings Services, 55 Water Street, New York, New York 10041, Attention: Refunded Bonds Municipal Bond Department, and to Fitch Ratings, One State Street Plaza, New York, New York, 10004, Attention: Public Finance Rating DeskRefunded Bonds. Section 9.8. Amendments. This Agreement shall not be amended except to cure any ambiguity or formal defect or omission in this Agreement. No amendment shall be effective unless the same shall be in writing and signed by the parties thereto. No such amendment shall adversely affect the rights of the holders of the Rehnded Bonds. No such amendment shall be made without first receiving written confirmation from the rating agencies (if any) which have rated the Refunded Bonds that such administrative changes will not result in a withdrawal or reduction of its rating then assigned to the Refimded Bonds. If this Agreement is amended, prior written notice and copies of the proposed changes shall be given to the rating agencies which have rated the Refunded Bonds. EXECUTED as of the date first written above. CITY OF RENTON, WASHMGTON U.S. BANK NATIONAL ASSOCIATION Exhibit A - Exhibit B - Exhibit C - Exhibit D - Exhibit E - Appendix A - Appendix B - Appendix C - Authorized Signer Addresses of the City and the Escrow Agent Description of the Refimded Bonds Schedule of Debt Service on Refunded Bonds Description of Beginning Cash Deposit (if any) and Escrowed Securities Escrow Fund Cash Flow Notice of Redemption for the 2001 Bonds Notice of Defeasance for the 2001 Bonds Fee Schedule writing and signed by the parties thereto. No such amendment shall adversely affect the rights of the holders of the Refunded Bonds. No such amendment shall be made without first receiving written confirmation from the rating agencies (if any) which have rated the Refunded Bonds that such administrative changes will not result in a withdrawal or reduction of its rating then assigned to the Refunded Bonds. If this Agreement is amended, prior written notice and copies of the proposed changes shall be given to the rating agencies which have rated the Refunded Bonds. EXECUTED as of the date first written above. CITY OF RENTON, WASHINGTON Exhibit A - Exhibit B - Exhibit C - Exhibit D - Exhibit E - Appendix A - Appendix B - Appendix C - Designated City Representative U.S. BANK NATIONAL ASSOCIATION " Authorized Signer Addresses of the City and the Escrow Agent Description of the Refunded Bonds Schedule of Debt Service on Refunded Bonds Description of Beginning Cash Deposit (if any) and Escrowed Securities Escrow Fund Cash Flow Notice of Redemption for the 2001 Bonds Notice of Defeasance for the 2001 Bonds Fee Schedule City: EXHIBIT A Addresses of the City and Escrow Agent City of Renton 1055 S. Grady Way Renton, Washington 98057 Attention: Finance and Information Services Administrat01 Escrow Agent: U.S. Bank National Association Corporate Trust Services PD-WA-T7CT 1420 Fifth Avenue, 7th Floor Seattle, WA 98101 Attention: Carolyn Morrison, Vice President EXHIBIT B Description of the Refunded Bonds City of Renton, Washington Limited Tax General Obligation and Refunding Bonds, 2001 Maturity Years (December 1) Principal Amounts Interest Rates EXHIBIT C Schedule of Debt Service on the Refunded Bonds Principal1 Date Interest Redemption Price Total 06/01/2010 $153,556.25 - $ 153,556.25 12/01/2010 153,556.25 - 153,556.25 06/01/2011 153.556.25 - 153,556.25 EXHIBIT D Escrow Deposit I. Cash: $1.16 11. Other Obligations: Principal Description Maturity Date Amount Interest Rate Total Cost SLGS 06/01/2010 $ 153,557 - $ 153,557 SLGS 12/01/2010 127,762 0.23% 127,762 SLGS 06/01/2011 130,578 0.45 130,578 SLGS 12/01/2011 6,130,872 $6,542,769 111. Costs of Issuance: Escrow Agent Fee (US. Bank) $ 1,000.00 Bond Counsel Fee (K&L Gates LLP) 20,000.00 Financial Advisor Fee (Piper Jafiay) 5,000.00 Escrow Verification Fee (Grant Thomton LLP) 2,500.00 Rating Agency (S&P) 6,375.00 Contingency proceeds 289.74 TOTAL: $ 35,164.74 EXHIBIT E Escrow Fund Cash Flow Escrow Net Escrow Excess Cash Date Requirement Receipts Receipts Balance 0511 1/2010 $ 1.16 $ 1.16 $ 1.16 06/01/2010 $ 153,556.25 153,557.00 0.75 1.91 12/01/2010 153,556.25 153,555.58 -0.67 1.24 06/01/2011 153.556.25 153.556.03 -0.22 1.02 APPENDIX A NOTICE OF REDEMPTION* City of Renton, Washington Limited Tax General Obligation and Refunding Bonds, 2001 NOTICE IS HEREBY GIVEN that the City of Renton, Washington has called for redemption on December 1, 201 1 a portion of its outstanding Limited Tax General Obligation and Refunding Bonds, 2001 (the "Bonds"). The Bonds will be redeemed at a price of one hundred percent (100%) of their principal amount, plus interest accrued to December 1, 201 1. The redemption price of the Bonds is payable on presentation and surrender of the Bonds at the office oE The Bank of New York Mellon Wells Fargo Bank National Worldwide Series Processing Association 2001 Bryan Street, 9" Floor -or- Corporate Trust Department Dallas, Texas 75021 14th Floor - MJS 257 999 Third Avenue Seattle, Washington 98 104 Interest on all Bonds or portions thereof which are redeemed shall cease to accrue on December 1, 201 1. The following Bonds are being redeemed: Maturity Years (December 1) Principal Amounts Interest Rates CUSIP Nos. 2018 $1,385,000 5.25% 7601 33PL6 2019 1,460,000 5.25 760133PM4 This notice sbaU be given not more than 60 nor less than 30 days prior to December 1, 201 1 by fust class mail to each registered owner of the Refunded Bonds. In addition notice shall be mailed to Piper Jafkay & Co.; The Depository Trust Company of New York, New York; Assured Guaranty Corporation (formerly Financial Security Assurance Inc.); Standard & Poor's Ratings Senices, a Standard & Poor's Financial Services LLC business, New York, New York; Fitcb, Inc., New York, New York; and to the Municipal Securities Rulemaking Board. Page I-Appendix A P:\20358-oG\2o35s_oNA By Order of the City of Renton, Washington The Bank of New York Mellon, as Paying Agent Dated: Withholding of 28% of gross redemption proceeds of any payment made within the United States may be required by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act") unless the Paying Agent has the correct taxpayer identification number (social security or employer identification number) or exemption certificate of the payee. Please furnish a properly completed Form W-9 or exemption certificate or equivalent when presenting your Bonds. Page 2-Appendix A APPENDIX B Notice of ~efeasance* City of Renton, Washington Limited Tax General Obligation and Refunding Bonds, 2001 NOTICE IS HEREBY GIVEN to the owners of that portion of the above-captioned bonds with respect to which, pursuant to an Escrow Deposit Agreement dated May 11,2010, by and between City of Renton, Washington (the "City") and U.S. Bank National Association, Seattle, Washington (the "Escrow Agent"), the City has deposited into an escrow account, held by the Escrow Agent, cash and non-callable direct obligations of the United States of America, the principal of and interest on which, when due, will provide money sufficient to pay each year, to and including the respective maturity or redemption dates of such bonds so provided for, the principal thereof and interest thereon (the "Defeased Bonds"). The Defeased Bonds will be called on December 1, 201 1 at a price of 100% plus accrued interest. Such Defeased Bonds are therefore deemed to be no longer outstanding pursuant to the provisions of Ordinance No. 4922 of the City, authorizing the issuance of the Defeased Bonds, but will be paid by application of the assets of such escrow account. The Defeased Bonds are described as follows: Limited Tax General Obligation and Refunding Bonds, 2001 (Dated November 1,2001) Maturity Years Principal Call Date (December 1) Amounts Interest Rates CUSIP Nos. (at 100%) 2018 $1,385,000 5.25% 7601 33PL6 12/1/2011 2019 1,460,000 5.25 760133PM4 12/1/2011 2021 3,155,000 5.00 760133PP7 12/1/2011 Information for Individual Registered Owner The addressee of this notice is the registered owner of Bond Certificate No. - of the Defeased Bonds described above, which certificate is in the principal amount of $ All of which has been defeased as described above. * This notice shall be given immediately by first class mail to each registered owner of the Defeased Bonds. In addition notice shall be mailed to Piper JafSfay & Co.; Assured Guaranty Corporation (formerly Financial Security Assurance Inc.); The Depositoly Trust Company of New York, New York; The Bank of New York Mellon, as Paying Agent; Staodard & Poor's Ratings Services, a Standard & Poor's Financial Senices LLC business, New York, New York; Fitch, Inc., New York, New York; and to the Municipal Securities Rulemakiig Board. Appendix B P:OO358-DG\2035s_ONa APPENDIX C Fee Schedule ~.~:~ank Customer Confidential Schedule of Fees for Services as Refunding Escrow Agent For City of Renton, Washington Limited Tax General Obligation Refunding Bonds 2010 (2001) Escrow CTS04480 INIT Escrow Agent, One Time One-time fee for the standard escrow agent services $1,000.00 MlSC associated with the administration of the account. Administration fees are payable in advance. Direct Out of Pocket Expenses Reimbunement of expenses associated with the At Cost performance of our duties, including but not limited to publications, legal counsel after the initial close, travel expenses and filing fees. Extraordinary Services Extraordinary Services are duties or responsibilities of an unusual nature, including termination, but not provided for in the governing documents or otherwise set forth in this schedule. A reasonable charge will be assessed based on the nature of the services and the responsibility involved. At our option, these charges will be billed at a flat fee or at our hourly rate then in effect. Account approval is subject to review and qualification. Fees are subject to change at our discretion and upon wiltten notice. Fees paid in advance will not be prorated. The fees set forth above and any subsequent modifications thereof are Dart of vour aareement. Finalization of the transaction constitutes agreement to the above - fee scned~ e. ncludlng agreement to any subsequent changes upon proper wnden nouce In tne event your transaction is not fina zed any related out-of-pocket expenses w I be b lled to yo^ d~renly Absent your wntten Instmctnons to sweep or otherwee anvest all suns in your account w II rerna n un~nvested and no accned mterest or other compensation will be credited to the account. Payment of fees constitutes acceptance of the terms and condilions set forth IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT: To help the sovemment fight the funding of terrorism and money laundering activities, Federal law requires all financiel instiutions to obtain, verify and ricord information that identifies eachperson who opens an account. For a non-individual person such as a business entity, a charity, a Trust or other legal entity we will ask for documentation to verify its formation and existence as a legal enti. We may also ask to see financial statements. licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation. Dated: May 11,2010 Appendix C CERTIFICATE OF ESCROW AGENT I, the undersigned authorized officer of U.S. Bank National Association, Seattle, Washington (the "Escrow Agent"), DO HEREBY CERTIFY, with respect to the refunding of certain outstanding general obligation bonds (the "2001 Bonds"), of the City of Renton, Washington (the "City") and more particularly described in Ordinance No. 5534 of the City passed on April 5,2010 (the "Bond Ordinance"), as follows: 1. The Escrow Agent has established a refunding account (the "Escrow Fund") pursuant to the Escrow Deposit Agreement between the City and the Escrow Agent dated May 11,2010 (the "Escrow Agreement"). 2. The Escrow Agent has received from Seattle-Northwest Securities Corporation as Purchaser, $6,577,934.90 of the proceeds of the City's Limited Tax General Obligation Refunding Bonds, 2010, and has applied such sums as follows: $6,542,769.00 was applied to purchase Government Obligations, $1.16 to establish a beginning cash balance, and $35,164.74 to pay the costs of issuance (including contingency proceeds) as described in Exhibit D of the Escrow Agreement. 3. The Government Obligations described in Exhibit D of the Escrow Agreement will be deposited in the Escrow Fund as of their respective dates of purchase to be held in trust for the security and benefit of the owners of the Refunded Bonds and will be applied, together with interest thereon, as provided in the Bond Ordinance and the Escrow Agreement. 4. Attached to this certificate is evidence of the authority of the undersigned to execute this certificate and the Escrow Agreement on behalf of the Escrow Agent. Dated as of this 1 lth day of May, 2010. U.S. BANK NATIONAL ASSOCIATION BY Its dce President Seattle, WA 98101 AUTHORIZED SIGNATURES I hereby certify that the following is a true and exact extract from Article VI of the Bylaws presently in effect for U.S. Bank National Association, a national banking association organized and existing under the laws of the United States: Article VI CONVEYANCES, CONTRACTS, ETC. All transfers and conveyances of real estate, mortgages, and transfers, endorsements or assignments of stock, bonds, notes, debentures or other negotiable instruments, securities or personal property shall be signed by any elected or appointed officer. All checks, drafts, certificates of deposit and all funds of the Association held in its own or in a fiduciary capacity may be paid out by an order, draft or check bearing the manual or facsimile signature of any elected or appointed officer of the Association. All mortgage satisfactions, releases, all types of loan agreements, all routine transactional documents of the Association, and all other instruments not specifically provided for, whether to be executed in a fiduciary capacity or otherwise, may be signed on behalf of the Association by any elected or appointed officer thereof. The Secretary or any Assistant Secretary of the Association or other proper officer may execute and certify that required action or authority has been given or has taken place by resolution of the Board under this Bylaw without the necessity of further action by the Board. Ifurther certify that the following officers of U.S. Bank 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 President Debby R. Wight Vice President Greg E. Skutnik Deborah Kuykendall Assistant Vice President Vice President I IN WITNESS WHEREOF I have hereunto set my hand this flay of 9 ,2010. U.S. BANK NATIONAL ASSOCIATION, By: &&WLb& U.S. BANK NATIONAT, ASSOCIA~ON FOR~ERLYNAMED TAR BM, NATIONA~ASSOC~~O~~ CHARTER NO. 24 AMENDED AND RESTATED ARTICLES OF ASSOCIATION These Aniended and Restated Articles of Association supersede the Arficles of Association pf Fistar Bank, National Association, being renamed U.S. Bank National Association (the "Association"), heretofore in effect. FIRST: The title of the Associatiin shall be V.S. ~ank ~tkonal Associatio~~" SECOND: The main office of the Association shall be in the City of Cincinnati, County of Hamilton, State of Ohio. The general business of the Association shall be conducted at its main office and its branches. TElIRD: The Board of Duectors ofthe Association shall consiSt of not less than five (5) nor m,o,~e than lyenv-five (25) shareholders, the exact number of Diiectors within such and miup limits to be futed and determined fiom time to time,by resolution of a majority of the tidl Board of Directors or by resolution of the sharehpldeis at anJi mual or special meeting thereof. Unless otherwise provided by the laws of the' United States, any vakancy the Board of Directors for any reason, including an increase in the nimber thereof, may be filled by action of the Boqd of Directors. . . ... .. . . . . . FO@TBI:, The.*al meeting of the shareholders for the electiori of Direct& and &e transa@ion of wliafever other business may be brought before said meeting shall bt: held at the maib offie or such othq as the Board of Directors may dksigite; oithe daydf each fear. . ,. speci6.d plereof by ,the Bylaws, but if no electidn is held on that daY,,'it inay be held onany snbs.equentday according to the pr6visions' of law; and all elections shall &held aii.ord& to thepro~$ons of law; and all electi~ni shall be held according to Such lawful . rigulatibgs . Ginay . . bepr&$ied by the Bbltrd of ~Gectors. . . . . . .. . . . .. . . @-:. The aggregate number of shares of common stock tha't the Associatioi has . ' ' 'authorjiy'to is.me is 3,640,000, all.of which are of one class only, each sieh ;hire hadg a p,ar vah of'$5.00 (the "Common Stock?'). The Association shd also have authority to issue 2,41:1,935 shares of pref&ed''itock, without par value (the "Preferred Stock"). . . .. . . . . . - . . . No holder' of sh$res bf th~ capital stock of any class of the Ais~~iation shall have any .. re-e&ptive or .preferenti+ right of subscription to any shares of any class of stock of the Association,'~whethcr now or he&fter ai~thoiizd, orto any obligations'convertib~e ;1;to stock of the Assockion issued or sold, nor any right of subscription to any therwf other th& skh, if -&, as the ~oqd of Directors, in its discretion; may &om time to tkpe determine -and at such price as the Board of Diretois may from time to time fix. The Association, at any time and from time to time, may authorize and issue debt obligations, whether or not subordinated, without the approval of the shareholders. Section 5.01. Series A Preferred Stock Pursuant to the provisions of this Article Fifth, . a series of Series A Non-Cumulative Preferred Stock, consisting of one hundred sixty-seven thousand (167,000) shares, is hereby established and authorized to be issued, and jq addition to such matters specified elsewhere in this Article Fifth, such Series A Non-Cumulative Preferred Stock shall have the following powers, preferences and relative, participating, optional or other special rights id qualifications, limitations or restrictions: (a) Desicnation and Amount. The shares of Preferred Stock shall be designated as the Series A Non-CumuIative Preferred Stock (the "Series A Preferred Stock"), and the number of shares constituting the Series A Preferred Stock shall be one hundred sixty-seven thousand (167,000). The liquidation preference of the Series A Preferred Stock shall be $1,000 per share (the "Series A Liquidation Value"). @) Rank The Series A Preferred Stock shall, with respect to dividend rights and upon liquidation, dissolirtion and winding up of the Association, rank (i) s6nior to all classes and . series of Common Stock of the Associationand to all classes and series of capital stock of the Association now or hereafter authorized, issued or outstanding, which by their terms expressly provide that they are jdor to the Series A Preferred Stock as to dividend distributions and diitributions upon the liquidation, dissolution or *ding up of the Association, or whi& ,do not ~Hcifytheir rank (collectively with the Common Stock, the "Series A Junior Securities"); (Qon a parity with the Series B Preferred Stock and the Series C Preferred Stockand each other class of capital stock or seriei of preferred stock issued by the Association after the date hereof, the , ' ' terms of which specifically provide that such class or series will mnk on a parity with the Smies A Prfe* Stock as to dividend distributions and distributions upon the bqoidation, dissolution or winding up of the Association'(coUect~ely with the Series B'Preferred Stock and the SenesC . ~referied Stock, the"~+es A Parity Securities"); and (i) junior tb each other class of capital i stock or series of preferred stock issued by the Association after the date hereof,.the teps of which'specifically provide that. such class or series will rank senior to the Series A Preferred. Stock as to dividend distributions and distributions upon the li&+tion, dissolution oi &ding 'up of the Association (col1&tively, the "Series A Senior Securities"). (c) Dividends. Dividends are payable on the Series A Preferred Stock as follows: (i) The holders of shares of the Series A Prefe&d Stockin preference to the Series A Junior Securities shall be entitled to receive, out of funds legally available for that purpose, And when, as, and if declaied by the Board of Directors of the Association, : dividends payable in cash at the annual rate of eight percent (8%) of the Series A : Li~dation Value (the "Series A Dividend Rate"). . . (i Dividends on the Series A Preferred Stock shall be non-curhulative. Dividends not paid on any Series A Dividend Payment ate shall not accumulate^. thereafter. Dividends shall accumulate from the first daj. of any Series A Dividend . - . Period to but excluding the immediately succeeding Series A Ijiyidend Payment Date: Dividends, if and when declared, shall be payable in arrears jn cash on each Series A Dividend Payment Date of each year with respect to the Series A Dividend Period ending on theday immediately prior to such Series A Dividend Payment Date at the Series A Dividend Rate to holders of record at the close of business on the applicable Record Date, commencing on December 31, 2000 with respect to any shares of Series A Preferred - Stock issued prior to that Series A Dividend Payment Date; provided that dividends payable on the Series A Preferred Stock on the Series A Dividend Payment Date immediately following tbfvst Series A Dividend Period following the Issue Date (and any dividend payable for a period less than a full semiannual period) shall be prorated for the periodand computed on the basis of a 360-day year of twelve 30day months and the actual number of days in such Series A Dividend Period; and provided, further, that dividends payable on the Series A Preferred Stock on the Series A Dividend Payment Date immediately following the first Series A Dividend Period following the Issue Date shall include any accumulated and unpaid divided on the Realty Compahy Series B , Exchangeable Stock exchanged for the Series A Prefened Stock as of the Exchange Date for the then current dividend period. Dividends on such Series A Preferred Stock shall be paid only in cash. (iii) ' No dividends on shares of Series A Preferred Stock shall be declared by the Board of Diredors or paid or set apart for payment by the Board of Directors or paid or set apart for payment by the Association if such declaration or payment shall be .restricted or prohibited by law. (iv) Holders of shares of Series A Preferred Stock shall not be entitled to any dividends id excess of full dividends declared, as herein provided, on the shares of ~eGes A PreferredStock - Nb interest, or sum of money in lieu of interest, shall be in reSpect of any dividend payment on the shares of Series A Preferred Stock &at may be in ariears. . (v) (A) $0 long =.any shires of Series A ~referred'stobk are outstanding, no dividends (oder than dividends or distributions paid in shares of, or options, Warrarits . . . . or rights to 'subscribe for or purchase shares of, Series A Junior Securities and other than . as provided in clause (B) below) shall be declare paid or set aide for payment or other .. . . - . dihibirtion upon anyseries A Junior Securities or by other Series A Parity Securities, nor shall any shares of any Series A Junior Securities or any other ~enw A Parity ' Securities be redeemed,purchased or othenvise acquired for any wn$deratioq (or any , . ,' moneys be paid to or set aside or m.de available.for a s-g fund for the redemption of any shares of any such stock) by the Association (except by wnversion into or exchange . ' . fdr shares of, or options, wmants or iights to subscribe for or purchase, Series A Jpior . . , . SecUr;ties) unless, in each case; the full dividends on all outstanding shares of the Series :A'Prefeeed Stock shall have been declared and paid, when due, for the Series A ~ividend Period, if any,'terminating on or immediately prior to the date of payment .in 'respect of such dividend, distribution, redemption, purchase or acpuisition. (B) When dividends for any Series A Dividend Period are not paid in full, provided in clause (A] above, on the shares of the Series A Preferred Stock or any &er Series AParity Securities, dividends may be declared and paid on any such shares fdr any dividend period therefor, but only if such dividends are declared and paid pro rata so that the amount of dividends declared and paid per share on the shares of the Series A -3- Preferred Stock and any other Series A Parity Securities, in all cases shall bear to each other the same ratio that the amount of unpaid dividends pa share on the shares of the Series A Preferred Stock for such Series A Dividend Period and such other Series A Parity Securities for the corresponding dividend period bear to each other. (d) Liquidation Preference. (i) In .the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Association; the holders of shares of Series APreferred . Stock then outstanding shall be entitled to be paid out of the assets of the Association available for distribution to its shareholders an amount in cash equal to the Series A Liqiidation Value for each share outstanding, plus an amount in cash-equal to all unpaid dividends thereon for the then current Series A ~ividend Period, whether or not earned or declared, before any payment shall be made or any assets distributed to the holders of- Series A Junior Securities. Ifthe assets of the Association ace not sufficient to pay in full the liquidation payments payable to the holders of o-d'mg shares of the Series A preferred Stock and any Series A Parity Securities, thep the holders of all such shares shall share.mtab1y in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding -shares of Series A Preferred Stock and the holders of outstanding shares of such Series A Parity Securities are entitled were paid in fall. (ii) For the purpose of this Sectio6 5.01(d), neither the voluntary sale, conveyance, exchange or tTamfer (for cash, shares of stock, 'securities or other consideration) of all or substantially all of the property or assets of the Association, nor . the consolidation or merger of the Association, Shall be deemed to be a voluntary or involunkq .liquidation, dissolution or winding up of the Association, unless such. ' voluntary sale, conveyance, exchiuge or kamfer.shall be in connection with a plqof '. : liquidation, ~~sqlution or winding up of the ~ssociation. . . (e)' . Redemption. The Series A Prefmed Stock is not redeemable prior to December '. * 3 1,'2021: Oq or after such date, the Series A Pkeferred Stock shall.be redeemable, in whole or iq part,.,af thi option of the Association, but with the consent of the Comptroller of the Currency and my ,other'appropriate regulatory authorities, ifrequired, for cash out of any source of funds legally ivailable, at a redemption price equal to 100% of the Series A Liquidation mue per shark'pl& unpaid dividends thereon accumulated since the &mediately preceding series A ~i$dend Payment Date (the "Series A ~edem~tion Price". . Any date of such redemption is &fed to as the "SGes A Redemption Date." Iffewer than all the outstanding shes of Series i A ~i4ferred Stock are to be redeemed, the Association will select those to be redeemed by lot or pro raia or by any other method as may be-determined by the Boafd of Directors to be equitable. . : . . . . . I The Series A Preferred Stock is not subject to any sinking fund. I (f) , Procedure for Redem~tion. -I (i) - Upon redemption of the Series A Preferred Stock pursuant to Sectibn . 5.01(e) hereof, notice of such redemption (a "Series A Noticeof Redemption") shall be "mailed by fist-class mail, postage prepaid, not less than thirty (30) days nor more than sixty (60) days prior to the Series A Redemption Date to the holders of record of the shares to be redeemed at theirrespective addresses as they shall appear in the records of the Association; provided, however, that failure to give such notice or any defect therein or in the mailing thereof shall not affect the vali&ty of the proceeding for the redemption of any shares so to be redeemed except as to the holder to whom the Association has failed to, give such notice or except as to the holder to whom notice was defective. Each such notice shall state: (A) the Series A Redemption Date; (B) the Series A Redemption Price; (C) the place or places where certificates for such shares are to be surrendered for payinent of the Series A ~edem~tion Price; and (D) the CUSP number of the shares being redeemed. (ii) Lf a Series A Notice of ~edemptionshall have been given as aforesaid and the Association shall have deposited on or before the Series A Redemption Date a sum . sufficient to redeem the shares of Series A Preferred stock as to which a Series A Notice . of Redemption has been giveti in tmst with the Transfer Agent with irrevocable instructions and authority to pay the Series A RedemptionPrice to the holders thereof, or if no such deposit is made, then upon the Sen'es A Redemption Date (unless the Association shall default in making payment of theseries A Redemption Price), all rights of the holders thereof as shareholders of the Association by reason of the omship of such shares (except their right to receive the Series A Redemption Price. thereof without . . interest) shall cease and terminate, and such shkres shall no longer be deemed outstanding for any purpose. The Association shall be entitled to receive, fiom time to time,.fiom the Trakf~r Agent the inkrest, if any, earned on such moneys deposited with it, and the holders of .any shares so redeemed shall have no claim to &y slch interest. In case the . . . holder of any shares of Series A Prefe~ed stock so called for redemption shall not claim the Series A Redemption Price for its shares within twelve (12) months after the related Series A Redemption Date, the Transfer Agent shall, upon demand, pay over to the Association such amo@ remaining on deposit, and the Transfer Agent shall thereupon be relieved of all responsibility to the holder of such shares, and' such holcler shall look . . odyto the Association for payment . thereof. . . . . . (3) Not later than 1:30 p,m., EastemStandard Time, on the Business Day immediately preceding the Series A Redemption Date, the Association shd irrevocably deposit with the Transfer Agent sufficient funds for the payment of the Series A Redemption Price for the shares to be redeemed on the 'Series A Redemption Date and shall !give the Trmfq Agent irrevocable instructions to apply such~'fUnds, and, if applicable and so specified in the instructions, the income and proceeds therefrom, to the payment of such Series A Redemption Price. The Association may directthe Transfer Agent to invest any such available finds, provided that 'the proceeds of any such inves'@ent will be available to the Transfer Age@ &I Milwaukee, Wisconsin at the -. ' opening of business on'such SeriesA ~edemptionDate. (iv) Except as othenvise expressly set forth in this Section 5.01(fi, nothing contained in these Amended and Restated Articles of Association shall limit any legal right of the Association to purchase or otherwise acquire any shares of Series A Prefened Stock at any price, whether higher or lower than the Series A Redemption Price, in private negotiated transactions, the over-the-counter market or otherwise. (v) If the Association shall not have funds legally available for the redemption of all of the shares of Series A Preferred Stock on any Series A Redemption Date, the Association shall redeem on the Series A Redemption Date only the number of shares of Series A Preferred Stock as it shall have legally available funds to redeem, as determined in an equitable manner, and the remainder of the shares of Series A Preferred Stock shall be redeemed, at the option of the Association, on the earliest practicable date next following the day on which the Association shall fist have funds legally available for the redemption of such shares. (g) Reacquired Shares. Shares of the Series A Preferred Stock that have been redeemed, purchased or otherwise acquired by the Association ax6 not subject to reissuance or resale as shares of Series A Preferred Stock and shall be held in treasury. Such shares shall revert to the status of authorized but unissued shares of preferred stock, undesignated as to series, until the Board of Directors of the Association shall designate them again for issuance as part of a series. @) Voting Riehts. Except as otherwise required by applicable law, the holders of A Preferre'd Stock shall not have any voting rights. . . Section 5.02. Series B Preferred stock Pursuant to the provisidns of this Article Fifth, a series of Series B Non-Cumulative Preferred Stock, consisting of one million four hundred ninety-four thousand he hundred thirty-five (1,494,935) shares, is hereby established and au&or&ed to be issued, and in addition to such matters specified elsewhere in this Article Fi suchseries B Non-Cuniulative Preferred Stock shall have the following powers, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions: ' - (a) ~esikation and Amonnt. The shares of Preferred Stock shd be designated as the Series B Non:@mulative Preferred Stock (the "Series B Preferred Stock"), and the number of shares constituting the Series B Preferred Stock shg be one &%on four hundred ninety-four . tho&Gd hine hundred --five (1,494,935). . The liquidation preferenck of the Series B Prif&red Stock shall be $1,000 per share (the "Series B Liquidation Value"). . . @) Rank The Series B Preferred Stock shall, with respect to dividend rights and upon liquidation, dissolution and winding up of the Association, rank (i) senior to all classes and s$es of Common Stock of he Association and to'all classes and.se?jes of capital stock of the Association now or hereafter authorized, issued or outstanding, which by their tenqi expressly proyjde that they are junior to t& Series B Preferred Stock as to dividend distkibutions and distributioqs up* the liquidation, dissolution or winding up of the Association, or which do not specify their rank (collectively ~vith the Common Stock, the "Series B Junior Securities"); (ii) on ?parity with the Series.A Prefked Stock and the Series C Preferred Stock and each other class of capital stock or series of preferred stock issued by the Association after the date hereof, the te& of which specifically provide that such class or series will rank on a parity with the Series B Preferred Stock as to dividend distributions and distributions upon the liquidation, dissolution oi &diii.dp of the Association (col!ectively with the Series A Preferred Stock and the Series C Preferred Stock, the "Series B Parity Securities"); and (iii) junior to each other class of capital stock or series of preferred stock issued by the Association after the date here& tk.terms of which specifically provide that such class- or series will ra& senior to the Series B Preferred Stock as to dividend distributions and distkbutions upon the liquidation, dissolution or winding up of the Association (collectively, the "Series B Senior Securities"). (c) DMdends. Dividends are payable on ihe Series B Preferred Stock as follows: (i) The holders of the Series B Preferred Stock in preference to the Series B Junior Securities shall be entitled to receive, out of funds legally available for that purpose, and when, as, and if declared by the Board of Directors of the Association, dividends payable in cash at the applicable mual rate set forth ip this Section 5.02(c)(i) below of the Series B Liquidation Value (the "Series B Dividend Rate"): (1) With respect to dividends payable on each Series B Dividend Payment Date occurring fiom the Issue Date through December 31, 2005, the Series B Dividend Rate shall be eight and seven-eighths. percent (8.875%); and (2) Thereafter, dividends shall accrue at a variable rate per mum equal 'to the 5-year Cbfl Rate plus two percent (2%). On December 3'1, 2005, and on ~ecember 31 every five (5) years thereafter, the previous dividend rate shall be ,replaced by the then~urrent Eyear ~hfT Rate plus two percent (2%). The 5-year CMT Rate for each 5-year period shall be determined by the Calculation Ag+ on the second Business Day immediately preceding the first day of such period (each a ''ChfI ~etermination Date"). (i) Dividends on the Series B ~ref~ned. Stock shall be non-cukulative. Dividends not-paid on any Series B Dividend Payment Date shall not accmate thereafter. Dividends shall +ccwgulate-from the first day of anj Series A ~ividend period to but excluding &e iqmediately succeeding Series A Dividend Payment Date. Dividends, if and when declaied,.shdl be payable in mears.in caih on each Series B ~iedehd~a~m&t Date of each yek with respect to the Seriis B ~ivjdend Period.ending : on tlje day immediately prior to such Series B Dividend Payment gate at the:Se;is B Dividend Rate per share to holders of record at the close of bw&ess;on the applicable Record Date, commencing on ?he Exchange Date with.respect to any shg& of Series B Prefefied stock issued prior to &at Series B Dividend Payment Date; provided that ' dihdefids payable on the series B Preferred Stock on the Series B Dividend. Payment , . Date i&iediately following the fir& Series B Dividend period fol!d+ng the Issue Date (*Ay dividend payable for a period less than a full &rterly period) shall be prorated for the period and computed on thi basis of i 360-diy ye& of twelve 30-day months and the actual.number of days in such Series B Dividend Period; and proVided, further, that dividends payable on the Series ,B '~refkrred Stock on the Series B Dividend Payment Dde hediately fol!owing the first Series B Dividend Period following the Issue Date , sh& include any accumulated and unpaid dividends on the Realty Company Series C Exchangeable Stock exchanged for the Series B Preferred Stock a$ of the Exchange Date for the then cu&ent dividend peiiod. Dividends on such Series B Preferred Stock shdl be .' paid only in cash. -7- (iii) No dividends on shares of Series B Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Board of Directors or paid or set apart for payment by the Association if such declaration or payment shall be restricted or prohibited by law. (iv) Holders of shares of Series B Preferred Stock shall not be entitled to any dividends in excess of full dividends declared, as herein provided, on the shares of Series B Preferred Stock. No inkresf or sum of money in lieu of interest, shall be payable in respect of any dividend payment on the shares of Series B Preferred Stock that may be in mars. (v) (A) So long as any shares of Series B Preferred Stock are outstanding, no dividends (other than dividends or distributions paid ig shares of, or options, wmts or rights to subscribe for or purchase shares of, SeriesB Junior Securities and other than as provided in cIause @) be1ow)shall be declared, paid or set aside for pawent or other distribution upon any Series B Junior Securities or any other Series B Parity Securities, nor shall any shares of any Series B Junior Secmes or any. other Series' B Parity Securities be redeemed, purchased or otherwise acquired for any consideration (or any moneysbe paid to or set aside or made, available for asinking fund for the redemption of anj~ shares of any such stock) by the Association (except by conversion into or exchange fo'r sharesof,-or options, wmk or rights to subscribe for or pkhase, Series B Junior S&urities) unless, ~IJ each case, the fuU dividends on d outstanding shares of the Series B Preferred Stock shall have been declared and paid, when due, for the Series B Dividend -Period, if any, 'terminating on or immediately prior to the date of payment in respect of - ' , such dividend, .distributioq'redemption, pwchase or acquisition. (B) When dividends for iny Series B Dividend Period are not paid in fX, as provided ig clause (A) above, onthe,shares of the Series B Preferred Stock or any , other Series B Paiity Secudties,dividends may bd declared and paid on any such shares for any dividend period therefor, but only if such &vidends a& declqed and paid pro rata so that the aihount of dividends declaredagd paid per share on the shares of the Series B Referred Stock and any other Series B Parity Securities, in all cases shall bear to each 6ther the same. ratio that the amount of unpaid dividinds per shai.e on the shares 'of the Series B Preferred Stockfor such Series B Dividend period and such other Series B Parity Securities for the corr~sponding dividend bear to each other. ,. . (d) ~iauidation Preference. (i) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the aff* of the Association, the holders of shares of Series B Preferred ~tokk thenoirtstanding shall be entitled to be paid o,it of the &sets of the Association available for distribution to its &reholders an amount & cash equal to the Series B Liquidation Value for each share outstanding; plus an aq~owt in cashequal to all unpaid dividends thereon for the then current Series B Dividend Period, whether or not earned or . ileclved, before ay payment shall be made or any assets djstributed to the holders of Series junior Securities. If the &sets of the Associatioil we not dcient to pay in full @e liquidation payments payable to the holders of outstandig shares of theseries B Preferred Stock and any Series B Parity Securities, then the holders of all such shares shall share ratably in such dibution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series B Preferred Stock and the holders of outstanding shares of such Series B Parity.Securities are entitled were paid in fill. (ii) For the purpose of this Section 5.02(d), neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other considemtion) of all or substantially all of the properly or assets of the Association, nor the consolidation or merger of the Association, shall be deemed to be a voluntary or involmtary liquidation, dissolution or winding up of the Association, unless such voluntary sale, conveyance, exchange or transfer shall be in connection with a plan of liquidation, dissolution or winding up of the Association. (e) . Redemption. The Series B Preferred Stock is not redeemable prior to December 31,2005. On such date and on each fifth anniversary of such date, the Series B Preferred Stock shall be redeemable, &I whole or in par& at the option of the Association, but with the consent of the Comptroller ofthe Currency and any other appropriate regulato~y authorities, if required, for . . cash out,of any source of funds legally available, at a redemption price equal to 100% of the Series B 'Liquidiition Value per share .plus. unpaid divideaids thereon accumulated since the mediately preceding Series B Dividend Payment p ate' (the "Series B Redemption Price"). Anij date of such redemption is referred to as the "Series B Redemption Date." Iffewer than d the outstanding shares of Series B Preferred Stock are to be redeemed, the Association will select those to be redeemed by lot or pro rata or by any other method as may be deterinined by the . . Board of Directors to be equitable. T& Series B Prefened stock is not subject to any sinking fund. : (0 procedure for Redem~tion: . (i) Upon redemption of the Series B preferred Stock. pursuant to SectionS.O2(e) hereof, notice of such redemption (a "Series BNotice of'~edem~tion") shall be mailed by first-class mail, postage prepaid, not lea than thirty (30) days nor more than sjxty (60) days prior to the Senes B Redemption Date to the holders of record :,of-the shares to be redeemed at their respective addresses as they shall appear in the records of the Association; provided, however, that failure to give such notice or any defect therein or in the mailing thereof shall riot affect the validity of the proceeding for the redemptionof any shares so to be redeemed except is to the holder to whom the Association has failed to &ve such notice or except asto the holder to whom notice was defective. Each such notice shall state: (A) the Series B Redemption Date; @) the Series B Redemption Price; (C) the place or where certificates for ~ch shares are to be Gendered for payment of the Series B Redimption Price; and (D) the CUSIP nurhber of the shares being redeemed (ii) If a Series B Notice of ~edem~iion shall have been give; as aforesaid and the Association shall have deposited on or before the Series B Redemption Date a sum sufficient to redeem the shares of Series B Preferred Stock as to which a Series B Notice of Redemption has been given in trust with the Transfer Agent with irrevocable instructions and authority to pay the Series B Redemption Price to the holders thereof, or if no such deposit is made, then upon the Series B Redemption Date (unless. the Association shall default in making payment.of the Series B Redemption Price), all rights of the holders thereof as shareholders of the Association by reason of the ownership of such shares (except their right to receive the Series B'~edem~tion Price thereof without interest) shall cease and terminate, and such shares shall no longer be deemed'outstanding for any purpose. The Associati6n shall be entitled to receive, froni time to time, from the Transfer Agent the interest, if any, earned on such moneys deposited with it, and the holders of any shares so &eemed shall have no claim to any such interest. In case the holder of any shares of Series B Preferred Stock so called for redemption shall not claim the Series B Redemption Price for its shares within twelve (12) months after the reIated Series B Redemption Date, the Transfer Agent shall, upon demand, pay over to the Association such amount remaining on deposit, and the Transfer Agent shall thereupon be relieved of all responsibilityto the holder of such shares, aid such holder shall look only to the Association for payment thereof. (iii) Not later than 1:30 p.m., Eastern Standard Time, on the Business Day imu@iately preceding the Series B Redemption Date, the Association shd irrevocably . . . deposit with the Transfer Agent sufiicient funds for the payment of the ~&es B . . Redemption hice for the shares to be redeemed on the Series B Redemption Date and shall give the Transfer Agent irrevocable instructions to. apply' such f&ds, and, if .. applicable and so speczed in the insbiuctions, the income a&? proceeds therefrom, to the payment of such Series B Redemption Price. The Association may direct the Transfer . . Agent to invest any such available hds, that the proceeds of any such investment will be available to the Transfer Agent ii~ MiIwaikee, Wisconsin at the . ' opening of business on such Series B . Redemption . Date. . . (iv) Except as othenvid expressly set forth in this. Section 5.020, nothing . . contained in these Amended and Restated Articles of ~ssociation shall limit any legal . . right of the &sociation to purchase or otherwise acquire any shares of Serbs B Preferred stock at a@ price, vhether higher or lower than the Series B ~edemption Price, in ' . , ' ' psvate negotiated transactions, the ovefle-counter market or otherwise. . . . . (v) If the Association shall not have fundslegally available for the redemption of rJ1 of the shares of Series B Preferred Stock on 'any Series B Redemption Date, the Associationshall redeem on the Series B Redemption Date only the number of shares of Series B Referred Stock '& it shall have legally available funds to redeem, as determined in & equitable manner, and the remainder of the shares of Series B Wferred Stock shall '. be redkmed, at the option of the Association, on the earliest practicable date -next followi@ the day on which the Association shall first have funds legally available for the r&ieinption bf such shares. (g) Reacquired Shares. Shares of the Series B Preferred Stock that have been redeemed, purchased or otherwise acquired by the Association are not subject to reissuance or resale as shares of Series B Preferred Stock and shall be held in treasury., Such shares shall revert to the status of authorized but unissued shares of preferred stock, undesignated as to series, until the Board of Directors of the Association shall designate them again for issuance as part of a series. . ) . Votinv kiehts. Except as otherwise required by applicable law, the holders of Series B Preferred Stock shall not have any voting rights. Section 5.03. Series C Preferred Stock Pursuant to the provisions of this Article Fifth, a series of Series C Non-Cumulative Preferred Stock, consisting of seven hundred fifty thousand (750,000) shares, is hereby established and authorized to be issued, and in addition to ,such matters specified elsewhere in this Article Fifth, such Series C Non-Cumulative Preferred Stock shall have the following powers, preferences and relative, participating, optional or other special dghtr and qualifications, limitations or restrictions: (a) Desimation and Amount. The shares of Preferred Stock shall be designated as the Series C Non-Cumulative Preferred Stock (the "Series C Preferred StocB'), and the number of shares constituting the Series C Preferred Stock shall be seven hundred fifty thousand (750,000). The liquidation preference of the Series C Preferred Stock shall be $1,000 per share (the "Series C Liquidation Value"). , @). . The Series C Preferred Stock shall, with respect to dividend rights and uponliquidation, dissolution arid winding up of the Association,.rank (i) senior to 'dl cl&ses and series of Common Stock of the Association and to dI classes and series of capita1 stock of ihe ' ' Association now or hereafter au~orized, issued or outstanbg, whichby their terms expressly pr,ovide thatthey are junior to the Series,C Preferred Stock as to dividend dis@ib$ions &d . , d+tcibuti6ns upoh the liq~dation, dissolution or winding up' of the Association, or which do not .specify their rank: (collectively with the Common Stock, the "Series C Junior Securities''); (ii) on apidy . . with the Series A Preferred Stock and the Series B Preferred Stock and each other class ofcapital stock or series of preferred stock issued by 'the Association after the date hereof, the terms of which specifically provide that such class orseries will'rank on a parity with theseries C ~referreii Stock as to dividend didistributions and d&tributions upon the liquidation, dissolution or 'winding up of the Association (collectively with the Series A Preferred Stock and the Series B .Preferred Stock, the "~eii& C Parity Seciuities"); and (iii) junior to each other class of 'capital stock or series of preferred stock issued by the &so&ation after the date hereof, the terms of which specifically provide that such class or series will rank senior 6 the Series'C Preferred Stock as to dividend distributions &nd distributions upon the liquidatioq &ssolution or winding up of the Association (collec@ely, the "Series C Senior Securities"). . . . . . . (c) Dividends. Dividends are *ayable on the Series C Pteferred Stock as follows: (i) , The holders of the Series C Preferred Stock in preference to the Series C Junior. Securities shd hi entitled to receive, out of 'hds legally available for that purpose, and when, as, and if declaied by the Board of ?Directors of the Association, dividends payable in cash at the annual rate of 7.75% of the Series C Liquidation Value (6e "Series C Dividend Rate"). (ii) Dividends on the Series C preferred Stock shall be non-cumulative. Dividends not paid on any Series C Dividend Payment Date shall not'accumulate thereafter. Dividends shall accumulate fiom the first day of any Series C Dividend Period to but excluding the immediately succeeding Series C Dividend Payment Date. Dividends, if and when declared, shall be payable in arrears in cash on each Series C Dividend Payment Date of each year with respect to the Series C Dividend Period ending on the day immediately prior to such Series C Dividend Payment Date at the Series C Dividend Rate per share to holders of record at the close of business on the applicable Record Date; commencing on the Exchange Date with respect to any shares of Series C ' Preferred Stock issued prior to that Series C Dividend Payment Date; provided that dividends payable on the Series C Preferred Stock on the Series C Dividend Payment Date immediately following the fist Series C Dividend Period foLIowing the Issue Date (and any dividend payable for a period less than a full quarterly period) shall be prorated for the period and computed on'the basis of a 360day year of twelve 30-day months and fhe actual number of days in such Series C Dividend Period; and provided, further, that dividends payable on the Series C Preferred Stock on the Series C Dividend Payment Date immediately following the first Series C Dividend Period following the Issue Date . . .sh& include any accumulated' and unpaid divid+&' on the F~ding. Company Exchangeawe Securities exchanged for the Series C Preferred Stock as of the Exchange Date for the then current dividend period. Dividends on such Series C Preferred Stock shall be paid.only in cash. (iii) No dividends on shares of Series C Preferred Stock shall be declared by the.Board of Directors or paid or set apart for paymeht by the Board of Directors or p&d or set apait for payment by the hociation if such declaration or payment'shall be restricted or prohibited by law. . ' - (iv) Holders of shares of Series C Preferred Stock sh.$ not be entitied to any , dividends.in excess of full dividends declared, as hereb provided, on the shaies of Series C Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of ahy dividend payment ontheshares of Series C prkfened Stock that may be in arrears. (v) (A) So long as any shares of Series C Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, w-ts or rights to subscribe for or pqrchase shires of, Series C Junior Securities and. other than as provided in clause @) below) shall be dec~ared, paid or set aside for piyment or other distribution bpoiany Series C Juhior Securities or any other Series C Pahy Securities, .nor shall any shares of any Series C Junior Securities or any other Series C Parity securities be redeemed, purchased or otherwise acquired for any consideration (or any ' rnorieys be paid to or set'aside or niade availablLfor a sinking fund for thd iedemption of any.shares of &y such stock) by the Association (except by cobversion into or exchange for shares of, or options, wau& or rights to subscribe for or purchase, Series C Junior ,..Securities) unless, in each case, the full dividends on all outstanding shares of the Series C Prefeped Stock shall have been declared and pGd, when due, for the Series C Dividend Period, if any, terminating on or &mediate~y'~rior to the date of payment in respect of . such dividend, distributidn, redemption, purchase br acquisition. @) When dividends for any Series C Dividend Period are not paid in full, is provided clause (A) above, on the shares of the Series C Preferred Stock or any other Series C Parity Secutities, dividends may be declared and paid on any such shares for any dividend period therefor, but only if such dividends are declared and paid pro rata so that the amount of dividends declared and paid per share on the shares of the Series C preferred Stock and any other Series C Parity Securities, in all cases Shall bear to each other the same ratio that the amount. of unpaid dividends per share on the shares of the Series C preferred Stock for such Series C Dividend Period and such other Series C Parity Securities for the corresponding dividend period bear to each other. (d) . Liquidation Preference. (i) Ln the event of any voluntary or involuntary liquidation, dissolution or %ding up of the affairs of the Association, the holders of shares of Series C Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Association available for disf+b~on to its shareholders an amount in cash equal to the Series C Liquidation Value for each share outstanding, plk an amount in cash equal to all unpaid dividends thereon for the then current Series C Dividend Period, whether or not earned or declared, before any payment shall be made or any assets Wbuted to the holders of Series C Junior Securities. If the assets of the Association.are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Series C refe eked Stock and any Series C Parity Securities, then the holders ofall such shares shall' share ratably in such di&ibution of assets in accordance with the amount which would be payable on such distribution ifthe amounts to'which the holders of outstanding sha;es of Series C Preferred Stock and the holders of outstanding sh.&s of such Series C P&ty securities are entitled were paid in full. ... . . . . . ., (ii) For. the purpose of this Section 5.03(d),- neither the volwitary sale, conveyance, exchange or transfer (for cash, shares of .stock, .seaxities or other .coGideration) of all or substantially all of the property' or assets of the Association, nor the consolidation or merger of the Association,' shall be deemed to be a voluntary or jn~~l~tary libuidation, dissolution or winding up of the Association, unless such voly~tary sale, conveyance, exchange or transfer shall be in connection with aplan of liquidation, dissolution or winding up of the Association - . (e) Redemption. The Series C preferred stock shall- be redeemable at any time, in whole o? in parf at the optionof the Association, but with the consent of the Comptroller of the : Currencyand any other appiopriate regulatory authorities, if required, for cash out .of any source of funds legally available, at a redemption price equal to,100% of the. Series C Liquidation Value per share plus unpaid dividends thereon accumuI&ed since the immediately preceding Series C Dividend Payinent Date (the "Series C Redemption Price"). Any date of such redemption is referred to as the "Series C Redemption Date." Iffewer than all the outs@ding shares of Series C Preferred Stock are to be redeemed, the Association will select those to be redeemed by lot or pro rata or by any other method is may be deteded by the Board of Directors to beequitable. The Series C Preferred Stock is ndt subject to any sinking fund. (f) Procedure for Redemption. (i) Upon redemption of the Series C Preferred Stock pursuant to Section 5.03(e) hereof; notice of such redemption (a "Series C Notice of Redemption") shall be mailed by first-class mail, postage prepaid, not less than thirty (30) days nor more than sixty (60) days prior to the Series C Redemption Date to the holders of record of the shares to be redeemed at their respective addresses as they shaU appear in the records of the Association; provided, however, that failure to give such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceeding for the redemption of any shares so to be redeemed except as to the holder to whom the Association has failed to give such notice or except as to the holder to whom notice was defective. Each such noticeshall state: (A) the Series C Redemption Date; @)the Series C Redemption Price; (C) the place or places where certiticates for such shares are to be mendered for payment of the Series C Redemption P,rice; and (D) the CUSP number of the shares being redeemed. (ii) Ifa Series C Notice ofRedemption shall have been given as aforesaid and ' the Association shall have deposited on or before the Series C Redemption Date a sum sufficient to redeem the shares of Series C Preferred Stock as to which a Series' C Notice of Redemption has heen given in trust with ,the Trankfer Agent with irrevocable instructions id authority to pay the Series C ~edem~tion price to the holders thereof; or if no such deposit is made, then upon the Series C Redemption Date (unless the Association shall default in making payment of the Series C Redemption Price), all rights of the liolders thereof as shareholders of 'the Association by reason of the ownership of such shares (except their right to receive the Series CRedemption Price thereof withobt 'intecst)'shall cease and terminate, and such shares shall no longer be deemed outstanding for any purpose. The Association shall be entitled to receive, hm time to time, from the Transfer Agent the interest, if any; eagned on such- moneys .deposited with it, &d the holders of a~@ shares so redeemed shall have no claim to my such interest: In case'the holder of any shares of Series C Preferred Stock so ded for redemption shall not claim .the Series c Redemption Price for its shares 'within twelve (12) months after the related, Series C Redemption Date, the Transfer Agent shall, upon dhimd, pay. over to the . . Association such amount remaining on deposit, qnd the Transfer Agent shall thereupon be relieved of all respo&ibiility to the holder of such ,shares, and stich'holder shall look only to the Association for payment thereof. (iG) Not later than 1:30 p.m.; Eastern Standard Time, on the Business Day inimediately preceding the Series C Redemption Date, the Association shall irrevocably deposit with the Transfer 'Agent sufficient funds for .the payment o* the' Series C ~edemption Price for the shares to be redeemed on the Series C Redemption Date and .shal' giv8 the ~ransfe; ' Agent. irrevocable inshctio~s to apply such funds, and, if applicable Gd so speciftedin the htiuctions, the income and proceeds therefkom,to the payment of such Series C Redemption Price. The Association may direct the Transfer Agent to invest any such available funds, provided that the proceeds" of ai~y such investment will be available to the Transfer Agent in Milwaukee, Wisconsin at the ' opening of business on such Series C Redemption Date. (iv) Except as otherwise expressly set forth in this Section 5.03(f), nothing contained in these Amended and Restated Articles of Association shali limit any legal right of the Association to purchase or otherwise acquire any shares of Series C Preferred . Stock at any price, whether higher or lower than the Series ~'~edem~tion Price, in private negotiatkd transactions, the over-the-counter market or otherwise. (v) Ifthe Association shall not have funds legally available for the redemption of all of the shares of Series C Preferred Stock on any Series C Redemption Date, the Association shall redeem on the Series C Redemption Date only the number of shares of Series C Preferred Stock as it shall have legally available funds to redeem, as determined in,an'equitable manner, and the remainder of the shares of Series C Preferred Stock shall be redeemed, at the option of the Association, on the earliest practicable date nex? follohg the day on which the Association shall fust have hds legally available for the redemption of such shares. (g) Reacauired Shares. Shares of the Series C Prefened stock that have been redeemed, purchased or otherwise acquired by the Association are not subject to reissuance or resale as shires of. Series C Preferred Stock and shall .be held in treasury. Such shares shall revert to the status of authorized but ugissued shares of preferred stock, ujdesignated as to series; until the Board of Directors of the Association shall designate them a,& for issuance as part of a series. . . @) Voting Rights. Except as otherwise required by applicable law, the holders of Series C Preferred Stock shall not have any voting rights. section 5.04. Definitions. For the purpose of Sections 5.01, 5.02 and 5.03 hereof, the fouo&g tms shall have the meanings indicated: "5-year CMT Rate" for iny CMT Detemiwtion Date will be the rate equal'to: . - (i) the weekly average interest rate of U.S: Treasury securities having index maturity of five for t& week that ends immediately before the week in which the relevant CMT. Determination Date .falls, as such rate appears on page "7052" on Telerate (or such otherpage as may replace the ' 7052 page on'that service or any successor services) under the heading-". .. Treasury Constant Maturities ... Federal Reserve Board ele ease H.15 ... Mondays Approximately 3:45 pM." (ij) If the applicable rate described in clause (i) above is not displ~yed on ~elerate page 7052 at 3:00 p.m., New Yo& City time, on the relevant CMT ~ete'nninati~n Date,-then the.5-ye? CMT Rate will be the re& constant maturity rate applicable to a five-year iidex maturiqfo~ the weekly average as p;blished in H.15(519) (as defined below). 3 (iii) . 1f the applicable rate described in clause (ii) above does not appear in ' H.15(519) at 3:00 p.m., New York City time, on the rclevant CMT ~ete&tion,DBte, then the 5-year CMT Rate .dl be the Treasury constant maturity rate, or other U.S. Treasury rate, applicable to a five:. year index maturity with reference to the relevant CMT Determination Date, that: . . (a) is published by the Board of Governors of the Federal Reserve System, or the U.S. Department of the Treasury; &d . (b) is determined by the Association to be comparable to the applicable rate formerly displayed an Telerate page 7052 and published in H.I5(519). (iv) If the rate described in clause (iii) above does not appear at 3:00 p.m., New York City time, on the relevant CMT Determination Date,.tban the .5- year Ch4T Rate will be the yield to maturity of the arithmetic mean of the secondary market offered rates for Treasury notes having an' origkl maturity of approximately five years and a remaining term to maturity of not less than four years, and in a representative amount, as of approximately 3:30 p.m., New. York City time, on the relevant CMT 'Determination Date, 'as -quoted by three primary U.S. .government securities deders in ~ew York City selected by the Association. In selecting these offered rates, the Association will request quotations fiom five primary dealers and will disregard the highbt quotation - or, if there is equality, one of ?he highest - and the lowest quotation - or, if there is equality, one of the lowest (v) If the Association is unable to obtain tkee quotations of .the kind described in clause (iv) above, the CMT ate will be the yield to maturity . of the arithmetic mean of the secondary market offered-rates for Treasury notes wit. an osginal .&aturity longer than five years- and 'a remaining term to maturity closest to five years, and in a representative amount, as of approximately 3:30 p.m., New York City.time, on the relevant Cm ~eleni&ation Date; as quoted by the thee'primary U.S governmental securities dealers in New York City seIected by the Association. 'h ?efecGg these offered rates, the&sociation will requ&t quotations from five primary declares and will disregard ihe highdt quotation - or, if there is equality, one of the highest - and the lowest quotation, or, if there is .equality, one of the lowest. (vi) If fewer than five but more than two p~%ary dealers we quoting offered rates as descr'ibed above in clause (v),tlien the 5-ye? CMT ate' for the relevMCh4T Determination Date will be based on the dthmetic mean of the offered rate; so obtained, and neither thehighest nor the lowest of. thos~quotatio~ will be disregarded. (vii) If two or fewer primary de&S are. offered rates as described above in clause (v), the 5-year CMT Rate in effect for the new dividend period 621 be the 5-year CMT Rate in effed for the prior dividend period: As used in this dehition, "H.15(519)" means the weekly statistical release entitled "Statistical ReIease H.15(519)," or any successor publication, published by the Board of Governors of the Federal Reserve System. Absent manifest e&r, the Association's detehation of the 5-year CMT Rate will be final and binding. "Association" means U.S. Bank National Association (formerly named Firstar Bank, National Association), a national banking association "Business Day" means a day on which the New York Stock Exchange is open for trading and whichis not a day on which banking institqtions in The City of New York and Milwaukee, Wisconsin are authorized or ~equired by law or executive order to close. "CalcuIafion Agent" means any Person authorized by the Association to determine the Series B Dividend Rate, which initially shall be the Association. ",CMT~etermkzfion ate" has the meaning set forth in ~ection,5.02(c)(i)(2) hereof. "~ihdend Paymeni Date" meank, as the context requires, a Series A Dividend Payment Date, a Series B Dividend Payment Date or a Series,C Dividend Payment Date. "~xchah~e'Date" means, the context tquirds, any date on which the Realty Company ' Series B Exchangeable Stock is exchanged for the SeriesA Preferred Stock, riny date on which the Realty Company Series C Exchangeable Stock is exchanged for theseries B Prefemed Stock, or any date on which the Funding Company Exchangeable Securities . . are exchanged for the Series C Preferred Stock "~ifhr ~eal@" means Firstar Realty L.L.C., an Illinois limited liability company. "&ding cornpar& Excha&able Seczgitiar" me& the ~on-~~ul~tive ~xchk~eable Preferred Secilrities of USB FmdingLLd, 8 Delaware liinited liability company. .:. . "Issue Date" means, as the context requires, the first date on which shares of Series A Preferred Stock, Series B Prefd Stock or Series C Preferred Stock are issued. "Per,son"means any individual, firm, bank or other entity and shall include any successor (by merger ar othe+ke) ~f such,entity. . . "Realty Compcny Series B &changeable Stock" means the Series B Non-Cumulative : ~xchangeable . . Prefened Stock of ~ir$ar Realty. "Real@ Company Series C Exchangeable Stock?' means the Series C.Non-Cumulative Exchangeable Preferred Stock of Firstar Realty. ' . "Record Date" means the 15th day of the moqth in which the applicable Dividend Payment Date falls for dividends declared by the Board of Directors. . . "Series A Dividend Puyment Date" means each June30 and December 3 1 of each year. I "Series A ~ividend Period" is the period fiom a Series A Dividend Payment Date to, but excluding, the next succeeding Series A Dividend Payment Date, except that the initial Series A Dividend Period shall commence on the date of the original issuance of shares of Series A Preferred Stock. t - "Series A DividendRate" has the meaning set forth in Section S.Ol(c)(i) hereof. r I: "Series A Junior Securities" has the meaning set forth in Section 5.01@) hereof. i l "Se?ies A Liquidation Value" has the meaning set forth in Section 5.01(a) hereof. "Series A Notice ofRedemption9' has themeaning set forth in Section 5.01(fl(i) hereof. "Series A Parity Securities?' has the meaning set forth in Section 5.01@) hereof. 11 "Series A PrefrredStofoc has the meaning set forth in Section 5.01(a) hereof. "Series A Redemption Date" has the meaning set forth in Section 5.01(e) hereof. I I "SeriesA Redemption Price" has the meaning set forth in Section 5:01(e) hereof. . I ~ "~e& A Senior Securities" has'the meaning set forth in Section 5.01@) hereof. ' .I ~ . . "Series B Dividend Payment Date" means each June 30 and December 3 1 of each year. "Series B Dividendperiod" is the period fiom a Series B Dividend Payment Date to, but excIuding, the.next succeeding Series B Dividendpayment Date,,except that the initial Series B ~ivjdend~eriod shall commence on the origii~al issuance of shires of Series B Preferred Stock "Series B Dividend Rate" has the meaning set forth in Section 5.02(c)(i) hereof. "Series B Junior Securities" has the meaning set forth in Sectio~ 5.02@) hereof. : . . "Series B Liquidation Value" hh the meaning set forth in Section 5.02(a) hereof. "Series B Notice of~edem~tion~has the meaning set forth in Section 5.02(f)(i) hereof. I 1 . . "Seriis B Parity Secun'ties" has the meaning set forth in Section 5.02@) hereof. "Series B Prefemed.Stoc#' has the meaning set forfh in Section 5.02(a) hereof. "series B ~edempfon ~afe" has the meaning set forth in Section 5.02(e) hereof. . .I.[ "Series B Redemption Price" has the meaning set forth insection 5.02(e) hereof I: "Series B Senior Securities" has the meaning set forth in Section 5.02@) hereof. "Series C Dividend Payment Date" means each January 15 and July 15 of each year. "Series C Dividend Period" is the period from a Series C Dividend Payment Date to, but excluding, the next succeeding Series C Dividend Payment Date, except that the initial Series C Dividend Period shall commence on the original issuance of shares of Series C Preferred Stock. "Series C Dividend Rate" has the meaning set forth in Section 5.03(c)(i) hereof. "Series C Junior Securities" has the meaning set forth in Section 5.03@) hereof "Series CLiquidation Value" has the meaning set forth in Section 5.03(a) hereof. ekes ~~otice of~kdi.m~tion" has the meaning set forth in Section 5.03(f)(i) hereof. "Series CParity Secm'ties" has the meaning set f0rth.k S&tion 5.03@) hereof. "Series C Preferred Stock" has the meaning set forth in Section 5.03(a) hereof. "Series C Redemption Dafe" has the meaning set forth in Section 5.03(e) hereof. "Series C Re&mptiin Price" ha ?he meaning set forth in Section 5.03(e) hereof. "Series CSenior Seixritiesnhas the meaning Set forth'in Section 5.03@) hereof. ''Transfer Agent' me& a bank o; trust cogpiny as m;iy be appohited i?om.he to. time bythe Board of Directors of the Association, oi acomrnittee thereof, to act as trapfer ageii, paying.,agent and regism of the. Series A Preferred Stock, the Series ~'~ieferred Stock and'the Sees C Preferred Stock. . . - SIXTH: The Board of ~kectors shall appoint one of its members President, of the Association, who shall be Chairman of the Board, unless the Board appoints another ~irec&r to be the Ch'ahan of the Board The Board of Directors shall have the power to appoint one or .more Vice Presidents; andto appoint a cashier and such other officers and eniployees as may be required to trarisact the Business of the Association. .The Boqd of Directors fiave the power to define the duties of the officers and employies of the Associatio=; to f~u'the $alafies to be.paid to them; to dismiss them; to require bonds from them and to fix the penalty thereofi.to regulate .the manner -in which any increase of the capital of the Association slid be made; to manage and administer the business affairs of the Association; to make all Bylaws that it may be lawfd for them to make and generalIy to do gd perfoim all acts that it may be legal foi a Board of Directors to do and perform. SEVENTH: The Board bf Directors, without need for approval of shareholders, shall have the power to change the Iocation of the main office of the Association, subject to such limitations as fiom time to time may be provided by law; .and shall have the power to estabIish or change the location of ady branch or branches o'f the Association to any other location, without the approval of the shareholders, but subject to the approval of the Comptroller of the Currency. EIGHTH: The corporate existence of the Association shall continue untilterminated in accordance with the laws of the United States. NXWlit The Board of Directors of the Associatio& the Chairman of the Board; the President, or any three or more holders of Common Stock owning, in the aggregate, not less than twenty-fi?e percent of the Common Stock of this Association, may calI a special meeting of shareholders at any time. Unless otherwise provided by the laws of the United States, 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 (10) days prior to the date of such meeting to each shareholder of record entitled to vote at such meeting at his address as shown upon the books of the Association TENTH: Any person, his heirs, executors, or administratois, may be indeded or reimbursed by the Association for reasonable expenses actually incurred in connection with any actio~suit, or proceeding, civil or criminal, to which he or they shall be made a party by reason of his being or having been a Director, officer, or employee of the Association 01 of any firm, corporation, or organization which he .served in any such capacity at the request 'of the kssociation. Provided, however, that no person shall be so indemnified or reimbursed in relation to any matter in such action, suit, or proceeding to whichhe &all finally be adjudged to have bein guilty of or liable for gross negligence, willW misconduct or criminal acts in the performanceof his duiies to the kssociation. -And, Ijrovided fuaher, that no person shd be so indemnified or reimbursed in relation to any matter in such action, suit, or proceeding which has been mide the -subject of a compromise settlement exc6pt with the approval of a court of competent jurisdiction, or the holders of record of a majority of the outstandingshares of the Association, or the Board of Duictors, acting by vote of ~irectok not'parfies to the same or substantially the same action, suit or proceeding, constituting a majority of the whole number of Directors. An4 provided Mer; that PO Director, officer or employee shall be so indemnitied or reimbursed foi expenses, penalties or other payments incurred in an administrative proceeding oraction .instituted by an appropriate bank regulatory agency where said proceeding or action results' in a final order assessing civil money penalties or requiring affiative action by an individual or individuals in the form of paymentsto the Association. The-foregoing right of indemnification shall not be exclusive of other rights to which suchperson; his heis, executors, or administrators, may be entitled as a matter of law. The Association may, upon ?.he &ative vote of a majority of its Board of Directors, p.wchase insurance for the purpose of indemnifying its Directors, officers and other employees to the extent that such ihdemnification ig'allowed in the precedhg paragaph. Such insurance may, but iieed not, be for the benefit of all Directors, officers, or employees. ' . ;. . . ELEVENTH: Except as otherwise spec5cally provided in Article Fi hereof, these Amended and Restated Articlg of Association may be amended at any ,re@= or special meeting of the shareholders by the affumative vote of the holders of a majority of 'the outstanding shares of Common Stock of the Association, unless the vote of the:holders of a geater amount of stock is required by law and in that case by the vote of the holders of such greater amount AMENDED ASJD.@STATED BYLAWS OF . .:. U.S. BANK NATIONAL ASSOCIATION' : . ' . .., . : . : : ........ ... > ... ARTICLE L .... . . . .. ,. . MEETINGS OF SHAREHOLDERS . . . . ..... ................ ..... . , . , . :::. .:. . , ! :.: , : ..:.: ..;. : :. ;: : .: ,.: ; :. ....... ... . . .- Section I..,:. .,:.Annual Meeting ;: :*:.. ,. ... -. . . .. .... .. ;..... .... i .. : ;... ........... ... : .. .:............ .... . . .?. ::. .:, ... ,,<,.., ................. . , : ..:. : ............... ..: j. . ........ .> !>; ... :: . .:. ....... . . . . ... The q&g.%f the.&~h~lderg, for theelectioq of directqrs %d&e transacti.o~:of other . business, sh@ be,heldat,a:#me &place:as..the. Chiairmap .orPresi signate, .., .;: , .'.: ... :. I . . : . . ,. ;. ., ........:. ....... ... ... ...... ..... ,. ..> ..:,.. .;.. '! .: ,:.. :.: .<,,!..., ::<..: :,,: :. .......... .,;.;.; y... , . j Section 2.. . : S~ecld Meetings ... ,.. :': ;. ,I.._ .... i . . . :.; ... ,; .... :. .......... :.>.! ... :: : : .:;,... .......... : ,>. ... : .. :! .:, .:.. .., ...... .. .,.. . .*. i , .... ..: . ..> .... , ..<............ ; ........ ........ .....,. ........... . . ~$6~d.$~@s~df:$h&h~l&er~ :,.::. ..... ..... .: ... > ..... ma$,je:call<d &d:likld at'iu&h ti$es . . subh ::;: ': : notice as is specified inthk'~rtiiles6f ~iioci&bn; ... ..... . ., . ...... .... .:..... '..'.i ........... .,;..I ::. ' ....... Section 3. Quorum . . . . ... . ,.. : . ............., ........ ,( ,,:- .... :.:. :..: .................. > ......................... ..:;. "i' ' ' A Gjority ...... of.theo,utsbiding ,. ".,,: ,: ...T... ... :, .,.:. c@j@ stock.@i,~s~teq,~ person:or,b$ pro* sball, . ,. :. . ...... .... ....... ... ........ constim.a ~~qo,w;!of aiiy,,ie@ig of ..,: theesharehprd%i, ,u$@s 11: : .othe$Se p;0ijded"by:iaw .:,: .? but i ' :. i less ,+,:a.quodmay @j6& agy,m@ti% . ~ hm:fime to* . atid,t& ................. meeting.i.;ly .; , ............ held.-. .! .; .. I ,: . . .............. adjouihed ................ *th&t f&hqf @itii<;. ,,:: ...... :. ... ..... ... ... , .. :.: : ............... ... ,:... ... ........,.. . . .......... .. -. ..-... ,. .. 8.' , ,. . :< : . ;. ,..... .,.. ....... .. * ........ .... . . ...... ... . . .I . . Section 4. Insoectors The Board of Directors may, and in the &vent of its failure $0 t6 do, the chairma6 of the Board , . .::.: .;.: ma): .. appoint inspecto~.of Ble&on who .... : sku. dete-e the pp.ence ,of .quorum, , :. ..: the valiillty ......... ~.f:~r'@xies"&dthe , ,:, ........ >. ...!:; ksulti 'o:fall,electio~s:aid (?1 other:mae, ... ~,o~,uiionby. ,.... :.:.,.. .:.. .. .:, .... shareli6lders ........... at.& kg@:.&$ %&id nbee$is of shareh(ild+. ...... , .:;.' ......... ... ',:, ........ ........ ... . . . ..,! :.. . . . . ,..,: ,. ., :,,::c ..., ... .. .. ..: ..:: : Section 5. Voting ... ...... In deciding on questions at meetings of shareholders, except in the election of dkectok; each shareholder ......... : ..... sSq be~entitldto.qne..vo~for.each.~.~~.~f stockheld.. A majoTity of votes cast shalldecide each matter submitied to the sharehold&i, except whekibj 1aw:a 1,Cg'er vote is, required. In all elections of directors, each shareholder shall have the right to vote the nhber of shares owned by him for as many persons as there are directors to be elected, or to cumulate ,, ST such . shares and gi$e one candidate as many votes as the number of directors multiplied by the number of his shares equal, or.to disvibug them on the.saw principle m,ong as many candidates as he shall. think .fitsection 6.. : -.Waiver andconsent '...... ., .. .:.. !, . ... ... I . : ,._ :. :. . . ... ...... . . ........ The shareholders may act without notice or a meeting by a unanimous writtek consent by all shareholders. . . Section 1. Term of Office ... The diuectors of this Association shall hold office for one year and until their successors are duly elected and qualified. Section 2. Number .... . . As provided in the Articles of Association, the Board of this Association shall consist of not less than five nor more than twenty-five members. At any meeting of the.shareholders held for the purpose of electing directors, or changing the number thereof, the number of directors may be determined by a majority of the votes cast by the shareholders in person or by proxy. Any vacaacy occurring in the Board shall be filled by the remaining~directors. Betwekn meetings of the shareholders held for the purpose of electing directors, the Board by a majority vote of the full Board may increase the size of the Board by not more than four directors in any one but not to more than a total of twenty-five directors, and fill any vacancy socreated in the Board. All direcfors shall hold office until their successors are eld and qualified. ... . . Section 3. Re& Meetings The organizational meeting of the Board of Directors shall be held as soon as practicable following m.&eti"g at anaplace.aSttiaCha@& @$ president &j deiignafe; 0thei reg& meeting of the,Board 6f~hkc~rs:bMl b.b.held q.Gaitiily.at ~chtim& &d'pliCe & .~ajr b& desi*ated ndti&'bf *'= When any. .: regular meeting of the Board falls on a holiday, the meeting shall b'e.he1.a on'theneict banking: business day, unless the Board shall designate some other day. . . .... ..:&p&i.4.&&&g S:b~& e'boaia.of Dirkto Is b&.c&id b9.f;y&-6f fii BQard': ...... a , ........ of theAssoc.igti;. or iiit'the.x*isi ofthree Lr m&re.,D' 'Noii.e.bf thd @e, pl~.,d ; ...... ..... of such meetings shall be giiren by letter, by feIi phone, in giscii g9 fG&il;, b$' .: . . electronic mail or other reasonable manner to every Director. . . 2'. ,...l... - ..... Sections. Ouom ................ .... ... .......... .......... I .,,..% <.. :. %% :;.y ..,:.. :...~:., : ....... i ..... ... ... ... .. . . .. . .... .S6*on6 :"ate:;: ; '.. :' ... .: ..: : : :. :,.:I ;..i:' ..' : .;,: :. ,..,::,: ..... . . ..... ..: . . ... ..:: ............ ..... !. .. ..;.:> -: ..... -: .. ;.. ...... ., . .., :.I! .: i. ... : : . . ..:..;....... , : ;::, : >:..: .; ...... ; : ~-iiiaj;~fity ofthose ~i~c~~* pre'ent.*d.irothg at &y'gmw dfthe B,j& of ~'j&& shall decide each matter considered, except where othenvise required by laWor'th&Plrticki or ';'; Bylaws of this Association ... ......... ? .. .!. . <: .: :\:. :;:: ......... .... ... .;. ,.>. ...........:. :>. ..:: :.; .~.:. , . ..: ... .... Section 7. Com~ensation >.'>' ,: : ..,: :. , Page 2 of 9 . . Directors, excluding full-time employees of the Bank,'i.hall re&ive'such reasonable compensation .. : : ?.may be fixed %m time to time,by the ... Board ofDiitors. ~. . . Section 1. Who Shall Constitute ... ... .......... . . ... .':The Officeis ofthe ~s&~ati&&& bk a ~ha&G $f:+e +.ard,, chief EX~V~ .: 0ffikr. a Fkideht. a Secret&. &a oth&officers such &Vi& Cbainn& of theBoard, . ' ~xecutive vice presidents, ~e$or vice Presidents, Vice Presidents, Assistant ~ic&~~idents, Assistant Secretaries. Trust Officers. Assistant Trust Officen, Controller, and Assistant Controller, as the ~oard may appoint hm:time tohe. The Board may choose to delegate authority to elect officers other than the Cham, Qief Executive Officer, President, Secretary, Vice Chaiian and Executive Vice presidents, td && Chief Executive OfEcer or President. Any person may hold two offices. The Chief Executive Officer and.he.Pres.ide,nt .... ... s.M at all times.be. members of the Bod of Directors. ..< . < .............. ..... . ~., . . . , , ..,.. ~g.gtion.2 . ... . : ': ~e&;f .... office . . i ,.. All officers shall be elected for and shall hold office until theur+ve successo~ are elected and aualified or until their earlier death. resipnation, retireme&'disaualificatiori or ..... ... removal from ~ffi,~, subject to the right of.@ Boa2 of ~i&cto~ hi& solddiscretion to discharge any officer at my ke. ... ...... Section 3. Chairman of the Board ......... ... ThqChainnan pf:the;Bod shall havegenerdexe.cutive powers and duties and shall perfom such $th& d&es q~y be assigned from to time bythe Board of Ditoe. He shal1,'whin present, presidide & 41 heetiogs qf the shareh&ders . _. .mid .:... :. directors and shall beex.: . : . offibi? a me$ber,df . . all co,-@eei'of .. .,.. :. the ~oard, . ~ . . ........ .... ..... ...... .: section 4: ... , ,:chief ~xec'utive /. . -. .i ...... . . The ~hikf ~xec~tive officer, who may alsobe thechairman or the President, shall.hav& general executive powers and duties and shall perform such other duties as may be assigned from time to time by the Board of Directors. ... Section 5. President . . . . The President shall have general executive powers and duties and shall perform &ch other duties as may be assigned from time to time by the board of Directors. In addition, if designated by the Board of Directors, the President shall be the Chief Executive Officer and shall have all the powers and duties of the Chief Executive Officer, includipg the same power to name temporarily a Chief Executive Officer to serve in the absence of the President if there is a vacancy in the position of the chairman or in the event of the absence or incapacity of the Chairman. Page 3 of 9 Section 6. Vice Chairmen of the Board ... The Board of ~irecto?~ shall haire the powkit6 ekci orieor more Vibe 'Chairmen of the Board of Directors. Any such Vice Chairman of the Boardshall participate in the formation of the policies of the Association and shall have such other duties as may be assigned to him from time to time by the Chairman of the Board or.by the Board of Directors. Section 7. Other Officers The Secretary and all other officers appointed by the Board of Diectors shall have such duties as defined by law and as may from time to ti&e be aisi*ed . to . theiti bi the Chief Executive Officer or the Board of Directors. . . ARTICLE IV. COMMIlTEES Section 1. Com~ensation Committee The duties of the Compensation Committee of the Association shall be carried out by the Compensation Committee of the financial holding company that is the parent of this Association Section 2. Committee on Audit The duties of the Audit Committee of the Association shall be &ed out by the Audit Committee of the financial holding company that is the parent of this Association. ' . Section 3. Trust Risk Manaeement Committee The Board of Directors of this Association shall a~~oint a Trust Risk Management Commitfk to provide oversight of the fiduciafy activities'of th6 Asskiation; The Tnist Risk Manaiement Comfnittee shall deteimine~~licies eoVemi!ig fiduciary ktivities; The Tat I&k -.- ~anagement Committee or such sub-conkttees; officeis or othh &i imjr be duly'deiignafed by the Tmt Risk Management Committee shall oversee the processes related @ fiduciary activities to assure conformity with fiduciary policies it establishes,iricIuding &ig the acceptance and the closing out or relinquishment of all trusts. All actions of the Trust Risk Committee shall be reported to the Board of Directors. ............... . . .... ........ . : . : .... '.%,' . :. Section 4. Other Committees The Board of Diectors may appoint, from time to time, other cominitt&s for such purposes and with such pow* as the Board may direct. ... . .:. . . . ........ ... . . .... ARTICLE v. , I..... . . . . . :MINUTE BOOK ... . , ... :The org&zationpGers of this ksoaation, the Bylaws as revised or &ended from tiine to time and the proceedings of all regular and special meetings of the shareholders and the directors Shall be'mrded inaminute book or books. All reports of .mmrnittees'required to be. . made to the Board shall be retbrded in a minute book or shall be filed by thehrding officer. The miriutes 'ofeach meeting of the shareholders and the Board shall be signed by the ,kcordig : .......... ... ! .. .:.. .. officer. , . . .... ARTICLE VI. CONVEYANCES, CONTRACTS, ETC. 'All tiansfem and '&n"eyan&s of real estate, mortgages, and mfers;endoiseinents or assignm&tf of Stock, boohds, not=ds,'debeh+ej or othernegotiable &tniinents, . . s&uriti@,or . . . ... :.. , . . personal$roperty shall be signedby el&d or appointed officer. ..... : ., '.., . . ...... . ....... . .. I. .... , :. . . . . ..:.;All checks, drafts, certificates of deposit and all funds of the Association held in its own or in a fiducie capacity may be $aid out by an order, draft or check bearing the manual or . :- . :,... . % facsimile sigiatureof any elected or appointed officer of the Association. ... . . .............. :.. :.. :.. .. . . :... . . All mortgage satisfactions, releases, all types of loan agreements, all routine transactional documents of the Association;:and all other instruments nots@ifically provided for, whether to be executedh ?fiduciary capacity or otherwise, may be signed on behalf of the Association by .... : ..... any elected or appointed officer thereot : . - ... . . :.. .<',,( ............ ... . . The secretary or any Assistant Secretary of the Association or other &oper officer may execute and certify that required action or authority has been given or has taken place by resolution of the Board under this Bylaw without the necessity of finther action by the Board. . . , ... ...... .......... ...... ARTICLE W. . . ..... ... ..... : . . SEAL The Association shall have no corpor& seal. ......... -. . . . . . . : ' . . . .... ARTICLE VIII. . : ... . . INDEMNIFICATION OF DIRECTORS, ..... ... OFFICERS, AND EMPLOYEES Section 1. ; -'General. - - . . . . . The Association shall indemnify to the full extent permitted by and in the manner permissible under the Delaware General Corporation Law, as amended from time to time (but, in i the case of any such amendment, only to the extent that such amendment permits the Association to provide broader indemnification rights than said law permitted the Association to provide Page 5 of 9 prior to such amendment), any person made, or threatened to be ma&, a party to any action, suit, or proceeding, whether criminal, civil, administrative, orinvestigative, by reason of the fact that such person (i) is or was a director, ad6sory director, or officer of the Association or any predecessor of the Association, or (ii) is or was a director, advisory director or officer of the Association or any predecessor of the Association and served &y other 'wrporatio'h, partnership, joint venture, bust, employee benefit plan or other enterprise as a director, advisory+ector, officer, partner, trustee, employee or agent at the request oft& Association or any predecessor of the Associition; provided. however, that the &sociation shall indemnify any such seeking indemnification in connection with a proceeding (or part thereof) initiated by such person, except for a proceeding contemplated by Section 4 of this Article VIE, only if such proceedkg (or part thereof) was authorized by the Board of Directors. Section 2. Advancement of Exuenses. The right to indemnification confd in this Article WI shall be a contract right and shall include the right to be aid by the Association the exuenses incurred in defending any such - -. proceeding oithreatekd prothredmg in advance of its final disposition, such advances to be paid by the Association within 20 davs after the receiot by the Association of a statement or kitemats hm the claimant requesting such ad&& or advances from time to time; provided, however, that if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director, advisory director or officer in his or her capacity as a director, advisory director or officer (and not in any other capacity in which service was or is rendered by such person while a director, advisory director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Association of an undertaking by or on behalf of such director, advisory director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director, advisory director or officer is not entitled to be indemniiied under this Article MI1 or otherwise. Section 3. Procedure for Indemnification To obtain indemnification under this Article VIII, a claimant shall submit to the Association a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonablv necessary to determine whether and to what extent ihe claimant is entitled to indemnification. -upon written request by a claimant for indemnification wursuant to the first sentence of this Section 3;a detknimtion. if muired bv applicable law, &th respect to the claimant's entitlement thereto shall be made.as foiows: (i) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (2) if no request is made by the claimant for a determination by Independent Counsel, (i) by a majority vote of the ' Disinterested Directors (as hereinafter defined), even though less thah a quorum, or by a majority vote of a committee of Disinterested Directors designatediby a majority vote of Disinterested Directors. even though less than a auorum. or Ci) if there are no Disinterested Directors or if the . ., ~isintekted ~irectirs so direct, b; Independent Counsel in a written opinion to.the Bod of. .. Directors. a co~v of which shall be delivered to the claimant. In the event the determination of entitlement to Ldernnification-is to be made by Independent Counsel at the request of the claimant, the independent Counsel shall be selected by the Board of Directors. If it is so : .. determined that the claimant is entitled to indemnification, payment to the claimant shall be: made within 10 days after such determination. . . . .. ' . ?i .:. . .. . .:.. .' .. .:. Page 6 of 9 Section 4. Certain Remedies. If a claim under Section 1 of this Article VIII is not paid in full by the Association within thirty days after a written claim pursuant to Section 3 of this Article VIIi has been received by the Association, or if a claim under Section 2 of this Article VIII is not paid in full by the Association within twenty days aRer a written claim pursuant to Section 2 of this Article Vm bas been received by the Association, the claimant may at any time thereafter bring suit against the Asbciation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Association) that the claimant has not met the standard of conduct which makes it permissible under the General Corporation Law of the State of Delaware for the Association to indemnify the claimant for the amount claimed, but the burden of vroving such defense shall be on the Association. Neither the failure of the Association (iicludini its Board of Directors or Independent Counsel) to have made a determination prior t6 ' the commencement of such action that indemnification of the claimant is proper in the cirmmsmks because he or she has met the applicable standard of conduk set forth in the General Corporation Law of the State of Delaware,.nor an actual d-tion by the . . ' . . . . Association (including its Board of Directors or Independent Counsel) that the claim& has not met sucL applicable standard of conduct, shall be a defense to the action or create a presumption that the.clahantthas not met the applicable standard of conduct Section 5. Binding Effect. If a determination shall have been made pursuant to Section 3 of this Article VZII that the clainiant isentitled to indemnification, the Association shall be bound by such determination in any judicial proceeding commenced pursuant to Section 4 of this Article VIII. . .. . Section 6. Validitv of this Article VIII. The Association shall be precluded from asdug in any judicial proceeding commenced pursuant to Section 4 of this Article VIII that the procedures and presumptions of this Article WII are not valid, binding and enforceable and shall stipulate in such proceeding that the Association is bound by all the provisions of this Article Vm. Section 7. Nonexclusivitv. etc. The right to indedcation and the payment of expenses incurred in defending a proceeding or threatened proceeding in advance of its final disposition conferred in this Article VIIi shall not be exclusive of any other right which any person may have or hereafter acquire unbk any statute, provision of the Articles of Association, Bylaws, agreement, vote of shareholders or Disinterested Directors or otherwise. No repeal or modification of this Article Vm, or adoption of any provision inconsistent herewithshall in any way diminish or adversely affect the rights of any present or former director, advisory director, officer, employee or agent of the Association or any predecessor thereof hereunder in respect of any occurrence or matter Page 7 of 9 arising, or of any claim involving allegations of acts or omissions occurring or arising, prior to any such repeal or modification. ... ... ... \ Section 8. Insurance. . . . .: The ~ssociation may &ritain.imce, atits expense, to prated &elf and any d-tor, officer, employee or agent ofthe Association or another corpo~$on, partnership, joint venture, trust or other enterprise against qy expense,.liiability or loss, whether or not the Association .:. would have the power to indemnify such personagainst such expense, liability or loss under the General Corporation Law of the State of Delawqe. To the extent that the Association metaim my policy or policies providing such insurance, each such director or officererand each such. :.. , . . agent or employee to whom rights to indemnification have been granted as provided in Section 9. of this Article VIII, shall be covered by such policy or policies in accordance with its or their -. terms to the maximum extent of the coverage thereunder for qy such director, officer, employee or agent. Section 9. Indemnification of Other Persons. ... The Association may grant rights ti indemnification, and rights to be paid by the ... - - Association the expensesincured in defending any proceeding in advance of itsfinal dis~osition, to any present or former emDloy& or agent of the Association or any predecessor of the-~sso&tion ti the fullest extent of the provisions of this ~icle ~m.with re&t @ the indemnification and advancemkt of expenses ofdirectors, advisory directors and.officers of the Association. Section 10. Severabilitv. If any provision or provisiqns of,& Article VIII shall be held to be in"alid, illegal or. :. unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the,. .. remaining provisions of this Article VIII (including, without litation, each portion of any paragraph of this Article VIIl containing any such provision held to be invalid, illegal or ..... unenforceable, that is not itself held to be invalid, illegd or uienforceable) shdl not in any way be &+ed or impaired thereby; a@ (2) to $e fullest expt possible,,the provisions of this Article VIII (including, without @itation, each such portion ofqy paragraph,of this , . : . ,,, . Article WI containingany such provision held tqbe invalid illegal or q-force+ble) shall be:.:. construed so as to give effect to the intent manifested by the pr6vision held halid, illegal er,, unenforceable. ..... ' . . :.\:. : .; : ......... Section 1 1. Certain Definitions. ... ...... ......... ... ..... . . ... ...... or of this ~rticle VI:. .. : ,, . ,. . :. .: :. ........ ... . . , ......... :,:: ....... .. . . :... : ....... ... .... . ... . : .... .... :.. ; :.. :.: :;, (1) '%i+f.Sted.~k&tbI"I''m@qy a Wctor of the Association who is not and!. . , was hot a party to the matter.in respect of which,ipdemnifica$on is sought by*. .::: .?. :.. ..... .... . clatnant.. ...........:..... . , :.... ... .; .; .:..... .:! :.. ... . ;:; : : . . . .,. ;: :.:: . ..... ..!:. : .:.:.: . . - (2) '?ndkpendeit ~b;'uns~1*' m-a la& %'a member ;fa bw firm: 9 ..( .. independent phetitioneith&t is experieidd in matters of corporation law and shall Page 8 of 9 include any such person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Association or the claimant in an action to determine the claimant's rights under this Article VIII. Section 12. Notices. Any notice, request or other communication required or permitted to be given to the Association under this Article VIII shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Association and shall be effective only upon receipt by the Secretary. Section 13. Pavments Notwithstanding any other provision of this Article VIU, however, (a) any - - indenmitication payments to an institution-filiated party, as defined at 12~~~1813(u), for an administrative uruceeding or civil action initiated by a federal banking agency, shall be - - .. reasonable andconsisten~withtherequirements of i2 USC 18280 and the associated regulations; and (b) any indemnification payments and advancement of costs and expenses to an institution-filiated.party, as defined at 12 USC 1813(u), in cases involving an administrative proceeding or civil action not initiated by a federal banking agency, shall'be consistent with safe and sound banking pwtices. ARTICLE Ix. AMENDMENTS These Bylaws, or any of them, may be added to, altered, amended or repealed by the Board at any regular or special meeting of the Board. ARTICLE X GOVERNING LAW This Association designates the Delaware General Corporation Law, as amended from time to time, as the law for its corporate governance procedwes, to the extent not inconsistent with Federal banking statutes and regulations. March 4,2009 Page 9 of 9 DEPARTMENT OF THE TREASURY BUREAU OF THE PUBLIC DEBT PARKERSBURG, WV 26106-1328 SUBSCRIPTION CONFIRMATION State and Local Government Series Securities Treasury Case Number: 201001648 Program Type: Time Deposit Issue Amount: $6,542,769.00 Issue Date: 0511 I12010 Owner Name: City of Renton TIN: 91-6001271 Rate Table Date: 04/08/20 1 0 Status: Complete Confirmation Date: 04/08/20 10 Confirmation Time: 01:32 PM EDT View a Subscription Before Issue - Tie Deposit Page 1 of 2 View a Subscription Before Issue - Time Deposit Treasury Case Number 201001648 Status Complete Issue Date 05/11/2010 Issue Amount $6,542,769.00 Rate Table Date 04/08/2010 Taxpayer Identification 91-6001271 Number City of Renton, Washington, Limited Tax General Obligation and Underlying Bond Issue Bonds, 2001 Owner Name City of Renton Address Line 1 1055 S. Grady Way Line 2 Line 3 City Renton State WA Zip Code 98058 Contact Name Iwen Wang Telephone 425-430-6858 Fax 425-430-6855 E-mail ABA Routing Number 091000022 Bank Reference Number Bank Name U.S. Bank National Association Address Line 1 Corporate Trust Services PD-WA-T7CT Line 2 1420 Fifth Ave Line 3 7th Floor City Seattle State WA Zip Code 98101 Contact Name Carolyn Morrison Telephone 206-344-4678 Fax 206-344-4630 E-mail carolyn.morrison@usbank.com ABA Routing Number 091000022 Bank Name U.S. Bank National Association Contact Name Carolyn Morrison Telephone 206-344-4678 Fax 206-344-4630 E-mail carolyn.morrison@usbank.com View a Subscription Before Issue - Time Deposit . . Page 2 of 2 ABA Routing Number 091000022 ABA Routing Number 091000022 U.S. Bank Account Name ACH RECEIPTS Bank Name National Account Number 173100077762 Association Account Type Checking. Address Line 1 60 Livingston Ave Line 2 EP-MN-WS3T Line 3 City St. Paul State MN Zip Code 55107-2292 INCOME contact ~ame PROCESSING Telephone 651-495-2996 Fax 651-495-8027 E-mail ABA/TIN 091000022 Organization Name US Bank, NA Address Line 1 6460 NE Botheil Way Line 2 Line 3 City Seattle State WA Zip Code 98028 Contact Name Ryan Brennan Telephone 206-344-4648 Fax 206-344-4632 E-mail ryan.brennan@usbank.com No Viewers Assigned t 1 i Cofl : : $153 557.00 j 0~00000000% : .& i 06/01/2010 - i ......... - ........ - ..... 1 $127,762.00 i 0.230000000% : 12/01/2010 ! 2 : COfl ................................ ... ................ .. + .-.- r-- ................ 3 i Note . 1 $120 578 . 00 4 i - 0.450000000% .. ............ i 06/01/2011 .. i 12/01/2010 - i 4 I Note $6,130,872.00 i 0.740000000% i 12/01/2011 i 12/01/2010 i First Interest Payment Date Maturity Date Interest Rate Principal Amount Security Number Security Type Cash Flow and Yield Verification Report City of Renton, Washington May 11,2010 Contents Letter Exhibit A Exhibit B Exhibit B-I Exhibit 8-2 Exhibit C Exhibit C-I Appendix I Schedule of Sources and Uses of Funds Escrow Account Cash Flow Cash Receipts From and Yield on the SLGS Debt Service Payments on the Refunded Bonds Debt Service Payments and Yield on the Bonds Net Original Issue Premium on the Bonds Applicable schedules provided by Seattle-Northwest Securities Corporation Audit. Tax. Advisory Grant Thornton LLP Report of Independent Certified Public Accountants On Applying Agreed-Upon Procedures City of Renton 1055 South Grady \Yay Renton, 1Vashington I<&L Gates LLP 925 Fourth Avenue, Suite 2900 Seattle, Washington U.S. Bank National Association 1420 Fifth Avenue, Seventh Floor Seattle, Washington Seattle-Northwest Securities Corporation 1420 Fifth Avenue, Suite 4300 Seattle, Washington $6,170,000 City of Renton, LVashington Limited Tax General Obligation Refunding Bonds, 2010 Dated May 11,2010 lVe have performed the procedures described in this report, which were agrced to by thc City of Renton, Washington (the "City") and Seattle-Northwest Securities Corporation (the "Underwriter"), to veriFy the mathematical accuracy of certain computations contained in the schedules attached in Appendix I provided by the Undenvriter. The Underwriter is responsible for these schedules. These were performed solely to assist you in the issuance of the above-captioned bond issue (the "Bonds") for the purpose of refunding a portion of the City's outstandilig Limited Tax General Obligation and Rehnding Bonds, 2001 (the "Refunded Bonds") as sulnmarized on the next page. This engagement was performed in accordance with Statements on Standards for Attestation Engagements established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely tlie responsibility of the addressees of this report who are the specified parties. Consequently, we make no representation regarding the sufficiency of the procedures described in this report either for the purpose for which this report has been requested or for any other purpose. Grant Thomf~o LLP u.S. member 6rmalGiani lharnlonlntcrnat~onai~td Principal Principal Mnruriries Redemption Redemption Issued Dared J&&d- Refunded Darc Pricc 12-1-18, 12-1-19 and 2001 $19,505,000 November 1,2001 $6,000,000 12-1-21 12-1-1 1 100% VERIFICATION OF ESCROW ACCOUNT CASH now SUFFICIENCY The Undenvriter provided us with schedules (Appendix I) summarizing future escrow account cash receipts and disbursements. These schedules indicate that there will be sufficient cash available in the escrow account to pay the principal and interest on the Refunded Bonds assuming the Refunded Bonds will be redeemed on December 1,2011 at 100 percent of par plus accrued interest. The attached Exhibit A (Schedule of Sources and Uses of Funds) was compiled based upon information provided by the Underwriter. As part of our engagement to recalculate the schedules attached as Appendix 1 we prepared schedules attached hereto as Exhibits B through B-2 independently calculating future escrow account cash receipts and disbursements and compared the information used in our calculations to the information listed below contained in applicable pages of the following documents: Subscription confirmation, dated April 8,2010, and Schedule 0fU.S. Treasury Securities provided by the Underwriter used to acquire certain United States Treasury Securities : State and Local Government Series (the "SLGY) insofar as the SLGS are described as to the principal amounts, interest rates, maturity dates, issuance date and fust interest payment date; and Official Statement and Ordinance for the Refunded Bonds provided by the Underwriter insofar as the Refunded Bonds are described as to the maturity and interest payment dates, primcipal amounts, interest rates and optional redemption date and price. In addition, we compared the interest rates €or each maturity of the SLGS, as shown on the Schedule of U.S. Treasury, Securities, with the maximum allowable interest rates shown on the Department of Treasury, Bureau of Public Debt, SLGS Table for use on April 8,2010 and found that the interest rates were equal to the maximum allowable interest rates for each maturity. Our procedures, as summarized in Exhibits B through 0-2, prove the mathemalical accuracy of the schedules provided by the Underwriter summarizing future escrow account cash receipts and disbursements. The schedules provided by the Underwriter and those prepared by us reflect that the anticipated receipts from the SLGS, together with an initial cash deposit of $1.16 to be deposited into the escrow account on May 11,2010, will be sufficient to pay, when dur, the ~rincipal and interest related to the Refunded Bonds assuming the Refunded Bonds will be redeemed on December 1,2011 at 100 percent of par plus accrued interest. VERIFICATION OF YIELDS The Underwriter provided us with schedules (Appendix I) which indicate that tlle yield on the cash receipts from the SLGS is less than the yield on the Bonds. These schedules were prepared based on the assumed settlement date of May 11,2010 using a 360-day year with interest compounded semi-annually. The term "yield", as used herein, mcans that yield which, when used in computing the present value of all paymcnts of principal and interest to be paid or received on an obligation produces an amount equal to, in the case of the cash receipts From the SLGS, the purchase price, and in the case of the Bonds, the issue price. In addition, we found that the schedules provided by the Undenvriter, which assume the redemption of the December 1,2020 and December 1,2021 maturities identified on Exhibits C and C-1 at par on June 1,2020 plus acc~ued interest, correctly treat those Bonds as yield-to-call Bonds as retired on the respective dates that For each Bond produces the lowest yield for the issue that includes the Bonds. Those Bonds identified as yield-to-call Bonds on the attached Exhibits C and C-1 are those Bonds that are subject to optional redemption and that are issued at an issue price that exceeds the stated redemption price at maturity of such Bonds by more than one-fourth of one percent lnultiplied by the product of the stated redemption price at maturity of such Bonds and the number of complete years to the f~st optional redemption date for the Bonds. We found that there are no other yield-to-call Bonds other than those identified on the attached Exhibits C and C-1. As part of our engagement to recalculate the schedules attached as Appendix I we prepared schedules attached hereto as Exhibits B-l and C independently calculating thc yields on (i) die cash receipts from the SLGS calculated on Exhibit B-1, and (i) the Bonds using the Official Statement provided by the Underwriter insofar as the Bonds arc described as to the maturity and interest payment dates, dated date, principal amounts, interest rates, optional redemption date and price, and issue price to the public. The results of our calculations, based on the aforementioned assumptions, are summarized below: Yield Exhibit Yield on the cash receipts from the SLGS 0.732486% B-l Yield on the Bonds 3.575057% 'C Our procedures, as summarized in Exhibits B-1 and C, prove the mathematical accuracy of the schedules provided by the Underwriter summarizing the yields. The schedules provided by the Undenvriter and those prepared by us reflect that the yield on the cash receipts from the SLGS is less than the yield on the Bonds. We were not engaged to, and did not, perform an examination in accordance with Statements on Standards for Attestation Engagements established by the American Institute of Certitied Public Accountants, the objective of which would be the expression of an examination opinion on the items referred to above. Accordingly we do not express such an opinion. Had we 'performed additional procedures, odler matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of those to whom this letter is addressed and is not intended to be and should not be used by anyone other than these specified parties. Minneapolis, Minnesota May 11,2010 Exlubit A City of Renton, Washington SCHEDULE OF SOURCES AND USES OF FUNDS May 11,2010 SOURCES: Principal amount of the Bonds Net original issue prenuun~ USES: Purchase price of the SLGS Beginning cash deposit to the escrow account Costs of issuance Undenvriter's discount Con~gency Exhibit B City of Renton, Washington ESCROW ACCOUNT CASH FLOW Cash receipts from SLGS Dates (Exhibit B-I) Cash deposit on May 11,2010 06-01-10 $153,557.00 12-01-10 153,555.58 06-01-1 1 153,556.03 12-01-11 6,153,556.23 $6,614,224.84 Debt service payments on Refunded Bonds Cash (Exhibit B-2) balance Exhibit B-l City of Renton, Washington CASH RECEIPTS FROM AND YIELD ON THE SLGS Present value on May 11,2010 Receipt Interest Cash rcceipts using a yield of date Principal rate Interest from SLGS 0.732486% 06-01-10 $153,557 0.000% $153,557.00 $153,494.64 12-01-10 127,762 0.230% $25,793.58 153,555.58 152,933.1 1 06-01-11 130,578 0.450% 22,978.03 153,556.03 152,375.50 12-01-11 6,130,872 0.740% 22,684.23 6,153,556.23 6,083,965.75 $6,542,769 $71,455.84 $6,614,224.84 $6,542,769.00 Purchase price of the SLGS $6,542,769.00 The sum of the present values of the cash receipts from the SLGS on May 11,2010, using a yield of 0.732486%. is equal to the purchase price of the SLGS. Exhibit R-2 City of Renton, Washington DEBT SERVICE PAYMENTS ON THE REFUNDED BONDS Interest Debt service Date Principal rate Interest payments 06-01-10 $153,556.25 $153,556.25 12-01-10 153,556.25 153,556.25 06-01-1 1 153,556.25 153,556.25 12-01-11 $6,000,000 (I) 153,556.25 6,153,556.25 $6,000,000 $614,225.00 $6,614,225.00 (1) Actual maturity dates, principal amounts and interest rates are as follows: Maturity Principal Interest date amount rate 12-01-18 $1,385,000 5.250% 12-01-19 1,460,000 5.250% 12-01 -21 3,155,000 5.000% $6,000,000 Exhibit C Date 12-01-10 06-01-11 12-01-11 06-01-12 12-01-12 06-01-13 12-01-13 06-01-14 12-01-14 06-01-15 12-01-15 06-01-16 12-01-16 06-01-17 12-01-17 06-01-18 12-01-18 06-01-19 12-01-19 06-01-20 12-01-20 06-01-21 12-01-21 City of Renton, Washington DEBT SERVICE PAYMENTS AND YIELD ON THE BONDS $6,170,000 issue dated May 11, 2010 Interest Principal rate Interest $140,000 3.000% $152,680.56 135,312.50 5,000 3.000% 135,312.50 135,237.50 5,000 3.000% 135,237.50 135,162.50 5,000 3.000% 135,162.50 135,087.50 5,000 3.000% 135,087.50 135,012.50 10,000 3.000% 135,012.50 134,862.50 10,000 3.000% 134,862.50 134,712.50 10,000 3.250% 134,712.50 134,550.00 1,395,000 4.500% 134,550.00 103,162.50 1,460,000 4.500% 103,162.50 70,312.50 1,530,000 4.500% 70,312.50 35,887.50 1,595,000 4.500% 35,887.50 86,170.000 $2.731.280.56 The present value of the future payments is equal to: Principal amount of the Bonds Net original issue premium Total debt service $292,680.56 135,312.50 140,312.50 135,237.50 140,237.50 135,162.50 140,162.50 135,087.50 140,087.50 135,012.50 145,012.50 134,862.50 144,862.50 134,712.50 144,712.50 134,550.00 1,529,550.00 103,162.50 1,563,162.50 70,312.50 1,600,312.50 35,887.50 1,630,887.50 $8,901,280.56 (1) Adjusted debt scrvicc 8292,680.56 135,312.50 140,312.50 135,237.50 140,237.50 135,162.50 140,162.50 135,087.50 140,087.50 135,012.50 145,012.50 134,862.50 144,862.50 134,712.50 144,712.50 134,550.00 1,529,550.00 103,162.50 1,563,162.50 3,195,312.50 Present value on May 1 I, 2010 using a yield OF 3.575057% $286,975.19 130,344.84 132,787.66 125,737.23 128,096.23 121,292.47 123,570.53 117,004.79 119,204.68 112,868.65 119,099.58 108,818.17 114,834.30 104,912.92 110,721.65 101,138.30 1,129,538.52 74,845.32 1,114,172.30 2,237,520.37 The sum of the present values of the adjusted debt scrvice payments of the Bonds on May 11,2010, using a yield of 3.575057%, is equal to the issue price of the Bonds. (1) Assumes that the December 1,2020 and December 1,2021 maturities are called on June 1,2020 at 100 percent of par plus accrued interest. Exhibit C-l Maturity date 12-01-10 12-01-11 12-01-12 12-01-13 12-01-14 12-01-15 12-01-16 12-01-17 12-01-18 12-01-19 12-01-20 12-01-21 City of Renton, Washington NET ORIGINAL ISSUE PREMIUM ON THE BONDS Principal $140,000 5,000 5,000 5,000 5,000 10,000 10,000 10,000 1,395,000 1,460,000 1,530,000 1,595,000 $6,170,000 Intcrcst rate 3.000% 3.000% 3.000% 3.000% 3.000% 3.000% 3.000% 3.250% 4.500% 4.500% 4,500% 4.500% Yield 0.600% 1 .OOO% 1.560% 1.870% 2.220% 2.570% 3.000% 3.260% 3.360% 3.530% 3.650% 3.740% Initial Net original public issue offering premium price (discount) 101.328% 81,859.20 103.079% 153.95 103.593% 179.65 103.868% 193.40 103.361% 168.05 102.212% 221.20 100.000% 99.932% (6.80) 108.413% 117,361.35 107.807% 113,982.20 107.098% (1) (2) 108,599.40 106.318% (1) (2) 100,772.10 $443,483.70 (1) Maturities were priced to call on June 1,2020 at 100 percent of par. (2) Represents the yield-to-call Bonds included for purposes of computing yield on the Bonds APPENDIX I Applicable schedules provided by Seattle-Northwest Securities Corporation ~ ~.. -~ ~- SOURCES AND USES OF FUNDS City of Renton Limited Tax General Oblinalion Refundinn Bonds. 2010 (Ref. 01 New S ort ti on) Dated Date 0511 IROIO Delivery Date 0511 112010 Sources: Bond Proceeds: Par Amounl Net Premium Uses: Refunding Escrow Deposiu: Casll Dr~osit 1.16 SLGS ~"rchases Delivcry Date Expenses: Cost of Issuance Undenwiter's Discount Other Uses ofFunds: Additional Procccds Apr 8, 2010 9:34 am Prepared by Seaule-Northwest Stcuritits Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW) Page 3 ESCROW SUFFICIENCY City of Renlon Limiled Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New % ponion) FINAL NUhlBERS Escrow Net Escrow Excess Dale Rcquircrnent Reccipts Receipts Excess Balance - Apr 8, 2010 9:34 urn Prcparcd by Scaltle.Northwcs1 Sccurilics Corp. (k:\ ... \RENTON.RENTON-ROILTNEW,ROILTNE\V) Page 14 ESCROW CASH FLOW - ~, ~ Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New S ponian) FINAL NUMBERS Presenl Valuc Net Escrow lo OYI 1/2010 Date Principal Interest Receipts Q 0.7324864% Escmw Cost Summary Purchac date Purchae cast of securities Target for yield calculation 6,542,769.00 ESCROW COST DETAIL City olRenlon Limited Tax Generdl Obligation Refunding Bonds, 2010 (Ref. 01 New % portion) FINAL NUMBERS Type or Maturity Par Total Sccurily Date Arnotrnt Rate Cost Global Proceeds Escrow: SLGS 06/01ROIO 153.557 153,557.00 SLGS 12/0112010 127.762 0.230% 127,762.00 SLGS 06/01/2011 130,578 0.450% 130,578.00 SLGS IUO1/2011 6,130,872 0.740% 6,130,872.00 Purchase Cost of Cach Tolal Dare Securities Deposit Escrow Cost Yield Global Proceeds Escrow: 05/11/2010 6.542.769 1.16 6,542.770.16 0.732486% Apr 8,2010 9:34 ;tm Prepad by Sealtlc-Northwcrl Securities Corp. (k:\..iRENTON:RENTON-ROILTNEW,ROlLTNEW) Page 12 ESCROW DESCRIPTIONS City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New $ ponion) FINAL NUMBERS Type of Type of Maturitj Fint In1 Par Max Securily SLGS Date Pmt Date Amount Rate Rate Mau ll.2OIO: . . SLGS Cenificate 06101R010 06/01/20IO 153,557 SLGS Certificate I2M)lROlO 12101/2010 127,762 0.230% 0.230% SLGS Note 06/01R011 IUOIROID 130,578 0.450% 0.450% SLGS Note 12/01/2011 1210112010 6,130,872 0.740% 0.740% SLGS Rates File Total Cenilicates oflndebtedness Total Notes Total original SLCS 6,542,769.00 Apr 8,2010 934 am Prepared by Sealtle-Narthwesl Securities Corp. (k:\ ... RENT0N:RENTON-ROILTNEW,ROILTNEW) Page 1 I PROOF OF COMPOSITE ESCROW YIELD Limited Tax General Obligation ~efundin~ Bonds, 2010 (Ref, 01 New 16 ponion) FINAL NUMBERS All restricted cscrows funded by bond ~roceeds Present Value Securily to 0511 112010 Dale Rcceiptr @ 0.7324864% Escmw Cost Summary Purchase dale Purchase cost of securities Target for yield calculation 6,542,769.00 .A?: 8, 2010 934 am Prepared by Sealtlc-Nonl>wesl Securities Corp. (k:\ ... \I<ENTON:REN'rON-ROILlNEW,ROILTNE\V) Page 16 ESCROW REQUIREMENTS City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New $ ponion) RNAL NUMBERS Period Principal Ending Interest Redeemed Total Apr 8, 2010 934 urn Prepared by Seatllc-Nonhwest Securities Corp. (k:\ ... KENT0N:RENTON-ROILTNEW,ROILMEW) Page 18 SUMMARY OF BONDS REFUNDED Citv of Renton Limited T~Y General Obligation Refunding Bonds, 2010 (Ret 01 New S porlion) FINAL NUMBERS Malurily lnlercst Par Call Call Bond Date Rale Amount Dale Price 2001 1.TGO & Refunding Bonds (ll/llOl): SERIALS 12/01/2018 5.250% I.~RS,OO~.~O IUOI~OI I 1on.ooo Apt 8,2010 9:34 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENTON;RENTON-ROILTNEW,ROlLTNEW) Page 19 BOND DEBT SERVICE Citv of Rcnlon Limited Tax General Obligation ~ef;ndin~ Bonds, 2010 (Ref. 01 New $ pollion) FINAL NUMBERS Dasd Date 0511 1R010 Delivery Date 0511 1/2010 Pcrid Annual Ending Principal Coupon Interest Debt Service Debt Service Apr 8,2010 9:34 am Prepared by Seattle-Nohwest Securities Corp. (k:\.,.\RENTON:RENTON-ROILTNEW,ROILTNEW) Poge 5 PROOF OF ARBITRAGE YIELD City oiRenlon Limited Tax General Oblinalion Refundinc Bonds, 2010 (Ref. 01 New $ uorlion) Present Value lo 0511 1/2010 Dale Debt Service @I 3.5750570% Proceeds Summa~y Dclivety date Par Value Premium (Discount) Target for yield calculation 6,613,483.70 Apr 8,2010 934 am Prepared by Seattle-Norlhwcsl Securitiec Cow. (k:\ ... \RENTON:RENTON-ROILTNEW,ROIL'fNEW) Page 7 PROOFOF ARBITRAGE YIELD City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New 5 ponion) FINAL NUMBERS Assumed Call/Com~ulation Dates for Premium Bonds Net Present Valuc (NPV) Bond Mahlrily Call call to 0511 in010 Comoonent Date Rate Yield Date Price @ 33.750570% - SERIAL 12/01/2020 4.500% 3.650% 06/01/2020 100.000 10.017.27 SERIAL 12/01/2021 4.500% 3.740% 06/01/2020 100.000 22.883.84 - .. . . . . Reieaed Call/Cam~utation Dates for Premium Bonds NCI Present Value (NPV) Bond Maturity Call Call to 0511 1/2010 lncrcnse Component Date Ilaa Yield Date Price @ 3.5750570% to NPV SERIAL 12/01/2020 4.500% 3.650% 14,885.10 4.867.83 SERIAL 12IO1RO2I 4.500% 3.740% 37,841.95 14.958.1 1 Apr 8,2010 9:34 am Prepmed by Seattle-Nonhwert Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILlNEW) Pogo 8 BOND PRICING City of Renton Limitcd Tax General Obligatio~~ Refunding Bonds. 2010 (Ref 01 New S porlion) FINAL NUMBERS sm* n~~ldc. lMlnIll0 144CW iW% O.MU% I(II.31 1.8JPIO 1~01a02011 5.m 3 ma*. I wv lolow 151% IMlnOl2 5.W 3W LJMV to3593 I7965 IMlnOll r.m lmx #nu% ,o>a~ !V~.*D lMlnOll 5.m l- 2220% ,Ol 36, 1-05 IMlnOl5 l0.W 3omS ?>70% 1022,t 221.20 IMhi2016 IO.~ >DM% 3ml~ rnaom IYilli2ill7 I0.W 3.250% 12(il% 99'112 4 SO IM112011 i,lW,m 45W l.lW 101411 111.161.1J IWlnOlO 1,464003 4JWX 1510% lOl807 - 111,%110 im~nrno om 4 3650% IOTLWPC w111mo IWW oooina~o lww 8a18.5w.40 trn~rnl t.s~.m 4.x~~ I~OX t&318 c >.s$w. m~nmo nmm w#mo lwm iw.,n~u 6.liO.aX1 411.411 70 Apr 8,2010 9:34 am Prepared by Scattlc-Nonhwesl Sccuritics Carp. (k:\ ... \RENTON:ENTON-ROILTNEW,ROILMEW) Page4 CERTIFICATE OF MANUAL SIGNATURE STATE OF WASHNGTON ) ) ss: COUNTY OF KING ) I, the undersigned affiant, being first duly sworn, on oath depose and say: My name is Denis Law (print or w) I have been duly chosen and am qualified and acting as Mayor (title orporilion) for Citv of Renton. Washincrton (name o~municipoliw) The signature appearing above is my true manual signature. This affidavit is made to comply with Ch. 86, Wash. Sess. Laws of 1969. SUBSCRIBED AND SWORN TO before me this '%% day of January, 2008. Not P bl'c E&fc Phumnnn [Printed Name] MY appointment expires: $?//?/ad 7 CERTIFICATE OF MAILING 1, Chervl Fountain , the duly chosen (PW OR TWENW qualified and acting Paralegal msmow of the law firm of K&L Preston Gates Ellis LLP BNNlCDUM DO HEREBY CERTIFY that on the 7" day of January, 2008 I mailed to the Secretary of State of the State of washington, postage prepaid, certificates of manual signature in the form attached hereto executed by the following officials: Name Position Denis Law Mayor, City of Renton, Washington Dated 1/7/08 CERTIFICATE OF MANUAL SIGNATURE STATE OF WASHINGTON ) ) ss: COUNTY OF KMG 1 I, the undersigned affiant, being first duly sworn, on oath depose and say: My name is Bonnie I. Walton &in1 or rype) I have been duly chosen and am qualified and acting as .,.. , ..... . . , .. . . . ..... :. . ',.. , . ,.::s .,;I, ..?, ' . :;y---:.:. ';:' .e , . ..;?*. ,>:... w, .;-.. ;3 Citv Clerk ;:; , -, r.. \*. *-> (rille orp~ition) for City of Renton. WashinPton (nome o/municipaliW The signature appearing above is my true manual signature. This affidavit is made to comply with Ch. 86, Wash. Sess. Laws of 1969. SUBSCRIBED AND SWORN TO hefore me this ba day of (\h&T I; [Seal or Stamp] [~rihted Name] , My appointment expires: 2 1 a7 / CERTIFICATE OF MAILING 1, Cheryl Fountain , the duly chosen OW DRTWE NhME) qualified and acting Paraleeal (POSITION) of the law firm of K&L Preston Gates Ellis LLP rhlUNlCPNlTY DO HEREBY CERTIFY that on the 6" day of November, 2007 1 mailed to the Secretary of State of the State of Washington, postage prepaid, certificates of manual signature in the form attached hereto executed by the following officials: Name Position Bonnie 1. Walton City Clerk City of Renton, Washington Kathy Keolker Mayor City of Renton, Washington Dated 1 1/6/07 SIGNATURE IDENTIFICATION CERTIFICATE We, Denis W. Law and Bonnie I. Walton, the duly chosen, qualified and acting Mayor and City Clerk, respectively, of the City of Renton, Washington (the "City"), do hereby certify that the signatures appearing on each of the following-described Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds") of the City are true and correct facsimiles of our signatures. The Bonds are in the total principal amount of $6,170,000, are dated as of the date of their delivery, are designated "City of Renton, Washington, Limited Tax General Obligation Refunding Bonds, 2010," are in the denomination of $5,000 each or integral multiples thereof, are fully registered, are numbered, bear interest at the rates per annum set forth in the following schedule, payable on December 1, 2010, and semiannually thereafter on the first days of each succeeding June and December, and mature on December 1 in the years and amounts as follows: Maturity Years (December 1) 2010 201 1 2012 2013 2014 201 5 2016 2017 2018 2019 2020 2021 Principal Amounts $1 40,000 5,000 5,000 5,000 5,000 10,000 10,000 10,000 1,395,000 1,460,000 1,530,000 1,595,000 Dared as of this 11 th day of May, 2010. Interest Rates 3.00% 3.00 3.00 3.00 3.00 3.00 3.00 3.25 4.50 4.50 4.50 4.50 Mayor ,E~.&wu~. &A?%-J City Clerk STATE OF WASHINGTON ) ss: COUNTY OF KING On this )I day of rC\,& 2010, before me, the undersigned, a Notary Public in and for the State of Washington, duly mmissioned and sworn, personally appeared Denis W. Law, to me known to be the Mayor of the City of Renton, Washington, described in and who executed the within and foregoing instrument; and acknowledged to me that he signed said instrument as his free and voluntary act and deed for [Printed Name] My commission expires 27 12010 ) ss: COUNTY OF KING 1 , 201 0, before me, the undersigned, a Notary Public in and sworn, personally appeared Bonnie I. Walton, to me known to be the City Clerk of the City of Renton, Washington, described in and who executed the within and foregoing instrument; and acknowledged to me that she signed said instrument as her free and voluntary act and deed fort ses and purposes therein mentioned. A ",., My commission expires IkbO CLOSING CERTIFICATE OF THE CITY OF RENTON The undersigned hereby certifies and represents to Seattle-Northwest Securities Corporation (the "Underwiter") that she is the duly appointed and acting Finance and Information Services Administrator of the City of Renton, Washington (the "City") and is authorized to execute and deliver this certificate and further certifies on behalf of the City to the Underwiter as follows: 1. This certificate is delivered in connection with the offering and sale of the $6,170,000 Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"). 2. The representations, warranties and covenants of the City set forth in the Bond Purchase Agreement for the Bonds (the "Purchase Agreement"), dated April 8, 2010, between the City and the Underwriter, and in Ordinance No. 5534 of the City (the "Bond Ordinance") were true and correct when made and remain true and correct as of this date. 3. No litigation or other proceedings are pending or, to my knowledge, threatened in any court in any way (a) affecting the position or title of the authorized officers of the City, or (b) seeking to restrain or to enjoin the authorization, issuance, sale or delivery of, or security for, any of the Bonds, or (c) contesting or affecting the validity or enforceability of the Bonds, the Bond Ordinance, the Purchase Agreement, or (d) contesting the completeness or accuracy of the Preliminary Official Statement or the Final Off~cial Statement, or (e) contesting the powers of the City or its authority with respect to the Bonds, the Bond Ordinance or the Purchase Agreement, or (f) materially affecting the finances of the City. 4. No event affecting the City has occurred since the date of the Final Official Statement which should be disclosed in the Final Official Statement for the purpose for which it is to be used or which is necessary to disclose therein in order to make the statements therein not misleading, and the Final Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided, however, no such representation or warranty is made with respect to the information in the Final Official Statement relating to DTC, the book-entry system, the Financial Advisor or the Underwriter). Capitalized terms not defined herein shall have the meaning set forth in the Purchase Agreement. Dated this 1 l th day of May, 2010. City of Renton, Washington Blanket Issuer Letter of Representations , ro be GJmol~;x by Issuer] City of Renton, Washington [Nun* ai Issuer: April 1 1997 !Due, Attention Undermiting Depment - Eb$bibv Tbe Depository 'LM Company 5.5 Water Street; 50th Floor Pjw Yo& hT 110041-0099 Ladies and Cendemcn: Thts letter sets farth our understanding with respect to all issues !the "Senrritics') that Issuer rhaU request be made eligible for depo5it.b~ The Depository Trust Company. ('DTC"). To induce DTC to accept rhe SccuriUes as eligible for depont at DTC, and to act in m&ce witb DTC5 Rules witb respect to the Securities, Issuer represents to DTC chat Issuer will amply witb the requirements sated in DTCr Operatiad Anangementr, as they may be amended horn time to time. sate: - vev + yours. Schedule A conrains statements hat DTC believes xnanw& 07C. the m& of eReaia took- @byamrferr d '. ~rrtcdhw#I dcs & City of Reneon. Washington atuin-nS7 . . (.4uLmnrod Ofsrds s@nue) Victoria A. Runkle, Finance and Received and ~ccepted: .r I COMP 200 Mill Avenue South 1% W) W (Sea) rmp) FEDERAL TAX CERTIFICATE I, the undersigned officer of the City of Renton, Washington (the "City"), make this certification for the benefit of all persons interested in the exclusion from gross income for federal income tax purposes of the interest to be paid on the City's Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"), which are being issued in the aggregate principal amount of $6,170,000 and delivered simultaneously with the delivery of this certificate. I do hereby certify as follows in good faith on the date of issue of the Bonds: 1. Resaonsible Officer. I am the duly chosen, qualified and acting officer of the City for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the City. I am the officer of the City charged, along with other officers of the City, with responsibility for issuing the Bonds. 2. Code and Regulations. The Bonds are subject to the provisions of sections 141, 148, 149 and 150 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations (the "Regulations") promulgated under sections 141, 148, 149 and 150 of the Code. These provisions of the Code and Regulations impose restrictions on the use of bond- financed facilities and on the investment of bond proceeds. This certificate is being executed and delivered pursuant to sections 1.141-1 through 1.141-15, 1.148-0 through 1.148-11, 1.149(b)-1, 1.149(d)-1, 1.149(g)-1, 1.150-1 and 1.150-2 of the Regulations. 3. Definitions. The capitalized terms used in this certificate (unless otherwise defined) that are defined in Ordinance No. 5534, passed on April 5, 2010, authorizing the issuance of the Bonds (the "Bond Ordinance") shall for all purposes hereof have the meanings therein specified. All terms defined in the Code or Regulations shall for all purposes of this certificate have the same meanings as given to those terms in the Code and Regulations unless the context clearly requires otherwise. 4. Reasonable Exaectations. The facts and estimates that are set forth in this certificate are accurate. The expectations that are set forth in this certificate are reasonable in light of such facts and estimates. There are no other facts or estimates that would materially change such expectations. The undersigned has to the extent necessary reviewed the certifications set forth herein with other representatives of the City as to such accuracy and reasonableness. The undersigned has also relied, to the extent appropriate, on representations set forth in the certificate of Seattle-Northwest Securities Corporation, the underwriter that has purchased the Bonds (the "Underwriter"), attached hereto as Exhibit A, the representations set forth in the certificate of Piper Jaffray & Co., the City's Financial Advisor (the "Financial Advisor") attached hereto as Exhibit B, and the report of Grant Thomton LLP, certified public accountants, dated May 11, 2010 (the "Report"). The undersigned is aware of no fact, estimate or circumstance that would create any doubt regarding the accuracy or reasonableness of all or any portion of such documents. 5. Descriation of Governmental Pumose. The City is issuing the Bonds pursuant to the Bond Ordinance (a) to provide funds that will be used to advance refund and defease a portion of the City's Limited Tax General Obligation and Refunding Bonds, 2001 (the "Prior Bonds"), pursuant to an escrow agreement between the City and U.S. Bank National Association (the "Escrow Agreement"), and (b) to pay the costs of issuance of the Bonds. The Prior Bonds were issued to provide funds to (i) advance refund a portion of the City's Limited Tax General Obligation Bonds, 1997B (the "1997B Bonds"), including the payment of costs of issuance of the Prior Bonds allocable to the advance refunding of the 1997B Bonds (the "2001 Refunding Project") and (ii) pay the costs of constructing and equipping a municipal parking garage (the "2001 Capital Improvements"), including costs of issuance of the Prior Bonds allocable to the 2001 Capital Improvements (the "2001 New Money Project"). The Report details all relevant aspects of the application of the proceeds of the Bonds and the City's program to refund the Prior Bonds. Specifically, all of the Prior Bonds maturing on December 1, 2018, December 1, 2019 and December 1,2021 in the amount of $6,000,000.00 (the "Refunded Bonds") will be called for redemption and retired with proceeds of the Bonds. The Refunded Bonds are being defeased in order to achieve a present-value savings in the debt service payable by the City. December 1, 201 1 is the fust date on which the Refunded Bonds are subject to optional redemption and on such date all of the Refunded Bonds will be called for redemption in advance of their scheduled maturities and retired with proceeds of the Bonds. In accordance with a multipurpose issue allocation of the Prior Bonds pursuant to Treasury Regulation section 1.148-9(h)(4)(v)(B), all of the Refunded Bonds are allocable to the 2001 New Money Project and the Bonds are the first advance refunding of the Refunded Bonds. 6. The Refunded Bonds. (a) General. No portion of the purchase price of any of the Refunded Bonds represents a loan made from the proceeds of another tax-exempt obligation. All of the original and investment proceeds allocable to the Refunded Bonds have been expended. No portion of the proceeds of the Refunded Bonds was used to pay the principal of, or interest on, any other issue of governmental obligations. In addition, other than to the extent of preliminary expenditures (i.., architectural, engineering, surveying, soil testing, reimbursement bond issuance, and similar costs that are incurred prior to commencement of acquisition, construction, or rehabilitation of a project, other than land acquisition, site preparation, and similar costs incident to commencement of construction), no portion of the proceeds of the Refunded Bonds was used to reimburse the City for any expenditures made by the City prior to the respective issuance dates of the Refunded Bonds or 60 days prior to the date that the City adopted a declaration of intent to reimburse itself fiom proceeds of the Refunded Bonds. (b) Prior Bond Fund. The City has maintained a debt service fund for the Prior Bonds (the "Prior Bond Fund") and has on hand in such Prior Bond Fund certain amounts that were to be used for the payment of debt service on the Prior Bonds. The Prior Bond Fund will be continued for the payment of debt service on the Prior Bonds that remain outstanding. The City has created a new debt service fund (the "Bond Fund") under the Bond Ordinance for purposes of the payment of debt service on the Bonds, as described in paragraph 16 below. 7. Use of Amounts Allocable to Refunded Bonds. Other than amounts described in paragraph 6 above, there are no amounts on hand that represent proceeds of the Refunded Bonds, replacement proceeds of the Refunded Bonds or accumulated earnings on such proceeds. 8. Expenditure of Proceeds of the Bonds. The sale proceeds from the issuance of the Bonds will be $6,613,483.70. Such amount represents the stated redemption price at maturity (excluding accrued interest for those Bonds the interest on which is paid at least once annually) of the Bonds, equal to $6,170,000.00, plus a net original issue premium in the amount of $443,483.70. No portion of the purchase price of any of the Bonds is provided by the issuance of any other issue of obligations. The sale proceeds will be expended as follows: (a) The amount of $6,542,769.00 will be deposited in the escrow fund established pursuant to the Escrow Agreement (the "Escrow Fund") and used on the date hereof to purchase United States Treasury Certificates of Indebtedness and Notes, State and Local Government Securities (the "Escrowed Securities"), the proceeds of which will be used as described in the Report to pay the principal of, and interest and redemption premium, if any, on the Refunded Bonds. No portion of the proceeds of the Bonds is expected to be used to pay any interest on, or principal of, any issue of governmental obligations other than the Bonds and the Refunded Bonds. (b) The amount of $34,798.80 will be allocated on the date of issuance of the Bonds to the Underwriter's discount or compensation. (c) The amount of $35,625.00 will be disbursed to pay other costs of issuance of the Bonds (including any rating agency fees charged to the City). (d) The amount of $289.74 represents a rounding amount and will be deposited in the Bond Fund and used to pay debt service on the Bonds on the first interest payment date. (e) The amount of $1.16 will be deposited as the initial cash balance in the Escrow Fund and disbursed to pay debt service on the Refunded Bonds. 9. Pre-issuance Accrued Interest. The Bonds are dated as of the date of their initial delivery to the Underwriter and the City will receive no pre-issuance accrued interest on the Bonds. 10. Investment Proceeds. Except for earnings on the amounts described in paragraphs 8(c), 8(d) and 8(e), all amounts received by the City, such as interest and dividends, resulting Gom the investment of any original proceeds or investment proceeds of the Bonds will be deposited in the Escrow Fund for the Refunded Bonds and used to pay the principal of, and interest and redemption premium, if any, on, the Refunded Bonds. Earnings on the amounts described in paragraphs 8(c), 8(d) and 8(e) will be used for one of the purposes described in such paragraphs. 11. Transferred Proceeds. There are no transferred proceeds with respect to the Bonds because all of the proceeds of Refunded Bonds have been or will be expended prior to the fust dates on which amounts are disbursed from the Escrow Fund to pay principal of the Refunded Bonds. 12. No Replacement Proceeds. Other than amounts described herein, there are no amounts that have a sufficiently direct nexus to the Bonds or to the governmental purposes of the Bonds, including the expected use of amounts to pay debt service on the Refunded Bonds, that the amounts would have been used for such purpose if the proceeds of the Bonds were not used or to be used for such purpose. (a) No Sinking Funds. Other than to the extent described herein, there is no debt service fund, redemption hnd, reserve fund, replacement fund, or similar fund reasonably expected to be used directly or indirectly to pay principal or interest on the Bonds. (b) No Pledged Funds. Other than amounts described herein, there is no amount that is directly or indirectly, other than solely by reason of the mere availability or preliminary earmarking, pledged to pay principal or interest on the Bonds, or to a guarantor of part or all of the Bonds, such that such pledge provides reasonable assurance that such amount will be available to pay principal or interest on the Bonds if the City encounters financial difficulty. For purposes of this certification, an amount is treated as so pledged if it is held under an agreement to maintain the amount at a particular level for the direct or indirect benefit of the holders or the guarantor of the Bonds. (c) No Other Replacement Proceeds. There are no other replacement proceeds allocable to the Bonds because the City reasonably expects that the term of the Bonds will not be longer than is reasonably necessary for the governmental purposes of the Bonds. Furthermore, if the term of the Bonds is longer than is reasonably necessary for the governmental purposes of the Bonds, the City does not reasonably expect to have available amounts during the portion of such period that is longer than is reasonably necessary. The Bonds would be issued to achieve a debt service savings independent of any arbitrage benefit as evidenced by the expectation that the Bonds reasonably would have been issued if the interest on the Bonds were included in gross income (assuming that the hypothetical taxable interest rate would be the same as the actual tax- exempt interest rate). (d) Weighted Average Maturity. The weighted average maturity of the Bonds, which has been computed by the Underwriter as set forth on Exhibit A, does not exceed the remaining weighted average maturity of the Refunded Bonds and the weighted average maturity of the Refunded Bonds is not greater than 120 percent of the weighted average estimated economic life of the 2001 New Money Project, determined in accordance with section 147(b) of the Code. Such weighted average estimated economic life is determined in accordance with the following assumptions: (a) the weighted average was determined by taking into account the respective costs of each of the assets financed by the Refunded Bonds; (b) the reasonably expected economic life of an asset was determined as of the later of the date hereof or the date on which such asset is expected to be placed in service (i.e., available for use for the intended purposes of such asset); (c) the economic lives used in making this determination are not greater than the useful lives used for depreciation under section 167 of the Code prior to the enactment of the current system of depreciation in effect under section 168 of the Code (i.e., the "mid-point lives") under the asset depreciation range ("ADR) system of section 167(m) of the Code, as set forth in Revenue Procedure 83-35, 1983-1 C.B. 745, where applicable, and the "guideline lives" under Revenue Procedure 62-21, 1962-2 C.B. 418, in the case of structures; and (d) land or any interest therein has not been taken into account in determining the average reasonably expected economic life of such project, unless 25 percent or more of the net proceeds of any issue is to be used to finance land. 13. No Excess Gross Proceeds. Except for the amount described in paragraph 8(d) above and earnings on the amounts described in paragraphs 8(c) and 8(d) above, all gross proceeds of the Bonds are allocable to: (a) the payment of principal, interest or call premium on the Refunded Bonds as described in paragraph 8(a) above; @) the payment of costs of issuance of the Bonds as described in paragraph 8@) and 8(c) above; (c) the payment of administrative costs allocable to repaying the Refunded Bonds, carrying and repaying the Bonds or investments of Bond proceeds; (d) transferred proceeds allocable to expenditures for the governmental purpose of the Refunded Bonds as described in paragraph 7 above (if any); and (e) replacement proceeds in a sinking fund for the Bonds. Investment earnings on the amounts described in paragraphs 8(c) and 8(d) are expected to be de minimis; therefore, the sum of the investment earnings on the amounts described in paragraphs 8(c) and 8(d), the amount described in paragraph 8(d) will be less than one percent of the original proceeds of the Bonds. 14. Yield on the Bonds. For the purposes of this certificate, the yield on the Bonds is the discount rate that, when used in computing the present value as of the issue date of the Bonds, of all unconditionally payable payments of principal, interest and fees for qualified guarantees on the Bonds, produces an amount equal to the present value, using the same discount rate, of the aggregate issue price of the Bonds as of the issue date. For purposes of determining the yield on the Bonds, the issue price of the Bonds is the sum of the issue prices for each group of substantially identical Bonds. For each group of substantially identical Bonds, the issue price is the fust price at which a substantial amount (i.e., ten percent) is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters and wholesalers). Based upon the representations of the Underwriter set forth in Exhibit A hereto, the issue price of the Bonds aggregated $6,613,483.70. No Underwriter's discount, issuance costs, or costs of carrying or repaying the Bonds is taken into account for purposes of computing the yield on the Bonds. The yield on the Bonds calculated in this manner, as shown in the Report, is 3.575057 percent. 15. Temporarv Periods and Yield Restriction. (a) Uninvested Amounts. The amounts described in paragraphs 8@) and 8(e) will not be invested and, therefore, are not subject to yield restriction. (b) Issuance Costs. It is expected that the amount described in paragraph 8(c) will be disbursed within 13 months of the date hereof for costs of issuing the Bonds; therefore, such amount will be invested for an allowable temporary period. To the extent any portion of the amount described in paragraph 8(c) is not expended within 13 months, the City will take steps to restrict the investment of such amounts to a yield which is not materially higher than the yield on the Bonds. (c) Rounding Amount. The amount described in paragraph 8(d) will be invested at a yield that is not higher than the yield on the Bonds. (d) Yield on the Escrowed Securities. The yield on the Escrowed Securities is computed using the same compounding interval and financial conventions used to compute the yield on the Bonds. The yield on the Escrowed Securities is the discount rate that, when used in computing the present value as of the date the Escrowed Securities were first allocated to the Bonds of all unconditionally payable receipts to be actually or constructively received from the Escrowed Securities, produces an amount equal to the amounts to be actually or constructively paid for the Escrowed Securities. The Escrowed Securities are all yield-restricted nonpurpose investments that are a single class of investments and that are treated as a single investment because all of the Escrowed Securities were purchased with Bond proceeds and held in a refunding escrow as described in paragraph 8(a) above. Such purchase price is equal to the price paid by the City to the United States for the Escrowed Securities. As shown in the Report, the yield on the Escrowed Securities determined in this manner is 0.732486 percent, a yield that is not higher than the yield on the Bonds. The City has covenanted in the Bond Ordinance to comply with, among other things, the requirements of section 148(f) of the Code and, if required, the City will satisfy this requirement with respect to earnings on the Escrowed Securities out of funds other than those in the Escrow Fund. Pursuant to section 1.148-9(g) of the Regulations, the City hereby elects to waive the 30-day temporary period available under section 1.148-9(d)(2)(i) of the Regulations: 16. Bond Fund. Pursuant to the Bond Ordinance, the City has created or continued, as the case may be, the Bond Fund and the proceeds from all taxes levied, assessed and collected for and on account of the Bonds are to be deposited in such Fund. The City expects that taxes levied, assessed and collected for and on account of the Bonds will be sufficient each year to pay such debt service. All amounts deposited in the Bond Fund which will be depleted at least once each bond year, except for a reasonable carryover amount not in excess of the greater of the earnings on such portion of the Bond Fund for the immediately preceding bond year or one- twelfth of the principal and interest paymen@ on the Bonds for the immediately preceding bond year. Therefore, all amounts therein may be invested at an unrestricted yield. Any amounts held in the Bond Fund for longer than 13 months will be invested in obligations the yield on which is not in excess of the yield on the Bonds. 17. Issue. There are no other obligations which (a) are sold at substantially the same time as the Bonds (i.e., within 15 days), (b) are sold pursuant to the same plan of financing with the Bonds, and (c) will be paid out of substantially the same source of funds as the Bonds. 18. Compliance With Rebate Reauirements. The City has covenanted in the Bond Ordinance that it will take all necessary steps to comply with the requirement that rebatable arbitrage earnings on the investment of the gross proceeds of the Bonds, if any, within the meaning of section 148(f) of the Code be rebated to the federal government. Specifically, the City will (a) maintain records regarding the investment of the gross proceeds of the Bonds as may be required to calculate such rebatable arbitrage earnings separately from records of amounts on deposit in the funds and accounts of the City which are allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (b) calculate at such intervals as may be required by applicable Regulations, the amount of rebatable arbitrage earnings, if any, earned from the investment of the gross proceeds of the Bonds and (c) pay, not less often than every fifth anniversary date of the delivery of the Bonds and within 60 days following the fmal maturity of the Bonds, or on such other dates required or permitted by applicable Regulations, all amounts required to be rebated to the federal govemment. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal govemment by entering into any investment arrangement with respect to the gross proceeds of the Bonds that might result in a reduction in the amount required to be paid to the federal govemment because such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at arm's-length and had the yield on the issue not been relevant to either party. The City hereby covenants to pay any rebate due on the Refunded Bonds within 60 days after the date the Refunded Bonds are retired. 19. Not an Abusive Transaction. (a) General. No action taken in connection with the issuance of the Bonds is or will have the effect of (a) enabling the City to exploit, other than during an allowable temporary period, the difference between tax-exempt and taxable interest rates to obtain a material financial advantage (including as a result of an investment of any portion of the gross proceeds of the Bonds over any period of time, notwithstanding that, in the aggregate, the gross proceeds of the Bonds are not invested in higher yielding investments over the term of the Bonds), and (b) overburdening the tax-exempt bond market by issuing more bonds, issuing bonds earlier, or allowing bonds to remain outstanding longer than is otherwise reasonably necessary to accomplish the governmental purposes of the Bonds, based on all the facts and circumstances. Specifically, (i) the primary purpose of each transaction undertaken in connection with the issuance of the Bonds is a bona fide governmental purpose; (ii) each action taken in connection with the issuance of the Bonds would reasonably be taken to accomplish the governmental purposes of the Bonds if the interest on the Bonds were not excludable from gross income for federal income tax purposes (assuming the hypothetical taxable interest rate would be the same as the actual tax-exempt interest rate on the Bonds); (iii) the proceeds of the Bonds will not exceed by more than a minor portion the amount necessary to accomplish the governmental purposes of the Bonds and will in fact not be substantially in excess of the amount of proceeds allocated to expenditures for the governmental purposes of the Bonds. (b) No Re-refunding. No portion of the Refunded Bonds has been refunded or defeased other than by reason of the issuance of the Bonds. (c) No Sinking Fund. No portion of the Bonds has a term that has been lengthened primarily for the purpose of creating a sinking fund or similar hnd with respect to the Bonds and thereby eliminating significant amounts of negative arbitrage in the Escrow Fund. (d) No Noncallable Bonds. The Refunded Bonds do not include any noncallable Prior Bonds. (e) No Window Refunding. No portion of the Bonds has been structured with maturity dates the primary purpose of which is to make available released revenues that will enable the City to avoid transferred proceeds or to make available revenues that may be invested to be ultimately used to pay debt service on another issue of obligations. (f) No Sale of Conduit Loan. No portion of the gross proceeds of the Prior Bonds or the Bonds has been or will be used to acquire, finance, or refinance any conduit loan to any Party. 20. No Arbitrage. On the basis of the foregoing facts, estimates and circumstances, it is expected that the gross proceeds of the Bonds will not be used in a manner that would cause any of the Bonds to be an "arbitrage bond" within the meaning of section 148 of the Code and the Regulations. To the best of the knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that would materially change such expectations. 2 1. No Private Use, Payments or Loan Financing. (a) General. The City reasonably expects, as of the date hereof, that no action or event during the entire stated term of the Bonds will cause either the "private business tests" or the "private loan financing test," as such terms are defined in the Regulations, to be met. Specifically, (i) Not more than 10 percent of the proceeds of the Bonds will be used and no portion of the proceeds of the Prior Bonds has been used in a trade or business of a nongovernmental person. For purposes of determining use, the City will apply rules set forth in applicable Regulations and Revenue Procedures promulgated by the Internal Revenue Service, including, among others, the following rules: (A) any activity carried on by a person other than a natural person or a state or local governmental unit will be treated as a trade or business of a nongovernmental person; (B) the use of all or any portion of the 2001 New Money Project is treated as the direct use of proceeds; (C) a nongovernmental person will be treated as a private business user of proceeds of the Bonds or the Prior Bonds as a result of ownership, actual or beneficial use of the proceeds pursuant to a lease, or a management or incentive payment contract, or certain other arrangements such as a take-or-pay or other output-type contract; and @) the private business use test is met if a nongovernmental person has special legal entitlements to use directly or indirectly the 2001 New Money Project. (ii) The City has not taken and will not take any deliberate action that would cause or permit the use of any portion of the 2001 New Money Project to change such that such portion will be deemed to be used in the trade or business of a nongovernmental person for so long as any of the Bonds remains outstanding (or until an opinion of nationally recognized bond counsel is received to the effect that such change in use will not adversely affect the excludability from gross income for federal income tax purposes of interest payable on the Bonds). For this purpose any action within the control of the City is treated as a deliberate action. A deliberate action occurs on the date the City enters into a binding contract with a nongovernmental person for use of the 2001 New Money Project that is not subject to any material contingencies. (iii) All payments of the debt service on the Bonds will be paid from and secured by a generally applicable tax. For this purpose, a generally applicable tax is a tax (A) which is an enforced contribution exacted pursuant to legislative City in the exercise of the taxing power that is imposed and collected for the purpose of raising revenue to be used for governmental purposes and (B) which has a uniform tax rate that is applied to all persons of the same classification in the appropriate jurisdiction using a generally applicable manner of determination and collection. No portion of the payment of the debt service on the Bonds will be directly or indirectly derived from payments (whether or not to the City or any related party) in respect of property, or borrowed money, used or to be used for a private business use. Furthermore, no portion of the payment of the debt service on the Bonds will be directly or indirectly secured by any interest in property used or to be used for a private business use or payments in respect of property used or to be used for a private business use. (iv) No portion of the proceeds of the Bonds will be directly or indirectly used to make or finance a loan to any person other than a state or local governmental unit. (b) Dispositions of Personal Prouerty in the Ordinarv Course. The City does not reasonably expect that it will sell or otherwise dispose of personal property components of the 2001 New Money Project refinanced with the Bonds other than in the ordinary course of an established governmental program that satisfies the following requirements: (i) The weighted average maturity of the portion of the Bonds refinancing personal property is not greater than 120 percent of the reasonably expected actual use of such personal property for governmental purposes; (ii) The reasonably expected fair market value of such personal property on the date of disposition will be not greater than 25 percent of its cost; (iii) Such personal property will no longer be suitable for its governmental purposes on the date of disposition; and (iv) The City is required to deposit amounts received from such disposition in a commingled fund with substantial tax or other governmental revenues and the City reasonably expects to spend such amounts on governmental programs within 6 months from the date of commingling. (c) Other Agreements. The City will not enter into any agreement with any nongovernmental person regarding the use of all or any portion of the 2001 New Money Project during the stated term of the Bonds unless such agreement will not adversely affect the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. 22. Weighted Average Maturity. The weighted average maturity of the Bonds set forth on Exhibit A attached to this certificate is the sum of the products of the issue price of each group of identical Bonds and the number of years to maturity (determined separately for each group of identical Bonds and taking into account mandatory redemptions), divided by the aggregate sale proceeds of the Bonds. 23. Bonds are not Hedge Bonds. The City represents that not more than 50 percent of the proceeds of the Refunded Bonds were a part was invested in nonpurpose investments (as defined in section 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more within the meaning of section 149(g)(3)(A)(ii) of the Code, and the City reasonably expected at the time the Refunded Bonds were issued that at least 85 percent of.the spendable pioceeds of each such Bonds would be used to carry out the governmental purposes of such issue within the corresponding three-year period beginning on the date of issue of the Refunded Bonds. 24. Federal Guarantee Prohibition. The Bonds are not "federally guaranteed" and the City will not cause or allow the bonds to become "federally guaranteed". Unless otherwise excepted under section 149(b) of the Code, the Bonds will be considered federally guaranteed if: (a) The payment of principal or interest with respect to the Bonds is guaranteed (in whole or in part) by the United States (or any agency or instnunentality thereof); (b) 5 percent or more of the proceeds of the Bonds are to be: (i) used in making loans the payment of principal or interest with respect to which are to be guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof), or (ii) invested (directly or indirectly) in federally insured deposits or accounts; or (c) The payment of principal or interest on the Bonds is otherwise indirectly guaranteed (in whole or in part) by the United States (or an agency or instrumentality thereof). CITY OF RENTON, WASHINGTON By: Date: May 1 1,201 0 EXHIBIT A CERTIFICATE OF UNDERWRITER Seattle-Northwest Securities Corporation has acted as underwriter (the "Underwriter"), in connection with the sale and delivery by the City of Renton, Washington (the "City") of Limited Tax General Obligation Refunding Bonds, 2010 in the aggregate principal amount of $6,170,000 (the "Bonds"). I, the undersigned, hereby certify as follows on behalf of the Underwriter: 1. I am the duly chosen, qualified and acting officer of the Underwriter for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Underwriter. 1 am the officer of the Underwriter charged, along with other officers of the Underwriter, with responsibility for the Bonds. 2. The Underwriter has purchased the Bonds From the City pursuant to a Bond Purchase Contract dated April 8, 2010, for an aggregate purchase price of $6,578,684.90. The Underwriter has made a bona fide public offering to the public of all of the Bonds of each maturity at the issue prices to the public set on the cover of the Official Statement. The issue prices set forth in the Official Statement were determined on the date the Bonds were purchased by the Underwriter based on the reasonable expectations regarding the initial public offering prices. The issue price for each maturity of the Bonds, as set forth in the Report, represents the first price (including original issue premium and discount and accrued interest to the issue date only) of the Bonds at which a substantial amount (at least 10 percent) of each such maturity was sold to the public. The aggregate of such issue prices of all of the Bonds is $6,613,483.70. The initial public offering prices described above do not exceed the fair market value for the Bonds on the sale date. The term "public," as used herein, does not include bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 3. The Underwriter computed the weighted average maturity of the Bonds to be 9.8603 years, as set forth in paragraph 23 of the Federal Tax Certificate to which this certificate is attached. 4. The yield on the Bonds is not less than 3.575057 percent. For purposes of this certificate, the term "yield" means that yield which is computed as described in paragraph 14 of the Federal Tax Certificate. For this purpose, the present value on each such mandatory redemption date is computed using the yield of only such group of identical Bonds to their stated final maturity as the discount rate. 5. 1 have worked closely with representatives of the City in structuring the financial terms of the Bonds and the refunding of the Refunded Bonds. The Underwriter has also performed certain computations that are the subject of the Report. I hereby confirm that, to the best of my knowledge, the schedules that are described in the Report as provided by the Underwriter are true, accurate and complete. I further hereby represent that to the best of my knowledge the statements set forth in paragraph 20 of the Federal Tax Certificate to which this certificate is attached, are true. The Underwriter hereby authorizes the City to rely on the statements made herein in connection with making the representations set forth in the Federal Tax Certificate to which this certificate is attached and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. The Underwriter hereby authorizes K&L Gates LLP to rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined have the meaning ascribed to such terms in the Federal Tax Certificate to which this certificate is attached. SEATTLE-NORTHWEST SECURITIES CORPORATION By: Name: Lindsay Sovde 1 Title: senior vice President Date: May 11, 2010 EXHIBIT B CERTIFICATE OF FINANCIAL ADVISOR I, the undersigned officer of the Financial Advisor, make this certificate for the benefit of all persons interested in the exclusion from gross income for federal income tax purposes of the interest on the Bonds. Each capitalized term used herein has the meaning specified for such term in the Federal Tax Certificate to which this Exhibit B is attached (the "Federal Tax Certificate"). I hereby certify as follows as of the Issue Date: 1. I am the duly chosen, qualified and acting officer of the Financial Advisor for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certjficate on behalf of the Financial Advisor. I am the officer of the Financial Advisor who has worked with representatives of the City in structuring the financial terms of the Bonds. 2. I have worked closely with representatives of the City in structuring the financial terms of the Bonds and the refunding of the Refunded Bonds. To the best of my knowledge, which was acquired in the course of structuring the Bonds on behalf of the City, (i) the Bonds were not structured to take advantage of the difference between tax exempt and taxable rates except as identified in the Federal Tax Certificate with respect to permissible investments subject to arbitrage rebate, and (ii) the Bonds were not issued earlier, in a greater amount, with reserves or sinking funds larger, or with a maturity longer than was reasonably necessary to refinance the 2001 New Money Project. The City may rely on the statements made herein in connection with making the representations set forth in the Certificate and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. K&L Gates LLP also may rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. PIPER JAFFRAY & CO. By: ,$Ad. ~amehn;~. Towery / ~itlepa~in~ Director Date. May 11,2010 / Final Numbers April 8, 2010 1420 Fifth Avenue, Suite 4300 r Seattle, WA 98101 r (206) 628-2882 ww.seattlenorthwestsecurities.com Washington r Oregon e Idaho . Utah California TABLE OF CONTENTS City of Renton Limited Tax General Oblieation Refundine Bonds . 2010 (Ref 01 New $ uoriion) FINAL N~BERS Report Page - ~ Summary of Refunding Results Savings Sources and Uses of Funds Bond Pricing ..... Bond Debt Service ................................ 5 Bond Summary Statistics ............................. 6 Proof of Arbitrage Yield ............................. 7 ............................... Form 8038 Statistics 9 ............................... Escrow Descriptions I I ............................... Escrow Cost Detail 12 Escrow Cash Flow ................................ 13 ............................... Escrow Sufficiency 14 ................................ Escrow Statistics 15 .......................... ProofofComposite Escrow Yield 16 Prior Bond Debt Service ............................. 17 .............................. Escrow Requirements 18 Summary of Bonds Refunded ........ Unrefundcd Bond Debt Service ........ Cost of Issuance .............. ... Apr 8. 2010 934 am Prepared by Seattle-Northwest Securities Cop . (k:\ \dbc\city\RENTON.RENTON.ROIL~~~. ROILTNEW) SUMMARY OF REFUNDING RESULTS City of Renton Limited Tax General Obligation ~efunding Bonds, 2010 (Ref 01 New $ portion) FINALNUMBERS Dated Date Delivery Date Arbitrage yield Escrow yield Bond Par Amount True Interest Cost Net Interest Cost Average Coupon Average Life Par amount of refunded bonds Average coupon of refunded bonds Average life of refunded bonds PV of prior debt to 0511 II2OlO @ 3.575057% Net PV Savings Percentage savings of refunded bonds Percentage savings of refunding bonds Apr 8, 2010 934 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROlLMEW,ROILTNEW) Page I SAVINGS City of Renton Limited Tax General Obligation ~efundin~ Bonds, 2010 (Ref 01 New 6 portion) FINAL NUMBERS Present Value Prior Refunding Annual to 0511 1/2010 Date Debt Service Debt Service Savings Savings @ 3.5750570% Savines Summary PV of savings from cash flow Plus: Refunding funds on hand Net PV Savings 277.33 1.28 p~ ~~ Apr 8,2010 9:34 am Prepared by Seanle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW) Page 2 SOURCES AND USES OF FUNDS City of Renton Limited Tax General Obligation ~efundin~ Bonds, 2010 (Ref. 01 New $ ponion) FINAL NUMBERS Dated Date 0511 112010 Delivery Date 0511 1/2010 Sources: Bond Proceeds: Par Amount Net Premium Uses: Refunding Escrow Deposits: Cash Deposit SLGS Purchases Delivery Date Expenses: Cost of Issuance Underwriter's Discount Other Uses of Funds: Additional Proceeds 289.74 6,613,483.70 Apr 8, 2010 934 am Prepared by Seattle-Nonhwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILR.IEW) Page 3 BOND PRICING City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref 01 New $ portion) FINAL NUMBERS Maluriw Yiddm Call Cdl Cdl Daa Call Pncs hmivm nand component DU A~OU~, nats ~dd P~CC ~.runry 011. P~C. for A+ ~ic~d for rlrb Y~CI~ (-~ismunt) Dated Dnt8 0~li"ay DlU Firn coupon Apr 8,2010 934 am Prepared by Seanle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW) Page 4 BOND DEBT SERVICE City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New $ portion) FINAL NUMBERS Dated Date 0511 1/2010 Delivery Date 0511 l/20lO Period Annual Ending Principal Coupon Interest Debt Service Debt Service Apr 8, 2010 9:34 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW) Page 5 BOND SUMMARY STATISTICS City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New S portion) FINAL NUMBERS Dated Date Delivery Date Last Maturity Arbitrage Yield True lnterest Cost (TIC) Net lnterest Cost (NIC) All-In TIC Average Coupon Average Life (years) Duration of Issue (years) Par Amount Bond Proceeds Total lnterest Net lnterest Total Debt Service Maximum Annual Debt Service Average Annual Debt Service Undem~iter's Fees (per $1000) Average Takedown Management Fee Other Fee Total Underwriter's Discount Bid Price Band Component Par Average Average Value Price Coupon Life Serial Bonds 6,170,000.00 107.188 4.492% 9.855 TIC Par Value 6,170,000.00 +Accrued lnterest + Premium (Discount) 443,483.70 - Underwriter's Discount -34,798.80 - Cost of Issuance Expense -Other Amounts Targct Value 6,578,684.90 All-In Arbitrage TI C Yield 6,170,000.00 6,170,000.00 443,483.70 443,483.70 -34,798.80 -35,625.00 6,543,059.90 6,613,483.70 Target Date Yield -- Apr 8,2010 934 nm Prepared by Seattle-Northwest Securities Carp. (k:\ ... \RENTON:RENTON-RO1 LTNEW,ROI LTNEW) Page 6 PROOF OF ARBITRAGE YIELD City of Renton Limited 'Tax General Obligation Refunding Bonds, 2010 (Ref 01 New $ portion) FINAL NUMBERS Present Value Date to 0511 1/2010 Debt Service @ 3.5750570% Proceeds Summary Delivery date Par Value Premium (Discount) Target for yield calculation Apr 8,2010 9:34 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILlNEW,ROILTNEW) Page 7 PROOF OF ARBITRAGE YIELD City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New $ portion) FINAL NUMBERS Net Present Value (NPV) Bond Maturity Call Call to 0511 1/2010 Component Date Rate Yield Date Price @ 3.5750570% SERIAL 12/01/2020 4.500% 3.650% 06/01/2020 100.000 10,017.27 SERIAL 12/01/2021 4.500% 3.740% 06/01/2020 100.000 22,883.84 Reiected Call/Comoutation Dates for Premium Bonds Net Present Bond Maturitv Value (NPV) Call Call to 0511 112010 Increase - Component Date Rate Yield Date Price @ 3.5750570% to NPV SERIAL. J2101/2020 ' 4.590% 3.650% 14,885.10 4,867.83 SERIAL 12/01/2021 4.500% 3.740% 37,841.95 14,958.1 1 Apr 8,ZOlO 934 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW) Page 8 FORM 8038 STATISTICS City of Renton Limited Tax General Oblieation Refundine Bonds. 2010 (Ref. 01 New $ oortionl FINAL NUMBERS Dated Date 05/11/2010 Delivery Date 05/11/2010 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity Serial Bonds: 1210 1/20 10 12/01/2011 12/01/2012 12/01/2013 12/01/2014 1210 1/20 15 12/01/2016 1210 1/20 17 12/01/2018 12/01/2019 1210 112020 12/01/2021 Stated Weighted Net Maturity Interest Issue Redemption Average Interest Date Rate Price at Maturity Maturity Yield Cost Final Maturity 12/01/2021 4.500% 1,695,772.10 1,595,000.00 Entire Issue - 6,613,483.70 6,) 70,000.00 9.8603 3.5751% 3.5083% Proceeds used for accrued interest Proceeds used for bond issuance costs (including underwriters' discount) Proceeds used for credit enhancement Proceeds allocated to reasonably required reserve or replacement fund Proceeds used to currently refund orior issues Proceeds used to advance refund prior issues Remaining weighted average maturity of the bonds to be currently refunded Remaining weighted average maturity of the bonds to be advance refunded Apr 8,2010 9:34 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW) Page 9 FORM 8038 STATISTICS City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New $ portion) FINAL NUMBERS Refunded Bonds Bond Component Date Principal Coupon Price Issue Price 2001 LTGO & Refunding Bonds (I l/l/Ol): SERIALS 12/01/2018 1,385,000.00 5.250% 100.000 1,385,000.00 SERIALS 12/01/2019 1,460,000.00 5.250% 100.000 1,460,000.00 TERM2021 IU01/2020 1,540,000.00 5.000% 100.000 1,540,000.00 TERM2021 12/01/2021 1,615,000.00 5.000% 100.000 1,615,000.00 Remaining Last Weighted Call Issue Average Date Date Maturity 2001 LTGO & Refunding Bonds (I l/l/Ol) 12/01/2011 11/01/2001 10.1197 All Refunded Issues 12/01/2011 10.1197 Apr 8,2010 9:34 am Prepared by Seanle-Nonhwcst Securities Corp. (k:\ ... \RENTON:RENTON-ROlLlNEW,ROILTNEW) Page 10 ESCROW DESCRIPTIONS City of Renlon Limited Tax General Oblieation Refundine Bonds. 2010 (Ref. 01 New S oortion) Type of Type of Maturity First Int Par Maw Security SLGS Date Pmt Date Amount Rate Rate May ll, 2010: SLGS Certificate 06/01/2010 06/01/2010 153,557 SLGS Certificate 12/01/2010 12/01/2010 127,762 0.230% 0.230% SLGS Note 06/01/2011 12/01/2010 130,578 0.450% 0.450% SI.GS Note 12/01/2011 12/01/2010 6,130,872 0.740% 0.740% SLGS Summary SLGS Rates File OBAPRIO Total Certificates of Indebtedness 281,319.00 Total Notes 6,261,450.00 Total original SLGS 6,542,769.00 Apr 8, 2010 9:34 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW) Page ll ESCROW COST DETAIL City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New S portion) FINAL NUMBERS Type of Maturity Par 'Total SecuriN Date Amount Rate Cast Global Proceeds Escrow: SLGS 06/01/2010 153,557 153,557.00 SLFS 12/01/2010 127.762 0.230% 127.762.00 SLGS 06/01/2011 130;578 0.450% 130;578.00 SLGS 12/01/2011 6,130,872 0.740% 6,130,872.00 Purchase Cost of Cash Total Date Securities Deposit Escrow Cost Yield Global Proceeds Escrow: 0511 1/2010 6.542.769 1 .I6 6.542.770.16 0.732486% Apr 8, 2010 9:34 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROlLTNEW,ROI LTNEW) Page I2 ESCROW CASH FLOW Date City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New 16 portion) FINAL NUMBERS Present Value Net Escrow to 0511 112010 Principal Interest Receipts @ 0.7324864% Escrow Cost Summaw Purchase date Purchase cost of securities Target for yield calculation 6,542,769.00 Apr 8, 2010 9:34 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENl'ON:RENTON-ROILTNEW,ROILTNEW) Page 13 ESCROW SUFFICIENCY City of Renton Limited T~Y General Obligation Refunding Bonds, 2010 (ReL 01 New $ ponion) FINAL NUMBERS Escrow Net Escrow Excess Excess Date Requirement Receipts Receipts Balance Apr 8, 2010 9:34 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW) Page 14 ESCROW STATISTICS City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New $ portion) FINAL NUMBERS Modified Yield to Yield to Perfect Value of Total Duration Receipt Disbursement Escrow Negative Cost of Escrow Cost (years) Date Date Cost Arbitrage Dead Time Global Proceeds Escrow: 6,542,770.16 1.480 0.732486% 0.732486% 6,275,282.97 267,487.1 1 0.08 6,542,770.16 6,275,282.97 267,487.1 1 0.08 Delivery date 0511 112010 Arbitrage yield 3.575057% Apr 8,2010 9:34 am Prepared by Seanle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW) Page 15 PROOF OF COMPOSITE ESCROW YIELD City of Renton Limited Tax General Oblieation Refundine Bonds. 2010 (Ref. 01 New 6 oonion) Present Value Security to 0511 1/2010 Date Receipts @ 0.7324864% Escroiv Cost Summary Purchase date Purchase cost of securities Target for yield calculation 6,542,769.00 Apr 8,2010 9:34 am Prepared by Seanle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILINEW) Pnge 16 PRIOR BOND DEBT SERVICE City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New $ ponion) FINAL NUMBERS Period Annual Ending Principal Coupon Interest Debt Service Debt Service 06/01/2010 153,556.25 153,556.25 12/01/2010 153,556.25 153,556.25 307,112.50 06/01/201 1 153,556.25 153,556.25 12/01/2011 153,556.25 153,556.25 307,112.50 06/01/2012 153,556.25 153,556.25 12/01/2012 153,556.25 153,556.25 307,112.50 06/01/2013 153,556.25 153,556.25 12/01/2013 153,556.25 153,556.25 307,112.50 06/01/2014 153.556.25 153,556.25 - - Apr 8, 2010 924 am Prepared by Seattle-Northwest Securities Carp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW) Page 17 ESCROW REQUIREMENTS City of Renton Limited Tax General Oblieation Refundine Bonds. 2010 (Ref 01 New 6 portion) Period Principal Ending Interest Redeemed Total Apr 8,2010 9:34 am Prepared by Seattle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROILTNEW Page 18 SUMMARY OF BONDS REFUNDED City of Renton Limited Tax General Oblieation Refundine Bonds. 2010 (Ref. 01 New $ ooriion) Maturity Interest Par Call Call Bond Date Rate Amount Date Price 2001 LTGO & Refunding Bonds (I l/l/Ol): SERIALS 12/01/2018 5.250% 1,385,000.00 12/01/2011 100.000 12/01/2019 5.250% 1,460,000.00 12/01/2011 100.000 TERM2021 12/01/2021 5.000% 3,155,000.00 12/01/2011 100.000 6,000,000.00 Apr 8,ZOlO 9:34 am Prepared by Seanle-Nonhwest Securities COT. (k:\ ... \RENTON:RENTON-ROlLTNEW,ROILTNW) Page 19 UNREFIJNDED BOND DEBT SERVICE City of Renton Limited Tax General Obligation Refunding Bonds, 2010 (Ref. 01 New S portion) FINAL NUMBERS Period Annual Ending . Principal Coupon Interest Debt Service Debt Service Apr 8, 2010 9:34 am Prepared by Seattle-Nonhwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILlNEW,ROILTNEW) Page 20 COST OF ISSUANCE City of Renton Limited Tax General Obligation Refunding Bonds. 2010 (Ref. 01 New $ oortion) Cost of Issuance $/I000 Amount Bond Counsel Financial Advisor S&P rating fee Escrow Agent Escrow Verification (P)OS printing & mailing Apr 8,2010 9:34 am Prepared by Seanle-Northwest Securities Corp. (k:\ ... \RENTON:RENTON-ROILTNEW,ROI L1NEW) Page 21 - 8038-6 (Rev. November 2000) ~OfmeTrasarrI Intd R- City of Renton, Washington 3 Number and street (or P.O. box if mail is not delivered to street address) 1055 South Grady Way 1 Iss~&sname 1 2 Issuei-s employer identification number lnformation Return for Tax-Exempt Governmental Obligations Under Internal Revenue Code section 149(e) b See separate Instructions. Caution: M the issue price is under $lW.OW. use Form 8W8-GC. Limited Tax General Obllgatlon Refunding Bonds, 2010 .......... 17 Utilities .................. Other, Describe , Municipal parking facilities OMe No. 1545.0720 91 i 6001271 7601 33RU4 ~ ~~ ~ -. -. lwen Wang, Finance and Information Services Administrator ( 425 ) 430-6858 m) 19 If obligations are TANS or RANs, check box . If obligations are BANS, check box t 20 If obligations are in the form of a lease or installment sale, check box ....... Description of Obligations. Complete for the entire issue for which this form is being filed. Rwm/suite 5 City, town, or post office, state, and ZIP code Renton, Washington 98055 7 Nameof issue 9 Name ana tllle of oKcer or lmal reoresentat.vc whom tne IRS mar call for more informatnon 1 10 Tdeonone LW d olh ar leaa rmesemaLve 11 Education ............................ 12 Health and hospital ......................... 13 Transportation ........................... 14 Public safety. ........................... .................... 15 Environment (including sewage bonds) 16 Housing ............................. 4 Repat number 3 01 6 Date of issue 0511112010 8 CUSlP number 11 l2 j3 l4 16 40 if me Issuer has identlfiea nedgi, check box ... 7 .................... [7 I ~nder -mimes mw. I oecare that I nave exammet mo ram ana acmnumylw scnooJs an0 SwlemenD, am to ice om of my ~weogo (a] Final maturity date (5) Stated redemption ..................... 24 Proceeds used for bond issuance costs (including underwriters' discount) . 26 Proceeds allocated to reasonably required reserve or replacement fund . . 27 Proceeds used to currently refund prior issues ......... 31 Enter the remaining weighted average maturity of the bonds to be currently refunded ... b 0 years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded , 10.1197 years ... 33 Enter the last date on which the refunded bonds will be called ........... b 12/01/2011 34 Enter the date($ the refunded bonds were issued b 1110112001 -Miscellaneous I am Gi. my m'&.&necf gnd ample. 35 Enter the amount of the state volume cap allocated to the issue under section 141@)(5) ... 36a Enter the amount of gmss proceeds invested or to be invested in a guaranteed investment wnbact (see instructions) b Enter the final maturity date of the guaranteed investment contract F - 37 Pooled finandngs: a Proceeds of this issue that are to be used to make loans to other governmental units 37a NIA b If this issue is a loan made from the proceeds of another tax-exempt issue, check box b and enter the name of the issuer b and the date of the issue b NIA 38 If the issuer has designated the issue under section 265@)(3)(8)@(110 (small issuer exception), check box ... b 6d ............. 39 If the issuer has elected to ~av a ~enaitv in lieu of arbitrage rebate. check box [7 35 36a NIA NIA K&L Gates LW 925 Fourth Avenue Suite 2900 Seattle. WA 98104-1158 May 11,2010 VIA CERTIFIED MAIL RETURN RECELPT REQUESTED Internal Revenue Service Ogden, UT 84201 Re: City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 201 0 - $6,170,000 Ladies and Gentlemen: Enclosed please find an IRS Form 8038-G relative to the above-captioned issue. Please acknowledge receipt of the same by signing the enclosed, duplicate copy of this letter where indicated, and returning it to me in the enclosed pre-addressed envelope. Thank you for your assistance in this matter. Very truly yours, K&L GATES LLP BY Deanna Gregory Enclosures I hereby acknowledge receipt of an IRS Form 8038-G as submitted by the City of Renton, Washington regarding its Limited Tax General Obligation Refunding Bonds, 2010. AFFIDAVIT OF MAILING STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) , being duly sworn, deposes and says that helshe is a the age of eighteen years; that helshe is a resident of ounty, Washington. That on ~a~ A, 2010, at '%/a.elshe caused IRS Form 8038-G, completed by City of Renton, Washington, with respect to its Limited Tax General Obligation Refunding Bonds, 2010, to be mailed by depositing the same in the United States mail, in a sealed envelope, certified delivery, first class, postage prepaid, properly addressed to the Internal Revenue Service, Ogden, Utah 84201. I certify that I how or have satisfactory evidence that is the person who appeared before me, and said person instrument, and acknowledged it to be histher free and Dated: (Urc this space for notarial slampheal) K\2037929\~08~0358.DG\20358L3112 Return RBCBIPI FBB 0 (mdorsem:l Requlwl) 0 ResMnBd DdIVBV FBB o (Endo~mOnI Required) m 1. Article Addressad to: Internal Revcnue Service Ogden, UT 84201 -0002 2. Mde Number ~r~fertmmswi~~~ 7009 0080 0000 7324 6778 PS Form 381 1, February 2004 Domestic Retum Recelpt \ ~iM59Sa2hCISIO CERTIFICATE OF AUTHORIZATION OF AmORIZED SIGNER FOR TIE BANK OF NEW YORK MELLON I, Steve Vaccarello, certify that I am a Vice President of The Bank of New York Mellon, New York, New York, fiscal agency for the State of Washington and Bond Registrar for the City of Renton, Washington, Limited Tax General Obligation Refunding Bonds, 2010; and I Mher certify that Joami LaBarbera is an Associate of The Bank of New York Mellon and is authorized by the Bank to sign the above bonds as the Authorized Signer for the Bank; and I further certify that the signature set forth below is the true and correct signature of such Authorized Signer. Dated as of this 1 lth day of May, 2010. Vice President Authorized Signer CEY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010-$6,170,000 CERTIFICATE OF AUTHENTICATION, REGISTRATION AND DELIVERY OF BONDS The Bank of New York Mellon of New York, New York (hereinafter sometimes referred to as "Registrar"), hereby certifies as follows: (1) The Registrar hereby acknowledges receipt in New York, New York, of the following numbers of unauthenticated bonds of the following issue: Number of Unauthenticated Bond Issue Bonds Received City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 201 0 - $6,170,000 12 (2) On the date hereof the Registrar authenticated and registered the City of Renton, Washington, Limited Tax General Obligation Refunding Bonds, 2010 in the aggregate principal amount of $6,170,000 by manually executing the Certificate of Authentication and by entering the names and addresses of the bond owners or their nominees in records maintained for such purpose and shall hold the Bonds on behalf of The Depository Trust Company. (3) All unauthenticated bonds delivered to the Registrar shall be held by it and shall he subject to the trust created by the Washington State Fiscal Agency Contract and the duties and obligations created therein. The Registrar shall be liqble for the safekeeping thereof and for the performance of its duties and obligations as specifically set forth therein and for the actions and omissions of its agent(s). The Registrar shall act in good faith, and no implied duties or obligations shall be inc11rred by the Registrar other than those specifically in said Fiscal Agency Contract. (4) CUSP Numbers have been assigned to the Bonds as follows: Matunty Years Principal Interest CUSP (December 1) Amounts Rates Nos. 2010 $ 140,000 3.00% 760133RH3 201 1 5,000 3.00 760133R79 2012 5,000 3.00 760133RK6 2013 5,000 3.00 760133RL4 2014 5,000 3.00 760133RM2 2015 10,000 3.00 760133RNO 2016 10,000 3.00 760133RP5 2017 10,000 3.25 760133RQ3 2018 1,395,000 4.50 760133RR1 2019 1,460,000 4.50 760133RS9 2020 1,530,000 4.50 760133RT7 2021 1,595,000 4.50 760133RU4 Dated at New York, New York, as of this 1 lth day of May, 2010. THE BANK OF NEW YORK MELLON, of New York, New York, as Registrar / BY- Au zed Signer CERTIFICATE OF PAYMENT AND DELIVERY 1, Iwen Wang, Finance and lnformation Services Administrator of the City of Renton, Washington (the "City"), do hereby certify that on this date the City delivered to Seattle- Northwest Securities Corporation, Seattle, Washington (the "Underwriter"), or its duly appointed agent, the City's Limited Tax General Obligation Refunding Bonds, 2010, in the aggregate principal amount of $6,170,000 (the "Bonds"), in the form provided by No. 5534 passed on April 5,2010. I further certify that at the time of such delivery, the City received payment for the Bonds, from the Underwriter, as follows: Source of Funds Principal Amount of Bonds Plus: Original Issue Premium Less: Underwriter's Discount Less: POS/OS Printing and Mailing Total Sources of Funds Distribution of Funds To: U.S. Bank National Association Deposit to Refunding Account $ 6,542,770.1 6 Deposit to Costs of Issuance Fund (including contingency proceeds) 35,164.74 $ 6,577,934.90 Total Funds Disbursed $ 6.577.934.90 Dated as of this 1 lth day of May, 2010. CITY OF RENTON, WASHINGTON Finance and lnformation ~eJces Administrator RECEIPT FOR BONDS Receipt of the City of Renton, Washington, Limited Tax General Obligation Refunding Bonds, 2010, in the aggregate principal amount of $6,170,000, this 11th day of May 2010, is hereby acknowledged on behalf of the Underwriter. SEATTLE-NORTHWEST SECURITIES CORPORATION Closing Memorandum Re: City of Renton, Washington $6,170,000 Limited Tax General Obligation Refunding Bonds, 2010 Dated: May 11,2010 From: Justin Mon Wai, Assistant Vice President Seattle-Northwest Securities Corporation Date: May 4, 2010 1420 Fifth Avenue Suite 4300 Seattle, WA, 98101 - - Closing Closing will occur at 9 a.m. on Tuesday, May illh via conference call initiated by K&L Gates LLP. Funds Seattle-Northwest Securities Corporation will initiate the following transaction: Transfer Amount: BBK: BNF: OBI: Reference: Attention: $6,577,934.90 (Federal Funds) U.S. Bank ABA #091000022 U.S. Bank National Association/AC #I80121167365 Corporate Trust City of Renton LTGO Refunding Bonds, 2010 (01) Escrow Carolyn Morrison, (206) 3444678 The following is a summary of the sources of funds for the Bonds and how the Escrow Agent will apply those funds: Sources of Funds Bond Proceeds Principal Amount Plus: Net Premium Less: (P)OS Printing and Mailing Less: Underwriter's Discount Total Sources of Funds Distribution of Funds U.S. Bank National Association. Escrow Agent Deposit to Escrow Account to buy U.S. Government securities (1) Escrow Beginning Cash Deposit Costs of Issuance (2) Additional Proceeds (3) Total Funds Disbursed (1) A list of the United States government securities to be purchased by the Escrow Agent is shown in Exhibit A. (2) See Exhibit B for a list of the costs of issuance to be paid at closing by the Escrow Agent. (3) The Escrow Agent will wire any unused proceeds back to the City after all costs of issuance have been paid. The final debt service schedules and pricing reports for the Bonds are attached as Exhibits C and D. Debt service payments for the unrefunded portion of the City's Limited Tax General Obligation and Refunding Bonds, 2001 are shown as Exhibit E. If you have any questions, please contact Lindsay Sovde at (206) 628-2875 or Justin Mon Wai at (206) 689-2784. Attachments cc: Ms. Iwen Wang, City of Renton Ms. Gina Jarvis, City of Renton Ms. Deanna Gregory, K&L Gates LLP Ms. Cynthia Weed, K&L Gates LLP Ms. Cheryl Fountain, K&L Gates LLP Ms. Jane Towery, Piper Jaffray & Co. Mr. Daren Bell, Piper Jaffray & Co. Ms. Carolyn Morrison, U.S. Bank National Association Ms. Sadie Richards, The Bank of New York Mellon Ms. Lindsay Sovde, Seattle-Northwest Securities Corporation Ms. Dorothy Michak, Seattle-Northwest Securities Corporation Ms. Joan Roddy, Seattle-Northwest Securities Corporation Ms. Rachael Sasse, Seattle-Northwest Securities Corporation Ms. Laura Westphal, Seattle-Northwest Securities Corporation EXHIBIT A ESCROW COST DETAIL City of Renm Limtod Tax General Obbgnhon Refmmng Bands, 2010 (Ref 01 New S parno") FINAL NUMBERS Typeof Mamily Par Total Securiry Date Am& Rare Coy Global Roe& Errow: SLCS 06!01!?OLO 153.517 I13.5S7.00 &kc Cmlof Carh Tow Oaf. Scclmbcr Deprit Evrow Cart Yield EXHIBIT B City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 Dated: May 11,2010 Costs of issuance to be paid by the Escrow Agent upon receipt of invoice: Descri~tion Firm Total Bond Counsel Fee K&L Gates LLP $ 20,000.00 Financial Advisor Piper Jaffray & Co. 5,000.00 Rating Fee Standard & Poor's 6,375.00 Escrow Verification Grant Thornton LLF 2,500.00 Escrow Agent U.S. Bank National Association 1,000.00 Subtotal $ 34.875.00 Costs of issuance to be paid directly to Seattle-Northwest at closing: Descriotion Firm Total Official Statement Seattle-Northwest Securities Corporation Printing and Mailing $ 750.00 Combined Total w EXHIBIT C - - BOND DEBT SERWCE City of Rentan LhitsdTax Gemal Obligation Reflmm Bonds, 1010 (ReC 01 New f portion1 FINAL NUMBERS DdbdDate 0511 112010 Delivery Date 0511112010 vend Armd Enha PnnclFel Colmon Interns Debt Sew,= Debt Se~ce EXHIBIT D - - -- BOND PRICING City ofRrntm LlmtedTm Gnrral Obligation kfrm6ing Bonds, 2010 (Ref 01 New S podon) FINAL NUMBERS -..be $.,11*814 10623ll2K Ad- ".-& 6.,nbPa A", 8,2010 9 34 am hcparsd by sattic-NmUlwat Secuntim Carp. ~:\.~RE~oN:RENToN.RoILTNEW,ROIL~EW hge4 EXHIBIT E UNREFUNDED BOND DEBT SERVICE C~ry of Renton hred~ucennal Obhphon Reflmmng Bands, 1010 (Ref 01 New I pornon) FNAL NUMBERS rend ArmVal ~nhn.2 Pnnciml Couom Interest Deb( Service Debt Service STATE OF WASHINGTON DEPARTMENT OF COMMERCE 906 Columbia Street SW P.O. Box 42525 Olympia, WA 98504-2525 Phone: 3601725-5021 Fax: 3601586-4162 BOND 101 REPORT FORM - ~~- Printed on 10/20/2010 2:57:33 PM Date of lssue Sale: 04/08/2010 lssue Purpose Page 1 of 3 Purpose of Proceeds: Purpose Type: Is this a Bond Cap issuance? Refund a portion of the City's outstanding general obligation debt. General Government 0 Yes No If yes: Bond Cap Use Category Project Title: Bond Cap Amount: - Par Value and Interest Rates Tax-Exempt Par Value: $6.1 70.000.00 Taxable par Value: $0.00 Total Par Value: $6,170.000.00 Discount: $0.00 Net Tax-Exempt Interest Rate: 3.819864% IJ Variable Net Taxable Interest Rate: 0% Variable Premium: $443.483.70 lssue Casts STATE OF WASHINGTON DEPARTMENT OF COMMERCE 906 Columbia Street SW P.O. Box 42525 Olympia. WA 98504-2525 Phone: 3601725-5021 Fax: 36015864162 Printed on 10/20/2010 2:57:33 PM Page 2 of 3 STATE OF WASHINGTON DEPARTMENT OF COMMERCE 906 Columbia Street SW P.O. Box 42525 Olympia. WA 98504-2525 Phone: 3601725-5021 Fax: 3601586-4162 Printed on 1012012010 2:57:33 PM Address: Email: Phone: 925 Fourth Avenue, Suite 2900 Seattle, WA 98104-1158 cheryl.fountain@klgates.com (206) 360-6697 UNITED STATES OF AMERICA STATE OF WASHINGTON CITY OF RENTON LIMITED TAX GENERAL OBLIGATION REFUNDmC BOND, 2010 INTEREST RATE: MATURITY DATE: CUSIP NO. 3.00% DECEMBER I, 2010 760133RH3 REGISTERED OWNER: CEDE & CO. PRWCIPAL AMOUNT: ONE HUNDRED FORTY THOUSAND AND NO1100 DOLLARS The City of Renton, Washington (the "City"), hereby acknowledges itself to owe and for value received promises to pay lo the Registered Owner identified above, or registered assigns, on the Marurity Date identified above, the Principal Amount indicated above and to pay interest thawn from May I1,2010, or the most recent date to which interest has been paid or duly provided for until payment of dis bond at the Interest Rate set forth abave, payable on December 1, 2010, and semiannoally thereafter on the fin1 days of each succeeding June and December. Both principal of and inte~at on this bond arc payable in lawful money of thc United States of America. ll~e fical agency of thc Slate of Washington has bcen appointed by the City as the authenticating agenc paying agem and registrar for the bonds of this issue (the "Bond Regktd?. For so long as the bonds of this issue arc hcld in fully immobilized form, payments of principal and interest thereon shall be mide as provided in accordance with the operational arrangements of The Depository .Trust Company ("DTC') reforal to in the Blanket Issua Letter of Representations (the "Letter of Represenratim") hm the City to DTC. i C The honds of this ksue are issued under and in accordance with the pronsions ofhe Consuluuun u~d applicahlc slatutes of the Slalc of Wash~ngron wd Ordinance Ko 5534 duly passed by the City Council on April 5,ZOlU (the "Bond M~llce"). Caplrallzal tm used In tbs bond have the me~nings givcn such tmns in the Bond Ordrnancc This bond shall not be valid or become obligatory for any purpose or be entltled to any sectnily or benefit under the Bond Ordinance until the Catificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Regism or i$ 1111 duly deignatcd aten~ lixs bond is onc of an author~~cd ,sue uf bonds of lllc Jatc, tcnor, rate of inlacst and date ofmatunly, cxccpt as lo numher and mount ln the aggregate pnnc~psl amount of 16,170,000 and is asued pursuant m the Bond Ordrnancc to rdund cmmn outsumdq lrrmtcd tax general oblrgauon bonds af the City and to pay costs of lrsuancc I I Tbe bonds of this issue are subject to redemption prior to Uleir scheduled maturities as provided in Ule Bond Ordinance and in the Bond Purchase Agramcnt. The City hereby incvocably covenants and agrm with the oma of this bond that it will include in its annual budget and levy taxes mually, within and as n part of the fax levy pennittcd to the City without a vote of the electorale, upon all the property subject to taxation in amounts softicien< together with otha money legally nvailable therefor, lo pay the principal of and interest on this bond as the same shall become due. The full faith, credit and resowccs of the City arc hereby imvocably pledged for the annual levy and wll~on of such taxes and the prompt paymcnt of such prkiial and interst The bonds of this isue have been designated as "qualified tax-exempt obligations" within the meaning of Section 265@) of the Infernal Revenue Code of 1986, as amended. The bonds of (his issue are not private activity bonds. Thc pledge of tax lcnu for pdymmt of pnnclpal of and interest on the honh may be d~xhged pnor to matunly of lhc bo& by maktng promion for thc payment thereof on thr rams and cdoons su fonh m lllc Bond Ord~namc It is hereby ce~fied that all acts, conditions and things required by the Constitution and StaNls of the State of Washington lo exist, to have happened, beco done and performed precedent to and in thc issuance of this bond have happened, been done and performed Paze 1 of3 I and that the issuance of this bond and the bonds olthis issue does nor violate any constirutional, statutory or athcr limitation upon the amount of bondcd indebtedness that the City may incur. I Ui WITNESS WHEREOF, the City of Renton, Washington has caused this bond to be exmuted by the manual or facsimile II)q signatures of the Mayor and City Clerk and the seal of the City imprinted, impressed or otherwise reproduced hcreon as of this I I" day 1 of May, 2010. CITY OF RENTON. WASHINGTON CERTIFICATE OF AUTHENTICATION I I Date of Authentication: May 11,2010 I This bond is one of the bonds described in thc wilhin mentioned Bond Ordinance and is one of the Limited Tax General 1/$ Obligation Rifiding Bonds, 2010 of the City of Renton, Washingt6n, dated May 11,2010. WASHn'lGTON STATE FISCAL AGENCY, as Bond Registrar -. BY Authorized Signet May II,2OlO City of Rcnton, Washington Seattle-Nonhwest Securities Corporation Seattle, Washington Re: C~ty of Renton, Washington Limed Tax General Obligation Refunding Bonds, 2010 --$6,170,000 Ladies and Gentlemen: We have acted as bond counsel to the City of Renton, Washington (the "City"), and have cxamjned a certified banscript of the proceedings taken in the matlcr of the issuance by the City of its Limited Tax General Obligation Rehmding Bonds, 2010 (the "Bonds"), dated as of their date of initial delivay, in the aggregate principal amount of $6,170,000, issued for the purpose of refunding ccnain outstanding limited tax general obligation bonds of the City and paying costs of issuance of the Bonds. .The Bonds are issued pursuant to Ordinance No. 5534 passed by the City Council of the City on April 5, 2010 (the "Bond Ordinance") Capitalized term used in lhis opinion which are not otherwise defined shall have the meanings given to such tnms in the Bond Ordinance. The Bonds arc subject to redemption prior to their stated maturities as provided in the Bond Ordinance and in the Bond Purchase Agreement. Rgard~ng qltatlons of fact matennl to our opln~o~ wc haw rcl~cd on rcpresm~allons of tl~c C~ty In thc Buud Ordu~mcc and ~n the ccrulied pmcced~ngs and on ulllcr eemficatlons of public ofinals ad uthm fumtshcd lo us wthout undmaking lo vcnfy the same by iudcpcndcnt investigation. Based on the foregoing, we src of the opinion that, under ajsting law: 1. The Bonds have been legally issued and cnnstitule valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of lhe holden and owners of the Bonds may be limited by laws relating to b3n!uuplcy. lnsolvmy, moralonum, &rgmizatloo or od~n sunilar laws of gcnd application nffcx~n~ the nghts c?cralilun, bythe applicahon of eqmtable princlplcs and the excrcise ofjudicial dimnun. 2. The Bond Ordinance is a re@, valid ahd binding obligation of the City, has been duly authorized, aecuted and delivered and b enforceable in accordance with its terms, except to the extent that enforcement may be limited by lam relating to banbptcy, insolvency, moratorium, mganization or other similar laws of general application affecting the rights of creditors, by lhc application of equitable principles and the exercise ofjudicial discretion. 3. Both principal of and interest on the Bonds are payable ant of annual levies of ad valorem taxes to be made upon all of the taxable property within the City within and as pan of the tax levy permilted to the City without a vote of the electorate and in amounts which, togaher with other aMilablc funds, will be sufficicnt to pay such principal and interest as the same shall become due. 1111 4. Interest on the Bonds is ucludablc horn gmss incomc for fedcral income tax pwposs and is not an ilcm of tax prcfcrence for plnposes of the federal alternative minimum tax impd on individuals and corporatim; however, interest on the Bonds b faken into account in determining adjusted cunent eaminp for the purpose of computing the alternative minimum tax imposed on certain comorations. ll~c minion set forth in thc orecedinn sentence is snbiect to the condition that the Ciw comlv with all requircmcn;s of the Internal ~cvcnuc Code of 1986, smcnd;b (the*Crulc"). &at must be sirhsfied subsequent tokc ios&cc of tbe Bonds in ordn that #be interest thcrmn be, and contilrue to bc, cxcludablc born goss Income for fedcnl Income tax purposes. The City has covcnmted to comply w~lh dl applicable requmnents. Failwe to canply with ccnain of such covenants may causc lntmt on the Bonds to be rncluded in gross ~ncomc lor fedcnl income tax purposes rmoacivcly to the dnlc of lssuancc orthe Bonds The City has designated the Bonds as "qualified lax-exempt Obligations" within the meaning of Section 265@)(3) of the We. Excevt as mrsslv slated above, we mras w opinion red in^ any other federal or state income tax consequences of . . acquiring, carry&, owmng or dispsing of ihe I3oni.s. Gwn& of ihc B& should consult thcir tax adnson regarding the a&licabllily of any collateral lax comquenscf of owing the Bonds, which my include original tswc d~scount, original Issue premium, pmhasc a1 a market discount or at a premium, Laxation upon sale, redemption or other disposition, and various withholding reguimnents ?his opinion is given as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hcreaftn come to our attention or any changes in law that may hereafter occur. K&L Gates w K&L] GATES K&L Gates ~LP 925 Fourth Avenue Suite 2900 Seattle. WA 98104-1158 May 11,2010 City of Renton, Washington Seattle-Northwest Securities Corporation Seattle, Washington Re: City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 - $6,170,000 Ladies and Gentlemen: We are bond counsel to the City of Renton, Washington (the "City"), and have acted as such in connection with the issuance and sale by the City of its Limited Tax General Obligation Refunding Bonds, 2010, in the aggregate principal amount of $6,170,000 (the "Bonds"), issued for the purpose of refunding certain outstanding bonds of the City (the "Refunded Bonds"). The Bonds are issued pursuant to Ordinance No. 5534 passed by the City Council on April 5, 2010 (the "Bond Ordinance"). Capitalized terms used in this opinion which are not otherwise defined shall have the meanings given to such terms in the Bond Ordinance. A portion of the proceeds of the Bonds will be used by U.S. Bank National Association (the "Escrow Agent"), to acquire certain noncallable U. S. Government Obligations ("Escrowed Securities"), described in the Escrow Deposit Agreement, dated as of May 11, 2010, between the City and the Escrow Agent (the "Escrow Agreement"), the proceeds of which shall mature in amounts sufficient to pay to the date of maturity thereof all remaining outstanding principal and interest on the Refunded Bonds. The sufficiency of such escrow and the Escrowed Securities maintained pursuant to the Escrow Agreement has been veritied by Grant Thornton LLP. For purposes of the opinions rendered herein, we have relied, without independent investigation, on the verification set forth therein and on the performance under the terms of the Escrow Agreement by the Escrow Agent, respectively. Based upon the foregoing, we are of the opinion that the Refunded Bonds have been defeased and discharged in accordance with the ordinance authorizing their issuance, are deemed paid and no longer outstanding and have no further claim of any kind or under any circumstances to be paid from any funds or money of the City. Very truly yours, K&L Gates LLP 925 Fourth Avenue Suite 2900 Seattle. WA 98104-1158 May 11,2010 City of Renton, Washington Seattle-Northwest Securities Corporation Seattle, Washington Re: City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 - $6,170,000 Ladies and Gentlemen: We have acted as bond counsel to the City of Renton, Washington (the "City"), and have examined a certified transcript of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"), dated as of their date of initial delivery, in the aggregate principal amount of $6,170,000, issued for the purpose of refunding certain outstanding limited tax general obligation bonds of the City and paying costs of issuance of the Bonds. The Bonds are issued pursuant to Ordinance No. 5534 passed by the City Council of the City on April 5, 2010 (the "Bond Ordinance"). Capitalized terms used in this opinion which are not otherwise defined shall have the meanings given to such terms in the Bond Ordinance. The Bonds are subject to redemption prior to their stated maturities as provided in the Bond Ordinance and in the Bond Purchase Agreement. We have not been engaged nor have we undertaken to review the accuracy, completeness or sufficiency of the official stalement or other offering material related to the Bonds (except to the extent, if any, stated in the official statement), and we express no opinion relating thereto, or relating to the undertaking by the City to provide ongoing disclosure pursuant to Securities and Exchange Commission Rule 15~2-12. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based on the foregoing, we are of the opinion that, under existing law: 1. The Bonds have been legally issued and constitute valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bonds may be limited by laws relating to bankruptcy, City of Renton, Washington Seattle-Northwest Securities Corporation May 11,2010 Page 2 insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 3. Both principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City within and as part of the tax levy permitted to the City without a vote of the electorate and in amounts which, toiether with other available funds, will be sufficient to pay such principal and interest as the same shall become due. 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such covenants may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. The City has designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code. Except as expressly stated above, we express no opinion regarding any other federal or state income tax consequences of acquiring, carrying, owning or disposing of the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds, which may include original issue discount, original issue premium, purchase at a market discount or at a premium, taxation upon sale, redemption or other disposition, and various withholding requirements. City of Renton, Washington Seattle-Northwest Securities Corporation May 11,2010. Page 3 .' This opinion is given as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, K&L GATES (� 925 gates LLP I ILE V Q N T 925 Fourth Avenue Suite 2900 Seattle, WA 98104-111; MAR 01 2011 r 206.623.7580 www.klgates.com By CITY OF RENTON Deanna Gregory deanna.gregory@klgates.com MAR 01 2011 206.370.8128 RECEIVED CITY CLERKS OFFICE February 28, 2011 Ms. Iwen Wang Finance and Information Services Department Administrator City of Renton • 1055 South Grady Way Renton, WA 98055 Re: City of Renton, Washington Limited Tax General Obligation Refunding Bonds, 2010 - $6,170,000 Dear Iwen: We are pleased to provide you with one soft cover transcript and one CD-ROM transcript of the record of proceedings in connection with the above referenced matter. I enjoyed working with you on this issue. Please feel free to contact me if you have any questions or comments regarding the transcripts. Very truly yours, / K&L GATES LLP cDj22`.1Q-( d'r By Deanna Gregory DLG:js Enclosure H:BDI/rRANSCRIPT COVER LETTERS/2037929-00008 TCL.DOC STATE OF WASHINGTON, COUNTY OF KING } AFFIDAVIT OF PUBLICATION B PUBLIC NOTICE Linda M Mills, being first duly sworn on oath that she is the Legal Advertising Representative of the NOTICERENTON OF ORDINANCE ADOPTED BY THE RENTON CITY COUNCIL Renton Reporter Following is summary the ordinance adopted bythe Renton City Council on April 5,2010: ORDINANCE NO.5534 An ordinance of the City of a weekly newspaper, which newspaper is a legal newspaper of Renton, Washington, providing general circulation and is now and has been for more than six months forx the era) obligationnce and sale fuof liited tax general refunding r ' prior to the date of publication hereinafter referred to, published in bonds of the City in the aggregate principal amount of not to exceed the English language continuous) as a weeklynewspaper er in King $6800,000 to provide_funds for County, Washington. The Renton Reporter has been approved as the purpose of refunding certain a Legal Newspaper by order of the Superior Court of the State of limited_,.tax' general_ obligation Washington for King County. th dappointtmen 1 of an escrow The notice in the exact form annexed was published in regular issuesagent and execution of an escrow of the Renton Reporter (and not in supplement form) which was agreement;and dvetinh certain authority to appprorove the final •. regularly distributed to its subscribers during the below stated period. terms of the bonds. . . The annexed notice, a: Effective: 5/9/2010 Complete text of this ordinance Public Notice is available at Renton City Hall, • 1055 South Grady Way; and posted at the Renton Public Libraries,100 Mill Avenue South was published on April 9 2010. - . and 2902 NE 12th Street. Upon request to the City Clerk's office, �`"»"1 (425)430-6510,copies will also Q AL g' 'i i i it bemailed in the Renton Reporter The full amount of the fee charged for said foregoing publication is 4-22..- r a fee. (,,,,,.��%�,,,, G 1i, on April 9,2010.#349425. the sum ,80.50. _ ,� yotI Exp,,,,� <'/4 'W/4, ..k.1- 4 o�ARy F�',, i iv � r C+ ' C in'a . Mills ', p •,`,,*. Le Repre entative, Renton orter Subsci o ed and swat tosme this 9th day April, 2010. //'Ase��-9TF"'���1` �P S:� ,,� ��� /� /Ilei ,�F N Kathy Dal 1g, otary Publ., for the State of Washington, Residing in Covington,Washington P. O. Number: i ;1 .1‘ .k k ;0. 1 CITY OF RENTON, WASHINGTON ORDINANCE NO. 5527 AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, PLEDGING THE CITY'S FULL FAITH AND CREDIT TOWARD THE PAYMENT OF ITS SHARE OF DEBT SERVICE ON REFUNDING BONDS TO BE ISSUED BY THE VALLEY COMMUNICATIONS CENTER DEVELOPMENT AUTHORITY AND APPROVING CERTAIN MATTERS RELATED THERETO. WHEREAS, pursuant to Resolution No. 3449 adopted by the City of Renton (the "City") on March 27, 2000, and chapter 39.34 RCW, the Interlocal Cooperation Act, the City entered into the Valley Communications Center Interlocal Agreement, effective April 17, 2000 (the "Interlocal Agreement"), with the City of Federal Way, the City of Auburn, the City of Tukwila and the City of Kent, Washington (together, the "Member Cities"), to reorganize a governmental administrative agency known as the Valley Communications Center ("ValleyCom"); and WHEREAS,the purpose of ValleyCom is to provide improved police, fire and medical aid service communications within the boundaries of the existing, established consolidated service area at a minimum cost to the Member Cities, together with such other governmental agencies that have contracted with ValleyCom for communication services; and WHEREAS, in order to address increased growth and to provide necessary services for the Member Cities and other governmental agencies that contract with ValleyCom for communication services, ValleyCom constructed a new dispatch facility known as the Valley Communications Center (the "Facility"); and WHEREAS, financing for the construction, equipping, and improvement of the Facility was provided by bonds issued by the Valley Communications Center Development Authority 1 ORDINANCE NO. 5527 • (the "Authority"), a public development authority chartered by the City of Kent pursuant to RCW 35.21.730 through 35.21.755; and WHEREAS, pursuant to the Interlocal Agreement, each Member City has agreed to contribute to the financing of the costs of the Facility, paying twenty-percent (20%) of the total cost of development, less contributions from grants, other agencies, or other sources; and WHEREAS, the Authority issued its Valley Communications Center Development Authority Bonds, 2000 (Valley Communications Center Project in King County, Washington) (the "2000 Bonds"), dated September 15, 2000, in the original aggregate principal amount of twelve million seven hundred fifty eight thousand dollars ($12,758,000); and WHEREAS, it appears that the 2000 Bonds may now be refunded at lower interest rates through the issuance of refunding bonds of the Authority, thereby yielding savings to the Authority and the Member Cities; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON DOES ORDAIN AS FOLLOWS: SECTION I. City Contributions to Bonds. Pursuant to the terms of the Interlocal Agreement, the City hereby irrevocably commits to pay its share, which shall be equal to twenty-percent (20%), of the debt service on bonds (the "Bonds") issued by the Authority for the purpose of defeasing and refunding all or a portion of the 2000 Bonds. The City recognizes that it is not obligated to pay the share of any other Member City; the City's obligation shall be limited to its 20% allocable share of debt service on such Bonds; all such payments shall be made by the City without regard to the payment or lack thereof by any other jurisdiction; and the City shall be obligated to budget for and pay its 20% allocable share. All payments with 2 ORDINANCE NO. 5527 I respect to the Bonds shall be made to ValleyCom in its capacity as administrator and servicer of the Bonds to be issued by the Authority. The City's obligation to pay its 20% allocable share shall be an irrevocable full faith and credit obligation of the City, payable from property taxes levied within the constitutional and statutoryauthority provided without a vote of the electors of the City on all of the taxable property within the City and other sourcesof revenues available therefor. The City hereby obligates itself and commits to budget for and pay its 20% allocable share and to set aside and include in its calculation of outstanding nonvoted general obligation indebtedness an amount equal to the principal component of its 20% allocable share for so long as any Bonds remain outstanding. SECTION II. Compliance with Continuing Disclosure Requirements and Official Statement. To the extent necessary to meet the conditions of paragraph (d)(2) of United States Securities and Exchange Commission Rule 15c2-12 (the "Rule"), the .Mayor or designee is hereby authorized to execute and deliver a continuing disclosure agreement or certificate in order to assist the underwriter for the Bonds in complying with the Rule. The Mayor or designee is further authorized to ratify and approve the information pertaining to the City and contained the preliminary and final official statements delivered in connection with the Bonds for purposes of the Rule. SECTION III. Allocation for Purposes of Bank Qualification. For purposes of Section 265(b)(3)(C)(iii) of the Internal Revenue Code of 1986, as amended (the "Code"), the City hereby agrees that the amount of each issue of obligations of the Authority shall be allocated in equal shares among each of the Member Cities. 3 ORDINANCE NO. 5527 SECTION IV. Tax Covenant. The City hereby agrees that it shall not (a) make any use of the proceeds from the sale of Bonds or any other money or obligations of the Authority or the Member Cities that may be deemed to be proceeds of the Bonds pursuant to Section 148(a) of the Code that will cause the Bonds to be "arbitrage bonds" within the meaning of said Section and said regulations, or (b) act or fail to act in a manner that will cause the Bonds to be considered obligations not described in Section 103(a)of the Code. SECTION V. General Authorization; Prior Acts. The Mayor or designee and each of the other appropriate officers, agents and representatives of the City are each hereby authorized and directed to take such steps, to do such other acts and things, and to execute such letters, certificates, agreements, papers, financing statements, assignments or instruments as in their judgment may be necessary, appropriate or desirable to carry out the terms and provisions of, and complete the transactions contemplated by, this ordinance. All acts taken pursuant to the authority of this ordinance but prior to its effective date are hereby ratified and confirmed. SECTION VI. This ordinance shall be effective upon its passage, approval,.and five (5) days after publication. PASSED BY THE CITY COUNCIL this 1st day of March , 2010. J. (Jan-_ Bonnie I. Walton, City Clerk 4 , f ,F ORDINANCE NO. 5527 APPROVED BY THE MAYOR this 1st day of March , 2010. lik 2 I ./ . a2, Den's Law, Mayor Approved as to form: Of • : Lawrence J. Warren, City Attorney �!} :h � am : ! ' , Date of Publication: 3/5/2010 (summary) ORD:1622:2/3/10:scr • 5 a CERTIFICATE FOR TRANSCRIPT I, Bonnie I. Walton, City Clerk of the City of Renton, Washington(the"City"), do hereby certify that the within and attached documents are in each case true and correct copies of the originals of such documents and that none of the resolutions, ordinances,proceedings, statements or certificates contained herein have been repealed, rescinded or canceled and all of the officers last certified as holding City offices have continued to hold their respective offices from such date to and including the date of this certificate. Dated as of this 11th day of May, 2010. 4. — Bonnie I. Walton, City Clerk City of Renton, Washington P:120358 DG@0358 0N3 CERTIFICATE I, Denis W. Law, the duly elected Mayor of the City of Renton, Washington (the "City"), do hereby certify that Iwen Wang and Bonnie I. Walton are the duly appointed Finance and Information Services Administrator and City Clerk, respectively, of the City. Dated as of this 11th day of May, 2010. }Lp Denis W. Law, Mayor City of Renton, Washington P:120358 DG\20358 0N3 CERTIFICATE I, Bonnie I. Walton, City Clerk of the City of Renton, do hereby certify that the attached is a true and correct copy of the proceedings of the City Council setting the date, time and place for regular meetings of the City Council. Dated as of this 11th day of May, 2010. � Y� Bonnie I. Walton, City Clerk City of Renton, Washington P:120358 DG120358 0N3 f CERTIFICATE I, Bonnie I. Walton, City Clerk of the City of Renton, Washington(the"City"), do hereby certify that the Renton Reporter is the official newspaper of the City. Dated as of this 11th day of May,2010. Bonnie I. Walton, City Clerk City of Renton, Washington • P:\20358 DG\20358 0N3 CERTIFICATE REGARDING OUTSTANDING DEBT I, Iwen Wang, Finance and Information Services Administrator of the City of Renton, Washington (the "City"), do hereby certify that the following are all of the City's currently outstanding general obligation bonds and long-term leases and financing contracts as of May 11, 2010 (excluding the City's Limited Tax General Obligation Refunding Bonds, 2010 issued on the date hereof): a Voted General Obligation Bonds: Designation Outstanding Balance Nons oted General Obligation Bonds: Designation Outstanding Balance 2000 Valley Corn Bonds 11) $ 184,000 2001 LTGO &Refunding(2) 18,700,000 2002 LTGO j 2,860,000 2006 LTGO 16,920,000 2009 SCORE Bonds (3) 31,044,600 2010 Valley Corn Bonds (il> 1,065,000 i (1) Valley Communications Center Development Authority issued special obligation bonds on September 15, 2000 (the "Valley Com Bonds") in the total aggregate principal amount of $12,758,000 of which the callable 2011 through 2015 maturities were refunded on April 5, 2010. The City is responsible for 20 percent of the debt service on the Valley Com Bonds. (2) Includes the bonds to be refunded. (3) The South Correctional Entity Facility Public Development Authority issued bonds on November 4, 2009 (the "SCORE Bonds"). The par amount of the SCORE Bonds was $86,235,000 and the City is obligated to pay 36 percent of the debt service on the SCORE Bonds. Pa20358_DG\20358_0N3 Long-term leases and conditional sale contracts (including COPs) and other debt: Designation Outstanding Balance Dated as of this 11th day of May, 2010. AOP Iw:- ' ang, . ance an.) ormation Services Adm c stator City of Renton,"' ashington CERTIFICATE REGARDING ORDINANCE I, Bonnie I. Walton, City Clerk of the City of Renton, Washington(the "City"), do hereby certify: 1. That the attached Ordinance No. 5534 (the"Ordinance") is a true and correct copy of an ordinance of the City Council, as finally adopted at a regular meeting of the City Council held on April 5, 2010, and duly ;recorded in my office, and that such Ordinance has not been amended or superseded. 2. That the meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of the meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the City Council voted in the proper manner for the adoption of the Ordinance; that all other requirements and proceedings incident to the proper adoption of the Ordinance have been duly fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. Dated this 11th day of May,2010. Bonnie I. Walton, City Clerk City of Renton, Washington P:120358-DG120358-0N3 it v CERTIFICATE I, Bonnie I. Walton, City Clerk of the City of Renton, Washington(the "City"), do hereby certify that the attached is a true and correct copy of the minutes of the March 22, 2010 regular meeting of the City Council which reflects the first reading of Ordinance No. 5534. Dated as of this 11th day of May, 2010. 60-7A-A4-1-4. Bonnie I. Walton, City Clerk City of Renton, Washington P:120358 DG120358 0N3 CERTIFICATE I, Bonnie I. Walton, City Clerk of the City of Renton, Washington(the "City"), do hereby certify that the attached is a true and correct copy of the minutes of the April 5, 2010 regular meeting of the City Council which reflects the second reading and passage of Ordinance No. 5534. Dated as of this 11th day of May, 2010. Bonnie I. Walton, City Clerk City of Renton, Washington P:120358_DG120358_0N3 CLOSING CERTIFICATE OF THE CITY OF RENTON The undersigned hereby certifies and represents to Seattle-Northwest Securities Corporation (the "Underwriter") that she is the duly appointed and acting Finance and Information Services Administrator of the City of Renton, Washington (the "City") and is authorized to execute and deliver this certificate and further certifies on behalf of the City to the Underwriter as follows: 1. This certificate is delivered in connection with the offering and sale of the $6,170,000 Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"). 2. The representations, warranties and covenants of the City set forth in the Bond Purchase Agreement for the Bonds (the "Purchase Agreement"), dated April 8, 2010, between the City and the Underwriter, and in Ordinance No. 5534 of the City (the "Bond Ordinance") were true and correct when made and remain true and correct as of this date. 3. No litigation or other proceedings are pending or, to my knowledge, threatened in any court in any way (a) affecting the position or title of the authorized officers of the City, or (b) seeking to restrain or to enjoin the authorization, issuance, sale or delivery of, or security for, any of the Bonds, or (c) contesting or affecting the validity or enforceability" of the Bonds, the Bond Ordinance, the Purchase Agreement, or (d) contesting the completeness or accuracy of the Preliminary Official Statement or the Final Official Statement, or (e) contesting the powers of the City or its authority with respect to the Bonds, the Bond Ordinance or the Purchase Agreement, or(f) materially affecting the finances of the City. 4. No event affecting the City has occurred since the date of the Final Official Statement which should be disclosed in the Final Official Statement for the purpose for which it is to be used or which is necessary to disclose therein in order to make the statements therein not misleading, and the Final Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading(provided,however,no such representation or warranty is made with respect to the information in the Final Official Statement relating to DTC, the book-entry system, the Financial Advisor or the Underwriter). Capitalized terms not defined herein shall have the meaning set forth in the Purchase Agreement. Dated this 11th day of May, 2010. i I fang mance anyf ormation Services Admi Fd strator City of Renton, Washington P:120358 DG120358 0N3 Y I SIGNATURE IDENTIFICATION CERTIFICATE We, Denis W. Law and Bonnie I. Walton, the duly chosen, qualified and acting Mayor and City Clerk, respectively, of the City of Renton, Washington (the "City"), do hereby certify that the signatures appearing on each of the following-described Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds") of the City are true and correct facsimiles of our signatures. The Bonds are in the total principal amount of$6,170,000, are dated as of the date of their delivery, are designated "City of Renton, Washington, Limited Tax General Obligation Refunding Bonds, 2010," are in the denomination of$5,000 each or integral multiples thereof, are fully registered, are numbered, bear interest at the rates per annum set forth in the following schedule, payable on December I, 2010, and semiannually thereafter on the first days of each succeeding June and December, and mature on December 1 in the years and amounts as follows: Maturity Years Principal Interest (December 1) Amounts Rates 2010 $140,000 3.00% 2011 5,000 3.00 2012 5,000. 3.00 2013 5,000 3.00 2014 5,000 3.00 2015 10,000 3.00 2016 10,000 3.00 2017 10,000 3.25 2018 1,395,000 4.50 2019 1,460,000 4.50 2020 1,530,000 4.50 2021 1,595,000 4.50 Dated as of this 11th day of May, 2010. Si a e Title Itor /4Mayor J. £ Ja City Clerk * * * * * * V STATE OF WASHINGTON ) ) ss: COUNTY OF KING ) On this 1 today of �� , 2010, before me, the undersigned, a Notary Public in and for the State of Washington, duly�mmissioned and sworn, personally appeared Denis W. Law, to me known to be the Mayor of the City of Renton, Washington, described in and who executed the within and foregoing instrument; and acknowledged to me that he signed said instrument�y hf4'i�„_nd voluntary act and deed for th ` es and p oses therein C1-- ... . entioned. tip'' :. .. Ma1- \\ ' �5 �' 1 �o�dc Pa Y V•. i ®'��G ; o\ Notary P blit [g'eal RItan\iT c��� L r 1t<V �. `�>'••...8-27.'...•$1+' [Printed Name] ------11- QF W P/,'1i1 Mycommission expires &la-1 "LaoD .vri,N/- 1� STATE OF WASHINGTON ) ) ss: COUNTY OF KING ) On this 11 day of �,.( , 2010, before me, the undersigned, a Notary Public in and for the State of Washington, duly ccimmissioned and sworn, personally appeared Bonnie I. Walton, to me known to be the City Clerk of the City of Renton, Washington, described in and who executed the within and foregoing instrument; and acknowledged to me that she signed said instrument as her free and voluntary act and deed for t e uses and purposes therein mentioned. J,,/„iii, l'' \N•R- MO ---- c________:) 11'` -*oN Exp••••.9 \ `o Notary Public ., 8-21'\°'2����\ [Printed Name] i �^4rF�F VJ PS)''” My commission expires U12-7I >i() -2- P:\20358 DG\20358 0N3 '- CERTIFICATE CERTIFICATE OF PAYMENT AND DELIVERY I, Iwen Wang, Finance and Information Services Administrator of the City of Renton, Washington (the "City"), do hereby certify that on this date the City delivered to Seattle- Northwest Securities Corporation, Seattle, Washington(the "Underwriter"), or its duly appointed agent, the City's Limited Tax General Obligation Refunding Bonds, 2010, in the aggregate principal amount of $6,170,000 (the "Bonds"), in the form provided by No. 5534 passed on April 5, 2010. I further certify that at the time of such delivery,the City received payment for the Bonds, from the Underwriter, as follows: Source of Funds Principal Amount of Bonds $ 6,170,000.00 Plus: Original Issue Premium 443,483.70 Less: Underwriter's Discount (34,798.80) Less: POS/OS Printing and Mailing (750.00) Total Sources of Funds $ 6,577,934.90 Distribution of Funds To:'U.S. Bank National Association Deposit to Refunding Account $ 6,542,770.16 Deposit to Costs of Issuance Fund(including contingency proceeds) 35,164.74 $ 6,577,934.90 Total Funds Disbursed $ 6,577,934.90 Dated as of this 11th day of May, 2010. I CITY OF RENTON, WASHIN TON /.‘irBy Iw-n Wang Finance and Information Servi es Administrator • ESCROW DEPOSIT AGREEMENT CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 THIS ESCROW AGREEMENT, dated as of May 11, 2010 (herein, together with any amendments or supplements hereto, called the "Agreement") is entered into by and between the City of Renton, Washington (herein called the "City") and U.S. Bank National Association, Seattle, Washington, as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent"). The notice addresses of the City and the Escrow Agent are shown on Exhibit A attached hereto and made a part hereof. WITNESSETH : WHEREAS, the City heretofore has issued and there presently remain outstanding the obligations described in Exhibit B attached hereto (the "Refunded Bonds"); and WHEREAS, pursuant to Ordinance No. 5534 passed on April 5, 2010 (the "Bond Ordinance"), the City has determined to issue its Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"); and WHEREAS, a portion of the proceeds of the Bonds are being used for the'purpose of providing funds to pay the costs of refunding the Refunded Bonds; and WHEREAS, Grant Thornton LLP, certified public accountants, has prepared a verification report which is dated May 11, 2010 (the"Verification Report") relating to the source and use of funds available to accomplish the refunding of the Refunded Bonds,the investment of such funds and the adequacy of such funds and investments to provide for the payment of the debt service due on the Refunded Bonds; and WHEREAS, pursuant to the Bond Ordinance, the Refunded Bonds have been designated for redemption prior to their scheduled maturity dates and, after provision is made for such redemption, the.Refunded Bonds will come due in such years, bear interest at such rates, and be payable at such times and in such amounts as are set forth in Exhibit C attached hereto and made a part hereof; and WHEREAS, when Escrowed Securities have been deposited with the Escrow Agent for the payment of all principal and interest of the Refunded Bonds when due, then the Refunded Bonds shall no longer be regarded as outstanding except for the purpose of receiving payment from the funds provided for such purpose; and WHEREAS, the issuance, sale, and delivery of the Refunding Bonds have been duly authorized to be issued, sold, and delivered for the purpose of obtaining the funds required to provide for the payment of the principal of, interest on and redemption premium (if any) on the Refunded Bonds when due as shown on Exhibit C attached hereto; NOW, THEREFORE, in consideration of the mutual undertakings, promises and agreements herein contained, the sufficiency of which hereby are acknowledged, and to secure the full and timely payment of principal of and the interest on the Refunded Bonds, the City and the Escrow Agent mutually undertake, promise and agree for themselves and their respective representatives and successors, as follows: Article 1. Definitions Section 1.1. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Agreement: Escrow Fund means the fund created by this Agreement to be established, held and administered by the Escrow Agent pursuant to the provisions of this Agreement. Escrowed Securities means the noncallable Government Obligations described in Exhibit D attached to this Agreement, or cash or other noncallable obligations substituted therefor pursuant to Section 4.2 of this Agreement. Government Obligations means direct, noncallable (a)United States Treasury Obligations, (b) United States Treasury Obligations - State and Local Government Series, (c) non-prepayable obligations which are unconditionally guaranteed as to full and timely payment of principal and interest by the United States of America or (d) REFCORP debt obligations unconditionally guaranteed by the United States. Paying Agent means the fiscal agency of the State of Washington, as the paying agent for the Refunded Bonds. Refunding Bonds means that portion of the Bonds authorized under the Bond Ordinance for the purpose of refunding the Refunded Bonds. Section 1.2. Other Definitions. The terms "Agreement," "City," "Escrow Agent," "Bond Ordinance," "Verification Report," "Refunded Bonds," and "Bonds" when they are used in this Agreement, shall have the meanings assigned to them in the preamble to this Agreement. Section 1.3. Interpretations. The titles and headings of the articles and sections of this Agreement have been inserted for convenience and reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the -2- P:\20358 DG\2035E ONA intended purpose of providing for the refunding of the Refunded Bonds in accordance with applicable law. Article 2. Deposit of Funds and Escrowed Securities Section 2.1. Deposits in the Escrow Fund. Concurrently with the sale and delivery of the Refunding Bonds the City shall deposit, or cause to be deposited, with the Escrow Agent, for deposit in the Escrow Fund, the funds (from the proceeds of the Refunding Bonds and a cash contribution by the City) sufficient to purchase the Escrowed Securities and pay costs of issuance described in Exhibit D, and the Escrow Agent shall,upon the receipt thereof, acknowledge such receipt to the City in writing. Article 3. Creation and Operation of Escrow Fund Section 3.1. Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as the Refunding Account(the "Escrow Fund"). The Escrow Agent hereby agrees that upon receipt thereof it will deposit to the credit of the Escrow Fund the funds and the Escrowed Securities described in Exhibit D attached hereto. Such deposit, all proceeds therefrom, and all cash balances from time to time on deposit therein (a) shall be the property of the Escrow Fund, (b) shall be applied only in strict conformity with the terms and conditions of this Agreement, and (c) are hereby irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds, which payment shall be made by timely transfers of such amounts at such times as are provided for in Section 3.2 hereof. When the final transfers have been made for the payment of such principal of and interest on the Refunded Bonds, any balance then remaining in the Escrow Fund shall be transferred to the City, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section 3.2. Payment of Principal and Interest. The Escrow Agent is hereby irrevocably instructed to transfer to the Paying Agent from the cash balances from time to time on deposit in the Escrow Fund, the amounts required to pay the principal of the Refunded Bonds at their respective redemption dates and interest thereon to such redemption dates in the amounts and at the times shown in Exhibit C attached hereto. Section 3.3. Sufficiency of Escrow Fund. The City represents that, based upon the information provided in the Verification Report, the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balance on deposit from time to time in the Escrow Fund will be at all times sufficient to provide moneys for transfer to the Paying Agent at the times and in the amounts required to pay the interest on the Refunded Bonds as such interest comes due and the principal of the Refunded Bonds as the Refunded Bonds are paid on an optional redemption date prior to maturity, all as more fully set forth in Exhibit E attached hereto. If, for any reason, at any time, the cash -3- P:12035E DG120356 ONA balances on deposit or scheduled to be on deposit in the Escrow Fund shall be insufficient to transfer the amounts required by the Paying Agent to make the payments set forth in Section 3.2. hereof, the City shall timely deposit in the Escrow Fund, from any funds that are lawfully available therefor, additional funds in the amounts required to make such payments. Notice of any such insufficiency shall be given promptly as hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the City's failure to make additional deposits thereto. Section 3.4. Trust Fund. The Escrow Agent or its affiliate, shall hold at all times the Escrow Fund, the Escrowed Securities and all other assets of the Escrow Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed'Securities or any other assets of the Escrow Fund1 to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow Agent as trust funds for the benefit of the owners of the Refunded Bonds; and a special account thereof shall at all times be maintained on the books of the Escrow Agent. The owners of the Refunded Bonds shall be entitled to the same preferred claim and first lien upon the Escrowed Securities, the proceeds thereof, and all other assets of the Escrow Fund to which they are entitled as owners of the Refunded Bonds. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the City, and the Escrow Agent shall have no right to title with respect thereto except as a trustee and Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject to warrants,j drafts or checks drawn by the City or, except to the extent expressly herein provided, by the Paying Agent. Article 4. Limitation on Investments Section 4.1. Investments. Except for the initial investment in the Escrowed Securities, and except as provided in Section 4.2 hereof, the Escrow Agent shall not have any power or duty to invest or reinvest any money held hereunder, or to make substitutions of the Escrowed Securities, or to sell,transfer, or otherwise dispose of the Escrowed Securities. Section 4.2. Substitution of Securities. At the written request of the City, and upon compliance with the conditions hereinafter stated, the Escrow Agent shall utilize cash balances in the Escrow Fund, or sell, transfer, otherwise dispose of or request the redemption of the Escrowed Securities and apply the proceeds therefrom to purchase Refunded Bonds or Government Obligations which do not permit the redemption thereof at the option of the obligor. Any such transaction may be effected by the Escrow Agent only if(a)the Escrow Agent shall have received a written opinion from a firm of certified public accountants that such transaction will not cause the amount of money and securities in the Escrow Fund to be reduced below an amount sufficient to provide for the full -4- P:\20356 DG\20358 0NA and timely payment of principal of and interest on all-of the remaining Refunded Bonds as they become due, taking into account any optional redemption thereof exercised by the City in connection with such transaction; and (b)the Escrow Agent shall have received the unqualified written legal opinion of its bond counsel or tax counsel to the effect that such transaction will not cause any of the Refunding Bonds or Refunded Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. Article 5. Application of Cash Balances Section 5.1. In General. Except as provided in Section 2.1, 3.2 and 4.2 hereof, no withdrawals, transfers or reinvestment shall be made of cash balances in the Escrow Fund. Cash balances shall be held by the Escrow Agent in United States currency as cash balances as shown on the books and records of the Escrow Agent and, except as provided herein, shall not be reinvested by the Escrow Agent; provided, however, a conversion to currency shall not be required (i) for so long as the Escrow Agent's internal rate of return does not exceed 20%, or (ii) if the Escrow Agent's internal rate of return exceeds 20%, the Escrow Agent receives a letter of instructions, accompanied by the opinion of nationally recognized bond counsel, approving the assumed reinvestment of such proceeds at such higher yield. Article 6. Redemption of Refunded Bonds Section 6.1. Call for Redemption. The City hereby irrevocably calls the Refunded Bonds for redemption on their earliest redemption dates, as shown in the Verification Report and on Appendix A attached hereto. Section 6.2. Notice of Redemption/Notice of Defeasance. The Escrow Agent agrees to give a notice of defeasance and a notice of the redemption of the Refunded Bonds pursuant to the terms of the Refunded Bonds and in substantially the forms attached hereto as Appendices A and B attached hereto and as described on said Appendices A and B to the Paying Agent for distribution as described therein. The notice of defeasance shall be given immediately following the execution of this Agreement, and the notice of redemption shall be given in accordance with the ordinance authorizing the Refunded Bonds. The Escrow Agent hereby certifies that provision satisfactory and acceptable to the Escrow Agent has been made for the giving of notice of redemption of the Refunded Bonds. Article 7. Records and Reports Section 7.1. Records. The Escrow Agent will keep books of record and account in which complete and accurate entries shall be made of all transactions relating to the receipts, disbursements, allocations and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds -5- P:120358 DG120358 0NA thereof, and such books shall be available for inspection during business hours and after reasonable notice. Section 7.2. Reports. While this Agreement remains in effect, the Escrow Agent quarterly shall prepare and send to the City a written report summarizing all transactions relating to the Escrow Fund during the preceding financial quarter, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities and transfers from the Escrow Fund for payments on the Refunded Bonds or otherwise, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. Article 8. Concerning the Paying Agents and Escrow Agent Section 8.1. Representations. The Escrow Agent hereby represents that it has all necessary power and authority to enter into this Agreement and undertake the obligations and responsibilities imposed upon it herein, and that it will carry out all of its obligations hereunder. Section 8.2. Limitation on Liability. The liability of the Escrow Agent to transfer funds for the payment of the principal of and interest on the Refunded Bonds shall be limited to the proceeds of the Escrowed Securities and the cash balances from time to time on deposit in the Escrow Fund. Notwithstanding any provision contained herein to the Contrary, the Escrow Agent shall have no liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund or any failure of the obligors of the Escrowed Securities to make timely payment thereon, except for the obligation to notify the City promptly of any such occurrence. The recitals herein and hi the proceedings authorizing the Refunding Bonds shall be taken as the statements of the City and shall not be considered as made by, or imposing any obligation or liability upon,the Escrow Agent. • The Escrow Agent is not a party to the proceedings authorizing the Refunding Bonds or the Refunded Bonds and is not responsible for nor bound by any of the provisions thereof (except to the extent that the Escrow Agent may be a place of payment and paying agent and/or a paying agent/registrar therefor). In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms.and provisions of this Agreement. The Escrow Agent makes no representations as to the value, conditions or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the City thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to any of such matters. -6- P.\20358 DG12035E ONA It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable except for its own neglect or willful misconduct, nor for any loss unless the same shall have been through its negligence or bad faith. Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the City with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund, to dispose of and deliver the same in accordance with this Agreement. If, however, the Escrow Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determination the Escrow Agent shall be liable only for its own willful misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the City or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and in this connection may make inquiries of, and consult with, among others, the City at any time. Section 8.3. Compensation. The City shall pay to the Escrow Agent fees for performing the services hereunder and for the expenses incurred or to be incurred by the Escrow Agent in the administration of this Agreement pursuant to the terms of the Fee Schedule attached hereto as Appendix C. The Escrow Agent hereby agrees that in no event shall it ever assert any claim or lien against the Escrow Fund for any fees for its services, whether regular or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its expenses as Escrow Agent or in any other capacity. Section 8.4. Successor Escrow Agents. Any corporation, association or other entity into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or otherwise transfer all or substantially all of its corporate trust assets and business or any corporation, association or other entity resulting from any such conversion, sale, merger, consolidation or other transfer to which it is a party, ipso facto, shall be and become successor escrow agent hereunder, vested with all other matters as was its predecessor, without the execution or filing of any instrument or any further act on the part of the parties hereto, notwithstanding anything herein to the contrary. -7- P:\20358 DG120356 0NA ' I l If at any time the Escrow Agent or its legal successor or successors should become unable,through operation or law or otherwise,to act as escrow agent hereunder, or if its property and affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith exist in the office of Escrow Agent hereunder. In such event the City, by appropriate action, promptly shall appoint an Escrow Agent to fill such vacancy. If no successor Escrow Agent shall have been appointed by the City within 60 days, a successor may be appointed by the owners of a majority in principal amount of the Refunded Bonds then outstanding by an instrument or instruments in writing filed with the City, signed by such owners or by their duly authorized attorneys-in-fact. If, in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred, the owner of any Refunded Bond may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if any, as it may deem proper,prescribe and appoint a successor Escrow Agent. Any successor Escrow Agent shall be a corporation organized and doing business under the laws of the United States or the State of Washington, authorized under such laws to exercise corporatetrust powers, having its principal office and place of business in the State of Washington, having a combined capital and surplus of at least $100,000,000 and subject to the supervision or examination by federal or state authority. Any successor Escrow Agent shall execute, acknowledge and deliver to the City and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to the terms of this Agreement, all the rights, powers and trusts of the Escrow Agent hereunder. Upon the request of any such successor Escrow Agent,the City shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights,powers and duties. The obligations assumed by the Escrow Agent pursuant to this Agreement may be transferred by the Escrow Agent to a successor Escrow Agent if (a)the requirements of this Section 8.4 are satisfied; (b)the successor Escrow Agent has assumed all the obligations of the Escrow Agent under this Agreement; and (c) all of the Escrowed Securities and money held by the Escrow Agent pursuant to this Agreement have been duly transferred to such successor Escrow Agent. Article 9. Miscellaneous Section 9.1. Notice. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly.given when mailed by registered or certified mail, postage prepaid addressed to the City or the Escrow Agent at the address shown on Exhibit A attached hereto. The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date -8- P:120358 DG\20358 0NA and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten days prior notice thereof. Section 9.2. Termination of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow Agent shall have no further obligations or responsibilities hereunder to the City, the owners of the Refunded Bonds or to any other person or persons in connection with this Agreement. Section 93. Binding Agreement. This Agreement shall be binding upon the City and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the owners of the Refunded Bonds, the City, the Escrow Agent and their respective successors and legal representatives. Section 9.4. Severability. In case any one or more of the provisions contained in this 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 Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 9.5. Washington Law Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Washington. Section 9.6. Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Agreement. Section 9.7. Notice to S&P and Fitch. In the event that this Agreement or any provision thereof is severed, amended or revoked, the City shall provide written notice of such severance, amendment or revocation to Standard & Poor's Ratings Services, 55 Water Street, New York, New York 10041, Attention: Refunded Bonds Municipal Bond Department, and to Fitch Ratings, One State Street Plaza, New York, New York, 10004,Attention: Public Finance Rating Desk/Refunded Bonds. Section 9.8. Amendments. This Agreement shall not be amended except to cure any ambiguity or formal defect or omission in this Agreement. No amendment shall be effective unless the same shall be in -9- P:120358 DG120358 ONA 1 writing and signed by the parties thereto. No such amendment shall adversely affect the rights of the holders of the Refunded Bonds. No such amendment shall be made without first receiving written confirmation from the rating agencies (if any) which have rated the Refunded Bonds that such administrative changes will not result in a withdrawal or reduction of its rating then assigned to the Refunded Bonds. If this Agreement is amended, prior written notice and copies of the proposed changes shall be given to the rating agencies which have rated the Refunded Bonds. EXECUTED as of the date first written above. CITY OF RENTON,WASHINGTON IP ,0- ignate• City ReVsentative U.S. BANK NATIONAL ASSOCIATION Authorized Signer Exhibit A — Addresses of the City and the Escrow Agent Exhibit B — Description of the Refunded Bonds Exhibit C — Schedule of Debt Service on Refunded Bonds Exhibit D — Description of Beginning Cash Deposit(if any) and Escrowed Securities Exhibit E — Escrow Fund Cash Flow Appendix A — Notice of Redemption for the 2001 Bonds Appendix B — Notice of Defeasance for the 2001 Bonds Appendix C — Fee Schedule -10 P:12035E DG120358 ONA EXHIBIT A Addresses of the City and Escrow Agent City: City of Renton 1055 S. Grady Way • Renton, Washington 98057 Attention: Finance and Information Services Administrator Escrow Agent: U.S. Bank National Association Corporate Trust Services PD-WA-T7CT 1420 Fifth Avenue, 7th Floor Seattle, WA 98101 Attention: Carolyn Morrison, Vice President A-1 P:120358 DG120356 0NA _ I 1 J EXHIBIT B Description of the Refunded Bonds 'City of Renton, Washington Limited Tax General Obligation and Refunding Bonds, 2001 Maturity Years (December 1) Principal Amounts Interest Rates 2018 $1,385,000 5.25% 2019 1,460,000 5.25 2021 3,155,000 5.00 • B-1 P:120358 DG120358 0NA EXHIBIT C Schedule of Debt Service on the Refunded Bonds Principal/ Date Interest Redemption Price Total 06/01/2010 $153,556.25 — $ 153,556.25 • 12/01/2010 153,556.25 — 153,556.25 06/01/2011 153,556.25 — , 153,556.25 12/01/2011 153,556.25 $6,000,000.00 6,153,556.25 $.614,225.00 $6,000,000.00 $6,614,225.00 C-1 1:120358 DG120358 0NA EXHIBIT D Escrow Deposit I. Cash: $1.16 II. Other Obligations: Principal Description Maturity Date Amount Interest Rate Total Cost SLGS 06/01/2010 $ 153,557 — $ 153,557 SLGS 12/01/2010 127,762 0.23% 127,762 SLGS 06/01/2011 130,578 0.45 130,578 SLGS 12/01/2011 6,130,872 0.74 6,130,872 $6,542,769 $ 6,542,769 III. Costs of Issuance: Escrow Agent Fee(U.S. Bank) $ 1,000.00 Bond Counsel Fee(K&L Gates LLP) 20,000.00 Financial Advisor Fee (Piper Jaffray) 5,000.00 Escrow Verification Fee(Grant Thornton LLP) 2,500.00 Rating Agency(S&P) 6,375.00 Contingency proceeds I 289.74 TOTAL: $ 35,164.74 D-1 P:120358 DG120358 0NA EXHIBIT E Escrow Fund Cash Flow Escrow Net Escrow Excess Cash Date Requirement Receipts Receipts Balance 05/11/2010 — $ 1.16 $ 1.16 $ 1.16 06/01/2010 $ 153,556.25 153,557.00 0.75 1.91 12/01/2010 153,556.25 153,555.58 -0.67 1.24 06/01/2011 153,556.25 153,556.03 -0.22 1.02 12/01/2011 6,153,556.25 6,153,556.23. -0.02 1.00 $6,614,225.00 $6,614,226.00 $ 1.00 E-1 P:120358 DG\20358 ONA '! APPENDIX A NOTICE OF REDEMPTION* City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 NOTICE IS HEREBY GIVEN that the City of Renton, Washington has called for redemption on December 1, 2011 a portion of its outstanding Limited Tax General Obligation and Refunding Bonds,2001 (the"Bonds"). The Bonds will be redeemed at a price of one hundred percent (100%) of their principal amount, plus interest accrued to' December 1, 2011. The redemption price of the Bonds is payable on presentation and surrender of the Bonds at the office of: The Bank of New York Mellon Wells Fargo Bank National Worldwide Series Processing Association 2001 Bryan Street, 9th Floor -or- Corporate Trust Department Dallas, Texas 75021 14th Floor-M/S 257 999 Third Avenue Seattle, Washington 98104 Interest on all Bonds or portions thereof which are redeemed shall cease to accrue on December 1, 2011. The following Bonds are being redeemed: Maturity Years (December 1) Principal Amounts Interest Rates CUSIP Nos. 2018 $085,000 5.25% 760133PL6 2019 1;460,000 5.25 760133PM4 2021 3,155,000 5.00 760133PP7 This notice shall be given not more than 60 nor less than 30 days prior to December 1,2011 by first class mail to each registered owner of the Refunded Bonds. In addition notice shall be mailed to Piper Jaffray& Co.; The Depository Trust Company of New York, New York; Assured Guaranty Corporation (formerly Financial Security Assurance Inc.); Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, New York, New York; Fitch, Inc., New York, New York; and to the Municipal Securities Rulemaking Board. Page 1—Appendix A P:120358_DG120358_0NA By Order of the City of Renton, Washington The Bank of New York Mellon, as Paying Agent Dated: Withholding of 28% of gross redemption proceeds of any payment made within the United States may be required by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act") unless the Paying Agent has the correct taxpayer identification number (social security or employer identification number) or exemption certificate of the payee. Please furnish a properly completed Form W-9 or exemption certificate or equivalent when presenting your Bonds. Page 2—Appendix A P:120358_DG120358_ONA APPENDIX B Notice of Defeasance* City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 NOTICE IS HEREBY GIVEN to the owners of that portion of the above-captioned bonds with respect to which, pursuant to an Escrow Deposit Agreement dated May 11, 2010, by and between City of Renton, Washington (the "City") and U.S. Bank National Association, Seattle, Washington (the "Escrow Agent"), the City has deposited into an escrow account, held by the Escrow Agent, cash and non-callable direct obligations of the United States of America, the principal of and interest on which, when due, will provide money sufficient to pay each year, to and including the respective maturity or redemption dates of such bonds so provided for, the principal thereof and interest thereon (the "Defeased Bonds"). The Defeased Bonds will be called on December 1, 2011 at a price of 100% plus accrued interest. Such Defeased Bonds are therefore deemed to be no longer outstanding pursuant to the provisions of Ordinance No. 4922 of the City, authorizing the issuance of the Defeased Bonds, but will be paid by application of the assets of such escrow account.; The Defeased Bonds are described as follows: Limited Tax General Obligation and Refunding Bonds, 2001 (Dated November 1, 2001) Maturity Years Principal , Call Date (December 1) Amounts Interest Rates CUSIP Nos. (at 100%) 2018 $1,385,000 . 5.25% 760133PL6 12/1/2011 2019 1,460,000 5.25 760133PM4 12/1/2011 2021 3,155,000 5.00 760133PP7 12/1/2011 Information for Individual Registered Owner The addressee of this notice is the registered owner of Bond Certificate No. of the Defeased Bonds described above, which certificate is in the principal amount of$ All of which has been defeased as described above. * This notice shall be given immediately by first class mail to each registered owner of the Defeased Bonds. In addition notice shall be mailed to Piper Jaffray&Co.;Assured Guaranty Corporation(formerly Financial Security Assurance Inc.);The Depository Trust Company of New York,New York;The Bank of New York Mellon, as Paying Agent; Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, New York, New York; Fitch, Inc., New York, New York; and to the Municipal Securities Rulemaking Board. Appendix B P:\20358_DG120358_0NA APPENDIX C Fee Schedule bank U.S. Bank Customer Confidential Schedule of Fees for Services as Refunding Escrow Agent For City of Renton, Washington . Limited Tax General Obligation Refunding Bonds 2010 (2001) Escrow CTS04480 INIT Escrow Agent,One Time One-time fee for the standard escrow agent services $1,000.00 MISC associated with the administration of the account. Administration fees are payable in advance. Direct Out of Pocket Expenses Reimbursement of expenses associated with the At Cost performance of our duties, including but not limited to publications, legal counsel after the initial close,travel expenses and filing fees. Extraordinary Services Extraordinary Services are duties or responsibilities of an unusual nature, including termination, but not provided for in the governing documents or otherwise set forth in this schedule.A reasonable charge will be assessed based on the nature of the services and the responsibility involved.At our option,these charges will be billed at a flat fee or at our hourly rate then in effect. Account approval is subject to review and qualification. Fees are subject to change at our discretion and upon written notice. Fees paid in advance will not be prorated. The fees set forth above and any subsequent modifications thereof are part of your agreement. Finalization of the transaction constitutes agreement to the above fee schedule,including agreement to any subsequent changes upon proper written notice. In the event your transaction is not finalized,any related out-of-pocket expenses will be billed to you directly. Absent your written instructions to sweep or otherwise invest,all sums in your account will remain uninvested and no accrued interest or other compensation will be credited to the account. Payment of fees constitutes acceptance of the terms and conditions set forth. IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT: To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain,verify and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a Trust or other legal entity we will ask for documentation to verify its formation and existence as a legal entity.We may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation. Dated: May 11,2010 • Appendix C P:120358_DG120358 ONA Fonn 8038-G Information Return for Tax-Exempt Governmental Obligations ► Under Internal Revenue Code section 149(e) OMB No:1545-0720 (Rev.November 2000) ► 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 ► ❑ 1 Issuer's name 2 Issuer's employer identification number City of Renton,Washington 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 98055 • 05/11/2010 7 Name of issue 8 CUSIP number Limited Tax General Obligation Refunding Bonds,2010 760133RU4 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 Iwen Wang,Finance and Information Services Administrator ( 425 )430-6858 Part II Type of Issue (check applicable box(es) and enter the issue price) See instructions and attach schedule 11 El Education 11 12 El Health and hospital 12 13 El Transportation 13 14 ❑ Public safety 14 I 15 ❑ Environment(including sewage bonds) 15 16 El Housing 16 17 ElUtilities 17 18 Other. Describe .. Municipal parking,facilities 18 6,613,484 19 If obligations are TANs or RANs, check box ► El If obligations are BANs, check box ► ❑ 20 If obligations are in the form of a lease orInstallment sale, check box ► ❑ ��� Part III Description of Obligations. Complete for the entire issue for which this form is being filed. (c)Stated redemption (d)Weighted (a)Final maturity date (b)Issue price price at maturity average maturity le)veld 21 12/01/2021 $ 6,613,484 $ 6,170,000 9.8603 years 3.5751 % Part IV Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest 22 0 23 Issue price of entire issue(enter amount from line 21, column (b)) 23 6,613,484 24 Proceeds used for bond issuance costs(including underwriters'discount) 24 70,424 r 25 Proceeds used for credit enhancement 25 0 26 Proceeds allocated to reasonably required reserve or replacement fund . 26 0 27 Proceeds used to currently refund prior issues 27 0 28 Proceeds used to advance refund prior issues 28 6,542,770 29 Total (add lines 24 through 28) 29 6,613,194 30 Nonrefunding proceeds of the issue(subtract line 29 from line 23 and enter amount here). . 30 290 Part V Description of Refunded Bonds (Complete this part only for refunding bonds.) 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . ► 0 years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . . II- 10.1197 years 33 Enter the last date on which the refunded bonds will be called ► 12/01/2011 34 Enter the date(s)the refunded bonds were issued ► 11/01/2001 Part VI Miscellaneous • 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . , 35 N/A 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract(see instructions) 36a N/A b Enter the final maturity date of the guaranteed investment contract ► rA 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a N/A b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► El and enter the name of the issuer ► _ _ - and the date of the issue ► N/A 38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box . . ► 0 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box ► ❑ 40 If the issuer has identified a hedge, check box ► ❑ 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,come :nd complete. Sign1 Here ( / // e/ 0 (wen Wang,Finance&Info.Svs.Dir. ' Si.n- •e of i er's authorized�esentative 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) FEDERAL TAX CERTIFICATE I, the undersigned officer of the City of Renton, Washington (the "City"), make this certification for the benefit of all persons interested in the exclusion from gross income for federal income tax purposes of the interest to be paid on the City's Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"), which are being issued in the aggregate principal amount of$6,170,000 and delivered simultaneously with the delivery of this certificate. I do hereby certify as follows in good faith on the date of issue of the Bonds: 1. Responsible Officer. I am the duly chosen, qualified and acting officer of the City for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the City. I am the officer of the City charged, along with other officers of the City, with responsibility for issuing the Bonds. 2. Code and Regulations. The Bonds are subject to the provisions of sections 141, 148, 149 and 150 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations (the "Regulations") promulgated under sections 141, 148, 149 and 150 of the Code. These provisions of the Code and Regulations impose restrictions on the use of bond- financed facilities and on the investment of bond proceeds. This certificate is being executed and delivered pursuant to sections 1.141-1 through 1.141-15, 1.148-0 through 1.148-11, 1.149(b)-1, 1.149(d)-1, 1.149(g)-1, 1.150-1 and 1.150-2 of the Regulations. 3. Definitions. The capitalized terms used in this certificate (unless otherwise defined) that are defined in Ordinance No. 5534, passed on April 5, 2010, authorizing the issuance of the Bonds (the "Bond Ordinance") shall for all purposes hereof have the meanings therein specified. All terms defined in the Code or Regulations shall for all purposes of this certificate have the same meanings as given to those terms in the Code and Regulations unless the context clearly requires otherwise. 4. Reasonable Expectations. The facts and estimates that are set forth in this certificate are accurate. The expectations that are set forth in this certificate are reasonable in light of such facts and estimates. There are no other facts or estimates that would materially change such expectations. The undersigned has to the extent necessary reviewed the certifications set forth herein with other representatives of the City as to such accuracy and reasonableness. The undersigned has also relied,to the extent appropriate, on representations set forth in the certificate of Seattle-Northwest Securities Corporation, the underwriter that has purchased the Bonds (the "Underwriter"), attached hereto as Exhibit A, the representations set forth in the certificate of Piper Jaffray& Co., the City's Financial Advisor (the "Financial Advisor") attached hereto as Exhibit B, and the report of Grant Thornton LLP, certified public accountants, dated May 11, 2010 (the "Report"). The undersigned is aware of no fact, estimate or circumstance that would create any doubt regarding the accuracy or reasonableness of all or any portion of such documents. 5. Description of Governmental Purpose. The City is issuing the Bonds pursuant to the Bond Ordinance (a)to provide funds that will be used to advance refund and defease a portion of the City's Limited Tax General Obligation and Refunding Bonds, 2001 (the "Prior Bonds"),pursuant to an escrow agreement between the City and U.S. Bank National Association (the "Escrow Agreement"), and (b) to pay the costs of issuance of the Bonds. The Prior Bonds were issued to provide funds to (i) advance refund a portion of the City's Limited Tax General Obligation Bonds, 1997B (the "1997B Bonds"), including the payment of costs of issuance of the Prior Bonds allocable to the advance refunding of the 1997B Bonds (the "2001 Refunding Project") and (ii)pay the costs of constructing and equipping a municipal parking garage (the "2001 Capital Improvements"), including costs of issuance of the Prior Bonds allocable to the 2001 Capital Improvements (the "2001 New Money Project"). The Report details all relevant aspects of the application of the proceeds of the Bonds and the City's program to refund the Prior Bonds. Specifically, all of the Prior Bonds maturing on December 1, 2018, December 1, 2019 and December 1, 2021 in the amount of$6,000,000.00 (the"Refunded Bonds")will be called for redemption and retired with proceeds of the Bonds. The Refunded Bonds are being defeased in order to achieve a present-value savings in the debt service payable by the City. December 1, 2011 is the first date on which the Refunded Bonds are subject to optional redemption'and on such date all of the Refunded Bonds will be called for redemption in advance of their scheduled maturities and retired with proceeds of the Bonds. In accordance with a multipurpose issue allocation of the Prior Bonds pursuant to Treasury Regulation section 1.148-9(h)(4)(v)(B), all of the Refunded Bonds are allocable to the 2001 New Money Project and the Bonds are the first advance refunding of the Refunded Bonds. 6. The Refunded Bonds. (a) General. No portion of the purchase price of any of the Refunded Bonds represents a loan made from the proceeds of another tax-exempt obligation. All of the original and investment proceeds allocable to the Refunded Bonds have been expended. No portion of the proceeds of the Refunded Bonds was used to pay the principal of, or interest on, any other issue of governmental obligations. In addition, other than to the extent of preliminary expenditures (i.e., architectural,1 engineering, surveying, soil testing, reimbursement bond issuance, and similar costs that are incurred prior to commencement of acquisition, construction, or rehabilitation of a project, other than land acquisition, site preparation, and similar costs incident to commencement of construction), no portion of the proceeds of the Refunded Bonds was used to reimburse the City for any expenditures made by the City prior to the respective issuance dates of the Refunded Bonds or 60 days prior to the date that the City adopted a declaration of intent to reimburse itself from proceeds of the Refunded Bonds. (b) Prior Bond Fund. The City has maintained a debt service fund for the Prior Bonds (the "Prior Bond Fund") and has on hand in such Prior Bond Fund certain amounts that were to be used for the payment of debt service on the Prior Bonds. The Prior Bond Fund will be continued for the payment of debt service on the Prior Bonds that remain outstanding. The City has created a new debt service fund (the "Bond Fund") under the Bond Ordinance for purposes of the payment of debt service on the Bonds, as described in paragraph 16 below. 7. Use of Amounts Allocable to Refunded Bonds. Other than amounts described in paragraph 6 above,there are no amounts on hand that represent proceeds of the Refunded Bonds, replacement proceeds of the Refunded Bonds or accumulated earnings on such proceeds. 2 8. Expenditure of Proceeds of the Bonds. The sale proceeds from the issuance of the Bonds will be $6,613,483.70. Such amount represents the stated redemption price at maturity (excluding accrued interest for those Bonds the interest on which is paid at least once annually) of the Bonds, equal to $6,170,000.00, plus a net original issue premium in the amount of $443,483.70. No portion of the purchase price of any of the Bonds is provided by the issuance of any other issue of obligations. The sale proceeds will be expended as follows: (a) The amount of $6,542,769.00 will be deposited in the escrow fund established pursuant to the Escrow Agreement (the "Escrow Fund") and used on the date hereof to purchase United States Treasury Certificates of Indebtedness and Notes, State and Local Government Securities (the "Escrowed Securities"), the proceeds of which will be used as described in the Report to pay the principal of, and interest and redemption premium, if any, on the Refunded Bonds. No portion of the proceeds of the Bonds is expected to be used to pay any interest on, or principal of, any issue of governmental obligations other than the Bonds and the Refunded Bonds. (b) The amount of$34,798.80 will be allocated on the date of issuance of the Bonds to the Underwriter's discount or compensation. (c) The amount of$35,625.00 will be disbursed to pay other costs of issuance of the Bonds (including any rating agency fees charged to the City). (d) The amount of$289.74 represents a rounding amount and will be deposited in the Bond Fund and used to pay debt service on the Bonds on the first interest payment date. (e) The amount of$1.16 will be deposited as the initial cash balance in the Escrow Fund and disbursed to pay debt service on the Refunded Bonds. 9. Pre-issuance Accrued Interest. The Bonds are dated as of the date of their initial delivery to the Underwriter and the City will receive no pre-issuance accrued interest on the Bonds. 10. Investment Proceeds. Except for earnings on the amounts described in paragraphs 8(c), 8(d) and 8(e), all amounts received by the City, such as interest and dividends, resulting from the investment of any original proceeds or investment proceeds of the Bonds will be deposited in the Escrow Fund for the Refunded Bonds and used to pay the principal of, and interest and redemption premium, if any, on, the Refunded Bonds. Earnings on the amounts described in paragraphs 8(c), 8(d) and 8(e) will be used for one of the purposes described in such paragraphs. 11. Transferred Proceeds. There are no transferred proceeds with respect to the Bonds because all of the proceeds of Refunded Bonds have been or will be expended prior to the first dates on which amounts are disbursed from the Escrow Fund to pay principal of the Refunded Bonds. 12. No Replacement Proceeds. Other than amounts described herein, there are no amounts that have a sufficiently direct nexus to the Bonds or to the governmental purposes of the Bonds, including the expected use of amounts to pay debt service on the Refunded Bonds, that 3 the amounts would have been used for such purpose if the proceeds of the Bonds were not used or to be used for such purpose. (a) No Sinking Funds. Other than to the extent described herein, there is no debt service fund, redemption fund, reserve fund, replacement fund, or similar fund reasonably expected to be used directly or indirectly to pay principal or interest on the Bonds. (b) No Pledged Funds. Other than amounts described herein, there is no amount that is directly or indirectly, other than solely by reason of the mere availability or preliminary earmarking, pledged to pay principal or interest on the Bonds, or to a guarantor of part orall of the Bonds, such that such pledge provides reasonable assurance that such amount will be available to pay principal or interest on the Bonds if the City encounters financial difficulty. For purposes of this certification, an amount is treated as so pledged if it is held under an agreement to maintain the amount at a particular level for the direct or indirect benefit of the holders or the guarantor of the Bonds. (c) No Other Replacement Proceeds. There are no other replacement proceeds allocable to the Bonds because the City reasonably expects that the term of the Bonds will not be longer than is reasonably necessary for the governmental purposes of the Bonds. Furthermore, if the term of the Bonds is longer than is reasonably necessary for the governmental purposes of the Bonds, the City does not reasonably expect to have available amounts during the portion of such period that is longer than is reasonably necessary. The Bonds would be issued to achieve a debt service savings independent of any arbitrage benefit as evidenced by the expectation that the Bonds reasonably would have been issued if the interest on the Bonds were included in gross income (assuming that the hypothetical taxable interest rate would be the same as the actual tax- exempt interest rate). (d) Weighted Average Maturity. The weighted average maturity of the Bonds, which has been computed by the Underwriter as set forth on Exhibit A, does not exceed the remaining weighted average maturity of the Refunded Bonds and the weighted average maturity of the Refunded Bonds is not greater than 120 percent of the weighted average estimated economic life of the 2001 New Money Project, determined in accordance with section 147(b) of the Code. Such weighted average estimated economic life is determined in accordance with the following assumptions: (a) the weighted average was determined by taking into account the respective costs of each of the assets financed by the Refunded Bonds; (b) the reasonably expected economic life of an asset was determined as of the later of the date hereof or the date on which such asset is expected to be placed in service (i.e., available for use for the intended purposes of such asset); (c) the economic lives used in making this determination are not greater than the useful lives used for depreciation under section 167 of the Code prior to the enactment of the current system of depreciation in effect under section 168 of the Code (i.e., the "mid-point lives") under the asset depreciation range ("ADR") system of section 167(m) of the Code, as set forth in Revenue Procedure 83-35, 1983-1 C.B. 745, where applicable, and the "guideline lives" under Revenue Procedure 62-21, 1962-2 C.B. 418, in the case of structures; and (d) land or any interest therein has not been taken into account in determining the average reasonably expected economic life of such project, unless 25 percent or more of the net proceeds of any issue is to be used to finance land. 4 13. No Excess Gross Proceeds. Except for the amount described in paragraph 8(d) above and earnings on the amounts described in paragraphs 8(c) and 8(d) above, all gross proceeds of the Bonds are allocable to: (a) the payment of principal, interest or call premium on the Refunded Bonds as described in paragraph 8(a)above; (b) the payment of costs of issuance of the Bonds as described in paragraph 8(b) and 8(c) above; (c) the payment of administrative costs allocable to repaying the Refunded Bonds, carrying and repaying the Bonds or investments of Bond proceeds; (d) transferred proceeds allocable to expenditures for the governmental purpose of the Refunded Bonds as described in paragraph 7 above (if any); and (e) replacement proceeds in a sinking fund for the Bonds. Investment earnings on the amounts described in paragraphs 8(c) and 8(d) are expected to be de minimis; therefore, the sum of the investment earnings on the amounts described in paragraphs 8(c) and 8(d), the amount described in paragraph 8(d) will be less than one percent of the original proceeds of the Bonds. 14. Yield on the Bonds. For the purposes of this certificate, the yield on the Bonds is the discount rate that, when used in computing the present value as of the issue date of the Bonds, of all unconditionally payable payments of principal, interest and fees for qualified guarantees on the Bonds,produces an amount equal to the present value, using the same discount rate, of the aggregate issue price of the Bonds as of the issue date. For purposes of determining the yield on the Bonds, the issue price of the Bonds is the sum of the issue prices for each group of substantially identical Bonds. For each group of substantially identical Bonds, the issue price is the first price at which a substantial amount (i.e., ten percent) is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters and wholesalers). Based upon the representations of the Underwriter set forth in Exhibit A hereto, the issue price of the Bonds aggregated $6,613,483.70. No Underwriter's discount, issuance costs, or costs of carrying or repaying the Bonds is taken into account for purposes of computing the yield on the Bonds. The yield on the Bonds calculated in this manner, as shown in the Report, is 3.575057 percent. 15. Temporary Periods and Yield Restriction. (a) Uninvested Amounts. The amounts described in paragraphs 8(b) and 8(e) will not be invested and,therefore, are not subject to yield restriction. (b) Issuance Costs. It is expected that the amount described in paragraph 8(c) will be disbursed within 13 'months of the date hereof for costs of issuing the Bonds; therefore, such amount will be invested for an allowable temporary period. To the extent any portion of the 5 amount described in paragraph 8(c) is not expended within 13 months, the City will take steps to restrict the investment of such amounts to a yield which is not materially higher than the yield on the Bonds. (c) Rounding Amount. The amount described in paragraph 8(d) will be invested at a yield that is not higher than the yield on the Bonds. (d) Yield on the Escrowed Securities. The yield on the Escrowed Securities is computed using the same compounding interval and financial conventions used to compute the yield on the Bonds. The yield on the Escrowed Securities is the discount rate that, when used in computing the present value as of the date the Escrowed Securities were first allocated to the Bonds of all unconditionally payable receipts to be actually or constructively received from the Escrowed Securities, produces an amount equal to the amounts to be actually or constructively paid for the Escrowed Securities. The Escrowed Securities are all yield-restricted nonpurpose investments that are a single class of investments and that are treated as a single investment because all of the Escrowed Securities were purchased with Bond proceeds and held in a refunding escrow as described in paragraph 8(a) above. Such purchase price is equal to the price paid by the City to the United States for the Escrowed Securities. As shown in the Report, the yield on the Escrowed Securities determined in this manner is 0.732486 percent, a yield that is not higher than the yield on the Bonds. The City has covenanted in the Bond Ordinance to comply with, among other things, the requirements of section 148(f) of the Code and, if required, the City will satisfy this requirement with respect to earnings on the Escrowed Securities out of funds other than those in the Escrow Fund. Pursuant to section 1.148-9(g) of the Regulations, the City hereby elects to waive the 30-day temporary period available under section 1.148-9(d)(2)(i) of the Regulations: 16. Bond Fund. Pursuant to the Bond Ordinance, the City has created or continued, as the case may be,the Bond Fund and the proceeds from all taxes levied, assessed and collected for and on account of the Bonds are to be deposited in such Fund. The City expects that taxes levied, assessed and collected for and on account of the Bonds will be sufficient each year to pay such debt service. All amounts deposited in the Bond Fund which will be depleted at least once each bond year, except for a reasonable carryover amount not in excess of the greater of the earnings on such portion of the Bond Fund for the immediately preceding bond year or one- twelfth of the principal and interest payments on the Bonds for the immediately preceding bond year..Therefore, all amounts therein may be invested at an unrestricted yield. Any amounts held in the Bond Fund for longer than 13 months will be invested in obligations the yield on which is not in excess of the yield on the Bonds. 17. Issue. There are no other obligations which (a) are sold at substantially the same time as the Bonds (i.e., within 15 days), (b) are sold pursuant to the same plan of financing with the Bonds, and(c)will be paid out of substantially the same source of funds as the Bonds. 18. Compliance With Rebate Requirements. The City has covenanted in the Bond Ordinance that it will take all necessary steps to comply with the requirement that rebatable 6 arbitrage earnings on the investment of the gross proceeds of the Bonds, if any, within the meaning of section 148(f) of the Code be rebated to the federal government. Specifically, the City will (a) maintain records regarding the investment of the gross proceeds of the Bonds as may be required to calculate such rebatable arbitrage earnings separately from records of amounts on deposit in the funds and accounts of the City which are allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (b) calculate at such intervals as may be required by applicable Regulations, the amount of rebatable arbitrage earnings, if any, earned from the investment of the gross proceeds of the Bonds and (c)pay, not less often than every fifth anniversary date of the delivery of the Bonds and within 60 days following the fmal maturity of the Bonds, or on such other dates required or permitted by applicable Regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Bonds that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at arm's-length and had the yield on the issue not been relevant to either party. The City hereby covenants to pay any rebate due on the Refunded Bonds within 60 days after the date the Refunded Bonds are retired. 19. Not an Abusive Transaction. (a) General. No action taken in connection with the issuance of the Bonds is or will have the effect of (a) enabling the City to exploit, other than during an allowable temporary period, the difference between tax-exempt and taxable interest rates to obtain a material financial advantage (including as a result of an investment of any portion of the gross proceeds of the Bonds over any period of time, notwithstanding that, in the aggregate, the gross proceeds of the Bonds are not invested in higher yielding investments over the term of the Bonds), and (b) overburdening the tax-exempt bond market by issuing more bonds, issuing bonds earlier, or allowing bonds to remain outstanding longer than is otherwise reasonably necessary to accomplish the governmental purposes of the Bonds, based on all the facts and circumstances. Specifically, (i) the primary purpose of each transaction undertaken in connection with the issuance of the Bonds is a bona fide governmental purpose; (ii) each action taken in connection with the issuance of the Bonds would reasonably be taken to accomplish the governmental purposes of the Bonds if the interest on the Bonds were not excludable from gross income for federal income tax purposes (assuming the hypothetical taxable interest rate would be the same as the actual tax-exempt interest rate on the Bonds); (iii) the proceeds of the Bonds will not exceed by more than a minor portion the amount necessary to accomplish the governmental purposes of the Bonds and will in fact not be substantially in excess of the amount of proceeds allocated to expenditures for the governmental purposes of the Bonds. (b) No Re-refunding. No portion of the Refunded Bonds has been refunded or defeased other than by reason of the issuance of the Bonds. 7 (c) No Sinking Fund. 'No portion of the Bonds has a term that has been lengthened primarily for the purpose of creating a sinking fund or similar fund with respect to the Bonds and thereby eliminating significant amounts of negative arbitrage in the Escrow Fund. (d) No Noncallable Bonds. The Refunded Bonds do not include any noncallable Prior Bonds. (e) No Window Refunding. No portion of the Bonds has been structured with maturity dates the primary purpose of which is to make available released revenues that will enable the City to avoid transferred proceeds or to make available revenues that may be invested to be ultimately used to pay debt service on another issue of obligations. (f) No Sale of Conduit Loan. No portion of the gross proceeds of the Prior Bonds or the Bonds has been or will be used to acquire, finance, or refinance any conduit loan to.any ply • 20. No Arbitrage. On the basis of the foregoing facts, estimates and circumstances, it is expected that the gross proceeds of the Bonds will not be used in a manner that would cause any of the Bonds to be an "arbitrage bond" within the meaning of section 148 of the Code and the Regulations. To the best of the knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that would materially change such expectations. 21. No Private Use, Payments or Loan Financing. (a) General. The City reasonably expects, as of the date hereof, that no action or event during the entire stated term of the Bonds will cause either the "private business tests" or the "private loan financing test," as such terms are defined in the Regulations, to be met. Specifically, (i) Not more than 10 percent of the proceeds of the Bonds will be used and no portion of the proceeds of the; Prior Bonds has been used in a trade or business of a nongovernmental person. For purposes of determining use, the City will apply rules set forth in applicable Regulations and Revenue Procedures promulgated by the Internal Revenue Service, including, among others, the following rules: (A) any activity carried on by a person other than a natural person or a state or local governmental unit will be treated as a trade or business of a nongovernmental person; (B) the use of all or any portion of the 2001 New Money Project is treated as the direct use of proceeds; (C) a nongovernmental person will be treated as a private business user of proceeds of the Bonds or the Prior Bonds as a result of ownership, actual or beneficial use of the proceeds pursuant to a lease, or a management or incentive payment contract, or certain other arrangements such as a take-or-pay or other output-type contract; and (D) the private business use test is met if a nongovernmental person has special legal entitlements to use directly or indirectly the 2001 New Money Project. (ii) The City has not taken and will not take any deliberate action that would cause or permit the use of any portion of the 2001 New Money Project to change such that such portion will be deemed to be used in the trade or business of.a nongovernmental person for so long as any of the Bonds remains outstanding (or until an opinion of nationally recognized bond counsel is received to the effect that such change in use will not adversely affect the 8 excludability from gross income for federal income tax purposes of interest payable on the Bonds). For this purpose any action within the control of the City is treated as a deliberate action. A deliberate action occurs on the date the City enters into a binding contract with a nongovernmental person for use of the 2001 New Money Project that is not subject to any material contingencies. (iii) All payments of the debt service on the Bonds will be paid from and secured by a generally applicable tax. For this purpose, a generally applicable tax is a tax (A)which is an enforced contribution exacted pursuant to legislative City in the exercise of the taxing power that is imposed and collected for the purpose of raising revenue to be used for governmental purposes and (B) which has a uniform tax rate that is applied to all persons of the same classification in the appropriate jurisdiction using a generally applicable manner of determination and collection. No portion of the payment of the debt service on the Bonds will be directly or indirectly derived from payments (whether or not to the City or any related party) in respect of property, or borrowed money, used or to be used for a private business use. Furthermore, no portion of the payment of the debt service on the Bonds will be directly or indirectly secured by any interest in property used or to be used for a private business use or payments in respect of property used or to be used for a private business use. (iv) No portion of the proceeds of the Bonds will be directly or indirectly used to make or finance a loan to any person other than a state or local governmental unit. (b) Dispositions of Personal Property in the Ordinary Course. The City does not reasonably expect that it will sell or otherwise dispose of personal property components of the 2001 New Money Project refmanced with the Bonds other than in the ordinary course of an established governmental program that satisfies the following requirements: (i) The weighted average maturity of the portion of the Bonds refinancing personal property is not greater than 120 percent of the reasonably expected actual use of such personal property for governmental purposes; (ii) The reasonably expected fair market value of such personal property on the date of disposition will be not greater than 25 percent of its cost; (iii) Such personal property will no longer be suitable for its governmental purposes on the date of disposition; and (iv) The City is required to deposit amounts received from such disposition in a commingled fund with substantial tax or other governmental revenues and the City reasonably expects to spend such amounts on governmental programs within 6 months from the date of commingling. (c) Other Agreements. The City will not enter into any agreement with any nongovernmental person regarding the use of all or any portion of the 2001 New Money Project during the stated term of the Bonds unless such agreement will not adversely affect the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. 9 22. Weighted Average Maturity. The weighted average maturity of the Bonds set forth on Exhibit A attached to this certificate is the sum of the products of the issue price of each group of identical Bonds and the number of years to maturity (determined separately for each group of identical Bonds and taking into account mandatory redemptions), divided by the aggregate sale proceeds of the Bonds. 23. Bonds are not Hedge Bonds. The City represents that not more than 50 percent of the proceeds of the Refunded Bonds were a part was invested in nonpurpose investments (as defined in section 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more within the meaning of section 149(g)(3)(A)(ii) of the Code, and the City reasonably expected at the time the Refunded Bonds were issued that at least 85 percent of the spendable proceeds of each such Bonds would be used to carry out the governmental purposes of such issue within the corresponding three-year period beginning on the date of issue of the Refunded Bonds. 24. Federal Guarantee Prohibition. The Bonds are not"federally guaranteed" and the City will not cause or allow the bonds to become "federally guaranteed". Unless otherwise excepted under section 149(b) of the Code,the Bonds will be considered federally guaranteed if: (a) The payment of principal or interest with respect to the Bonds is guaranteed (in whole or in part)by the United States (or any agency or instrumentality thereof); (b) 5 percent or more of the proceeds of the Bonds are to be: (i) used in making loans the payment of principal or interest with respect to which are to be guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof), or (ii) invested (directly or indirectly) in federally insured deposits or accounts; or (c) The payment of principal or interest on the Bonds is otherwise indirectly guaranteed(in whole or in part)by the United States (or an agency or instrumentality thereof). CITY OF RENTON,WASHINGTON By: Name: Iw- . , • Title: inance and Informa ion Services Administrator Date: May 11, 2010 K1203792910000B120358 DG120358021OV 10 EXHIBIT A CERTIFICATE OF UNDERWRITER Seattle-Northwest Securities Corporation has acted as underwriter(the "Underwriter"), in connection with the sale and delivery by the City of Renton, Washington (the "City") of Limited Tax General Obligation Refunding Bonds, 2010 in the aggregate principal amount of$6,170,000 (the"Bonds"). I,the undersigned, hereby certify as follows on behalf of the Underwriter: 1. I am the duly chosen, qualified and acting officer of the Underwriter for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Underwriter. I am the officer of the Underwriter charged, along with other officers of the Underwriter, with responsibility for the Bonds. 2. The Underwriter has purchased the Bonds from the City pursuant to a Bond Purchase Contract dated April 8, 2010, for an aggregate purchase price of $6,578,684.90. The Underwriter has made a bona fide public offering to the public of all of the Bonds of each maturity at the issue prices to the public set on the cover of the Official Statement. The issue prices set forth in the Official Statement were determined on the date the Bonds were purchased by the Underwriter based on the reasonable expectations regarding the initial public offering prices. The issue price for each maturity of the Bonds, as set forth in the Report, represents the first price (including original issue premium and discount and accrued interest to the issue date only) of the Bonds at which a substantial amount(at least 10 percent) of each such maturity was sold to the public. The aggregate of such issue prices of all of the Bonds is $6,613,483.70. The initial public offering prices described above do not exceed the fair market value for the Bonds on the sale date. The term "public," as used herein, does not include bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 3. The Underwriter computed the weighted average maturity of the Bonds to be 9.8603 years, as set forth in paragraph 23 of the Federal Tax Certificate to which this certificate is attached. 4. The yield on the Bonds is not less than 3.575057 percent. For purposes of this certificate, the term "yield" means that yield which is computed as described in paragraph 14 of the Federal Tax Certificate. For this purpose, the present value on each such mandatory redemption date is computed using the yield of only such group of identical Bonds to their stated final maturity as the discount rate. 5. I have worked closely with representatives of the City in structuring the financial terms of the Bonds and the refunding of the Refunded Bonds. The Underwriter has also performed certain computations that are the subject of the Report. I hereby confirm that, to the best of my knowledge, the schedules that are described in the Report as provided by the Underwriter are true, accurate and complete. I further hereby A-1 represent that to the best of my knowledge the statements set forth in paragraph 20 of the Federal Tax Certificate to which this certificate is attached, are true. The Underwriter hereby authorizes the City to rely on the statements made herein in connection with making the representations set forth in the Federal Tax Certificate to which this certificate is attached and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. The Underwriter hereby authorizes K&L Gates LLP to rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Capitalized terms used herein and not otherwise defined have the meaning ascribed to such terms in the Federal Tax Certificate to which this certificate is attached. SEATTLE-NORTHWEST SECURITIES CORPORATION By: Name: Lindsay Sovde Title: Senior Vice President Date: May 11, 2010 K12037929100008120358 DG1203580210V A-2 4 EXHIBIT B CERTIFICATE OF FINANCIAL ADVISOR I, the undersigned officer of the Financial Advisor, make this certificate for the benefit of all persons interested in the exclusion from gross income for federal income tax purposes of the interest on the Bonds. Each capitalized term used herein has the meaning specified for such term in the Federal Tax Certificate to which this Exhibit B is attached (the "Federal Tax Certificate"). I hereby certify as follows as of the Issue Date: I am the duly chosen, qualified and acting officer of the Financial.Advisor for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Financial Advisor. I am the officer of the Financial Advisor who has worked with representatives of the City in structuring the financial terms of the Bonds. The City may rely on the statements made herein in connection with making the representations set forth in the Certificate and in its efforts to comply with the conditions imposed by the Code on the exclusion of interest on the Bonds from the gross income of their owners. K&L Gates LLP also may rely on this certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. PIPER JAFFRAY& CO. By: Name: Jane D. Towery • Title: Managing Director Date: May 11, 2010 K\2037929\ODODB\20358 DG\203580210V B-1 CERTIFICATE OF ESCROW AGENT I, the undersigned authorized officer of U.S. Bank National Association, Seattle, Washington (the "Escrow Agent"), DO HEREBY CERTIFY, with respect to the refunding of certain outstanding general obligation bonds (the "2001 Bonds"), of the City of Renton, Washington (the "City") and more particularly described in Ordinance No. 5534 of the City passed on April 5, 2010 (the"Bond Ordinance"), as follows: 1. The Escrow Agent has established a refunding account (the "Escrow Fund") pursuant to the Escrow Deposit Agreement between the City and the Escrow Agent dated May 11,2010 (the"Escrow Agreement"). 2. The Escrow Agent has received from Seattle-Northwest Securities Corporation as Purchaser, $6,577,934.90 of the proceeds of the City's Limited Tax General Obligation Refunding Bonds, 2010, and has applied such sums as follows: $6,542,769.00 was applied to purchase Government Obligations, $1.16 to establish a beginning cash balance, and $35,164.74 to pay the costs of issuance (including contingency proceeds) as described in Exhibit D of the Escrow Agreement. 3. The Government Obligations described in Exhibit D of the Escrow Agreement will be deposited in the Escrow Fund as of their respective dates of purchase to be held in trust for the security and benefit of the owners of the Refunded Bonds and will be applied, together with interest thereon, as provided in the Bond Ordinance and the Escrow Agreement. 4. Attached to this certificate is evidence of the authority of the undersigned to execute this certificate and the Escrow Agreement on behalf of the Escrow Agent. Dated as of this 11th day of May,2010. U.S. BANK NATIONAL ASSOCIATION By Its Vice President RECEIPT FOR BONDS Receipt of the City of Renton, Washington, Limited Tax General Obligation Refunding Bonds, 2010, in the aggregate principal amount of$6,170,000, this 11th day of May 2010, is hereby acknowledged on behalf of the Underwriter. SEATTLE-NORTHWEST SECURITIES CORPORATION By Title STATE OF WASHINGTON,COUNTY OF KING } - AFFIDAVIT OF PUBLICATION PUBLIC NOTICE Linda M Mills,being first duly sworn on oath that she is the Legal Advertising Representative of the CITOF RENTON NOTICE OF ORDINANCE ADOPTED BY THE REN IDN CITY COUNCIL FRenton Reporter ordinance fs op summary oa the ordinance ado ed bythe Renton City Council on April 5,2010: ORDINANCE NO.5534 An ordinance of the City of a weekly newspaper, which newspaper is a legal newspaper of Renton, Washington, providing for the issuance and sale of lifted general circulation and is now and has been for more than six months tax general obligation refunding prior to the date of publication hereinafter referred to, published in bonds of the City in the aggregate the English language-continuouslyas a weeklynews a er_in_Kin _ _ _ _ - principal to ptovnot ftunds for g P P g $6,800,000 to provide funds for _ - _ _ — County, Washington. The Renton Reporter has been approved as• the purpose of refunding certain a Legal Newspaper order of the Superior Court of the State of limited tax general obligation by bonds of the City; authorizing Washington for King County. the appointment of an escrow The notice in the exact form annexed was published in regular issues agent and execution of an escrow n of the Renton Reporter not in supplement form) which was agreement;horityondpprovetithng ceinal P (and1?P authority to approve the final regularly distributed to its subscribers during the below stated period. terms of the bonds. • The annexed notice, a: Effective: 5/9/2010 Complete text of this ordinance Public Notice is available at Renton City Hall, 1055 South Grady Way; and ‘‘\‘‘NU1 posted at the Renton Public ���``QPi.-Seri'+/ and 290Librari2 NE Mill Street Upon was published on April 9,2010. -1 ,..�"ettttu,,, �i� request to the City Clerk's office, A, .:=%,._,\0�Exp14,,i0 �/> (425)430-6510,copies will also .y AAR i- Fin 4, i be mailed fora fee. . ' x 'z Published in the Renton Reporter The full amount of the fee charged for said foregoing publication is ;o - •"., o : on April 9,2010.#349425. the sum of $80.50. ��� ; %`' pt.,,- ., ca 4 z... , _,,, . /xindsi 4.Mills ,���irr o,.....,- c_i_ - • LegalAdvertising Representative,Renton Reporter �'''``'`' Subscr'•-d and sw: to me this 9th day April, 2010. ". ike- .,,_ �...d.�r Kathy Dal;g, otary Pub •e for the State of Washington,Residing in Covin! on,Washington . P. O.Number: CERTIFICATE I, i, _;tridersigned City Clerk of the City of Renton, Washington, certify t� aat this is a true and correct copy of �ouno'l Mendes Vs/ho . Subscribed and sealed this d-"day of /nay ,20 /0 RENTON CITY COUNCIL City Clerk Regular Meeting 4'. = • C) April 5,2010 Council Chambers Monday,7 p.m. MINUTES Renton City Hall ` • CALL TO ORDER Mayor Law called the meeting of the Renton City Council to order and led the Pledge of Allegiance to the flag. ... ROLL CALL OF DON PERSSON,Council President;MARCIE PALMER;RANDY CORMAN;GREG COUNCILMEMBERS TAYLOR;RICH ZWICKER;TERRI BRIERE;KING PARKER. CARRIED. CITY STAFF IN ATTENDANCE DENIS LAW,Mayor;JAY COVINGTON,Chief Administrative Officer,ANN NIELSEN,Assistant City Attorney;BONNIE WALTON,City Clerk;TERRY HIGASHIYAMA,Community Services Administrator;GREGG ZIMMERMAN, Public Works Administrator; IWEN WANG,Finance and Information Services Administrator;SUZANNE DALE ESTEY,Economic Development Director;PETER RENNER,Facilities Director;BONNIE RERECICH,Community Services Resource& Funding Manager;FIRE AND EMERGENCY SERVICES ADMINISTRATOR MARK • PETERSON,DEPUTY CHIEF BILL FLORA and EMERGENCY MANAGEMENT DIRECTOR DEBORAH NEEDHAM,Fire and Emergency Services Department; DEPUTY CHIEF TIM TROXEL and COMMANDER KATIE MCCLINCY,Police - Department. PROCLAMATION A proclamation by Mayor Law was read declaring the month of April 2010 to be Volunteer Month-April 2010 "Volunteer Month"in the City of Renton and encouraging all members of the community to commit a portion of their time to volunteer service. MOVED BY BRIERE,SECONDED BY ZWICKER,COUNCIL CONCUR IN THE PROCLAMATION. CARRIED. Community Services Administrator Terry Higashiyama accepted the proclamation with appreciation. She thanked Community Services Resource and Funding Manager Bonnie Rerecich for coordinating the City's volunteer efforts. Ms.Higashiyama stated that 4,119 volunteers provided 60,229 hours of service in 2009 and equated the value of their time to approximately $1,219,000. She noted that there are numerous events and activities planned this month to celebrate and recognize City volunteers. SPECIAL PRESENTATION Mayor Law announced that with Council's approval he appointed Mark Fire:Promotion of Mark Peterson as the new Fire Chief and Emergency Services Administrator on Peterson to Fire Chief and 3/23/2010. He stated that Chief Peterson joined the Renton Fire Department in Emergency Services 1980 and rose through the ranks to Deputy Chief. Mayor Law recognized Administrator . veterans of the Fire Department that were in attendance including former Deputy Chiefs Bob Van Home,Chuck Duffy,and Larry Rude,and former Fire Chief Lee Wheeler. He also recognized Fire Commissioners Craig Violante and Ray Barilleaux,and thanked everyone for attending the event. Mayor Law administered an oath of office and presented a Certificate of Appointment to Mark Peterson,Fire Chief and Emergency Services Administrator. Chief Peterson thanked City officials,the administration,and current and former members of the Fire Department for their support. He introduced members of his family who were in attendance and stated that he is looking forward to serving the community,in his new position. CERTIFICATE L !undersigned City Clerk of the C -'f Renton, Washington, certify that this is a true and correct copy of Council Minutes 3/a-/ . Subscribed and sealed thishL#day of Miry:'. ,20/0 1c.c-_ :� a_P•tgv RENTON CITY COUNCIL City Clerk :'•% '• • Regular Meeting • March 22,2010 Council Chambers Monday,7 p.m. MINUTES Renton City Hall • ' • r CALL TO ORDER Mayor Law called the meeting of the Renton City Council to order and led the' Pledge of Allegiance to the flag. ROLL CALL OF DON PERSSON,Council President;KING PARKER;TERRI BRIERE;RICH ZWICKER; COUNCILMEMBERS GREG TAYLOR;MARCIE PALMER. MOVED BY ZWICKER,SECONDED BY BRIERE, COUNCIL EXCUSE ABSENT COUNCILMEMBER RANDY CORMAN. CARRIED. CITY STAFF IN ATTENDANCE DENIS LAW,Mayor;JAY COVINGTON,Chief Administrative Officer;LAWRENCE J.WARREN,City Attorney;BONNIE WALTON,City Clerk;GREGG ZIMMERMAN, Public Works Administrator;IWEN WANG,Finance and Information Services Administrator;SUZANNE DALE ESTEY,Economic Development Director;CHIP VINCENT,Planning Director;PREETI SHRIDHAR,Communications Director, JENNIFER HENNING,Current Planning Manager;FIRE AND EMERGENCY SERVICES ADMINISTRATOR MARK PETERSON and EMERGENCY MANAGEMENT DIRECTOR DEBORAH NEEDHAM,Fire and Emergency Services Department; CHIEF KEVIN MILOSEVICH,DEPUTY CHIEF TIM TROXEL and COMMANDER DAVE LEIBMAN,Police Department. SPECIAL PRESENTATIONS Stacy Trussler,with the Washington State Department of Transportation,stated WSDOT:Night Closures on that the Renton Stage 2(1-405,SR 167 to SR 169)&SR 515 Interchange project Benson Rd S is ahead of schedule and under budget. She also remarked that the Renton Stage,1 project(1-405,1-5 to SR 167)is nearly complete. She introduced Lisa Hodgson,manager for the Renton Stage 2&SR 515 Interchange project. Ms.Hodgson reported that Talbot Rd.S.is being widened to accommodate new on and off ramps,and 1-405 is being widened by one lane in each direction from SR 167 to SR 169. She remarked that two noise walls have been constructed,and only three noise inquiries have been received since last October. Ms.Hodgson displayed various images of the project,and a time- lapsed video of the new bridge girders being set in place. She announced that • Benson Rd.S.will be closed from 8 p.m.3/26/2010 to 5 a.m.3/30/2010. Concluding,Ms.Hodgson stated that southbound 1-405 will be closed the weekend of 7/9/2010,and northbound 1-405 will be closed the weekend of 7/16/2010,in order to remove the existing Benson Rd.S.bridge. Fire:Renton Heart Month Fire and Emergency Services Administrator Mark Peterson reported that this is Wrap-Up the fourth year of the Renton Heart Month campaign. He explained that the purpose of the program is to raise heart health,blood sugar,and stroke awareness with City residents. He noted that that Cardiopulmonary Resuscitation(CPR)and Automated External Defibrillator(AED)training was also offered to citizens. Chief Peterson stated that extensive advertising was conducted to ensure residents were aware of the campaign. He reported that over 4,000 screenings were conducted that identified 520 people with high blood pressure,and 92 people with high blood sugar. He stated that 134 people were trained in CPR and AED use. Concluding,Chief Peterson thanked program sponsors and City officials and staff for their support. CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 ORDINANCE NO. 5534 AN ORDINANCE OF THE CITY OF ',RENTON, WASHINGTON, providing for the issuance and sale of limited tax general obligation refunding bonds of the City in the aggregate principal amount of not to exceed $6,800,000 to provide funds for the purpose of 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. PASSED: April 5, 2010 • PREPARED BY: K&L Gates LLP Seattle, Washington _ ; ;rix:;;; - . CERTIFICATE >: .I,14.-he p.ndersigned City Clerk of the • - r ;� i • :qty of Renton,Washington, certify =tat this is a true and correct copy of a . 12 cA r•LV;1 SS 3 . Subscribed • .�J 3; X4.4'` and sealed thisia_day of May ,20/0 City Clerk : INT = 1,tio_\ao r\ tv From: Fountain, Cheryl [cheryl.fountain@klgates.com] Sent: Thursday, April 22, 2010 2:50 PM To: Iwen Wang; Gina Jarvis; Bonnie Walton; Isovde@snwsc.com;jmonwai@snwsc.com; jane.d.towery@pjc.com; daren.m.bell@pjc.com; carolyn.rnorrison@usbank.com Cc: Gregory, Deanna; Weed, Cynthia Subject: City of Renton LTGO Refunding.Bonds, 2010 Attachments: CITY OF RENTON--Closing Documents.doc; 20358_ONA==CITY OF RENTON--Escrow Agreement 2010:LTGO Refunding Bonds.doc; IRS Form 8038g.pdf; 203580210V==Federal Tax Certificate.doc; CERTIFICATE OF ESCROW AGENT.doc; RECEIPT FOR BONDS.doc K&Gates LLP MEMORANDUM-VIA EMAIL TO: Finance Team FROM: Deanna Gregory and Cynthia Weed Cheryl Fountain, Paralegal DATE: April 22, 2010 RE: City of Renton LTGO Refunding Bonds, 2010 Attached are the following closing documents. It would be appreciated if we could receive two signed originals of each document listed below by May 10th in preparation for closing on May 11th. Please contact us with any questions or comments. Thank you. City Documents: 1. CIertificate for Transcript—to be signed by the City Clerk. 2. Certificate regarding the Finance__and Information Services Administrator and City,Clerk—to be signed by the Mayes. 3. Certificate regarding regular meetings of the City Council—to be signed by the City Clerk. We will attach a copy of Policy& Procedure No. 800-02 and the minutes of the 8/13/2007 council meeting to this certificate. Please provide any subsequent proceedings. 4. Certificate regarding the official newspaper of the City—to be signed by the City Clerk. if _5. Certificate of outstanding debt of the City—to be completed and signed by Iwen. 6. Certificate regarding Ordinance No. 5534—to be signed by the City Clerk. Please attach a copy of the ordinance. 7. Certificate regarding the minutes of the March 22, 2010 City Council meeting, showing first reading of the Bond Ordinance—to be signed by the City Clerk. Please attach a copy of the minutes. 8. Certificate regarding the minutes of the April 5, 2010 City Council meeting, showing second reading and passage of the Bond Ordinance—to be signed by the City Clerk. Please attach a copy of the minutes. 9. Certificate pursuant to the Purchase Contract— to be signed b Iwen.;`.; 1 ' r r N 10. Signature Identification Certificate— to be signed the ayor and the City Clerk and notarized. 11. Certificate of Payment and Delivery— to be signed b 0. The receipt may, be signed in advance and released at closing or signed and sent to us the morning of closing. 12. , Escrow Deposit Agreement—to be signed 13§ 1 and U.S. Bank. 13. SIRS Form 8038-G—to be reviewed and signed by wen... 14. Federal Tax Certificate—to be reviewed and signed b .Iwen. i 15. Certificate of Escrow Agent—to be signed by U.S. Bank. 16. Receipt for Bonds— to be signed by SNW. Escrow Agent Documents: 1. Escrow Deposit Agreement(document#12 above) 2. Certificate of Escrow Agent. Please also include a copy of signing authority. I j Underwriter's Documents: 1. Receipt for Bonds. 2. Certificate of Underwriters(attached as Exhibit A to the Federal Tax Certificate-Document#14). Financial Advisor's Document: 1. Certificate of Financial Advisor(attached as Exhibit B to the Federal Tax Certificate-Document#14) In addition to the certificates, we will need the following documents: A. Signed copy of Ordinance No. 5534. B. Minutes of the March 22rid and April 5th City Council meetings. C. Affidavit of publication of Ordinance No. 5534. D. Copy of the S&P rating letter. City Documents#1-11 #12 Escrow Deposit Agreement #13 Form 8038-G <<CITY OF RENTON--Closing Documents.doc>> «20358_ONA==CITY OF RENTON--Escrow Agreement 2010 LTGO Refunding Bonds.doc>> «IRS Form 8038g.pdf» #14 Federal Tax Certificate #15 Certificate of Escrow Agent Receipt for Bonds <<203580210V==Federal Tax Certificate.doc>> «CERTIFICATE OF ESCROW AGENT.doc» «RECEIPT FOR BONDS.doc» Cheryl Fountain Paralegal K&L Gates LLP 925 Fourth Avenue, Suite 2900 Seattle,Washington 98104-1158 206.370.6697 206.370.6251 (fax) www.klgates.com 2 • r i This electronic message contains information from the law firm of K&L Gates LLP. The contents may be privileged and confidential and are intended for the use of the intended addressee(s)only. If you are not an intended addressee, note that any disclosure, copying, distribution, or use of the contents of this message is prohibited. If you have received this e- mail in error, please contact me at cheryl.fountainaklgates.com. 3 go,44. racAo • CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 ORDINANCE NO. 5534 AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, providing for the issuance and sale of limited tax general obligation re unding bonds of the City in the aggregate principal am unt of not to exceed $6,800,000 to provide funds for the purpose of refunding certain limited tax general obligation bds of the City; authorizing the appointment of an escrow agnt and execution of an escrow agreement; and delegating certain authority to approve the final terms of the bonds. PASSED: April 5, 2010 PREPARED BY: K&L Gates LLP Seattle, Washington f ORDINANCE NO. 5534 TABLE OF CONTENTS* Page Section 1. Definitions 2 Section 2. Authorization of Bonds 7 Section 3. Description of Bonds 7 Section 4. Registration,Transfer and Payment of Bonds 8 Section 5. Redemption and Purchase of Bonds 13 Section 6. Form of the Bonds 17 Section 7. Execution of the Bonds 19 Section 8. Refunding Procedures 20 Section 9. Tax Covenants 23 Section 10. Bond Fund; Provision for Payment 25 Section 11. Defeasance 26 Section 12. Sale of the Bonds 27 Section 13. Bond Insurance 30 Section 14. Continuing Disclosure Undertaking 30 Section 15. Lost, Stolen or Destroyed Bonds 34 Section 16. Severability 34 Section 17. Effective Date of Ordinance 35 EXHIBIT A Form of Escrow Deposit Agreement * This Table of Contents is provided for convenience only and is not a part of this ordinance. -1- P:120358_DG120358_0MY 04/05/10 C TY OF RENTON,WASHINGTON ORDINANCE NO. 5534 AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, providing for the issuance and sale of limited tax general obligation re unding bonds of the City in the aggregate principal am unt of not to exceed $6,800,000 to provide funds for the urpose of refunding certain limited tax general obligation bolds of the City; authorizing the appointment of an escrow agent and execution of an escrow agreement; and delegating ceiLtain authority to approve the final terms of the bonds. WHEREAS, pursuant to •rdinance No. 4922 (the "2001 Bond Ordinance"), passed on October 22, 2001, the City of R:nton, Washington (the "City") issued its Limited Tax General Obligation and Refunding Bonds, 2001, dated November 1, 2001 (the "2001 Bonds"), currently outstanding in the aggregate p incipal amount of $18,700,000, and maturing in remaining principal amounts and bearing in erest as follows: Maturity Principal Interest (December 1) • Amount Rate 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 ;'and • ORDINANCE NO. 5534 WHEREAS, the 2001 Bonds maturing on and after December 1, 2012 are callable for redemption on or after December 1, 2011, in whole at any time or in part on any interest payment date, at a price of par plus accrued interest to the date of redemption; and WHEREAS, as a result of changed market conditions, it appears that a debt service savings may be obtained by refunding a portion of the callable 2001 Bonds through the issuance of limited tax general obligation refunding bonds of the City in the aggregate principal amount of not to exceed $6,800,000 (the "Bonds"); NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DOES ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: Acquired Obligations means the Government Obligations acquired by the City under the terms of this ordinance and the Escrow Agreement to effect the defeasance and refunding of the Refunded Bonds. Beneficial Owner means any person that has or shares the power, directly or indirectly to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). Bond Fund means the City of Renton Limited Tax General Obligation Bond Debt Service Fund described in Section 10 of this ordinance. Bond Insurance Policy means the municipal bond insurance policy, if any, issued by the Insurer insuring the payment when due of the principal of and interest on all or a portion of the Bonds as provided therein. -2- P:12035B_DG120358_0MY 04/05/10 • IY ORDINANCE NO. 5534 Bond Purchase Agreement means the contract for the purchase of the Bonds between the Underwriter and City, executed pursuant to Section 12 of this ordinance. Bond Register means the registration books showing the name, address and tax identification number of each Registered Owner of the Bonds, maintained pursuant to Section 149(a) of the Code. Bond Registrar means, i itially, the fiscal agency of the State of Washington, for the purposes of registering and auth nticating the Bonds, maintaining the Bond Register, effecting r transfer of ownership of the Bon s and paying interest on and principal of the Bonds. Bond Year means each one-year period that ends on the date selected by the City. The first and last Bond Years may b short periods. If no day is selected by the City before the earlier of the final maturity dat of the Bonds or the date that is five years after the date of issuance of the Bonds, Bond Yea s end on each anniversary of the date of issue and on the final maturity date of the Bonds. Bonds mean the City of enton, Washington, Limited Tax General Obligation Refunding Bonds, 2010, if any, issued pursu nt to this ordinance. - City means the City of enton, Washington, a municipal corporation of the State of • Washington. . Code means the Internal Revenue Code of 1986, as amended, and shall include all applicable regulations and rulings relating thereto. Commission means the Securities and Exchange Commission. Council means the City Council as the general legislative authority of the City, as the same shall be duly and regularly constituted from time to time. -3- P:12035813G1203513 OMY 04/05/10 ORDINANCE NO. 5534 Designated City Representative means the Mayor, the Chief Administrative Officer, or the Finance Director of the City and any successor to the functions of such offices. DTC means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, as depository for the Bonds pursuant to Section 4 hereof. Escrow Agreement means the Escrow Deposit Agreement between the City and the Escrow Agent to be dated as of the date of closing and delivery of the Bonds, substantially in the form attached hereto as Exhibit A. Escrow Agent means the financial institution selected by the Designated City Representative as provided in Section 8 of this ordinance. Finance Director shall mean the City's Finance and Information Services Administrator or the successor to such officer. Government Obligations mean those obligations now or hereafter defined as such in chapter 39.53 RCW. Insurer means the municipal bond insurance company, if any, selected and designated by the Designated City Representative, pursuant to Section 13 of this ordinance, or any successor thereto or assignee thereof, as issuer of a Bond Insurance Policy for all or a portion of the Bonds. Letter of Representations mean the blanket issuer letter of representations from the - City to DTC. MSRB means the Municipal Securities Rulemaking Board or any successor to its functions. • -4- P:\20358_DG\20358_OMY 04/05/10 . ORDINANCE NO. 5534 Net Proceeds, when used with reference to the Bonds, means the principal amount of the Bonds, plus accrued interest and original issue premium, if any, and less original issue discount, if any. rPrivate Person means an natural person engaged in a trade or business or any trust, estate, partnership, association, ompany or corporation. Private Person Use mean the use of property in a trade or business by a Private Person 7 if such use is other than as a ember of the general public. Private Person Use includes ownership of the property by the Private Person as well as other arrangements that transfer to the Private Person the actual or eneficial use of the property (such as a lease, management or incentive payment contract or ther special arrangement) in such a manner as to set the Private Person apart from the eneral public. Use of property as a member of the general public includes attendance by the Private Person at municipal meetings or business rental of property to the Private Person on a day-to-day basis if the rental paid by such Private Person is the same as the rental paid by ny Private Person who desires to rent the property. Use of property by nonprofit community groups or community recreational groups is not treated as Private Person Use if such use is incidental to the governmental uses of property, the property is made available for such use by all such community groups on an equal basis and such community groups are charged only a de minimis fee to cover custodial expenses. RCW means the Revised Code of Washington. Refunded Bonds mean all or a portion of the callable.2001 Bonds selected as Refunded Bonds by the Designated City Representative pursuant to Section 8. -5- PA20358 DG120358 0MY 04/05/10 ORDINANCE NO. 5534 Registered Owner means the person named as the registered owner of a Bond in the Bond Register. For so long as the Bonds are held in book-entry only form, DTC shall be deemed to be the sole Registered Owner. Rule means the Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Savings Target means a dollar amount equal to at least four percent (4%) of the outstanding principal of the Refunded Bonds. 2001 Bond Ordinance means Ordinance No.4922 passed by the City Council on October 22, 2001, authorizing the issuance of the 2001 Bonds. 2001 Bonds mean the outstanding "City of Renton, Limited Tax General Obligation and Refunding Bonds, 2001" issued pursuant to the 2001 Bond Ordinance. Underwriter means Seattle-Northwest Securities Corporation,Seattle, Washington. Interpretation. In this ordinance, unless the context otherwise requires: (a) The terms "hereby," "hereof," "hereto," "herein, "hereunder" and any similar terms, as used in this ordinance, refer to this ordinance as a whole and not to any particular article, section, subdivision or clause hereof, and the term "hereafter" shall mean after, and the term "heretofore" shall mean before,the date of this ordinance; (b) Words of the masculine gender shall mean and include correlative words of the feminine and neuter genders and words importing the singular number shall mean and include the plural number and vice versa; -6- P:12035B DG\20358 0MY 04/05/10 ORDINANCE NO. 5534 (c) Words importing persons shall include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public bodies, as well as natural persons; (d) Any headings preceding the text of the several articles and sections of this ordinance, and any table of con ents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this ordinance, nor shall they affect its meaning, construct on or effect; and (e) All references her-in to "articles," "sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof. Section 2. Authorization of Bonds. The Council hereby authorizes the issuance of limited tax general obligation ref nding bonds (the "Bonds") in an aggregate principal amount of not to exceed $6,800,000 for the purpose of providing the funds necessary to refund the Refunded Bonds and pay all or : portion of the costs incidental to the foregoing and to the issuance of the Bonds. Section 3. Descriptio of Bonds. The Bonds shall be general obligations of the City; shall be designated the "City of 'enton, Washington, Limited Tax General Obligation Refunding Bonds, 2010," with any additio al series designation, if necessary; shall be dated as of their initial date of delivery; shall be fully registered as to both principal and interest; shall be in the idenomination of$5,000 each, o any integral multiple thereof within a maturity, provided that no Bond shall represent more th n one maturity; shall be numbered separately in such manner and with any additional design tion as the Bond Registrar deems necessary for purposes of 1 identification; shall bear interest from their date, payable semiannually on the interest payment • -7- P:120358 DG120358 0MY 04/05/10 ORDINANCE NO. 5534 dates set forth in the Bond Purchase Agreement; and shall mature on December 1 in the years and principal amounts set forth and approved in the Bond Purchase Agreement executed by the Designated City Representative pursuant to Section 12 of this ordinance. Section 4. Registration,Transfer and Payment of Bonds. (a) Bond Registrar/Bond Register. The City hereby specifies and adopts the system of registration approved by the Washington State Finance Committee from time to time through the appointment of state fiscal agencies. The City shall cause a bond register to be maintained by the Bond Registrar. So long as any Bonds remain outstanding, the Bond Registrar shall make all necessary provisions to permit the exchange or registration or transfer of Bonds at its principal corporate trust office. The Bond Registrar may be removed at any time at the option of the Finance Director upon prior notice to the Bond Registrar and a successor Bond Registrar appointed by the Finance Director. No resignation or removal of the Bond Registrar shall be effective until a successor shall have been appointed and until the successor Bond Registrar shall have accepted the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of such Bonds and this ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication of the Bonds. (b) Registered Ownership. The City and the Bond Registrar, each in its discretion, may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all purposes (except as provided in Section 14 of this ordinance), and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be -8- P:120358_DG120358_0MY 04/05/10 . _ ' ORDINANCE NO. 5534 made only as described in Section 4(h) hereof, but such Bond may be transferred as herein provided. All such payments made as described in Section 4(h) 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. (c) DTC Acceptance/ etters of Representations. The Bonds initially shall be held in fully immobilized form by DTC .cting as depository. To induce DTC to accept the Bonds as eligible for deposit at DTC,the Ci y has executed and delivered to DTC a Blanket Issuer Letter of Representations. Neither the ity nor the Bond Registrar will have any responsibility or obligation to DTC participants or the persons for whom they act as nominees (or any successor depository) with respect to the :onds in respect of the accuracy of any records maintained by DTC (or any successor deposit ry) or any DTC participant, the payment by DTC (or any successor depository) or any DT participant of any amount in respect of the principal of or interest on Bonds, any notice which is permitted or required to be given to Registered Owners under this ordinance (except su h notices as shall be required to be given by the City to the Bond Registrar or to DTC (or an successor depository)), or any consent given or other action taken by DTC (or any successor depository) as the Registered Owner. For so long as any Bonds are held in fully-immobilized form hereunder, DTC or its successor depository shall be deemed to be the Registered Owner fo all purposes hereunder, and all references herein to the Registered Owners shall mean DTC (or any successor depository) or its nominee and shall not mean the owners of any beneficial interest in such Bonds. • -9- P:12035B_DG120358_0MY 04/05/10 ORDINANCE NO. 5534 If any Bond shall be duly presented for payment and funds have not been duly provided by the City on such applicable date, then interest shall continue to accrue thereafter on the unpaid principal thereof at the rate stated on such Bond until it is paid. (d) Use of Depository. (1) The Bonds shall be registered initially in the name of "Cede & Co.", as nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such immobilized Bonds, or any portions thereof, may not thereafter be transferred except (A)to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (B)to any substitute depository appointed by the Finance Director pursuant to subsection (2) below or such substitute depository's successor; or (C) to any person as provided in subsection (4) below. (2) Upon the resignation of DTC or its successor (or any substitute depository or its successor) from its functions as depository or a determination by the Finance Director to discontinue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the Finance Director may hereafter appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (3) In the case of any transfer pursuant to clause (A) or (B) of subsection (1) above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a written request on behalf of the Finance Director, issue a single new Bond for each maturity then -10- P:120358 DG120358 0MY 04/05/10 _ a ORDINANCE NO. 5534 outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, a as specified in such written request of the Finance Director. (4) In the event that (A) DTC or its successor (or substitute depository or its successor) resigns from its fu ctions as depository, and no substitute depository can be obtained, or (B)the Finance Dir ctor determines that it is in the best interest of the beneficial owners of the Bonds that such owners be able to obtain such bonds in the form of Bond certificates, the ownership of such Bonds may then be transferred to any person or entity as herein provided, and shall no loiger be held in fully-immobilized form. The Finance Director shall deliver a written request to the Bond Registrar, together with a supply of definitive Bonds, to issue Bonds as herein provide in any authorized denomination. Upon receipt by the Bond Registrar of all then outstanding onds together with a written request on behalf of the Finance Director to the Bond Registrar, n w Bonds shall be issued in the appropriate denominations and registered in the names of such p rsons as are requested insuch written request. (e) Registration of Tr nsfer of Ownership or Exchange; Change in Denominations. The transfer of any Bond may b registered and Bonds may be exchanged, but no transfer of any such Bond shall be valid unle s it is surrendered to the Bond Registrar with the assignment form appearing on such Bond duly executed by the Registered Owner or such Registered Owner's duly authorized agent i' a manner satisfactory to the Bond Registrar. Upon such surrender, the Bond Registrar s all cancel the surrendered Bond and shall authenticate and deliver, without charge to the Re istered Owner or transferee therefor, a new Bond (or Bonds at the option of the new Registe ed Owner) of the same date, maturity and interest rate and i for the same aggregate principal mount in any authorized denomination, naming as Registered -11- P:120358 DG120358 0MY 04/05/10 ORDINANCE NO. 5534 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. Any Bond may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same date, maturity and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer or to exchange any Bond during the 15 days preceding any interest payment or principal payment date any such Bond is to be redeemed. (f) Bond Registrar's Ownership of Bonds. The Bond Registrar may become the Registered Owner of any Bond with the same rights it would have if it were not the Bond Registrar, and to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as member of, or in any other capacity with respect to, any committee formed to protect the right of the Registered Owners of Bonds. (g) Registration Covenant. The City covenants that, until all Bonds have been surrendered and canceled, it will maintain a system for recording the ownership of each Bond that complies with the provisions of Section 149 of the Code. ' (h) Place and Medium of Payment. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be calculated on the basis of a year of 360 days and twelve 30-day months. For so long as all Bonds are in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Letter of Representations. In the event that the Bonds are no longer in fully immobilized form, interest on the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses -12- P:120358 DG120358 0MY 04/05/10 ,,.7- ; ORDINANCE NO. 5534 for such Registered Owners ap earing on the Bond Register on the fifteenth day of the month preceding the interest payment date, or upon the written request of a Registered Owner of more than $1,000,000 of Bonds (received by the Bond Registrarat least 15 days prior to the applicable payment date), suchayment shall be made by the Bond Registrar by wire transfer to the account within the con inental United States designated by the Registered Owner. Principal of the Bonds shall be payable upon presentation and surrender of such Bonds by the Registered Owners at the principal office of the Bond Registrar. Section 5.. Redem ti n and Purchase of Bonds. (a) Mandatory Rede ption of Term Bonds and Optional Redemption, if any. The Bonds may be called for redemption prior to scheduled maturity under terms approved by the Designated City Representative in the Bond Purchase Agreement pursuant to Section 12 of this ordinance. ' (b) Purchase of Bond . The City reserves the right to purchase any of the Bonds offered to it at any time at a pric deemed reasonable by the City. Bonds purchased by the City shall be cancelled. (c) Selection of Bonds for Redemption. Except to the extent that another method is prescribed in the Bond Purchase Agreement, for as long as the Bonds are held in book-entry only form, the selection of particular Bonds within a maturity to be redeemed shall be made in accordance with the operational rrangements then in effect at DTC. If the Bonds are no longer held in uncertificated form, the selection of such Bonds to be redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the following provisions of this subsection (c). If the City redeems at any one time fewer than all of the Bonds having the same -13- P:120358_1)G\20358 OMY 04/05/10 ORDINANCE NO. 5534 maturity date, the particular Bonds or portions of Bonds of such maturity to be redeemed shall be selected by lot (or in such manner determined by the Registrar) in increments of$5,000. In the case of a Bond of a denomination greater than $5,000,the City and the Bond Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of such Bond by $5,000. In the event that only a portion of the principal sum of a Bond is redeemed, upon surrender of such Bond at the principal office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the principal sum thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate in any of the denominations herein authorized. (d) Notice of Redemption. (1) Official Notice. For so long as the Bonds are held in uncertificated form, notice of redemption (which notice may be conditional) shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar will provide any notice of redemption to any Beneficial Owners. Thereafter (if the Bonds are no longer held in uncertificated form), notice of redemption shall be given in the manner hereinafter provided. Unless waived by any owner of Bonds to be redeemed, official notice of any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered -14- P:120358 DG120358 0MY 04/05/10 ORDINANCE NO. 5534 Owner of the Bond or Bonds to be redeemed at the address shown on the Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. In the case of an option I redemption, the notice of redemption may state that the City retains the right to rescind that notice on or prior to the scheduled redemption date, and that notice and optional redemption shall be of no effect to the extent that the City gives notice to the affected Registered Owners at any time on or prior to the scheduled redemption date that the City is rescinding the redemption notice in whole or in part. Any Bonds subject to a rescinded notice of redemption are to remain outstanding, and the rescission will not constitute a default hereunder. All official notices of rede ption shall be dated and shall state: (A) the redemption date, (B) the redemption price, (C) if f-wer than all outstanding Bonds are to be redeemed, the identification by maturity (and, in the case ofpartial redemption, the respective principal amounts)of the Bonds to be red:emed, (D) tha on the redemption date the redemption price will become due and payable upon each su ,h Bond or portion thereof called for redemption, and that interest thereon shall cease to ac,rue from and after said date, and (E) the 'lace where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal office of the Bond Registrar. ' -15- PA2035e oc\20358 OMY 04/05/10 ORDINANCE NO. 5534 On or prior to any redemption date, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. (2) Effect of Notice; Bonds Due. If an unconditional notice of redemption has been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. All Bonds which have been redeemed shall be canceled and destroyed by the Bond Registrar and shall not be reissued. (3) Additional Notice. In addition to the foregoing notice, further notice shall be given by the City as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (A)the CUSIP numbers of all Bonds being redeemed; (B)the date of issue of the Bonds as originally issued; (C)the rate of interest borne by each Bond being redeemed; (D)the maturity date of each Bond being redeemed; and (E) any other descriptive information needed to identify accurately the Bonds being redeemed. Each further notice of redemption may be sent at least 35 days before the redemption date to each party entitled to receive -16- P:120355 DG120358 0MY 04/05/10 ORDINANCE NO. 5534 notice.pursuant, to Section 14, the Insurer, if any, and to the Underwriter and with such • additional information as the City shall deem appropriate, but such mailings shall not be a condition precedent to the redemption of such Bonds. (4) Amendme Tt of Notice Provisions. The foregoing notice provisions of this Section 5, including but not limit d to the information to be included in redemption notices and the persons designated to rec ive notices, may be amended by additions, deletions and changes in order to maint in compliance with duly promulgated regulations and recommendations regarding notices of redemption of municipal.securities. Section 6. Form of the Bonds. The Bonds shall be in substantially the following form: [DTC LANGUAGE] [STATEMENT OF INSURANCE] UNITED STATES OF AMERICA NO. $ STATE OF WASHINGTON CITY OF RENTON LIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 2010 INTEREST RATE: % MATURITY DATE: CUSIP NO.: REGISTERED OWNER: CEDE&CO PRINCIPAL AMOUNT: The City of Renton, Washngton (the "City"), hereby acknowledges itself to owe and for value received promises to pay toI the Registered Owner identified above, or registered assigns, on.the Maturity Date identified' above, the Principal Amount indicated above and to pay interest thereon from , 2010, or the most recent date to which interest has been paid or duly provided for until i ayment of this bond at the Interest Rate set forth above, payable on , 20 , and semiannually thereafter on the first days of each succeeding June and December. Both principal of and interest on this bond are payable in lawful money of the United States of America. The fiscal agency of the State of Washington has.been appointed by the City as the authenticating agent, paying agent and registrar for the bonds of this issue (the "Bond Registrar"). For so Tong as the bonds of this issue are held in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the -17- P:120358 DG120358 0MY 04/05/10 ORDINANCE NO. 5534 operational arrangements of The Depository Trust Company ("DTC") referred to in the Blanket Issuer Letter of Representations (the "Letter of Representations")from the City to DTC. The bonds of this issue are issued under and in accordance with the provisions of the Constitution and applicable statutes of the State of Washington and Ordinance No. 5534 duly passed by the City Council on April 5, 2010 (the "Bond Ordinance"). Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication. hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. This bond is one of an authorized issue of bonds of like date, tenor, rate of interest and date of maturity, except as to number and amount in the aggregate principal amount of $ and is issued pursuant to the Bond Ordinance to refund certain outstanding limited tax general obligation bonds of the City and to pay costs of issuance. The bonds of this issue are subject to redemption prior to their scheduled maturities as provided in the Bond Ordinance and in the Bond Purchase Agreement. The City hereby irrevocably covenants and agrees with the owner of this bond that it will include in its annual budget and levy taxes annually, within and as a part of the tax levy permitted to the City without a vote of the electorate, upon all the property subject to taxation in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond as the same shall become due. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. The bonds of this issue have been designated as "qualified tax-exempt obligations" for purposes of Section 265(b) of the Internal Revenue Code of 1986. The bonds of this issue are not private activity bonds. The pledge of tax levies for payment of principal of and interest on the bonds may be discharged prior to maturity of the bonds by making provision for the payment thereof on the terms and conditions set forth in the Bond Ordinance. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, 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 and the bonds of this issue does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. -18- P:120358 DG\20358 0MY 04/05/10 ORDINANCE NO. 5534 IN WITNESS WHEREOF, the City of Renton, Washington has caused this bond to be executed by the manual or facsimile signatures of the Mayor and City Clerk and the seal of the City imprinted, impressed or of facsimile reproduced hereon as of this day of 2010. [SEAL] CITY OF RENTON, WASHINGTON By /s/manual or facsimile Mayor ATTEST: s manual or facsimile City Clerk The Bond Registrar's Ce 'ificate of Authentication on the Bonds shall be in substantially the following form: C:RTIFICATE OF AUTHENTICATION This bond is one of the be nds described in the within mentioned Bond Ordinance and is one of the Limited Tax General Obligation Refunding Bonds, 2010 of the City of Renton, Washington, dated , 2010. WASHINGTON STATE FISCAL AGENCY, as Bond Registrar By Section 7. Execution of the Bonds. The Bonds shall be executed on behalf of the City with the manual or facsimile signatures of the Mayor and Clerk of the City, and the seal of the City shall be impressed, imprinted or otherwise reproduced thereon. Only such Bonds as shall bear thereon a Certificate of Authentication in the form hereinbefore recited, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication • -19- P:120358 DG12035,5 OMY 04/05/10 ORDINANCE NO. 5534 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. • In case either of the officers who shall have executed the Bonds shall cease to be an officer or officers of the City before the Bonds so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bonds may nevertheless be authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be as binding upon the City as though those who signed the same had continued to be such officers of the City. Any Bond may be signed and attested on behalf of the City by such persons who at the date of the actual execution of such Bond, are the proper officers of the City, although at the original date of such Bond any such person shall not have been such officer of the City. Section 8. Refunding Procedures. (a) Designation of Refunded Bonds. All or some of the 2001 Bonds maturing on and after December 1, 2012 as outlined in the recitals to this ordinance may be refunded and refinanced with the proceeds of the Bonds authorized by this ordinance. Pursuant to the terms described in Section 12, the Designated City Representative may select some or all of the callable 2001 Bonds and designate those bonds as the "Refunded Bonds" at or prior to the time of sale of the Bonds. • (b) Creation of Refunding Account. A special account is hereby authorized to be created by the Finance Director, which account is to be drawn for the sole purpose of paying(or purchasing Government Obligations, which obligations so purchased, are herein called "Acquired Obligations") maturing in such amounts and at such times as to pay) the principal of -20- P:22035B DG120356 OMY 04/05/10 ORDINANCE NO. 5534 and premium, if any, and interest on the Refunded Bonds. The special account shall be held as a trust fund for the benefit of t e owners of the Refunded Bonds, wholly segregated from all other funds and securities on deposit with the Finance Director. The Finance Director shall not allow the assets or amounts on deposit for the benefit of the Refunded Bonds to be commingled with any other funds or securities of the City. The Finance Director shall cause the t assets and amounts on deposit n such special account to be held and disposed of only as set forth in this section. (c) Application of B nd Proceeds. A portion of the Net Proceeds of the Bonds J(exclusive of any amounts desig ated by the Designated City Representative to be used to pay costs of issuance of the Bonds), together with other available funds of the City in the amount specified by the Designated City Representative, if any, shall be applied at the direction of the Designated City Representative t purchase the Acquired Obligations to be used to redeem the Refunded Bonds on their redem tion date. (d) Defeasance of Re unded Bonds. The Net Proceeds of the Bonds so deposited shall be utilized immediately up n receipt thereof to redeem Refunded Bonds or to purchase the Government Obligations specified by the Designated City Representative and to maintain such necessary beginning cash balance to defease the Refunded Bonds and to discharge the other obligations of the City rela ing thereto under the 2001 Bond Ordinance, by providing for the payment of the interest on the Refunded Bonds to the date fixed for redemption and the redemption price on the redemption date for the Refunded Bonds. When the final transfers have been made for the payment of such redemption price and interest on the Refunded. -21- P:120356 DG420358 0MY 04/05/10 ORDINANCE NO. 5534 Bonds, any balance then remaining shall be used for the purposes specified by the Designated City Representative. (e) Redemption of Refunded Bonds. The Council authorizes the Designated City Representative to call the Refunded Bonds that are callable for redemption on the redemption date specified by the Designated City Representative in accordance with the 2001 Bond 9 Ordinance. Said defeasance and call for redemption of the Refunded Bonds shall be irrevocable after the deposit of the proceeds of the Bonds as described in Section 8(c). The Designated City Representative is hereby authorized and directed to provide for the giving of irrevocable notice of the redemption of the callable Refunded Bonds in accordance with the terms of the 2001 Bond Ordinance. The Finance Director is authorized and directed to provide whatever assistance is necessary to accomplish such redemption and the giving of notice therefor. (f) Escrow Agent and Escrow Agreement. The Designated City Representative is hereby authorized and directed to solicit proposals from and select a financial institution to serve as the Escrow Agent for the Refunded Bonds (the "Escrow Agent"). A beginning cash balance, if any, and Acquired Obligations shall be deposited irrevocably with the Escrow Agent in an amount sufficient to defease the Refunded Bonds. The proceeds of the Bonds remaining in the Refunding Account after acquisition of the Acquired Obligations and provision for the necessary beginning cash balance shall be utilized to pay expenses of the acquisition and safekeeping of the Acquired Obligations and expenses of the issuance of the Bonds. The Designated City Representative is authorized to execute and deliver to the Escrow Agent an -22- P:120358 DG120358 0MY 04/05/10 ORDINANCE NO.. 5534 Escrow Agreement substantially in the form attached hereto as Exhibit A, with such changes or modifications as the Designated City Representative, with the advice of bond counsel to the City, consider necessary or advisable. The City hereby irrevocably sets aside for and pledges to the payment of the Refunded Bonds the moneys and obligati ns to be deposited with the Escrow Agent pursuant to the Escrow Agreement to accomplis the plan of refunding and defeasance of the Refunded Bonds set forth herein and in the Escrow Agreement. When all of the Refunded Bonds shall have been redeemed and retired, the Desig ated City Representative may cause any remaining money to be transferred to the Bond Fund or the purposes set forth below. Section 9. Tax Coven nts. The City covenants that it will not take or permit to be taken on its behalf any action th t would adversely affect the exemption from federal income i taxation of the interest on the onds and will take or require to be taken such acts as may reasonably be within its ability a d as may from time to time be required under applicable law to continue the exemption from f deral income taxation of the interest on the Bonds. (a) Arbitrage Covenan . Without limiting the generality of the foregoing, the City covenants that it will not take any action or fail to take any action with respect to the proceeds of sale of the Bonds or any other funds of the City which may be deemed to be proceeds of the Bonds pursuant to Section 148 of the Code and the regulations promulgated thereunder which, if such use had been reasonably expected on the dates of delivery of the Bonds to the initial purchasers thereof, would have caused the Bonds to be treated as "arbitrage bonds" within the meaning of such term as used in Section 148 of the Code. -23- P:120358 DG120358_0MY 04/05/10 ORDINANCE NO. 5534 The City will comply with the requirements of Section 148 of the Code and the applicable regulations thereunder throughout the term of the Bonds. (b) Private Person Use Limitation for Bonds. The City covenants that for as long as the Bonds are outstanding, it will not permit: (i) more than 10% of the Net Proceeds of the Bonds to be allocated to any Private•Person Use; and (ii) more than 10% of the principal or interest payments on the Bonds in a Bond Year to be directly or indirectly secured by any interest in property used or to be used for any Private Person Use or secured by payments in respect of property used or to be used for any Private Person Use, or derived from payments (whether or not made to the City) in respect of property, or borrowed money, used or to be used for any Private Person Use. The City further covenants that, if: (i) more than five percent of the Net Proceeds of the Bonds are allocable to any Private Person Use; and (ii) more than five percent of the principal or interest payments on the Bonds in a Bond Year are (under the terms of this ordinance or any underlying arrangement) directly or indirectly secured by any interest in property used or to be used for any Private Person Use or secured by payments in respect of property used or to be used for any Private Person Use, or derived from payments (whether or not made to the City) in respect of property, or borrowed money, used or to be used for any Private Person Use, then, any Private Person Use of the projects refinanced by the proceeds of the Bonds or Private Person Use payments that is in excess of the five percent limitations described above will be for a Private Person Use that is related to the state or local governmental use of the projects refinanced by the proceeds of the Bonds, and any Private Person Use will not exceed the amount of Net Proceeds of the Bonds allocable to the state or local governmental use portion -24- P:120358 DG\20355 OMY 04/05/10 • L,J ORDINANCE NO. 5534 of the project(s) to which the Private Person Use of such portion of the projects refinanced by the proceeds of the Bonds rel te. The City further covenants that it will comply with any 1 limitations on the use of the projects refinanced by the proceeds of the.Bonds by other than state and local governmental u ers that are necessary, in the opinion of its bond counsel, to preserve the tax exemption of th interest on the Bonds. (c) Modification of T Covenants. The covenants of this section are specified solely to assure the continued exempti n from regular income taxation of the interest on the Bonds. To that end, the provisions o this section may be modified or eliminated without any requirement for formal amend ent thereof upon receipt of an opinion of the City's bond counsel that such modification r elimination will not adversely affect the tax exemption of interest on any Bonds. (d) Designation unde Section 265(6). The City hereby designates the Bonds as "qualified tax-exempt obligation " within the meaning of Section 265(b)(3) of the Code. The City does not anticipate issuing ore than $30,000,000 of tax-exempt obligations during 2010 (excluding obligations permitte by the Code to be excluded for purposes of the City's qualification as a qualified small i suer). Section 10. Bond Fund Provision for Payment. The City is hereby authorized to establish or maintain a fund to bi used for the payment of debt service the Bonds, designated as the "City of Renton Limited Tax General Obligation Bond Debt Service Fund" (the "Bond Fund"). No later than the date each payment of principal of and/or interest on the Bonds matures or becomes due and pa able, the City shall transmit sufficient funds, from the Bond Fund or from other legally available sources to the Bond Registrar for the payment of such -25- P:120355 DG120358 0MY 04/05/10 ORDINANCE NO. 5534 principal and/or interest. Money in the Bond Fund not needed to pay the interest or principal next coming due may temporarily be deposited in legal investments for City funds. The City hereby irrevocably covenants and agrees for as long as any of the Bonds are outstanding and unpaid that each year it will include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an amount that will be sufficient, together with all other revenues and money of the City legally available for such purposes, to pay the principal of and interest on the Bonds as the same shall become due. The City hereby irrevocably pledges that the annual tax provided for herein to be levied for the payment of such principal and interest shall be within and as a part of the tax levy permitted to cities without a vote of the people, and that a sufficient portion of each annual levy to be levied and collected by the City prior to the full payment of the principal of and interest on the Bonds will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the principal of and interest on the Bonds.The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of said taxes and for the prompt payment of the principal of and interest on the Bonds as the same shall become due. Section 11. Defeasance. In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in the Bond Fund or in another special account, cash or noncallable Government Obligations, or any combination of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its terms and to pay when due the interest and redemption premium, if any, -26- P.\20358 DG12035B OMY 04/05/10 ORDINANCE NO. 5534 thereon, and such cash and/or noncallable Government Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Bond Fund for the payment of the principal of and interest on such Bond. The owner of a Bond so provided for shall cease to be entitled to ny lien, benefit or security of this ordinance except the right to receive payment of principal, pr mium, if any, and interest from the Bond Fund or such special account, and such Bond shall be eemed to be not outstanding under this ordinance. The City shall give writte notice of defeasance to the owners of all Bonds so provided for within 30 days of the defeas nce and to each party entitled to receive notice in accordance with Section 14 of this ordinance Section 12. Sale of th Bonds. The Bonds shall be sold by negotiated sale to the Underwriter pursuant to the te-ms of the Bond Purchase Agreement. The Designated City Representative is hereby authorized to negotiate terms for the purchase of the Bonds and execute the Bond Purchase Agr ement, with such terms as are approved the Designated City Representative pursuant to this ection and consistent with this ordinance. The Underwriter has advised the Council that1.1 arket conditions are fluctuating and, as a result, the most favorable market conditions ma occur on a day other than a regular meeting date of the Council. The Council has determined that it would be in the best interest of the City to delegate to the Designated City Representative for a limited time the authority to determine whether to proceed with the refunding of the Refunded Bonds, to designate which of the callable 2001 Bonds shall be the Refunded Bonds, and to approve the final interest rates, maturity dates, aggregate principal amount, redemption rights and principal amounts of each maturity of the Bonds. The Designated City Re•resentative is hereby authorized to determine whether to -27- P:120358 DG\20358 0MY 04/05/10 ORDINANCE NO. 5534 proceed with the refunding of the Refunded Bonds if and to the extent that the aggregate savings to be realized as a result of the refunding of the Refunded Bonds (i.e., the present value of (i)the aggregate debt service on the Refunded Bonds minus (ii)the aggregate debt service on the Refunding Bonds, after payment of all costs of issuance of the Bonds), exceed the Savings Target. The Designated City Representative is further authorized to approve the final interest rates, maturity dates, aggregate principal amount, and principal amounts of each maturity of the Bonds in the manner provided hereafter so long as (i)the aggregate principal amount of all Bonds does not exceed $6,800,000; and (ii)the true interest cost for the Bonds does not exceed 4%. In determining whether or not to proceed with bond insurance and determining the final interest rates, aggregate principal amounts, principal maturities and redemption rights, the Designated City Representative shall take into account those factors that, in such individual's judgment, will result in the lowest true interest cost on the Bonds to their maturity, including, but not limited to current financial market conditions and current interest rates for obligations comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in this section, the Designated City Representative is hereby authorized to execute the final form of the Bond Purchase Agreement, upon the Designated City Representative's designation of the Refunded Bonds and approval of the final interest rates, aggregate principal amount, principal maturities and redemption rights set forth therein. Following the execution of the Bond Purchase Agreement, the Designated City Representative shall provide a report to the Council, describing the final terms of the Bonds approved pursuant to the authority delegated in this section. The authority granted to the -28- P:120358 DG12035E DMY 04/05/10 r 0 ORDINANCE NO. 5534 Designated City Representative by this section shall expire 120 days after the date of approval of this ordinance. If a Bond Purchase Agreement for the Bonds has not been executed within 120 days after the date of final a proval of this ordinance,the authorization for the issuance of the Bonds shall be rescinded, an the Bonds shall not be issued nor their sale approved unless such Bonds shall have been re- uthorized by ordinance of the Council. The ordinance re- authorizing the issuance and s.le of such Bonds may be in the form of a new ordinance repealing this ordinance in whol= or in part or may be in the form of an amendatory ordinance approving a bond purchase agre-ment or establishing terms and conditions for the authority delegated under this ordinance. Upon the passage and .pproval of this ordinance, the proper officials of the City including the Designated City R-presentative, are authorized and directed to undertake all actions necessary for the prom vt execution and delivery of the Bonds to the Underwriter thereof and further to execute dl closing certificates and documents required to effect the closing and delivery of the Bo ds in accordance with the terms of the Bond Purchase Agreement. The Finance Director is authorized to ratify and to approve for purposes of the Rule, on behalf of the City, the preliminary Official Statement and Official Statement (as defined in the Bond Purchase Agreement) relati g to the issuance and sale of the Bonds and the distribution of the preliminary Official Statement and Official Statement pursuant thereto with such changes, if any, as may be deemed by him to be appropriate. The preliminary Official Statement for the Bonds is hereby deemed final for the purposes of the Rule. -29- P:120358_DG120358_0MY 04/05/10 ORDINANCE NO. 5534 Section 13. Bond Insurance. The Finance Director is hereby further authorized to solicit proposals from municipal bond insurance companies for the issuance of a Bond Insurance Policy. In the event that the Finance Director receives multiple proposals in response to a solicitation, the Finance Director may select the proposal having the lowest cost and resulting in an overall lower interest cost with respect to the Bonds to be insured. The Finance Director may execute a commitment received from the Insurer selected by the Finance Director. The Council further authorizes all proper officers, agents, attorneys and employees of the City to cooperate with the Insurer in preparing such additional agreements, certificates, and other documentation on behalf of the City as shall be necessary or advisable in providing for the Bond Insurance Policy. Section 14. Continuing Disclosure Undertaking. (a) Contract/Undertaking. This section constitutes the City's written undertaking for the benefit of the owners of the Bonds as required by Section (b)(5) of the Rule. (b) Financial Statements/Operating Data. The City agrees to provide or cause to be provided to the Municipal Securities Rulemaking Board ("MSRB"), the following annual financial information and operating data for the prior fiscal year(commencing in 2011 for the fiscal year ended December 31, 2010): 1. Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute); 2. The assessed valuation of taxable property in the City; -30- P:120358 DG\20358 0MY 04/05/10 I ` c-- 't ORDINANCE NO. 5534 3. Ad valore taxes due and percentage of taxes collected; 4. Property tax levy rate per$1,000 of assessed valuation; and 5. Outstandi g general obligation debt of the City. Items 2-5 shall be requir d only to the extent that such information is not included in the annual financial statements. The information and dat described above shall be provided on or before nine months after the end of the City's fiscal ear. The City's current fiscal year ends December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such ann al financial information and operating data, the City may cross-reference to other docume is available to the public on the MSRB's internet website. If not provided as part of he annual financial information discussed above, the City shall provide the City's audited an ual financial statement prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or a y successor statute) when and if available to the MSRB. (c) Material Events. The City agrees to. provide or cause to be provided, in a timely manner to the MSRB notice of the occurrence of any of the following events with respect to the Bonds, if material: . • Principal and interestri ayment delinquencies; • Non-payment related defaults; • Unscheduled draws ori debt service reserves reflecting financial difficulties; • Unscheduled draws on credit enhancements reflecting financial difficulties; • Substitution of credit or liquidity providers, or their failure to perform; -31- P:120358_DG120358 OMY 04/05/10 ORDINANCE NO. 5534 • Adverse tax opinions or events affecting the tax-exempt status of the Bonds; • Modifications to the rights of Bond owners; • Bond calls (optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34-23856); • Defeasances; • Release, substitution or sale of property securing repayment of the Bonds; and • Rating changes. Solely for purposes of disclosure, and not intending to modify this undertaking, the City advises that no debt service reserves or property secures payment of the Bonds. (d) Notification Upon Failure to Provide Financial Data. The City agrees to provide or cause to be provided, in a timely manner, to the MSRB notice of its failure to provide the annual financial information described in subsection (b) above on or prior to the date set forth in subsection (b) above. (e) Emma; Format for Filings with the MSRB. Until otherwise designated by the MSRB or the Commission, any information or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org. All notices, financial information and operating data required by this undertaking to be provided to the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to this undertaking must be accompanied by identifying information as prescribed by the MSRB. -32- P:120358_DG120358 MY 04/05/10 1� ORDINANCE NO. 5534 (1) Termination/Modification. The City's obligations to provide annual financial information and notices of mat rial events shall terminate upon the legal defeasance, prior redemption or payment in full o all of the Bonds. Any provision of this section shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds and (2) notifies the MSRB of such opinion and the cancellation of this section. The City may,amend this ection with an opinion of nationally recognized bond counsel in accordance with the Rule. In the event of any amendment of this section, the City shall describe such amendment in th next annual report, and shall include a narrative explanation of the reason for the amendme t and its impact on the type (or in the case of a change of accounting principles, on the p esentation) of financial information or operating data being presented by the City. In additio , if the amendment relates to the accounting principles to be followed in preparing financial st tements, (i) notice of such change shall be given in the same manner as for a material event nder subsection (c) and (ii)the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. (g) Bond Owner's Remedies Under This Section. The right of any bondowner or beneficial owner of Bonds to enforce the provisions of this section shall be limited to a right to obtain specific enforcement of the City's obligations under this section, and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with -33- P:\20358 DG120358 0MY 04/05/10 ORDINANCE NO. 5534 respect to the Bonds. For purposes of this section, "beneficial owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories. Section 15. Lost, Stolen or Destroyed Bonds. In case any Bond or Bonds shall be lost, stolen or destroyed, the Bond Registrar may execute and deliver a new Bond or Bonds of like date, number and tenor to the Registered Owner thereof upon the Registered Owner's paying the expenses and charges of the City and the Bond Registrar in connection therewith and upon his/her filing with the City evidence satisfactory to the City that such Bond was actually lost, stolen or destroyed and of his/her ownership thereof, and upon furnishing the City and/or the Bond Registrar with indemnity satisfactory to the City and the Bond Registrar. Section 16. Severability. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bonds. -34- P:120358 DG120358 0MY 04/05/10 • r j ORDINANCE NO. 5534 Section 17. Effective ate of Ordinance. This ordinance shall be effective upon its passage, approval, and thirty(30) days after publication. • PASSED BY THE CITY COUNCIL this 5th day of April, 2010. Bonnie I. Walton, City Clerk • APPROVED BY THE MAYI►R this 5th day of April, 2010. 1.,f,41 Lk/ Zt,,r Denis Law, Mayor Approved as to form: • • / LIAIAL • Of DeanGregory 4 ' • K&L Gates LLP Bond Counsel t.t,,i^T,Nrifi,. Date of Publication: 4/9/2010 (summary) • • -35- P:120358 DGt26358_0MY 04/05110 ORDINANCE NO. 5534 EXHIBIT A ESCROW DEPOSIT AGREEMENT CITY OF RENTON, WASHINGTON - LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 THIS ESCROW AGREEMENT, dated as of , 2010 (herein, together with any amendments or supplements hereto, called the "Agreement") is entered into by and between the City of Renton, Washington (herein called the "City") and , as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent"). The notice addresses of the City and the Escrow Agent are shown on Exhibit A attached hereto and made a part hereof. WITNESSETH : WHEREAS, the City heretofore has issued and there presently remain outstanding the obligations described in Exhibit B attached hereto (the "Refunded Bonds"); and WHEREAS, pursuant to Ordinance No. passed on April 5, 2010 (the "Bond Ordinance"), the City has determined to issue its Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"); and WHEREAS, a portion of the proceeds of the Bonds are being used for the purpose of providing funds to pay the costs of refunding the Refunded Bonds; and WHEREAS, , certified public accountants, has prepared a verification report which is dated , 2010 (the "Verification Report") relating to the source and use of funds available to accomplish the refunding of the Refunded Bonds, the investment of such funds and the adequacy of such funds and investments to provide for the payment of the debt service due on the Refunded Bonds; and WHEREAS, pursuant to the Bond Ordinance, the Refunded Bonds have been designated for redemption prior to their scheduled maturity dates and, after provision is made for such redemption, the Refunded Bonds will come due in such years, bear interest at such rates, and be payable at such times and in such amounts as are set forth in Exhibit C attached hereto and made a part hereof; and WHEREAS, when Escrowed Securities have been deposited with the Escrow Agent for the payment of all principal and interest of the Refunded Bonds when due, then the Refunded Bonds shall no longer be regarded as outstanding except for the purpose of receiving payment from the funds provided for such purpose; and A-1 P:120358_DG120358 0MY 04/05/10 ORDINANCE NO. 5534 �..) WHEREAS, the issuance, sale, and delivery of the Refunding Bonds have been duly authorized to be issued, sold, anal delivered for the purpose of obtaining the funds required to provide for the payment of the principal of, interest on and redemption premium (if any) on the Refunded Bonds when due as shown on Exhibit C attached hereto; NOW, THEREFORE, in consideration of the mutual undertakings, promises and agreements herein contained,the sufficiency of which hereby are acknowledged, and to secure the full and timely payment of prjncipal of and the interest on the Refunded Bonds,the City and the Escrow Agent mutually undelrtake, promise and agree for themselves and their respective representatives and successors, as follows: Article 1. Definitions Section 1.1. Definitions. Unless the context clear y indicates otherwise, the following terms shall have the meanings assigned to them belo when they are used in this Agreement: Escrow Fund means the and created by this Agreement to be established, held and administered by the Escrow Agen pursuant to the provisions of this Agreement. Escrowed Securities me ns the noncallable Government Obligations described in Exhibit D attached to this Agre ment, or cash or other noncallable obligations substituted therefor pursuant to Section 4.2 f this Agreement. Government Obligation means direct, noncallable (a) United States Treasury Obligations, (b) United States T easury Obligations - State and Local Government Series, (c) non-prepayable obligations hich are unconditionally guaranteed as to full and timely payment of principal and inter st by the United States of America or (d) REFCORP debt obligations unconditionally guaranteed by the United States. Paying Agent means the =fiscal agency of the State of Washington, as the paying agent for the Refunded Bonds. Refunding Bonds means that portion of the Bonds authorized under the Bond Ordinance for the purpose of refunding the Refunded Bonds. Section 1.2. Other Definitions. The terms "Agreement," "City," "Escrow Agent," "Bond Ordinance," "Verification Report," "Refunded Bonds," and "Bonds" when they are used in this Agreement, shall have the meanings assigned to them in the preamble to this Agreement. A-2 P:12035B DG120358 0MY 04/05/10 ORDINANCE NO. 5534 Section 1.3. Interpretations. The titles and headings of the articles and sections of this Agreement have been inserted for convenience and reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the intended purpose of providing for the refunding of the Refunded Bonds in accordance with applicable law. Article 2. Deposit of Funds and Escrowed Securities Section 2.1. Deposits in the Escrow Fund. Concurrently with the sale and delivery of the Refunding Bonds the City shall deposit, or cause to be deposited, with the Escrow Agent, for deposit in the Escrow Fund, the funds (from the proceeds of the Refunding Bonds and a cash contribution by the City) sufficient to purchase the Escrowed Securities and pay costs of issuance described in Exhibit D, and the Escrow Agent shall, upon the receipt thereof, acknowledge such receipt to the City in writing. Article 3. Creation and Operation of Escrow Fund Section 3.1. Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as the Refunding Account (the "Escrow Fund"). The Escrow Agent hereby agrees that upon receipt thereof it will deposit to the credit of the Escrow Fund the funds and the Escrowed Securities described in Exhibit D attached hereto. Such deposit, all proceeds therefrom, and all cash balances from time to time on deposit therein (a)shall be the property of the Escrow Fund, (b) shall be applied only in strict conformity with the terms and conditions of this Agreement, and (c) are hereby irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds, which payment shall be made by timely transfers of such amounts at such times as are provided for in Section 3.2 hereof. When the final transfers have been made for the payment of such principal of and interest on the Refunded Bonds, any balance then remaining in the Escrow Fund shall be transferred to the City, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section 3.2. Payment of Principal and Interest. The Escrow Agent is hereby irrevocably instructed to transfer to the Paying Agent from the cash balances from time to time on deposit in the Escrow Fund, the amounts required to pay the principal of the Refunded Bonds at their respective redemption dates and interest thereon to such redemption dates in the amounts and at the times shown in Exhibit C attached hereto. A-3 P:120358 DG120358 0MY 04/05/10 i \ ORDINANCE NO. 5534 Section 3.3. Sufficiency of Escrow Fund. The City represents •that, based upon the information provided in the Verification Report, the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balance on deposit from time to time in the Escrow Fund will be at all times sufficient to provide moneys for transfer to the Paying Agent at the times and in the amounts required to pay the int rest on the Refunded Bonds as such interest comes due and the principal of the Refunded Bods as the Refunded Bonds are paid on an optional redemption date prior to maturity, all as mor fully set forth in Exhibit E attached hereto: If,for any reason, at any time, the cash balances n deposit or scheduled to be on deposit in the Escrow Fund shall be insufficient to transfe the amounts required by the Paying, Agent to make the payments set forth in Section 3.2 hereof, the City shall timely deposit in the Escrow Fund, from any funds that are lawfully availa le therefor, additional funds in the amounts required to make such payments. Notice of an such insufficiency shall be given promptly as hereinafter provided, but the Escrow Agent hall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the ity's failure to make additional deposits thereto. Section 3.4. Trust Fund. The Escrow Agent or its .ffiliate, shall hold at all times the Escrow Fund, the Escrowed Securities and all other assets of the Escrow Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securitiles and other assets of the Escrow Fund shall always be maintained by the Escrow Agent as trust funds for the benefit of the owners of the Refunded Bonds; and a special account thereof shall at all times be maintained on the books of the Escrow Agent. The owners of the.Refunded Bonds shall be entitled to the same preferred claim and first lien upon the Escrowed Securities, the proceeds thereof, and all other assets of the Escrow Fund to which they are entitled as owners of the Refunded Bonds. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the City, and the Esrow Agent shall have no right to title with respect thereto except as a trustee and Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject to warrants, drafts or checks drawn by the City or, except to the extent expressly herein provided, by the Paying Agent. Article 4. Limitation on Investments Section 4.1. Investments. Except for the initial invetment in the Escrowed Securities, and except as provided in Section 4.2 hereof, the Escrow Agent shall not have any power or duty to invest or reinvest any A-4 P:120358 DG120358 OMY 04/05/10 ORDINANCE NO. 5534 money held hereunder, or to make substitutions of the Escrowed Securities, or to sell,transfer, or otherwise dispose of the Escrowed Securities. Section 4.2. Substitution of Securities. At the written request of the City, and upon compliance with the conditions hereinafter stated, the Escrow Agent shall utilize cash balances in the Escrow Fund, or sell, transfer, otherwise dispose of or request the redemption of the Escrowed Securities and apply the proceeds therefrom to purchase Refunded Bonds or Government Obligations which do not permit the redemption thereof at the option of the obligor. Any such transaction may be effected by the Escrow Agent only if(a)the Escrow Agent shall have received a written opinion from a firm of certified public accountants that such transaction will not cause the amount of money and securities in the Escrow Fund to be reduced below an amount sufficient to provide for the full and timely payment of principal of and interest on all of the remaining Refunded Bonds as they become due, taking into account any optional redemption thereof exercised by the City in connection with such transaction; and (b)the Escrow Agent shall have received the unqualified written legal opinion of its bond counsel or tax counsel to the effect that such transaction will not cause any of the Refunding Bonds or Refunded Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. Article 5. Application of Cash Balances Section 5.1. In General. Except as provided in Section 2.1, 3.2 and 4.2 hereof, no withdrawals, transfers or reinvestment shall be made of cash balances in the Escrow Fund. Cash balances shall be held by the Escrow Agent in United States currency as cash balances as shown on the books and records of the Escrow Agent and, except as provided herein, shall not be reinvested by the Escrow Agent; provided, however, a conversion to currency shall not be required (i) for so long as the Escrow Agent's internal rate of return does not exceed 20%, or (ii) if the Escrow Agent's internal rate of return exceeds 20%, the Escrow Agent receives a letter of instructions, accompanied by the opinion of nationally recognized bond counsel, approving the assumed reinvestment of such proceeds at such higher yield. Article 6. Redemption of Refunded Bonds Section 6.1. Call for Redemption. The City hereby irrevocably calls the Refunded Bonds for redemption on their earliest redemption dates, as shown in the Verification Report and on Appendix A attached hereto. A-5 P:120358_DG120358_0MY 04/05/10 • ORDINANCE NO. 5534 Section 6.2. Notice of Re emption/Notice of Defeasance. The Escrow Agent agrees o give a notice of defeasance and a notice of the redemption of the Refunded Bonds pursuant it/ the terms of the Refunded Bonds and in substantially the forms attached hereto as Appeihdices A and B attached hereto and as described on said Appendices A and B to the Payin Agent for distribution as described therein. The notice of defeasance shall be given imme iately following.the execution of this Agreement, and the notice of redemption shall be giv n in accordance with the ordinance authorizing the Refunded Bonds. The Escrow Agent here y certifies that provision satisfactory and acceptable to the Escrow Agent has been made for he giving of notice of redemption of the Refunded Bonds. Arti le 7. Records and Reports Section 7.1. Records. The Escrow Agent will k-ep books of record and account in which complete and accurate entries shall be made of all transactions relating to the receipts, disbursements, allocations and application of the oney and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and suc books shall be available for inspection during business hours and after reasonable notice. Section 7.2. Reports. While this Agreement re ains in effect„the Escrow Agent quarterly shall prepare and send to the City a written repo summarizing all transactions relating to the Escrow Fund during the preceding financial qu.rter, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities and transfers from the Escrow Fund for payments o the Refunded Bonds or otherwise, together with a detailed statement of all Escrowed Securi ies and the cash balance on deposit in the Escrow Fund as of the end of such period. - Article 8. Concer ing the Paying Agents and Escrow Agent Section 8.1. Representations. • The Escrow Agent hereby represents that it has all necessary power and authority to enter into this Agreement and u I dertake the obligations and responsibilities imposed upon it , herein, and that it will carry out a 11 of its obligations hereunder. Section 8.2. Limitation on Liability. The liability of the Escrow Agent to transfer funds for the payment of the principal of and interest on the Refunded Bonds shall be limited to the proceeds of the Escrowed Securities A-6 P:120358_1DGV20358_0MY 04/05/10 ORDINANCE NO. 5534 ' and the cash balances from time to time on deposit in the Escrow Fund. Notwithstanding any provision contained herein to the contrary, the Escrow Agent shall have no liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund or any failure of the obligors of the Escrowed Securities to make timely payment thereon, except for the obligation to notify the City promptly of any such occurrence. The recitals herein and in the proceedings authorizing the Refunding Bonds shall be taken as the statements of the City and shall not be considered as made by, or imposing any obligation or liability upon, the Escrow Agent. The Escrow Agent is not a party to the proceedings authorizing the Refunding Bonds or the Refunded Bonds and is not responsible for nor bound by any of the provisions thereof (except to the extent that the Escrow Agent may be a place of payment and paying agent and/or a paying agent/registrar therefor). In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms and provisions of this Agreement. The Escrow Agent makes no representations as to the value, conditions or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the City thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to any of such matters. It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable except for its own neglect or willful misconduct, nor for any loss unless the same shall have been through its negligence or bad faith. Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the City with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund, to dispose of and deliver the same in accordance with this Agreement. If, however, the Escrow Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determination the Escrow Agent shall be liable only for its own willful misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the City or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such A-7 P:120356 DG120358 0MY 04/05/10 ORDINANCE NO. 5534 event or contingency, and in this connection may make inquiries of, and consult with, among others,the City at any time. Section 8.3. Compensation. The City shall pay to the scrow Agent fees for performing the services hereunder and for the expenses incurred or to,be incurred by the Escrow Agent in the administration of this Agreement pursuant to the terms of the Fee Schedule attached ,hereto as Appendix C. The Escrow Agent hereby agrees tha in no event shall it ever assert any claim or-lien against the Escrow Fund for any fees for its s rvices, whether regular or extraordinary, as Escrow Agent, or in any other capacity, or for rei bursement for any of its expenses as Escrow Agent or in any other capacity. • Section 8.4. Successor Es row Agents. Any corporation, associa ion or other entity into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or otherwise transfer all or substantially all o its corporate trust assets and business or any corporation, association or other entity resulting from any such conversion, sale, merger, consolidation or other transfer to which it is a party, ipso facto, shall be and become successor escrow agent hereunder, vested with all other matters as was its predecessor, without the execution or filing of any instrument or any further ct on the part of the parties hereto, notwithstanding anything herein to the contrary. If at any time the Escro Agent or its legal successor or successors should become unable, through operation or la or otherwise, to act as escrow agent hereunder, or if its property and affairs shall be t ken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith exist in the offi a of Escrow Agent hereunder. In such event the City, by appropriate action, promptly shal appoint an Escrow Agent to fill such vacancy. If no successor Escrow Agent shall have been ppointed by the City. within 60 days, a successor may be appointed by the owners of a ajority in principal amount of the Refunded Bonds then outstanding by an instrument or instruments in writing filed with the City, signed by such owners or by their duly authorized,attorneys-in-fact. If, in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred,the owner of any Refunded Bond may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent. Any successor Escrow Agent shall be a corporation organized and doing business under the laws of the United States or the State of Washington, authorized under such laws to exercise corporate trust powers, having its principal office and place of business in the State of A-8 P:120358 DG120353 0MY 04/05/10 ORDINANCE NO. 5534 Washington, having a combined capital and surplus of at least $100,000,000 and subject to the supervision or examination by federal or state authority. Any successor Escrow Agent shall execute, acknowledge and deliver to the City and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to the terms of this Agreement, all the rights, powers and trusts of the Escrow Agent hereunder. Upon the request of any such successor Escrow Agent, the City shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights, powers and duties. ' The obligations assumed by the Escrow Agent pursuant to this Agreement may be transferred by the Escrow Agent to a successor Escrow Agent if (a) the requirements of this Section 8.4 are satisfied; (b) the successor Escrow Agent has assumed all the obligations of the Escrow Agent under this Agreement; and (c) all of the Escrowed Securities and money held by the Escrow Agent pursuant to this Agreement have been duly transferred to such successor Escrow Agent. Article 9. Miscellaneous Section 9.1. Notice. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid addressed to the City or the Escrow Agent at the address shown on Exhibit A attached hereto. The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten days prior notice thereof. Section 9.2. Termination of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow Agent shall have no further obligations or responsibilities hereunder to the City, the owners of the Refunded Bonds or to any other person or persons in connection with this Agreement. Section 9.3. Binding Agreement. This Agreement shall be binding upon the City and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the owners of the Refunded Bonds, the City, the Escrow Agent and their respective successors and legal representatives. A-9 P:12035B DG\20358 0MY 04/05/10 ORDINANCE NO. 5534 Section 9.4. Severability. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illeg.I or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect Many other provisions of this Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 9.5. Washington aw Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of W.shington. Section 9.6. Time of the E.sence. Time shall be of the ess-nce in the performance of obligations from time to time imposed upon the Escrow Agent sy this Agreement. Section 9.7. Notice to S& and Fitch. In the event that this A reement or any provision thereof is severed, amended or revoked, the City shall provide w itten notice of such severance, amendment or revocation to Standard & Poor's Ratings Servic s, 55 Water Street,'New York, New York 10041, Attention: Refunded Bonds Municipal Bon Department, and to Fitch Ratings, One State Street Plaza, New York, New York, 10004,Atte tion: Public Finance Rating Desk/Refunded Bonds. Section 9.8. Amendment . This Agreement shall not e amended except to cure any ambiguity or formal defect or omission in this Agreement. N amendment shall be effective unless the same shall be in writing and signed by the parties thereto. No such amendment shall adversely affect the rights of the holders of the Refunded Bonds. No such amendment shall be made without first receiving written confirmation from the rating agencies (if any) which have rated the Refunded Bonds that such administrative changes will not result in a withdrawal or reduction of its rating then assigned to the Refunded Bvnds. If this Agreement is amended, prior written notice and copies of the proposed changes shall be given to the rating agencies which have rated the Refunded Bonds. • A-10 P:120358_DG1203513_0MY 04/05/10 ORDINANCE NO. 5534 EXECUTED as of the date first written above. CITY OF RENTON, WASHINGTON Designated City Representative [ESCROW AGENT] Authorized Signer Exhibit A — Addresses of the City and the Escrow Agent Exhibit B — Description of the Refunded Bonds Exhibit C — Schedule of Debt Service on Refunded Bonds Exhibit D — Description of Beginning Cash Deposit (if any) and Escrowed Securities Exhibit E — Escrow Fund Cash Flow Appendix A — Notice of Redemption for the 2001 Bonds Appendix B — Notice of Defeasance for the 2001 Bonds Appendix C — Fee Schedule A-11 P:120358 DG20356 0MY 04/05/10 . ORDINANCE NO. 5534 �_.. EXHIBIT A Addresses of the City and Escrow Agent City: City of Rent n 1055 S. Gra y Way Renton, Wa hington 98057 Attention: finance and Information Services Administrator Escrow Agent: [to come] A-A-1 P:120358_DG120358_0MY 04/05/10 ORDINANCE NO'. 5534 ' - EXHIBIT B Description of the Refunded Bonds City of Renton, Washington Limited Tax General Obligation and Refunding Bonds, 2001 Maturity Years (December 1) Principal Amounts Interest Rates A-B-1 P:\20358 DG\20358 0MY 04/05/10 1 • ORDINANCE NO. 5534 EXHIBIT C Schedule of Debt Service on the Refunded Bonds Principal/ Date Interest Redemption Price Total A-C-1 P:.20353 DG120358 0MY 04/05/10 ORDINANCE NO. 5534 --- EXHIBIT EXHIBIT D Escrow Deposit Cash: $ II. Other Obligations: Principal Description Maturity Date Amount Interest Rate Total Cost $ $ III. Costs of Issuance: Escrow Agent Fee ( ) $ Bond Counsel Fee (K&L Gates) Escrow Verification Fee ( ) Preliminary Official Statement Posting Official Statement Printing/Mailing Rating Agencies (S&P/Fitch) Contingency proceeds TOTAL: $ • A-D-1 P:120358 DG120358 0MY 04/05/10 ' 1 ORDINANCE NO. 5534 EXHIBIT E Escrow Fund Cash Flow Escrow Excess Cash Date Requirement Net Escrow Receipts Receipts Balance • • • A-E-1 P:120358DG120358 OMY 04/05/10 ORDINANCE NO. 5534 APPENDIX A NOTICE OF REDEMPTION* City of Renton, Washington Limited Tax General Obligation and Refunding Bonds, 2001 NOTICE IS HEREBY GIVEN that the City of Renton, Washington has called for redemption on December 1, 2011 a portion of its outstanding Limited Tax General Obligation and Refunding Bonds, 2001 (the "Bonds"). The Bonds will be redeemed at a price of one hundred percent (100%) of their principal amount, plus interest accrued to December 1, 2011. The redemption price of the Bonds is payable on presentation and surrender of the Bonds at the office of: The Bank of New York Mellon Wells Fargo Bank National Worldwide Series Processing Association 2001 Bryan Street, 9th Floor -or- Corporate Trust Department Dallas,Texas 75021 14th Floor- M/S 257 999 Third Avenue Seattle, Washington 98104 Interest on all Bonds or portions thereof which are redeemed shall cease to accrue on December 1, 2011. The following Bonds are being redeemed: Maturity Years (December 1) Principal Amounts Interest Rates CUSIP Nos. * This notice shall be given not more than 60 nor less than 30 days prior to December 1, 2011 by first class mail to each registered owner of the Refunded Bonds. In addition notice shall be mailed to Piper Jaffray& Co.; The Depository Trust Company of New York, New York; Assured Guaranty Corporation (formerly Financial Security Assurance Inc.);Standard&Poor's Ratings Services,a Standard&Poor's Financial Services LLC business, New York, New York; Fitch, Inc., New York, New York;and to the Municipal Securities Rulemaking Board. Page 1—Appendix A P:120358.5G120358_0MY 04/05/10 ORDINANCE NO. 5534 By Order of the City of Renton, Washington The Bank of New York Mellon, as Paying Agent Dated: . Withholding.of 28% of gross redemption proceeds of any payment made within the United States may be required by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act") unless the Paying Agent has the correct taxpayer identification number (social security or employer identificati.n number) or exemption certificate of the payee. Please furnish a properly completed For W-9 or exemption certificate or equivalent when presenting your Bonds. Page 2—Appendix A P:12035B_DG120358_0MY 04/05/10 ORDINANCE NO. 5534 APPENDIX B Notice of Defeasance* City of Renton,Washington Limited Tax General Obligation and Refunding Bonds, 2001 NOTICE IS HEREBY GIVEN to the owners of that portion of the above-captioned bonds with respect to which, pursuant to an Escrow Deposit Agreement dated , 2010, by and between City of Renton, Washington (the "City") and (the "Escrow Agent"), the City has deposited into an escrow account, held by the Escrow Agent, cash and non-callable direct obligations of the United States of America, the principal of and interest on which, when due, will provide money sufficient to pay each year, to and including the respective maturity or redemption dates of such bonds so provided for, the principal thereof and interest thereon (the "Defeased Bonds"). The Defeased Bonds will be called on December 1, 2011 at a price of 100% plus accrued interest. Such Defeased Bonds are therefore deemed to be no longer outstanding pursuant to the provisions of Ordinance No. 4922 of the City, authorizing the issuance of the Defeased Bonds, but will be paid by application of the assets of such escrow account. The Defeased Bonds are described as follows: Limited Tax General Obligation and Refunding Bonds, 2001 (Dated November 1, 2001) Maturity Years Principal Call Date (December 1) Amounts Interest Rates CUSIP Nos. (at 100%) $ % 12/1/2011 12/1/2011 12/1/2011 12/1/2011 Information for Individual Registered Owner The addressee of this notice is the registered owner of Bond Certificate No. of the Defeased Bonds described above, which certificate is in the principal amount of $ All of which has been defeased as described above. * This notice shall be given immediately by first class mail to each registered owner of the Defeased Bonds. In addition notice shall be mailed to Piper Jaffray&Co.;Assured Guaranty Corporation (formerly Financial Security Assurance Inc.);The Depository Trust Company of New York, New York;The Bank of New York Mellon, as Paying Agent; Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, New York, New York; Fitch,Inc., New York, New York;and to the Municipal Securities Rulemaking Board. Appendix B P:120358_DG120358_OMY 04/05/10 ORDINANCE NO. 5534 APPENDIX C Fee Schedule • Appendix C P:12035B_DG120355_0MY 04/05/10 ORDINANCE NO. 5534 CERTIFICATION I, the undersigned, City Clerk of the City of Renton, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance No. 5534 (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on April 5, 2010, as that ordinance appears on the minute book of the City; and the Ordinance will be in full force and effect after publication in the City's official newspaper as provided by law; and 2. A quorum of the members of the City Council was present throughout the meeting and a majority of those members present voted in the proper manner for the passage of the Ordinance. IN WITNESS WHEREOF, I have hereunto set my hand this day of April, 2010. CITY OF RENTON, WASHINGTON Bonnie Walton, City Clerk P:120358 DG120356 0MY 04/05/10 April 5,2010 Renton City Council Minutes Page 6 UNFINISHED BUSINESS Transportation(Aviation)Committee Chair Corman presented a report Transportation (Aviation) recom II ending concurrence in the staff recommendation to approve the Committee expenditure of funds from the Intersection Safety and Mobility Program for Transportation: NE 4th St/ design of traffic signals at NE 4th St.and Bremerton Ave. NE and NE 4th St. and Bremerton Av NE&Whitman Whitmen Ave. NE,and construction of the signal at NE 4th St.and Whitman Av NE,Signal Improvements Ave. NE in 2011. The Committee further recommended that Council direct staff to present to the Commilttee the results of the associated traffic study prior to construction of the subject traffic signal(s). MOVEID BY CORMAN,SECONDED BY PALMER,COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Finance Committee Finance Committee Chair Parker presented a report recommending approval of Finance:Vouchers Claim\ouchers 291542-291864 and two wire transfers totaling$3,201,670.26; and ap�roval of one Payroll Voucher totaling$(2,977.40). MOVED BY PARKER, SECONDED BY TAYLOR, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Human Resources: GIS Analyst FinanceCommittee Chair Parker presented a report recommending &Coordinator,Salary Grades concurence in the staff recommendation to approve classification and salary &Class Specifications grades f the GIS Analyst series and the GIS Coordinator position approved as part of the 2010 Budget. At the time the 2010 Budget was approved,these GIS classifications had not been assigned a salary grade. Based on salary data and internal equity, it is recommended that the GIS positions be classified as follows effecti)e January 1, 2010:, • GIS Analyst I(AFSCME,grade a21) • GIS Analyst II (AFSCME,grade a23) • GIS Coordinator(Non-represented,grade m26) MOVE BY PARKER,SECONDED BY TAYLOR,COUNCIL CONCUR IN THE COMM TTEE REPORT. CARRIED. RESOLUTIONS AND The following ordinance was presented for second and final reading and ORDINANCES adoption: ORDINANCE#5534 An ordi lance was read providing for the issuance and sale of limited tax Finance: Bond Refinancing, general obligation refunding bonds of the City in the aggregate principal 2001 LTGO Bonds amount of not to exceed$6.8 million to provide funds for the purpose of 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 ADOPT THE ORDINANCE AS READ. ROLL CALL ALL AYES. CARRIED. AUDIENCE COMMENT BenJoPnson (Renton) requested that Council ask each other more probing Citizen Comment:Johnson- questions on various topics and issues that are presented at Council meetings. Council Interaction He opined that the current set up of the Council Chambers does not allow for the easy exchange of ideas. Mr.Johnson used the recent Parks Expulsion ordinance as an example and remarked that it was not debated in Council Chambers. March 22,2010 Renton City Council Minutes 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 184h 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 ordi ance was read providing for the issuance and sale of limited tax 2001 LTGO Bonds genera obligation refunding bonds of the City in the aggregate principal amoun of not to exceed $6.8 million to provide funds for the purpose of refundi g certain limited tax general obligation bonds of the City; authorizing the ap ointment 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 Mayor..aw remarked that the future of the Lindbergh Pool is in jeopardy and Community Event: Lindbergh explainpd 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 coyer$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 ANNEXPTION 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 16 ng-term solution is still needed. *MOTION CARRIED. AUDIENCE COMMENT Anne Meis(King County)expressed support for the adult entertainment Citizen Comment: Meis-Adult morat9rium 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. Bonnie I.Walton, CMC, City Clerk Jason Seth, Recorder March 22,2010 RENTON CITY COUNCIL COMMITTEE MEETING CALENDAR Office of the City Clerk COUNCIL COMMITTEE MEETINGS SCHEDULED AT CITY COUNCIL MEETING March 22, 2010 COMMITTEE/CHAIRMAN DATE/TIME AGENDA COMMITTEE OF THE WHOLE MON., 3/29 No Meetings(5th Monday) (Persson) MON.,4/5 Next Steps Library Facility Planning with King 5 p.m. County Library System COMMUNITY SERVICES (Palmer) FINANCE MON.,4/5 Vouchers; (Parker) 4 p.m. GIS Positions Class Specifications &Salary Grades PLANNING & DEVELOPMENT THURS., 3/25 CANCELED (Briere) PUBLIC SAFETY MON.,4/5 CANCELED (Taylor) TRANSPORTATION (AVIATION) THURS.,3/25 Traffic Signals on NE 4th St; (Corman) 3 p.m. Status of the SW 27th St./Strander Blvd Extension Project UTILITIES THURS.,3/25 2010 Committee Work Plan (briefing only) (Zwicker) 2 p.m. NOTE: Committee of the Whole meetings are held in the Council Chambers unless otherwise noted. All other committee meetings are held in the Council Conference Room unless otherwise noted. March 22,2010 Renton City Council Minutes Page 496 CED: Membership Agreement, Commul ity 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 -- - ----finance-Committee coneurrenee-inc e-staff-rec-ommendat-ion-to-authorize-the-proposed-purchasing------- -- Policy: Purchasing(Bidding policy and 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 CONCU 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 .� the app oximate amount of$6.15 million to refinance Limited Tax General Obligati n 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 Binds. 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 �PARKERk,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 SmurfitIStone 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 concurrience 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. i 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 • • APPROVED BY CITY COUNCIL FINANCE COMMITTEE '' • • COMMITTEE REPORT Date 3-a2- -70io • March 22, 2010 AdvancRefunding of 2001. LTGO Bonds ;f March 15, 2010 • The Finance Committee recomm nds concurrence in the staff recommendation to approve issuance of new bonds in the approximate amountof $6.15 million to refinance Limited Tax General Obligation Bonds (LTGO) Issued 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 cif the outstanding 2001 LTGO 'Bonds. . This refinancing will generate a savings of approximatelY$500,000 over the next 11.5 years. • The committee further recommen•s that the ordinance regarding this matter be presented for - first reading: • Or% 4 0 AO AV King Parker, Chair • Greg Taylor,Vice Chair • Don Persson, Substitute Member • • Cc: Iwen Wang, FIS Administrator , March 15,2010 Renton City Council Minutes Page 485 Finance:2010 Fee Schedule Finance and Information Services Department recommended adopting the Amendments amended 2010 Fee Schedule to incorporate changes to Fire and Emergency Services fees and other housekeeping fee adjustments. Refer to Finance Committee. Finance: Bond Refinancing, Financ I and Information Services Department requested approval of an 2001 LTGO Bonds ordinance authorizing the issuance of bonds in the amount of approximately tCYL tt Fi(e- $6.15 million to refinance Limited Tax General Obligation Bonds issued in 2001 for the[development of the City Center Parking Garage at a savings of approximately$500,000 over the next 11.5 years. Refer to Finance Committee. Police: Hire at Step D Police Department requested authorization to hire a police officer at Step D of the salary range,effective 4/1/2010. Council concur. CAG:08-149, 1-405(1-5 to SR Transportation Systems Division recommended approval of an amendment to 169)Stage 2 Widening, CAG-Oil-149,with the Washington State Department of Transportation,to WSDOT accept!additional reimbursement of$50,050 for a Renton Project Coordinator for the 1-405/1-5 to SR 169 Stage 2-Widening project. Council concur. Airport:AirO, Inc Lease, LAG- Transportation Systems Division recommended approval of an addendum to 03-002 airport lease LAG-03-002,with AirO, Inc.,to increase the total ground lease rate by$6,886 annually through 10/31/2012,and to readjust the rate thereafter using tie CPI index. Council concur. MOVED BY PERSSON,SECONDED BY BRIERE,COUNCIL APPROVE THE CONSENT AGENDA MINUS ITEMS 6.g.AND 6.b. CARRIED. Separate Consideration Item Financ and Information Services Department recommended approval of a 6.g. resolution offering an incentive to the first telecom company and/or other Finance:'Fiber to the Premises enterprise to construct a Fiber to the Premises(FTTP) network, and provide (FTTP)Construction Incentive service'at competitive rates. Refer to Finance Committee. MOVED BY PARKER,SECONDED BY CORMAN,COUNCIL CONCUR IN CONSENT AGENCA ITEM 6.g. CARRIED. (See page 486 for resolution.) Separate Consideration Item Mayor Law appointed Michael O'Halloran to the Planning Commission for an 6_b. unexpired term expiring 6/30/2011(position previously held by Shawn Duffee). Appointment: Planning Refer to Community Services Committee. Commission MOVED BY ZWICKER,SECONDED BY CORMAN, COUNCIL CONCUR IN CONSENT AGENDA ITEM 6.b. CARRIED. UNFINISHED BUSINESS Finance Committee Chair Parker presented a report recommending Finance Committee concurrence in the staff recommendation to approve a shelter fees waiver Community Services: Picnic request in the amount of$300 for the REACH annual CROPWALK event on Shelter Fee Waiver Request, 5/2/2010. REACH is comprised of local churches and the community CROPWALK supporting Church World Services,a non-profit world hunger organization. MOVED BY PARKER,SECONDED BY TAYLOR,COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. Community Services:Golf Finance Committee Chair Parker presented a report recommending Course Greens Fees Waiver, concurrence in the staff recommendation to waive Maplewood Golf Course Liberty High School Girls Team greens'fees in the amount of$2,900 for the Liberty High School Girls golf team for the!2010 season. MOVED BY PARKER,SECONDED BY TAYLOR,COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. CITY OF RENTON COUNCIL AGENDA BILL LV Subject/Title: Meeting: Advance Refunding of 2001 LTGO Bonds Regular Council - 15 Mar 2010 Exhibits: Submitting Data: Dept/Div/Board: Summary of Refunding Results Finance & Information Technology Escrow Agreement Draft Bond Ordinance Staff Contact: Iwen Wang, F&IT Administrator Recommended Action: Refer to Finance Committee Fiscal Impact: Expenditure Required: $ I Transfer Amendment: $, Amount Budgeted: $ Revenue Generated: $ Total Project Budget: $ City Share Total Project: $ SUMMARY OF ACTION: Should the City refinance the 2001 limited Tax General Obligation (LTGO) Bonds issued for the construction of the City Center Parking Garage? The City issued $19.5 million of Limited Tax General Obligation Bonds (LTGO) in 2001 for 1) $13.5 million to refinance the 1997 LTGO issued for the acquisition and remodeling of the current City Hall; and 2) $6 million to provide "new money" for the development of City Center Garage. The garage portion of the, issue was for 20 yeas, with interest only payments up to 2017, and principle payments spread from 2018 through 2021. These bonds have a provision that allows the City to redeem them at face (par)value starting December 1, 2011, and on any debt service payment dates thereafter. The refinancing plan is to provide for sufficient funds through the new bond issue in escrow to pay the interest on the old bonds for the remaining of 2010 and 2011, and then pay the $6 million principal balance on December 1, 2011. The new issue is expected to be around $6.15 million, and will follow the same amortization schedule as the 2001 issue, interest only payments through 2018 and principal will be paid between 2018 and 2021. The lower interest rate will allow the City to save around $42,000 a year, or$500,000 over the remaining 11.5 years, with a present value savings at$424,000. STAFF RECOMMENDATION: Approve the refinancing plan and all the associated documents necessary to issue the new bonds, • including the associated Escrow Agreement, and redemption of the outstanding 2001 bonds. . SUMMARY OF REFUNDING RESULTS City of Renton Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS Dated Date 05/19/2010 Delivery Date 05/19/2010 Arbitrage yield 3.236801% Escrow yield 0.554716% Bond Par Amount 6,150,000.00 True Interest Cost 3.369569% Net Interest Cost 3.518175% Average Coupon 4.277530% Average Life 9.804 Par amount of refunded bonds 6,000,000.00 Average coupon of refunded bonds 5.106203% Average life of refunded bonds 10.098 PV of prior debt to 05/19/2010 @ 3.236801% 7,102,145.98 Net PV Savings 424,063.95 Percentage savings of refunded bonds 7.067733% Percentage savings of refunding bonds 6.895349% Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-R0ILTNEW,R0ILTNEW) Page 1 4- SAVINGS City of Renton • Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS Present Value Prior Refunding Annual to 05/19/2010 Date Debt Service Debt Service Savings Savings @ 3.2368011% 06/01/2010 153,556.25 - 153,556.25 - 153,391.99 12/01/2010 153,556.25 282,586.67 -129,030.42 24,525.83 -126,839.62 06/01/2011 153,556.25 127,537.50 26,018.75 - 25,169.63 12/01/2011 153,556.25 132,537.50 21,018.75 47,037.50 20,008.98 06/01/2012 153,556.25 127,487.50 26,068.75 - 24,421.14 12/01/2012 153,556.25 137,487.50 16,068.75 42,137.50 14,813.43 06/01/2013 153,556.25 127,387.50 26,168.75 - 23,740.18 12/01/2013 153,556.25 137,387.50 16,168.75 42,337.50 14,434.61 06/01/2014 153,556.25 127,237.50 26,318.75 - 23,121.80 12/01/2014 153,556.25 137,237.50 16,318.75 42,637.50 14,108.18 06/01/2015 153,556.25 127,087.50 26,468.75 - 22,518.79 12/01/2015 153,556.25 137,087.50 16,468.75 42,937.50 13,787.96 06/01/2016 153,556.25 126,937.50 26,618.75 - 21,930.81 12/01/2016 153,556.25 136,937.50 16,618.75 43,237.50 13,473.89 06/01/2017 153,556.25 126,737.50 26,818.75 - 21,397.39 12/01/2017 153,556.25 136,737.50 16,818.75 43,637.50 13,205.16 06/01/2018 153,556.25 126,537.50 27,018.75 - 20,875.78 12/01/2018 1,538,556.25 1,521,537.50 17,018.75 44,037.50 12,939.96 06/01/2019 117,200.00 98,637.50 18,562.50 - 13,888.94 12/01/2019 1,577,200.00 1,548,637.50 28,562.50 47,125.00 21,030.84 06/01/2020 78,875.00 69,637.50 9,237.50 - 6,693.33 12/01/2020 1,618,875.00 1,584,637.50 34,237.50 43,475.00 24,412.81 06/01/2021 40,375.00 35,550.00 4,825.00 - 3,385.64 12/01/2021 1,655,375.00 1,615,550.00 39,825.00 44,650.00 27,499.63 9,236,912.50 8,729,136.67 507,775.83 507,775.83 423,411.24 Savings Summary PV of savings from cash flow 423,411.24 Plus:Refunding I ds on hand . 652.71 Net PV Savings 424,063.95 • Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-ROILTNEW,ROILTNEW) Page 2 SOURCES AND USES OF FUNDS City of Renton Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS Dated Date 05/19/2010, Delivery Date 05/19/2010 Sources: Bond Proceeds: Par Amount 6,150,000.00 Premium 500,903.05 6,650,903.05 • Uses: Refunding Escrow Deposits: Cash Deposit 153,557.34 SLGS Purchases 6,407,293.00 6,560,850.34 Delivery Date Expenses: . Cost of Issuance 46,350.00 Underwriter's Discount 43,050.00 , 89,400.00 Other Uses of Funds: Additional Proceeds 652.71 6,650,903.05 Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-ROILTNEW,ROILTNEW) Page 3 i • BOND PRICING City of Renton Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS Maturity Yield to Call Call Call Date Call Price Premium Bond Component Date Amount Rate Yield Price Maturity Date Price for Arb Yield for Arb Yield (-Discount) Serial Bonds(Ref 01 LT): 12/01/2010 145,000 2.000% 1.0 0% 100.530 - - - - - 768.50 12/01/2011 5,000 2.000% 1.2 0% 101.135 - - - - - 56.75 12/01/2012 10,000 2.000% 1.250% 101.864 - - - - - 186.40 12/01/2013 10,000 3.000% 1.420% 105.425 - - - - - 542.50 12/01/2014 10,000 3.000% 1.70% 105.558 - - - - - 555.80 12/01/2015 10,000 3.000% 2.170% 104.571 - - - - - 457.10 12/01/2016 10,000 4.000% 2.500% 108.989 - - - - - 898.90 12/01/2017 10,000 4.000% 2.770% 108.310 - - - - - 831.00 12/01/2018 1,395,000 4.000% 3.0 0% 107.244 - - - - - 101,053.80 12/01/2019 1,450,000 4.000% 3.280% 106.527 - - - - - 94,641.50 12/01/2020 1,515,000 4.500% 3.3;0% 110.088 C 3.355% 06/01/2020 100.000 06/01/2020 100.000 152,833.20 12/01/2021 1,580,000 4.500% .3.390% 109.372 C 3.505% 06/01/2020 100.000 06/01/2020 100.000 148,077.60 6,150,000 500,903.05 Dated Date 05/19/2010 Delivery Dat 05/19/2010 First Coupo, 12/01/2010 Paz Amount 6,150,000.00 Premium 500,903.05 Production 6,650,903.05 108.144765% Underwrite) Discount -43,050.00 -0.700000% Purchase Pel6,607,853.05 107.444765% . Accrued In- - - Net Pro -.• 6,607,853.05 • Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-ROILTNEW,R01LTNEW) Page 4 • BOND DEBT SERVICE City of Renton Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS Dated Date 05/19/2010 Delivery Date 05/19/2010 Period Annual Ending Principal Coupon Interest Debt Service Debt Service 12/01/2010 145,000 2.000% 137,586.67 282,586.67 282,586.67 06/01/2011 - - 127,537.50 127,537.50 - 12/01/2011 5,000 2.000% 127,537.50 132,537.50 260,075.00 06/01/2012 - - 127,487.50 127,487.50 - 12/01/2012 10,000 2.000% 127,487.50 137,487.50 264,975.00 06/01/2013 - - 127,387.50 127,387.50 - 12/01/2013 10,000 3.000% 127,387.50 137,387.50 264,775.00 06/01/2014 - - 127,237.50 127,237.50 - 12/01/2014 10,000 3.000% 127,237.50 137,237.50 264,475.00 06/01/2015 - - 127,087.50 127,087.50 - 12/01/2015 10,000 3.000% 127,087.50 137,087.50 264,175.00 06/01/2016 - - - 126,937.50 126,937.50 - 12/01/2016 10,000 4.000% 126,937.50 136,937.50 263,875.00 06/01/2017 - - 126,737.50 126,737.50 - 12/01/2017 10,000 4.000% 126,737.50 136,737.50 263,475.00 06/01/2018 - - 126,537.50 126,537.50 - 12/01/2018 1,395,000 4.000% 126,537.50 1,521,537.50 1,648,075.00 06/01/2019 - - 98,637.50 98,637.50 - 12/01/2019 1,450,000 4.000% 98,637.50 1,548,637.50 1,647,275.00 06/01/2020 - - 69,637.50 69,637.50 - 12/01/2020 1,515,000 4.500% 69,637.50 1,584,637.50 1,654,275.00 06/01/2021 - - 35,550.00 35,550.00 - 12/01/2021 1,580,000 4.500% 35,550.00 1,615,550.00 1,651,100.00 6,150,000 2,579,136.67 8,729,136.67 8,729,136.67 Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-ROILTNEW,R01LTNEW) Page 5 L BOND SUMMARY STATISTICS City of Renton Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS • Dated Date 05/19/2010 Delivery Date 05/19/2010 Last Maturity 12/01/2021 Arbitrage Yield 3.236801% True Interest Cost(TIC) 3.369569% Net Interest Cost(NIC) 3.518175% All-In TIC 3.457330% Average Coupon 4.277530% Average Life(years) 9.804 Duration of Issue ears) 8.162 Par Amount 6,150,000.00 Bond Proceeds 6,650,903.05 Total Interest 2,579,136.67 Net Interest 2,121,283.62 Total Debt Servic 8,729,136.67 Maximum Annua Debt Service 1,654,275.00 Average Annual ebt Service 756,861.56 Underwriter's Fee (per$1000) Average Takedo - Other Fee • 7.000000 Total Underwriters Discount 7.000000 Bid Price 107.444765 Par Average Average Bond Component Value Price Coupon Life Serial Bonds(Ref 01 LT) • 6,150,000.00 108.145 4.278% 9.804 6,150,000.00 9.804 All-In Arbitrage TIC TIC Yield Par Value 6,150,000.00 6,150,000.00 6,150,000.00 — +Accrued Interest - - - +Premium(Discount) 500,903.05 500,903.05 500,903.05 -Underwriter's Discount -43,050.00 -43,050.00 -Cost of Issuance Expense -46,350.00 -Other Amounts - - - Target Value 6,607,853.05 6,561,503.05 6,650,903.05 Target Date 05/19/2010 05/19/2010 05/19/2010 Yield 3.369569% 3.457330% 3.236801% Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-ROILTNEW,ROILTNEW) Page 6 • PROOF OF ARBITRAGE YIELD City of Renton Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS Present Value to 05/19/2010 Date Debt Service @ 3.2368011% 12/01/2010 282,586.67 277,788.65 06/01/2011 127,537.50 123,375.34 12/01/2011 132,537.50 126,170.23 06/01/2012 127,487.50 119,429.98 12/01/2012 137,487.50 126,746.69 06/01/2013 127,387.50 115,565.41 12/01/2013 137,387.50 122,652.36 06/01/2014 127,237.50 111,781.89 12/01/2014 137,237.50 118,647.01 06/01/2015 127,087.50 108,122.10 12/01/2015 137,087.50 114,772.31 06/01/2016 126,937.50 104,581.98 12/01/2016 136,937.50 111,024.02 06/01/2017 126,737.50 101,117.74 12/01/2017 136,737.50 107,358.76 06/01/2018 126,537.50 97,768.00 12/01/2018 1,521,537.50 1,156,878.65 06/01/2019 98,637.50 73,803.14 12/01/2019 1,548,637.50 1,140,276.58 06/01/2020 3,164,637.50 2,293,042.21 8,588,399.17 6,650,903.05 Proceeds Summary Delivery date 05/19/2010 Par Value 6,150,000.00 Premium(Discount) 500,903.05 Target for yield calculation 6,650,903.05 • Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-ROILTNEW,ROILTNEW) Page 7 L , 1 PROOF OF ARBTlRAGE YIELD City of Renton Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS Assumed Call/Computation Dates for Premium Bonds Net Present Value(NPV) Bond Maturity Call Call to 05/19/2010 Component Date Rate Yield Date Price @ 3.2368011% SERIAL1 12/01/2020 4 500% 3.310% 06/01/2020 100.000 9,986.94 SERIAL1 12/01/2021 41.500% 3.390% 06/01/2020 100.000 21,728.22 Rejected Call/Computation Dates for Premium Bonds Net Present Value(NPV) Bond Maturity Call Call to 05/19/2010 Increase Component Date Rate Yield Date Price @ 3.2368011% to NPV SERIAL1 12/01/2020 4.500% 3.310% - - 16,809.85 6,822.91 SERIALI 12/01/2021 4.500% 3.390% - - 42,737.00 21,008.78 Mar 4,2010 11:23 am Prepared by Seattle-Northwes ISecurities Corp. (k:\...\RENTON:RENTON-ROILTNEW,ROILTNEW) Page 8 1 P PRIOR BOND DEBT SERVICE City of Renton Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS 2001 LTGO&Refunding Bonds(11/1/01) Period Annual Ending Principal Coupon Interest Debt Service' Debt Service 06/01/2010 - - 153,556.25 153,556.25 - 12/01/2010 - - 153,556.25 153,556.25 307,112.50 06/01/2011 - - 153,556.25 153,556.25 - 12/01/2011 - - 153,556.25 153,556.25 307,112.50 06/01/2012 - - 153,556.25 153,556.25 - 12/01/2012 - - 153,556.25 153,556.25 307,112.50 06/01/2013 - - 153,556.25 153,556.25 - 12/01/2013 - - 153,556.25 153,556.25 307,112.50 06/01/2014 - - 153,556.25 153,556.25 - 12/01/2014 - - 153,556.25 153,556.25 307,112.50 06/01/2015 - - 153,556.25 153,556.25 - 12/01/2015 - - 153,556.25 153,556.25 307,112.50 06/01/2016 - - 153,556.25 153,556.25 - 12/01/2016 - - 153,556.25 153,556.25 307,112.50 06/01/2017 - - 153,556.25 153,556.25 - 12/01/2017 - - 153,556.25 153,556.25 307,112.50 06/01/2018 - - 153,556.25 153,556.25 - 12/01/2018 1,385,000 5.250% 153,556.25 1,538,556.25 1,692,112.50 06/01/2019 - - 117,200.00 117,200.00 - 12/01/2019 1,460,000 5.250% 117,200.00 1,577,200.00 1,694,400.00 06/01/2020 - - 78,875.00 78,875.00 - 12/01/2020 1,540,000 5.000% 78,875.00 1,618,875.00 1,697,750.00 06/01/2021 - - 40,375.00 40,375.00 - 12/01/2021 1,615,000 5.000% 40,375.00 1,655,375.00 1,695,750.00 6,000,000 3,236,912.50 9,236,912.50 9,236,912.50 Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-ROILTNEW,R0ILTNEW) Page 9 ESCROW REQUIREMENTS City of Renton Propos d Ref.of New Money Portion of 2001 LTGO '\ PRELIMINARY NUMBERS Period Principal Ending Interest Redeemed Total 06/01/2010 153,556.25 - 153,556.25 12/01/2010 153,556.25 - 153,556.25 06/01/2011 153,556.25 - 153,556.25 12/01/2011 153,556.25 6,000,000.00 6,153,556.25 614,225.00 6,000,000.00 6,614,225.00 Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-R0ILTNEW,R0ILTNEW) Page 10 r SUMMARY OF BONDS REFUNDED City of Renton Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS Maturity Interest Par Call Call Bond Date Rate Amount Date Price 2001 LTGO&Refunding Bonds(11/1/01): SERIALS 12/01/2018 5.250% 1,385,000.00 12/01/2011 100.000 12/01/2019 5.250% 1,460,000.00 12/01/2011 100.000 TERM2021 12/01/2021 5.000% 3,155,000.00 12/01/2011 . 100.000 6,000,000.00 Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-R0ILTNEW,ROILTNEW) Page 11 ESCROW STATISTICS City of Renton Propo ed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS Modified Yiel to Yield to Perfect Value of Total Duration Receipt Disbursement Escrow Negative Cost of Escrow Cost (years) Date Date Cost Arbitrage Dead Time Global Proceeds Escrow: 6,560,850.34 1.493 0.554716% 0.554716% 6,310,818.41 249,867.61 164.32 6,560,850.34 6,310,818.41 249,867.61 164.32 Del t ery date 05/19/2010 Arbitrage yield 3.236801% • Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-ROILTNEW,R0ILTNEW) Page 12 ESCROW DESCRIPTIONS City of Renton Proposed Ref.of New Money Portion of 2001 LTGO PRELIMINARY NUMBERS Type of Type of Maturity First hit Par Max Security SLGS Date Pmt Date Amount Rate Rate May 19,2010: SLGS Certificate 12/01/2010 12/01/2010 134,769 0.190% 0.190% SLGS Note 06/01/2011 12/01/2010 136,150 0.330% 0.330% SLGS Note 12/01/2011 12/01/2010 6,136,374 0.560% 0.560% 6,407,293 SLGS Summary SLGS Rates File 04MAR10 Total Certificates of Indebtedness 134,769.00 Total Notes 6,272,524.00 Total original SLGS 6,407,293.00 • Mar 4,2010 11:23 am Prepared by Seattle-Northwest Securities Corp. (k:\...\RENTON:RENTON-ROILTNEW,ROILTNEW) Page 13 May 19,2010 City of Renton,Washington Seattle-Northwest Securities Corporation Seattle, Washington Re: City of Renton, Washington Limited Tax General Obligation Refunding Bonds,2010 $ • Ladies and Gentlemen: We have acted as bo d counsel to the City of Renton, Washington (the "City"), and have examined a certified transcript of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Refunding Bonds, 2010 (the "Bonds"), dated as of their date of initial delivery, in the aggregate principal amount of$ , issued for the purpose of refunding certain outstanding limited tax general obligation bonds of the City and paying costs of issuance of the Bonds. The Bonds are issued pursuant to Ordinance No. passed by the City JCouncil of the City on April 5, 2010 (the "Bond Ordinance"). Capitalized terms used in this opinion which are not otherwise defined shall have the meanings given to such terms in the Bond Ordinance. The Bonds are subject to redemption prior to their stated maturities as provided in the Bond Ordinance and in the Bond Purchase Agreement. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without,undertaking to verify the same by independent investigation. Based on the foregoing,we are of the opinion that,under existing law: 1. The Bonds ha.-Te been legally issued and constitute valid and binding general obligations of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bonds may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the' application of equitable principles and the exercise of judicial discretion. 2. The Bond Ordlinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by theapplication of equitable principles and the exercise of judicial discretion. City of Renton,Washington Seattle-Northwest Securities Corporation May 19,2010 Page 2 3. Both principal of and interest on the Bonds are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City within and as part of the tax levy permitted to the City without a vote of the electorate and in amounts which, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds is taken into • account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such covenants may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. The City has designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)of the Code. Except as expressly stated above, we express no opinion regarding any other federal or state income tax consequences of acquiring, carrying, owning or disposing of the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds, which may include original issue discount, original issue premium, purchase at a market discount or at a premium, taxation upon sale, redemption or other disposition, and various withholding requirements. This opinion is given as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, K&L GATES LLP DG:CF 02037929100008120358 DG120358L210P 4 CITY OF RENTON,WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 ORDINANCE NO. AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, providing for the issuance and sale of limited tax general obligation re-unding bonds of the City in the aggregate principal amount of not to exceed $[6,150,000] to provide funds for the purpose of 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. PASSED: April 5, 2010 PREPARED BY: K&L Gates LLP Seattle,Washington ORDINANCE NO. TABLE OF CONTENTS* Page Section 1. Definitions 4 Section 2. Authorization of Bonds 8 Section 3. Description of Bonds 9 Section 4. Registration,Transfer and Payment of Bonds 9 Section 5. Redemption and Purchase of Bonds 14 Section 6. Form of the Bonds 18 Section 7. Execution of the Bonds 20 Section 8. Refunding Procedures 21 Section 9. Tax Covenants 23 Section 10. Bond Fund; Provision for Payment 26 Section 11. Defeasance 27 Section 12. Sale of the Bonds 27 Section 13. Bond Insurance 30 Section 14. Continuing Disclosure Undertaking 30 Section 15. Lost,Stolen or Destroyed Bonds 34 Section 16. Severability 34 Section 17. Effective Date of Ordinance 34 EXHIBIT A Form of Escrow Deposit Agreement 1 - P:120358_DG120358_0MY 03/08/10 % • CITY OF RENTON, WASHINGTON ORDINANCE NO. AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, providing for the issuance and sale of limited tax general obligation refunding bonds of the City in the aggregate principal amoiunt of not to exceed $[6,150,000] to provide funds for the purpose of 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. WHEREAS, pursuant to Ordinance No. 4922 (the "2001 Bond Ordinance"), passed on October 22, 2001, the City of R nton, Washington (the "City") issued its Limited Tax General Obligation and Refunding Bonds, 2001, dated November 1, 2001 (the "2001 Bonds"), currently outstanding in the aggregate principal amount of $18,700,000, and maturing in remaining principal amounts and bearing interest as follows: Maturity Principal Interest (December 1) Amount Rate 2010 $ 4.00% 1,350,000 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 ; and WHEREAS, the 2001 Bonds maturing on and after December 1, 2012 are callable for • redemption on or after December 1, 2011, in whole at any time or in part on any interest } ORDINANCE NO. payment date, at a price of par plus accrued interest to the date of redemption; and WHEREAS, as a result of changed market conditions, it appears that a debt service savings may be obtained by refunding a portion of the callable 2001 Bonds through the issuance of limited tax general obligation refunding bonds of the City in the aggregate principal amount of not to exceed$16,150,000] (the `Bonds"); NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DOES ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: Acquired Obligations means the Government Obligations acquired by the City under the terms of this ordinance and the Escrow Agreement to effect the defeasance and refunding of the Refunded Bonds. Beneficial Owner means any person that has or shares the power, directly or indirectly to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). Bond Fund means the City of Renton Limited Tax General Obligation Bond Debt Service Fund described in Section 10 of this ordinance. Bond Insurance Policy means the municipal bond insurance policy, if any, issued by the Insurer insuring the payment when due of the principal of and interest on all or a portion of the Bonds as provided therein. Bond Purchase Agreement means the contract for the purchase of the Bonds between the Underwriter and City, executed pursuant to Section 12 of this ordinance. Bond Register means the registration books showing the name, address and tax -2- P:120358 DG120358 0MY 03/08/10 s t ORDINANCE NO. identification number of each Registered Owner of the Bonds, maintained pursuant to Section 149(a)of the Code. Bond Registrar means, initially, the fiscal agency of the State of Washington, for the purposes of registering and authenticating the Bonds, maintaining the Bond Register, effecting transfer of ownership of the Bonds and paying interest on and principal of the Bonds. Bond Year means each ore-year period that ends on the date selected by the City. The first and last Bond Years may b short periods. If no day is selected by the City before the earlier of the final maturity date of the Bonds or the date that is five years after the date of issuance of the Bonds, Bond Year end on each anniversary of the date of issue and on the final maturity date of the Bonds. Bonds means the City of enton, Washington Limited Tax General Obligation Refunding Bonds, 2010, if any, issued pursu nt to this ordinance. City means the City of R nton, Washington, a municipal corporation of the State of Washington. Code means the Internal Revenue Code of 1986, as amended, and shall include all applicable regulations and rulings relating thereto. Commission means the Securities and Exchange Commission. Council means the City Council as the general legislative authority of the City, as the same shall be duly and regularly constituted from time to time. Designated City Representative means the Mayor, the Chief Administrative Officer, and the Finance Director of the City and any successor to the functions of such offices. DTC means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, as depository for the Bonds -3- P:120358_DG120358 0MY 03/08/10 a • 5 � ORDINANCE NO. pursuant to Section 4 hereof. Escrow Agreement means the Escrow Deposit Agreement between the City and the Escrow Agent to be dated as of the date of closing and delivery of the Bonds, substantially in the form attached hereto as Exhibit A. Escrow Agent means the financial institution selected:by the Finance Director as provided in Section 8 of this ordinance. Finance Director shall mean the City's Finance and Information Services Administrator or the successor to such officer. Government Obligations means those obligations now or hereafter defined as such in chapter 39.53 RCW. Insurer means the municipal bond insurance company, if any, selected and designated by the Designated City Representative, pursuant to Section 13 of this ordinance, or any successor thereto or assignee thereof, as issuer of a Bond Insurance Policy for all or a portion of the Bonds. Letter of Representations means the blanket issuer letter of representations from the City to DTC. MSRB means the Municipal Securities Rulemaking Board or any successor to its functions. Net Proceeds, when used with reference to the Bonds, means the principal amount of the Bonds, plus accrued interest and original issue premium, if any, and less original issue discount, if any. Private Person means any natural person engaged in a trade or business or any trust, estate, partnership, association, company or corporation. -4- P:\20358 DG120358 0MY 03/08/10 3 s ORDINANCE NO. Private Person Use means the use of property in a trade or business by a Private Person if such use is other than as a member of the general public. Private Person Use includes ownership of the property by the Private Person as well as other arrangements that transfer to the Private Person the actual or beneficial use of the property(such as a lease, management or incentive payment contract or other special arrangement) in such a manner as to set the Private Person apart from the g neral public. Use of property as a member of the general public includes attendance by the Private Person at municipal meetings or business rental of property to the Private Person o a day-to-day basis if the rental paid by such Private Person is the same as the rental paid by any Private Person who desires to rent the property. Use of property by nonprofit community groups or community recreational groups is not treated as Private Person Use if such use is ncidental to the governmental uses of property, the property is made available for such use by all such community groups on an equal basis and such community groups are charged only a de minimis fee to cover custodial expenses. RCW means the Revised Code of Washington. Refunded Bonds mean all or a portion of the callable 2001 Bonds selected as Refunded Bonds by the Designated City Representative pursuant to Section 8. Registered Owner means the person named as the registered owner of a Bond in the Bond Register. For so long as the Bonds are held in book-entry only form, DTC shall be deemed to be the sole Registered Owner. Rule means the Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. Savings Target means a I dollar amount equal to at least percent (_%) of the outstanding principal of the Refunded Bonds. -5- P:\20358_13G\20358_0MY' 03/08/10 ORDINANCE NO. 2001 Bond Ordinance means Ordinance No. 4922 passed by the City Council on October 22, 2001, authorizing the issuance of the 2001 Bonds. 2001 Bonds mean the outstanding "City of Renton, Limited Tax General Obligation and Refunding Bonds, 2001" issued pursuant to the 2001 Bond Ordinance. Underwriter means Seattle-Northwest Securities Corporation,Seattle,Washington. Interpretation. In this ordinance, unless the context otherwise requires: (a) The terms "hereby," "hereof," "hereto," "herein, "hereunder" and any similar terms, as used in this ordinance, refer to this ordinance as a whole and not to any particular article, section, subdivision or clause hereof, and the term "hereafter"shall mean after, and the term "heretofore"shall mean before,the date of this ordinance; (b) Words of the masculine gender shall mean and include correlative words of the feminine and neuter genders and words importing the singular number shall mean and include the plural number and vice versa; (c) Words importing persons shall include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public bodies,as well as natural persons; (d) Any headings preceding the text of the several articles and sections of this ordinance, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this ordinance, nor shall they affect its meaning, construction or effect; and (e) All references herein to "articles," "sections" and other subdivisions or clauses are to the corresponding articles,sections, subdivisions or clauses hereof. Section 2. Authorization of Bonds. The City is hereby authorized to issue limited tax -6- P:120358 DG120358_OMY 03/08/10 • ORDINANCE NO. general obligation refunding bonds (the `Bonds") in an aggregate principal amount of not to exceed $[6,150,000] for the purpose of providing the funds necessary to refund the Refunded Bonds and pay all or a portion o the costs incidental to the foregoing and to the issuance of the Bonds. Section 3. Description of Bonds. The Bonds shall be general obligations of the City; shall be designated the"City of Renton,Washington, Limited Tax General Obligation Refunding Bonds, 2010," with any additiortal series designation, if necessary; shall be dated as of their initial date of delivery; shall be lly registered as to both principal and interest; shall be in the denomination of$5,000 each, or any integral multiple thereof within a maturity,provided that no Bond shall represent more than one maturity; shall be numbered separately in such manner and with any additional designatim as the Bond Registrar deems necessary for purposes of identification; shall bear interest from their date, payable semiannually on the interest payment dates set forth in the Bond Purchase Agreement; and shall mature on December 1 in the years and principal amounts set forth and approved in the Bond Purchase Agreement executed by the Designated City Representative pursuant to Section 12 of this ordinance. Section 4. Registration,Transfer and Payment of Bonds. (a) Bond Registrar/Bond Register. The City hereby specifies and adopts the system of registration approved by the Washington State Finance Committee from time to time through the appointment of state fiscal agencies. The City shall cause a bond register to be maintained by the Bond Registrar. So long as any Bonds remain outstanding, the Bond Registrar shall make all necessary provisions to permit the exchange or registration or transfer of Bonds at its principal corporate trust office. The Bond Registrar may be removed at any time at the option of the Finance Director upon prior notice to the Bond Registrar and a successor -7- P:120358_DG120358 OMY 03/08/10 • I 4 ORDINANCE NO. Bond Registrar appointed by the Finance Director. No resignation or removal of the Bond Registrar shall be effective until a successor shall have been appointed and until the successor Bond Registrar shall have accepted the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of such Bonds and this ordinance and to carryout all of the Bond Registrar's powers and duties under this ordinance. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication of the Bonds. (b) Registered Ownership. The City and the Bond Registrar, each in its discretion, may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all purposes (except as provided in Section 14 of this ordinance), and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as described in Section 4(h) hereof, but such Bond may be transferred as herein provided. All such payments made as described in Section 4(h) 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. (c) DTC Acceptance/Letters of Representations. The Bonds initially shall be held in fully immobilized form by DTC acting as depository. To induce DTC to accept the Bonds as eligible for deposit at DTC, the City has executed and delivered to DTC a Blanket Issuer Letter of Representations. Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the persons for whom they act as nominees (or any successor depository) with respect to the Bonds in respect of the accuracy of any records maintained by DTC (or any successor depository) or any DTC participant,the payment by DTC(or any successor depository) or any DTC participant of any amount in respect of the principal of or interest on -8- P:120358_DG120358_0MY 03/08/10 i ORDINANCE NO. Bonds, any notice which is permitted or required to be given to Registered Owners under this ordinance (except such notices a shall be required to be given by the City to the Bond Registrar or to DTC (or any successor depository)), or any consent given or other action taken by DTC (or any successor depository) as the Registered Owner. For so long as any Bonds are held in fully-immobilized form hereunder, DTC or its successor depository shall be deemed to be the Registered Owner for all purpo es hereunder, and all references herein to the Registered Owners shall mean DTC (or any successor depository) or its nominee and shall not mean the owners of any beneficial interest in such Bonds. If any Bond shall be duly presented for payment and funds have not been duly provided by the City on such applicable tate, then interest shall continue to accrue thereafter on the unpaid principal thereof at the rake stated on such Bond until it is paid. (d) Use of Depository. (1) The Bonds shall be registered initially in the name of "Cede & Co.", as nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such immobilized Bonds, or any portions thereof, may not thereafter be transferred except (A) to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (B) to any substitute depository appointed by the Finance Director pursuant to subsection (2) below or such substitute depository's successor; or (C) to any person as provided in subsection (4) below. (2) Upon the resignation of DTC or its successor(or any substitute depository or its successor) from its functions as depository or a determination by the Finance Director to -9- P:120358_DG120358_0MY 03/08/10 ORDINANCE NO. discontinue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor),the Finance Director may hereafter appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (3) In the case of any transfer pursuant to clause (A) or (B) of subsection (1) above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a written request on behalf of the Finance Director, issue a single new Bond for each maturity then outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such written request of the Finance Director. (4) In the event that (A) DTC or its successor (or substitute depository or its successor) resigns from Its functions as depository, and no substitute depository can be obtained, or (B) the Finance Director determines that it is in the best interest of the beneficial owners of the Bonds that such owners be able to obtain such bonds in the form of Bond certificates, the ownership.of such Bonds may then be transferred to any person or entity as herein provided, and shall no longer be held in fully-immobilized form. The Finance Director shall deliver a written request to the Bond Registrar,together with a supply of definitive Bonds, to issue Bonds as herein provided in any authorized denomination. Upon receipt by the Bond Registrar of all then outstanding Bonds together with a written request on behalf of the Finance Director to the Bond Registrar, new Bonds shall be issued in the appropriate denominations and registered in the names of such persons as are requested in such written request. (e) Registration of Transfer of Ownership or Exchange; Change in Denominations. The transfer of any Bond may be registered and Bonds may be exchanged, but no transfer of any such Bond shall be valid unless it is surrendered to the Bond Registrar with the assignment -10- P:120358_DG120358_0MY 03/08/10 , ORDINANCE NO. form appearing on such Bond duly executed by the Registered Owner or such Registered Owner's duly authorized agent in a manner satisfactory to the Bond Registrar. Upon such surrender, the Bond Registrar s all cancel the surrendered Bond and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the new Register d Owner) of the same date, maturity and interest rate and for the same aggregate principal a ount in any authorized denomination, naming as Registered Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Bond, in exchange or such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond Regis rar and exchanged, without charge, for an equal aggregate principal amount of Bonds of t e same date, maturity and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer or to exchange any Bond during the 15 days preceding any interest payment or principal payment date any such Bond is to be redeemed. (f) Bond Registrar's wnership of Bonds. The Bond Registrar may become the LRegistered Owner of any Bond ith the same rights it would have if it were not the Bond Registrar, and to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as member of, or in any other capacity with respect to, any committee formed to protect the right of the Registered Owners of Bonds. (g) Registration Covenant. The City covenants that, until all Bonds have been surrendered and canceled, it will maintain a system for recording the ownership of each Bond that complies with the provisions of Section 149,of the Code. (h) Place and Medium of Payment. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be - 11- P:\20356 DG12O358 OMY 03/08/10 ORDINANCE NO. calculated on the basis of a year of 360 days and twelve 30-day months. For so long as all Bonds are in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Letter of Representations. In the event that the Bonds are no longer in fully immobilized form, interest on the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register on the fifteenth day of the month preceding the interest payment date, or upon the written request of a Registered Owner of more than $1,000,000 of Bonds (received by the Bond Registrar at least 15 days prior to the applicable payment date), such payment shall be made by the Bond Registrar by wire transfer to the account within the continental United States designated by the Registered Owner. Principal of the Bonds shall be payable upon presentation and surrender of such Bonds by the Registered Owners at the principal office of the Bond Registrar. Section 5. Redemption and Purchase of Bonds. (a) MandatoryRedemption ofTerm Bonds and Optional Redemption, if any. The p � P � P � Bonds may be called for redemption prior to scheduled maturity under terms approved by the Designated City Representative in the Bond Purchase Agreement pursuant to Section 12 of this ordinance. (b) Purchase of Bonds. The City reserves the right to purchase any of the Bonds offered to it at any time at a price deemed reasonable by the City. Bonds purchased by the City shall be cancelled. (c) Selection of Bonds for Redemption. Except to the extent that another method is prescribed in the Bond Purchase Agreement, for as long as the Bonds are held in book-entry only form, the selection of particular Bonds within a maturity to be redeemed shall be made in - 12- P:120358 DG120358_0MY 03/08/10 ORDINANCE NO. accordance with the operational arrangements then in effect at DTC. If the Bonds are no longer held in uncertificated form, the selection of such Bonds to be redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the following provisions of this subsection (c): If the City redeems at any one time fewer than all of the Bonds having the same. maturity date, the particular Bonds or portions of Bonds of such maturity to be redeemed shall be selected by lot (or in such.maner determined by the Registrar) in increments of$5,000. In the case of a Bond of a denomin tion greater than $5,000,the City and the Bond Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of $5,000 as is obtained by dividin the actual principal amount of such Bond by $5,000. In the event that only a portion of the rincipal sum of a Bond is redeemed, upon surrender of such Bond at the principal office of th Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the hen unredeemed balance of the principal sum thereof, at the option of the Registered Owner; Bond or Bonds of like maturity and interest rate in any of the denominations herein authorize . (d) Notice of Redemp on. (1) Official Notice. For so long as the Bonds are held in uncertificated form, notice of redemption (which notice may be conditional) shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar will provide any notice of redemption to any Beneficial Owners. Thereafter(if the Bonds are no longer held in uncertificated form), notice of redemption shall be given in the manner hereinafter provided. Unless-waived by any owner of Bonds to be redeemed, official notice of any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on -13- P:120358_DG120358 0MY 03/08/10 ORDINANCE NO. behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered Owner of the Bond or Bonds to be redeemed at the address shown on the Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. In the case of an optional redemption, the notice of redemption may state that the City retains the right to rescind that notice on or prior to the scheduled redemption date, and that notice and optional redemption shall be of no effect to the extent that the City gives notice to the affected Registered Owners at any time on or prior to the scheduled redemption date that the City is rescinding the redemption notice in whole or in part. Any Bonds subject to a rescinded notice of redemption are to remain outstanding, and the rescission will not constitute a default hereunder. All official notices of redemption shall be dated and shall state: (A) the redemption date, (B) the redemption price, (C) if fewer than all outstanding Bonds are to be redeemed, the identification by maturity (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed, (D) that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date, and (E) the place where such Bonds are to be surrendered for payment of the redemption price,which place of payment shall be the principal office of the Bond Registrar. On or prior to any redemption date, the City shall deposit with the Bond Registrar an - 14- P:120358 DG120358 OMY 03/08/10 . ORDINANCE NO. amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on tha date. (2) Effect of Notice; Bonds Due. If an unconditional notice of redemption has been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be pa able as herein provided for payment of interest. All Bonds which have been redeemed shall •e canceled and destroyed by the Bond Registrar and shall not be reissued. (3) Additional otice. In addition to the foregoing notice,further notice shall be given by the City as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (A) the CUSIP numbers of all Bonds being redeemed; (B) the date of issue of the Bonds as originally issued; (C) the rate of interest borne by each Bond being redeemed; (D) the maturity date of each Bond being redeemed; and (E) any other descriptive information needed to identify accurately the Bonds being redeemed. Each further notice of redemption may be sent at least 35 days before the redemption date to each party entitled to receive notice pursuant to Section 14, the Insurer, if any, and to the Underwriter and with such additional information as the City shall deem appropriate, but such mailings shall not be a - 15- P:120358_DG120358 OMY 03/08/10 ORDINANCE NO. condition precedent to the redemption of such Bonds. (4) Amendment of Notice Provisions. The foregoing notice provisions of this Section 4, including but not limited to the information to be included in redemption notices and the persons designated to receive notices, may be amended by additions, deletions and changes in order to maintain compliance with duly promulgated regulations and recommendations regarding notices of redemption of municipal securities. Section 6. Form of the Bonds. The Bonds shall be in substantially the following form: [DTC LANGUAGE] [STATEMENT OF INSURANCE] UNITED STATES OF AMERICA NO. $ STATE OF WASHINGTON CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 2010 INTEREST RATE: % MATURITY DATE: CUSIP NO.: REGISTERED OWNER: CEDE&CO. PRINCIPAL AMOUNT: The City of Renton, Washington (the "City"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified above,the Principal Amount indicated above and to pay interest thereon from , 2010, or the most recent date to which interest has been paid or duly provided for until payment of this bond at the Interest Rate set forth above, payable on December 1, 2010, and semiannually thereafter on the first days of each succeeding June and December. Both principal of and interest on this bond are payable in lawful money of the United States of America. The fiscal agency of the State of Washington has been appointed by the City as the authenticating agent, paying agent and registrar for the bonds of this issue (the "Bond Registrar"). For so long as the bonds of this issue are held in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of The Depository Trust Company ("DTC") referred to in the Blanket Issuer Letter of Representations (the "Letter of Representations")from the City to DTC. The bonds of this issue are issued under and in accordance with the provisions of the Constitution and applicable statutes of the State of Washington and Ordinance No. -16- P:'20358 DG\20358_0MY 03/08/10 ORDINANCE NO. duly passed by the City Council on April 5, 2010 (the "Bond Ordinance"). Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the B Ind Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. This bond is one of an authorized issue of bonds of like date, tenor, rate of interest and date of maturity, except as to number and amount in the aggregate principal amount of $[6,150,000] and is issued pursuant to the Bond Ordinance to refund certain outstanding limited tax general obligation bonds of the City and to pay costs of issuance. The bonds of this issue ar subject to redemption prior to their scheduled maturities as provided in the Bond Ordinance and in the Bond Purchase Agreement. The City hereby,irrevocably covenants and agrees with the owner of this bond that it will include in its annual budget an J levy taxes annually, within and as a part of the tax levy permitted to the City without a v9 to of the electorate, upon all the property subject to taxation in amounts sufficient, together w th other money legally available therefor, to pay the principal of and interest on this bond as t e same shall become due. The full faith, credit and resources of the City are hereby irrevocabl pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. The bonds of this issue have been designated as "qualified tax-exempt obligations" for purposes of Section 265(b) of the Internal Revenue Code of 1986. The bonds of this issue are ,, not private activity bonds. The pledge of tax levies for payment of principal of and interest on the bonds may be discharged prior to maturity of Vile bonds by making provision for the payment thereof on the terms and conditions set forth in he Bond Ordinance. It is hereby certified that II acts, conditions and things required by the Constitution and I statutes of the State of Washington to exist, to have happened, been done and performed precedent to and in the issuanc of this bond have happened, been done and performed and that the issuance of this bond and the bonds of this issue does not violate any constitutional, statutory or other limitation upo the amount of bonded indebtedness that the City may incur. IN WITNESS WHEREOF, the City of Renton, Washington has caused this bond to be executed by the manual or facsimile signatures of the Mayor and City Clerk and the seal of the City imprinted, impressed or otherwise reproduced hereon as of this' day of , 2010. [SEAL] CITY OF RENTON,WASHINGTON By /s/manual or facsimile - 17- P:120358 DG120358_0MY 03/08/10 } ORDINANCE NO. Mayor ATTEST: Is/manual or facsimile City Clerk The Bond Registrar's Certificate of Authentication on the Bonds shall be in substantially the following form: CERTIFICATE OF AUTHENTICATION This bond is one of the bonds described in the within mentioned Bond Ordinance and is one of the Limited Tax General Obligation Refunding Bonds, 2010 of the City of Renton, Washington, dated , 2010. WASHINGTON STATE FISCAL AGENCY, as Bond Registrar By Section 7. Execution of the Bonds. The Bonds shall be executed on behalf of the City with the manual or facsimile signatures of the Mayor and City Clerk of the City and the seal of the City shall be impressed, imprinted or otherwise reproduced thereon. Only such Bonds as shall bear thereon a Certificate of Authentication in the form hereinbefore recited, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this ordinance. In case either of the officers who shall have executed the Bonds shall cease to be an officer or officers of the City before the Bonds so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bonds may nevertheless be -18- P:120358 DG120358 0MY 03/08/10 ORDINANCE NO. authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be as binding upon the City as though those who signed the same had continued to be such officers of the City. Any Bond may be signed and attested on behalf of the City by such persons who at the date of the actual execution of such Bond, are the proper officers of the City, although at the original date of uch Bond any such person shall not have been such officer of the City. Section 8. Refunding rocedures. (a) Designation of Refunded Bonds. ,All or some of the 2001 Bonds maturing on and after December 1, 2012 as outlined in the recitals to this ordinance may be refunded and refinanced with the proceeds of the Bonds authorized by this ordinance. The Designated City Representative may select some or all of the callable 2001 Bonds and designate those bonds as the "Refunded Bonds" at or prior to the time of sale of the Bonds. (b) Creation of Refunding Account. A special account is hereby authorized to be created by the Finance Director, which account is to be drawn for the sole purpose of paying (or purchasing Government Oblig tions, which obligations so purchased, are herein called "Acquired Obligations ) maturin in such amounts and at such times as to pay) the principal of r and premium, if any, and interest on the Refunded Bonds. The special account shall be held as a trust fund for the benefit of the owners of the Refunded Bonds, wholly segregated from all other funds and securities on deposit with the Finance Director. The Finance Director shall not allow the assets or amounts on deposit for the benefit of the Refunded Bonds to be commingled with any other funds or securities of the City. The Finance Director shall cause the assets and amounts on deposit in such special account-to be held and disposed of only as set forth in this section. - 19- 1.320356 DG120358 0MY 03/08/10 ORDINANCE NO. (c) Application of Bond Proceeds. A portion of the Net Proceeds of the Bonds (exclusive of any amounts designated by the Designated City Representative to be used to pay costs of issuance of the Bonds), together with other available funds of the City in the amount specified by the Designated City Representative, if any, shall be applied at the direction of the Designated City Representative to purchase the Acquired Obligations to be used to redeem the Refunded Bonds on their redemption date. (d) Defeasance of Refunded Bonds. The Net Proceeds of the Bonds so deposited shall be utilized immediately upon receipt thereof to redeem Refunded Bonds or to purchase the Government Obligations specified by the Designated City Representative and to maintain such necessary beginning cash balance to defease the Refunded Bonds and to discharge the other obligations of the City relating thereto under the 2001 Bond Ordinance, by providing for the payment of the interest on the Refunded Bonds to the date fixed for redemption and the redemption price on the redemption date for the Refunded Bonds. When the final transfers have been made for the payment of such redemption price and interest on the Refunded Bonds, any balance then remaining shall be used for the purposes specified by the Designated City Representative. (e) Redemption of Refunded Bonds. The Council authorizes the Designated City Representative to call the Refunded Bonds that are callable for redemption on the redemption date specified by the Designated City Representative in accordance with the 2001 Bond Ordinance. Said defeasance and call for redemption of the Refunded Bonds shall be irrevocable after the deposit of the proceeds of the Bonds as described in Section 8(c). The Designated City Representative is hereby authorized and directed to provide for the -20- P:\20358_DG120358_0MY 03/08/10 ORDINANCE NO. giving of irrevocable notice of the redemption of the callable Refunded Bonds in accordance with the terms of the 2001 Bond Ordinance. The Finance Director is authorized and directed to provide whatever assistance is iecessary to accomplish such redemption and the giving of notice therefor. (f) Escrow Agent and Escrow Agreement. The Designated City Representative is hereby authorized and directed to solicit proposals from and select a financial institution to serve as the Escrow Agent for t e Refunded Bonds (the "Escrow Agent"). A beginning cash balance, if any, and Acquired Ob igations shall be deposited irrevocably with the Escrow Agent in an amount sufficient to defea e the Refunded Bonds. The proceeds of the Bonds remaining in the Refunding Account after cquisition of the Acquired Obligations and provision for the necessary beginning cash balan a shall be utilized` to pay expenses of the acquisition and safekeeping of the Acquired Obligations and expenses of the issuance of the Bonds. The Designated City Representative or the Finance Director is authorized to execute and deliver to the Escrow Agent an Escrow Agreement substantially in the form attached hereto as Exhibit A, with such changes or modifications as the Designated City Representative or the Finance Director, with the advice of bond counsel bathe City, consider necessary or advisable. The City hereby irrevocably sets aside for and pledges to the payment of the Refunded Bonds the moneys and obligations to be deposited with the Escrow Agent pursuant to the Escrow Agreement to accomplish the plan of refunding and defeasance of the Refunded Bonds set forth herein and in the Escrow Agreement. When all of the Refunded Bonds shall have been redeemed and retired, the Designated City Representative or Finance Director may cause any remaining money to be transferred to the Bond Fund for the purposes set forth below. Section 9. Tax Covenants. The City covenants that it will not take or permit to be -21- P:120358_DG120358 OMY 03/08/10 ` f ORDINANCE NO. taken on its behalf any action that would adversely affect the exemption from federal income taxation of the interest on the Bonds and will take or require to be taken such acts as may reasonably be within its ability and as may from time to time be required under applicable law to continue the exemption from federal income taxation of the interest on the Bonds. (a) Arbitrage Covenant. Without limiting the generality of the foregoing, the City covenants that it will not take any action or fail to take any action with respect to the proceeds of sale of the Bonds or any other funds of the City which may be deemed to be proceeds of the Bonds pursuant to Section 148 of the Code and the regulations promulgated thereunder which, if such use had been reasonably expected on the dates of delivery of the Bonds to the initial purchasers thereof, would have caused the Bonds to be treated as "arbitrage bonds" within the meaning of such term as used,in Section 148 of the Code. The City will comply with the requirements of Section 148 of the Code and the applicable regulations thereunder throughout the term of the Bonds. (b) Private Person Use Limitation for Bonds. The City covenants that for as long as the Bonds are outstanding, it will not permit: (i) more than 10% of the Net Proceeds of the Bonds to be allocated to any Private Person Use;,and (ii) more than 10% of the principal or interest payments on the Bonds in a Bond Year to be directly or indirectly secured by any interest in property used or to be used for any Private Person Use or secured by payments in respect of property used or to be used for any Private Person Use, or derived from payments (whether or not made to the City) in respect of property, or borrowed money, used or to be used for any Private Person Use. The City further covenants that, if: (i) more than five percent of the Net Proceeds of the Bonds are allocable to any Private Person Use; and (ii) more than five percent of the principal or -22- P:120358_13G120358_0MY 03/08/10 a s ORDINANCE NO. interest payments on the Bonds in a Bond Year are (under the terms of this ordinance or any underlying arrangement) directly or indirectly secured by any interest in property used or to be used for any Private Person Use or secured by payments in respect of property used or to be used for any Private Person Use, or derived from payments(whether or not made to the City) in respect of property, or borrowed money, used or to be used for any Private Person Use, then, any Private Person Use of the Pr jects or Private Person Use payments that is in excess of the five percent limitations described above will be for a Private Person Use that is related to the state or local governmental use f the Projects funded by the proceeds of the Bonds, and any Private Person Use will not exce d the amount of Net Proceeds of the Bonds allocable to the state or local governmental use portion of the project(s) to which the Private Person Use of such portion of the projects refLInded by the proceeds of the Bonds relate. The City further covenants that it will comply with any limitations on the use of the.projects refinanced by the proceeds of the Bonds by other han state and local governmental users that are necessary, in the opinion of its bond counsel,t preserve the tax exemption of the interest on the Bonds. (c) Modification of T Covenants. The covenants of this section are specified solely Bonds. to assure the continued exemption from regular income taxation of the interest on the B o To that end, the provisions of this section may be modified or eliminated without any requirement for formal amendment thereof upon receipt of an opinion of the City's bond counsel that such modification or elimination will not adversely affect the tax exemption of interest on any Bonds. (d) Designation under Section 265(b). The City hereby designates the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code. The City does not anticipate issuing more than $30,000,000 of tax-exempt obligations during 2010 -23- P:120358_DG120358_0MY 03/08110 1 I ORDINANCE NO. (excluding obligations permitted by the Code to be excluded for purposes of the City's qualification as a qualified small issuer). Section 10. Bond Fund; Provision for Payment. The City is hereby authorized to establish a fund to be used for the payment of debt service the Bonds, designated as the "City of Renton Limited Tax General Obligation Bond Debt Service Fund" (the "Bond Fund"). No later than the date each payment of principal of and/or interest on the Bonds matures or becomes due and payable, the City shall transmit sufficient funds, from the Bond Fund or from other legally available sources to the Bond Registrar for the payment of such principal and/or interest. Money in the Bond Fund not needed to pay the interest or principal next coming due may temporarily be deposited in legal investments for City funds. The City hereby irrevocably covenants and agrees for as long as any of the Bonds are outstanding and unpaid that each year it will include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an amount that will be sufficient, together with all other revenues and money of the City legally available for such purposes, to pay the principal of and interest on the Bonds as the same shall become due. The City hereby irrevocably pledges that the annual tax provided for herein to be levied for the payment of such principal and interest shall be within and as a part of the tax levy permitted to cities without a vote of the people, and that a sufficient portion of each annual levy to be levied and collected by the City prior to the full payment of the principal of and interest on the Bonds will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the principal of and interest on the Bonds.The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of said taxes and for the prompt payment of the principal of and interest on the Bonds as the same shall become -24- P:120358 DG120358 OMY 03/08/10 , _ ORDINANCE NO. due. Section 11. Defeasanc . In the event that the City, in order to effect the payment, retirement or redemption of a y Bond, sets aside in the Bond Fund or in another special account, cash or noncallable Government Obligations, or any combination of cash and/or noncallable Government Obligations, in amounts and maturities which, together with the known earned income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its terms and to pay when due the interest and redemption premium, if any, thereon, and such cash and/or oncallable Government Obligations are irrevocably set aside and pledged for such purpose,t en no further payments need be made into the Bond Fund for li the payment of the principal of and interest on such Bond. The owner of a Bond so provided for shall cease to be entitled to any lien, benefit or security of this ordinance except the right to receive payment of principal, premium, if any, and interest from the Bond Fund or such special account, and such Bond shall be deemed to be not outstanding under this ordinance. The City shall give written notice of defeasance to the owners of all Bonds so provided for within 30 days of the defeas nce and to each party entitled to receive notice in accordance with Section 14 of this ordinance; Section 12. Sale of the Bonds. The Bonds shall be sold by negotiated sale to the Underwriter pursuant to the terms of the Bond Purchase Agreement. The Designated City Representative is hereby authorized to negotiate terms for the purchase of the.Bonds and execute the Bond Purchase Agreeme t, with such terms as are- approved the Designated City Representative pursuant to this section and consistent with this ordinance. The Underwriter has advised the Council that market conditions are fluctuating and, as a result, the most favorable market conditions may occur on a day other than a regular meeting date of the Council. The -25- P:120358_DG\20358_0MY 03/08/10 ORDINANCE NO. Council has determined that it would be in the best interest of the City to delegate to the Designated City Representative for a limited time the authority to determine whether to proceed with the refunding of the Refunded Bonds, to designate which of the callable 2001 Bonds shall be the Refunded Bonds, and to approve the fmal interest rates, maturity dates, aggregate principal amount, redemption rights and principal amounts of each maturity of the Bonds. The Designated City Representative is hereby authorized to determine whether to proceed with the refunding of the Refunded Bonds if and to the extent that the aggregate savings to be realized as a result of the refunding of the Refunded Bonds (i.e., the present value of(i) the aggregate debt service on the Refunded Bonds minus (ii) the aggregate debt service on the Refunding Bonds, after payment of all costs of issuance of the Bonds), exceed the Savings Target. The Designated City Representative is further authorized to approve the final interest rates, maturity dates, aggregate principal amount, and principal amounts of each maturity of the Bonds in the manner provided hereafter so long as (i) the aggregate principal amount of all Bonds does not exceed $[6,150,000]; and (ii)the true interest cost for the Bonds does not exceed %. In determining whether or not to proceed with bond insurance and determining the final interest rates,aggregate principal amounts, principal maturities and redemption rights,the Designated City Representative shall take into account those factors that, in such individual's judgment, will result in the lowest true interest cost on the Bonds to their maturity, including, but not limited to current financial market conditions and current interest rates for obligations comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in this section, the Designated City Representative is hereby authorized to execute the final form of the Bond Purchase Agreement, upon the Designated City Representative's designation of the Refunded Bonds and approval of -26- P:\20358_DG120358 OMY 03/08/10 ORDINANCE NO. the final interest rates, aggregate principal amount, principal maturities and redemption rights set forth therein. Following the execution of the Bond Purchase Agreement, the Designated City Representative shall provide a report to the Council, describing the final terms of the Bonds approved pursuant to the authority delegated in this section. The authority granted to the Designated City Representative by this section shall expire 120 days after the date of approval of this ordinance. If a Bond Purc ase Agreement for the Bonds has not been executed within 120 days after the date of final approval of this ordinance,the authorization for the issuance of the Bonds shall be rescinded, ani the Bonds shall not be issued nor their sale approved unless such Bonds shall have been r -authorized by ordinance of the Council. The ordinance 1 nce re-authorizing the issuance and sale of such Bonds may be in the form of a new ordinance repealing this ordinance in whole or in part or may be in the form of an amendatory ordinance approving a bond purchase agre ment or establishing terms and conditions for the authority delegated under this ordinance. Upon the passage and pproval of this ordinance, the proper officials of the City including the Designated City Representative, are authorized and directed to undertake all actions necessary for the prompt execution and delivery of the Bonds to the Underwriter thereof and further to execute all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms of the Bond Purchase Agreement. The Finance Director is authorized to ratify and to approve for purposes of the Rule, on I behalf of the City, the preliminary Official Statement and Official Statement (as defined in the Bond Purchase Agreement) relating to the issuance and sale of the Bonds and the distribution of the preliminary Official Statement and Official Statement pursuant thereto with such i -27- P:\20358_DG\20358_0MY • 03/08/10 I • ORDINANCE NO. changes, if any, as may be deemed by him to be appropriate. The preliminary Official Statement for the Bonds is hereby deemed final for the purposes of the Rule. Section 13. Bond Insurance. The Finance Director is hereby further authorized to solicit proposals from municipal bond insurance companies for the issuance of a Bond Insurance Policy. In the event that the Finance Director receives multiple proposals in response to a solicitation, the Finance Director may select the proposal having thelowest cost and resulting in an overall lower interest cost with respect to the Bonds to be insured. The Finance Director may execute a commitment received from the Insurer selected by the Finance Director. The Council further authorizes all proper officers, agents, attorneys and employees of the City to cooperate with the Insurer in preparing such additional agreements, certificates, and other documentation on behalf of the City as shall be necessary or advisable in providing for the Bond Insurance Policy. Section 14. Continuing Disclosure Undertaking. (a) Contract/Undertaking. This section constitutes the City's written undertaking for the benefit of the owners of the Bonds as required by Section (b)(5) of the Rule. (b) Financial Statements/Operating Data. The City agrees to provide or cause to be provided to the Municipal Securities Rulemaking Board ("MSRB"),the following annual financial information and operating data for the prior fiscal year (commencing in 2011 for the fiscal year ended December 31, 2010): 1. Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute); -28- P:120358_DG\2035B_OMY 03/08/10 I ORDINANCE NO. 1 2. The assessed valuation of taxable property in the City; 3. Ad valorem taxes due and percentage of taxes collected; 4. Property tax levy rate per$1,000 of assessed valuation; and 5. Outstanding general obligation debt of the City. Items 2-5 shall be required only to the extent that such information is not included in the annual financial statements. The information and data described above shall be provided on or before nine months after the end of the City's fiscal yar. The City's current fiscal year ends December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such annual financial information and operating data, the City may cross-reference to other documents available to the public on the MSRB's internet website. If not provided as part of the annual financial information discussed above,the City shall provide the City's audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute)when and if available to the MSRB. (c) Material Events. The City agrees to provide or cause to be provided, in a timely manner to the MSRB notice of the occurrence of any of the following events with respect to the Bonds, if material: I I • Principal and interest payment delinquencies; • Non-payment related defaults; • Unscheduled draws on debt service reserves reflecting financial difficulties; • Unscheduled draws on credit enhancements reflecting financial difficulties; • Substitution of credit or liquidity providers, or their failure to perform; -29- P:120358 DG120358_0MY 03/08/10 ORDINANCE NO. • Adverse tax opinions or events affecting the tax-exempt status of the Bonds; • Modifications to the rights of Bond owners; • Bond•calls (optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34-23856); • Defeasances; • Release,substitution or sale of property securing repayment of the Bonds; and • Rating changes. Solely for purposes of disclosure, and not intending to modify this undertaking, the City advises that no debt service reserves, [credit enhancement] or property secures payment of the Bonds. (d) Notification Upon Failure to Provide Financial Data. The City agrees to provide or cause to be provided, in a timely manner,to the MSRB notice of its failure to provide the annual financial information described in Subsection (b) above on or prior to the date set forth in Subsection (b) above. (e) Emma;Format for Filings with the MSRB. Until otherwise designated by the MSRB or the Commission, any information or notices submitted to the MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org. All notices, financial information and operating data required by this undertaking to be provided to the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to this undertaking must be accompanied by identifying information as prescribed by the MSRB. (f) Termination/Modification. The City's obligations to provide annual financial -30- P:120358_DG120358_0MY • 03/08/10 4 Y ORDINANCE NO. information and notices of material events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. Any provision of this section shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds and (2) notifies the MSRB of such opinion and the cancellation of this section. The City may amend this section with an opinion of nationally recognized bond counsel in accordance with the Rule. In the event of any amendment of this section, the City shall describe such amendment in the pext annual report, and shall include a narrative explanation of the reason for the amendment and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial-information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial s latements, (i) notice of such change shall be given in the same manner as for a material event under Subsection (c) and (ii) the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. (g) Bond Owner's Remedies Under This Section. The right of any bondowner or beneficial owner of Bonds to enforce the provisions of this section shall be limited to a right to obtain specific enforcement of the City's obligations under this section, and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds. For purpises of this section, "beneficial owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of -31- P:120358_DG120358 0MY 1 03/08/10 1 ORDINANCE NO. ownership of, any Bonds, including persons holding Bonds through nominees or depositories. Section 15. Lost,Stolen or Destroyed Bonds. In case any Bond or Bonds shall be lost, stolen or destroyed, the Bond Registrar may execute and deliver a new Bond or Bonds of like date, number and tenor to the Registered Owner thereof upon the Registered Owner's paying the expenses and charges of the City and the Bond Registrar in connection therewith and upon his/her filing with the City evidence satisfactory to the City that such Bond was actually lost, stolen or destroyed and of his/her ownership thereof, and upon furnishing the City and/or the Bond Registrar with indemnity satisfactory to the City and the Bond Registrar. Section 16. Severability. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of.the Bonds. Section 17. Effective Date of Ordinance. This ordinance shall be effective upon its passage, approval, and five (5) days after publication. PASSED BY THE CITY COUNCIL this 5th day of April, 2010. Bonnie I.Walton, City Clerk APPROVED BY THE MAYOR this 5th day of April, 2010. Denis Law, Mayor -32- P:120358 DG120358_0MY 03/08/10 • y y _ I ' ORDINANCE NO. Approved as to form: K&L Gates LLP Bond Counsel Date of Publication: -33- P:120358_DG120358_0MY 03/08/10 EXHIBIT A ESCROW DEPOSIT AGREEMENT CITY OF RENTON, WASHINGTON LIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2010 THIS ESCROW AGREEMENT, dated as of , 2010 (herein, together with any amendments or supplements hereto, called the "Agreement") is entered into by and between the City of Renton, Washington (herein called the "City") and , as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent"). The notice addresses of the City and the Escrow Agent are shown on Exhibit A attached hereto and made a part hereof. WITNESSETH : WHEREAS, the City heretofore has issued and there presently remain outstanding the obligations described in Exhibit B attached hereto (the "Refunded Bonds"); and WHEREAS, pursuant to Ordinance No. passed on April 5, 2010 (the "Bond Ordinance"), the City has determined to issue its Limited Tax General Obligation Refunding Bonds, 2010(the "Bonds"); and WHEREAS, a portion of the proceeds of the Bonds are being used for the purpose of providing funds to pay the costs of refunding the Refunded Bonds;and WHEREAS, , certified public accountants, has prepared a verification report which is dated , 2010 (the "Verification Report") relating to the source and use of funds available to accomplish the refunding of the Refunded Bonds, the investment of such funds and the adequacy of such funds and investments to provide for the payment of the debt service due on the Refunded Bonds; and WHEREAS, pursuant to the Bond Ordinance, the Refunded Bonds have been designated for redemption prior to their scheduled maturity dates and, after provision is made for such redemption, the Refunded Bonds will come due in such years, bear interest at such rates, and be payable at such times and in such amounts as are set forth in Exhibit C attached hereto and made a part hereof; and WHEREAS, when Escrowed Securities have been deposited with the Escrow Agent for the payment of all principal and interest of the Refunded Bonds when due, then the Refunded A- 1 P:120358 DG\20358 0MY 03/08/10 ti e Bonds shall no longer be regarded as outstanding except for the purpose of receiving payment from the funds provided for such!purpose; and WHEREAS, the issuance, sale, and delivery of the Refunding Bonds have been duly authorized to be issued, sold, and delivered for the purpose of obtaining the funds required to provide for the payment of the plincipal of, interest on and redemption premium (if any)on the Refunded Bonds when due as shown on Exhibit C attached hereto; NOW, THEREFORE, in consideration of the mutual undertakings, promises and agreements herein contained, the sufficiency of which hereby are acknowledged, and to secure the full and timely payment of principal of and the interest on the Refunded Bonds,the City and the Escrow Agent mutually undertake, promise and agree for themselves and their respective representatives and successors, ads follows: Article Definitions Section Definitions. Unless the context cleally indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Agreement: Escrow Fund means the (fund created by this Agreement to be established, held and administered by the Escrow Agent pursuant to the provisions of this Agreement. Escrowed Securities mens the noncallable Government Obligations described in Exhibit D attached to this Agreement, or cash or other noncallable obligations substituted therefor pursuant to Section 4.2 of this Agreement. Government Obligations means direct, noncallable (a) United States Treasury Obligations, (b) United States Treasury Obligations - State and Local Government Series, (c) non-prepayable obligations which are unconditionally guaranteed as to full and timely payment of principal and inte lest by the United States; of America or (d) REFCORP debt obligations unconditionally guar nteed by the United States. Paying Agent means the fiscal agency of the State of Washington, as the paying agent for the Refunded Bonds. Refunding Bonds means that portion of the Bonds authorized under the Bond Ordinance for the purpose of refunding the Refunded Bonds. i Section Other Definitions. The terms "Agreement,(' "City," "Escrow Agent," "Bond Ordinance," "Verification Report," "Refunded Bonds," andi"Bonds" when they are used in this Agreement, shall have the meanings assigned to them in the preamble to this Agreement. A-.2 P:120358_DG120358_0MY 03/08/10 Section Interpretations. The titles and headings of the articles and sections of this Agreement have been inserted for convenience and reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the intended purpose of providing for the refunding of the Refunded Bonds in accordance with applicable law. Article Deposit of Funds and Escrowed Securities Section Deposits in the Escrow Fund. Concurrently with the sale and delivery of the Refunding Bonds the City shall deposit, or cause to be deposited, with the Escrow Agent, for deposit in the Escrow Fund, the funds (from the proceeds of the Refunding Bonds and a cash contribution by the City) sufficient to purchase the Escrowed Securities and pay costs of issuance described in Exhibit D, and the Escrow Agent shall, upon the receipt thereof, acknowledge such receipt to the City in writing. Article Creation and Operation of Escrow Fund Section Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as the Refunding Account (the "Escrow Fund"). The Escrow Agent hereby agrees that upon receipt thereof it will deposit to the credit of the Escrow Fund the funds and the Escrowed Securities described in Exhibit D attached hereto. Such deposit, all proceeds therefrom, and all cash balances from time to time on deposit therein (a) shall be the property of the Escrow Fund, (b) shall be applied only in strict conformity with the terms and conditions of this Agreement, and (c) are hereby irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds, which payment shall be made by timely transfers of such amounts at such times as are provided for in Section 3.2 hereof. When the final transfers have been made for the payment of such principal of and interest on the Refunded Bonds, any balance then remaining in the Escrow Fund shall be transferred to the City, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section Payment of Principal and Interest. The Escrow Agent is hereby irrevocably instructed to transfer to the Paying Agent from the cash balances from time to time on deposit in the Escrow Fund, the amounts required to pay the principal of the Refunded Bonds at their respective redemption dates and interest thereon to such redemption dates in the amounts and at the times shown in Exhibit C attached hereto. Section Sufficiency of Escrow Fund. A-3 P:120358 DG120358 OMY 03/08/10 • The City represents that, based upon the information provided in the Verification Report, the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balance on deposit from time to time in the Escrow Fund will be at all times sufficient to provide moneys for transfer to the Paying Agent at the times and in the amounts required to pay the interest on the Refunded Bonds as such interest comes due and the principal of the Refunded Bonds as the Refunded Bonds are paid on an optional redemption date prior to maturity, all as more fully set forth in Exhibit E attached hereto. If,for any reason, at any time, the cash balances do deposit or scheduled to be on deposit in the Escrow Fund shall be insufficient to transfer the amounts required by the Paying Agent to make the payments set forth in Section 3.2. hereof, the City shall timely deposit in the Escrow Fund, from' any funds that are lawfully available therefor, additional funds in the amounts required to make such payments. Notice of ani such insufficiency shall be given promptly as hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the City's failure to make additional deposits thereto. Section Trust Fund. The Escrow Agent or its affiliate, shall hold at all times the Escrow Fund, the Escrowed Securities and all other assets of the Escrow Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow Agentas trust funds for the benefit of the owners of the Refunded Bonds; and a special account tliiereof shall at all times be maintained on the books of the Escrow Agent. The owners of the Refunded Bonds shall be entitled to the same preferred claim and first lien upon the Escrowed Securities, the proceeds thereof, and all other assets of the Escrow Fund to which they are entitled as owners of the Refunded Bonds. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the City, and the Escrow Agent shall have no right to title with respect thereto except as a trustee and Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject to warrants, drafts or checks drawn by the City or, except to the extent expressly herein provided, by the Paying Agent. Article Limitation on Investments Section Investments. Except for the initial investment in the Escrowed Securities, and except as provided in Section 4.2 hereof, the Escrow Agent shall not have any power or duty to invest or reinvest any money held hereunder, or to make substitutions of the Escrowed Securities, or to sell, transfer, or otherwise dispose of the Escrowed Securities. Section Substitution of Securities. A-4 P:\20358_1DG120358_0MY 03/08/10 At the written request of the City, and upon compliance with the,conditions hereinafter stated, the Escrow Agent shall utilize cash balances in the Escrow Fund, or sell, transfer, otherwise dispose of or request the redemption of the Escrowed Securities and apply the proceeds therefrom to purchase Refunded Bonds or Government Obligations which do not permit the redemption thereof at the option of the obligor. Any such transaction may be effected by the Escrow Agent only if(a) the Escrow Agent shall have received a written opinion from a firm of certified public accountants that such transaction will not cause the amount of money and securities in the Escrow Fund to be reduced below an amount sufficient to provide for the full and timely payment of principal of and interest on all of the remaining Refunded Bonds as they become due, taking into account any optional redemption thereof exercised by the City in connection with such transaction; and (b) the Escrow Agent shall have received the unqualified written legal opinion of its bond counsel or tax counsel to the effect that such transaction will not cause any of the Refunding Bonds or Refunded Bonds to be an "arbitrage bond"within the meaning*of Section 148 of the Internal Revenue Code of 1986, as amended. Article Application of Cash Balances Section In General. Except as provided in Section 2.1, 3.2 and 4.2 hereof, no withdrawals, transfers or reinvestment shall be made of cash balances in the Escrow Fund. Cash balances shall be held by the Escrow Agent in United States currency as cash balances as shown on the books and records of the Escrow Agent and, except as provided herein;shall not be reinvested by the Escrow Agent; provided, however, a conversion to currency shall not be required (i) for so long as the Escrow Agent's internal rate of return does not exceed 20%, or (ii) if the Escrow Agent's internal rate of return exceeds 20%, the Escrow Agent receives a letter of instructions, accompanied by the opinion of nationally recognized bond counsel, approving the assumed reinvestment of such proceeds at such higher yield. Article Redemption of Refunded Bonds Section Call for Redemption. The City hereby irrevocably calls the Refunded Bonds for redemption on their earliest redemption dates, as shown in the Verification Report and on Appendix A attached hereto. A-5 P:120358 DG\2035B OMY 03/08/10 4 1 1 Section Notice of Redemption/Notice of Defeasance. The Escrow Agent agrees to give a notice of defeasance and a notice of the redemptionof the Refunded Bonds pursuant to the terms of the Refunded Bonds and in substantially theforms attached hereto as Appendices A and B attached hereto and as described on saidAppendices A and B to the Paying Agent for distribution as described therein. The notice ofdefeasance shall be given immediately following the execution of this Agreement, and thenotice of redemption shall be given in accordance with the ordinance authorizing the RefundedBonds. The Escrow Agent hereby certifies that provision satisfactory and acceptable to t i eEscrow Agent has been made for the giving of notice of redemption of the Refunded Bonds. Article Records and Reports Section Records. The Escrow Agent will eep books of record and account in which complete and accurate entries shall be made of all transactions relating to the receipts, disbursements, allocations and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such books shall be available for inspection during business hours and after reasonable notice. Section Reports. While this Agreement remains in effect, the Escrow Agent quarterly shall prepare and send to the City a written report summarizing all transactions relating to the Escrow Fund during the preceding financial quarter, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities and transfers from the Escrow Fund for payments on the Refunded Bonds or otherwise, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. Article Concerning the Paying Agents and Escrow Agent Section Representation . i The Escrow Agent hereby represents that it has all necessary power and authority to enter into this Agreement and undertake the obligations and responsibilities imposed upon it herein,and that it will carry out ill of its obligations hereunder. Section Limitation on Liability. The liability of the Escrow Agent to transfer funds for the payment of the principal of and interest on the Refunded Bonds shall be limited to the proceeds of the Escrowed Securities and the cash balances from time to time on deposit in the Escrow Fund. Notwithstanding any A- 6 P:120358 DG120358 0MY 03/08/10 . i ' provision contained herein to the contrary, the Escrow Agent shall have no liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund or any failure of the obligors of the Escrowed Securities to make timely payment thereon, except for the obligation to notify the City promptly of any such occurrence. The recitals herein and in the proceedings authorizing the Refunding Bonds shall be taken as the statements of the City and shall not be considered as made by, or imposing any obligation or liability upon,the Escrow Agent. The Escrow Agent is not a party to the proceedings authorizing the Refunding Bonds or the Refunded Bonds and is not responsible for nor bound by any of the provisions thereof (except to the extent that the Escrow Agent may be a place of payment and paying agent and/or a paying agent/registrar therefor). In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms and provisions of this Agreement. The Escrow Agent makes no representations as to the value, conditions or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the City thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to any of such matters. It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the.Escrow Agent shall not be answerable except for its own neglect or willful misconduct, nor for any loss unless the same shall have been through its negligence or bad faith. Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the City with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund, to dispose of and deliver the same in accordance with this Agreement. If, however, the Escrow Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determination the Escrow Agent shall be liable only for its own willful misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the City or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and in this connection may make inquiries of, and consult with, among others,the City at any time. A-7 P:120358 DG120358 OMY 03/08/10 { i, 1 1 1 1 Section Compensation. 1 The City shall pay to the Escrow Agent fees for performing the services hereunder and for the expenses incurred or to be incurred by the Escrow Agent in the administration of this Agreement pursuant to the tern?s of the Fee Schedule attached hereto as Appendix C. The Escrow Agent hereby agrees that in no event shall it ever assert any claim or lien against the Escrow Fund for any fees for its services,whether regular or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its expenses as Escrow Agent or in any other capacity. Section Successor Escro7 Agents. Any corporation, association or other entity into which the Escrow Agent may be converted or merged, or with which it may be consolidated,or to which it may sell or otherwise transfer all or substantially all of its corporate trust assets and business or any corporation, association or other entity resulting from any such conversion, sale, merger, consolidation or other transfer to which it is a party, ipso facto, shall be and become successor escrow agent hereunder, vested with all other natters as was its predecessor, without the execution or filing of any instrument or any further act on the part of the parties hereto, notwithstanding anything herein to the contrary. If at any time the Escrow Agentor its legal successor or successors should become unable, through operation or Iaiw or otherwise, to act as escrow agent hereunder, or if its property and affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith exist in the office of Escrow Agent hereunder. In such event the City, by appropriate action, promptly sha I appoint an Escrow Agent to fill such vacancy. If no successor Escrow Agent shall have been appointed by the City within 60 days, a successor may be appointed by the owners of a majority in principal amount of the Refunded Bonds then outstanding by an instrument or instruments in writing filed with the City, signed by such , owners or by their duly authorized attorneys-in-fact. If; in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred, the owner of any Refunded Bond may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent. Any successor Escrow Agent shall be a corporation organized and doing business under the laws of the United States or the State of Washington, authorized under such laws to exercise corporate trust powers,'having its principal office and place of business in the State of Washington, having a combined'capital and surplus of at least $100,000,000 and subject to the supervision or examination by federal or state authority. Any successor Escrow Agent shall execute, acknowledge and deliver to the City and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to A-8 P:120358_DG120358_0MY 03/08/10. et the terms of this Agreement, all the rights, powers and trusts of the Escrow Agent hereunder. Upon the request of any such successor Escrow Agent, the City shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights, powers and duties. The obligations assumed by the Escrow Agent pursuant to this Agreement may be transferred by the Escrow Agent to a successor Escrow Agent if (a) the requirements of this Section 8.4 are satisfied; (b) the successor Escrow Agent has assumed all the obligations of the Escrow Agent under this Agreement; and (c) all of the Escrowed Securities and money held by the Escrow Agent pursuant to this Agreement have been duly transferred to such successor Escrow Agent. Article Miscellaneous Section Notice. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid addressed to the City or the Escrow Agent at the address shown on Exhibit A attached hereto. The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten days prior notice thereof. Section Termination of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the•Escrow Agent shall have no further obligations or responsibilities hereunder to the City, the owners of the Refunded Bonds or to any other person or persons in connection with this Agreement. Section Binding Agreement. This Agreement shall be binding upon the City and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the owners of the Refunded Bonds, the City, the Escrow Agent and their respective successors and legal representatives. A-9 P:120356 DG120356 0MY 03/06/10 4 .q Section Severability. 1 In case any one or morel of the provisions contained in this 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 Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section Washington Law Governs. 1 This Agreement shall bei governed exclusively by the provisions hereof and by the applicable laws of the State of Washington. Section Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Agreement. Section Notice to S&P and Fitch. In the event that this Agreement or any provision thereof is severed, amended or revoked, the City shall provide written notice of such severance, amendment or revocation to Standard & Poor's Ratings Services, 55 Water Street, New York, New York 10041, Attention: Refunded Bonds Municipal Bond Department, and to Fitch Ratings, One State Street Plaza, New York, New York, 10004,Attention: Public Finance Rating Desk/Refunded Bonds. Section 9.8. Amendmen s. This Agreement shall not be amended except to cure any ambiguity or formal defect or omission in this Agreement. Nlo amendment shall be effective unless the same shall be in writing and signed by the parties thereto. No such amendment shall adversely affect the rights of the holders of the Refunded Bonds. No such amendment shall be made without first receiving written confirmation f iom the rating agencies (if any) which have rated the Refunded Bonds that such administrative changes will not result in a withdrawal or reduction of its rating then assigned to the Refunded Bonds. If this Agreement is amended, prior written notice and copies of the proposed changes shall be given to the rating agencies which have rated the Refunded Bonds. A- 10 P:\20358_DG120358_0MY 03/08/10 EXECUTED as of the date first written above. CITY OF RENTON,WASHINGTON Designated City Representative [ESCROW AGENT] Authorized Signer Exhibit A — Addresses of the City and the Escrow Agent Exhibit B — Description of the Refunded Bonds Exhibit C — Schedule of Debt Service on Refunded Bonds Exhibit D — Description of Beginning Cash Deposit(if any) and Escrowed Securities Exhibit E — Escrow Fund Cash Flow Appendix A — Notice of Redemption for the 2001 Bonds Appendix B — Notice of Defeasance for the 2001 Bonds Appendix C — Fee Schedule A- 11 P:120358_DG120358_0MY 03/08/10 4 • EXHIBIT A Addresses of the City and Escrow Agent City: City of Renton 1055 S. Grady Way Renton, Washington 98057 Attention: Finance and Information Services Administrator Escrow Agent: [to come] A-A- 1 P:120358_DG120358 0MY 03/08/10 } EXHIBIT B Description of the Refunded Bonds City of Renton,Washington Limited Tax General Obligation and Refunding Bonds, 2001 Maturity Years (December 1) Principal Amounts Interest Rates • P:120358 DG120356 0MY 03/08/10 EXHIBIT C Schedule of Debt Service on the Refunded Bonds Principal/ Date Interest Redemption Price Total • Pf 20358_DG120358_0MY 03/08110 . Lo EXHIBIT D Escrow Deposit I. Cash: $ II. Other Obligations: Principal Amount Description Maturity Date Interest Rate Total Cost $ % $ III. Costs of Issuance:. Escrow Agent Fee ( ) $ Bond Counsel Fee (K&L Gates) Escrow Verification Fee ( Preliminary Official Statement Posting Official Statement Printing/Mailing Rating Agencies(S&P/Fitch) Contingency proceeds TOTAL: $ P:120358 DG120358 0MY 03/08/10 { EXHIBIT E Escrow Fund Cash Flow Escrow Requirement Excess Cash Date Net Escrow Receipts Receipts Balance • II P:\20358_DG\20358_0MY • 03/08/10 I APPENDIX A NOTICE OF REDEMPTION* City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 NOTICE IS HEREBY GIVEN that the City of Renton, Washington has called for redemption on December 1, 2011 a portion of its outstanding Limited Tax General Obligation and Refunding Bonds, 2001 (the `Bonds"). The Bonds will be redeemed at a price of one hundred percent (100%) of their principal amount, plus interest accrued to December 1, 2011. The redemption price of the Bonds is payable on presentation and surrender of the Bonds at the office of: The Bank of New York Mellon Wells Fargo Bank National Worldwide Series Processing Association 2001 Bryan Street, 9th Floor -or- Corporate Trust Department , Dallas,Texas 75021 14th Floor-M/S 257 999 Third Avenue Seattle, Washington 98104 Interest on all Bonds or portions thereof which are redeemed shall cease to accrue on December 1, 2011. The following Bonds are being redeemed: Maturity Years (December 1) Principal Amounts Interest Rates CUSIP Nos. By Order of the City of Renton, Washington The Bank of New York Mellon, as Paying Agent Dated: Withholding of 28% of gross redemption proceeds of any payment made within the United States may be required by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act") unless the Paying Agent has the correct taxpayer identification number (social security or employer identification number) or exemption certificate of the payee. Please furnish a properly completed Form W-9 or exemption certificate or equivalent when presenting your Bonds. Page 1—Appendix A P:120358_DG\20358_0MY 03/08/10 APPENDIX B Notice of Defeasance* City of Renton,Washington Limited Tax General Obligation and Refunding Bonds,2001 NOTICE IS HEREBY GIVEN to the owners of that portion of the above-captioned bonds with respect to which, pursuant to an Escrow Deposit Agreement dated , 2010, by and between City of Renton, Washington (the "City") and (the "Escrow Agent"),the City has deposited into an escrow account, held by the Escrow Agent, cash and non-callable direct obligations of the United States of America, the principal of and interest on which, when due, will provide money sufficient to pay each year, to and including the respective maturity or redemption dates of such bonds so provided for, the principal thereof and interest thereon (thee "Defeased Bonds"). The Defeased Bonds will be called on December 1, 2011 at a price of 100% plus accrued interest. Such Defeased Bonds are therefore deemed to be no longer outstanding pursuant to the provisions of Ordinance No. 4922 of the City, authorizing the issuance of the Defeased, Bonds, but will be paid by application of the assets of such escrow account. The Defeased Bonds are described as follows: Limited Tax General Obligation and Refunding Bonds, 2001(Dated November 1, 2001) Maturity Years Principal Amounts Call Date (December 1) Interest Rates CUSIP Nos. (at 100%) 12/1/2011 12/1/2011 12/1/2011 12/1/2011 Information for Individual Registered Owner The addressee of this notice is the registered owner of Bond Certificate No. of the Defeased Bonds described above, which certificate is in the principal amount of $ All of which has been defeased as described above. i Appendix B P:120358_DG120358_0MY 03/08/10 . e APPENDIX C Fee Schedule Appendix C P:120358 DG120358_OMY 03/08/10 F CERTIFICATION I, the undersigned, City lerk of the City of Renton, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance No. (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on April 5, 2010, as that ordinance appears on the minute book of the City; and the Ordinance will be in full force and effect after publication in the City's official newspaper as provided by law; and 2. A quorum of the members of the City Council was present throughout the meeting and a majority of those members present voted in the proper manner for the passage of the Ordinance. IN WITNESS WHEREOF, I have hereunto set my hand this day of April, 2010. CITY OF RENTON, WASHINGTON Bonnie Walton, City Clerk P:\20358_DG120358_DMY 03/08/10