ORD 95-53 GENERAL OBLIGATION REFUNDING BONDSORDINANCE NO. 95-53
AN ORDINANCE of the City of Bainbridge Island, Washington, relating to
contracting indebtedness; providing for the issuance of $2,450,000 par value of
Limited Tax General Obligation Refunding Bonds, 1995, of the City to provide part
of the funds with which to pay the cost of advance refunding the City's outstanding
$2,400,000 Water and Sewer Revenue Bonds, 1989, and paying the administrative
costs of such refunding and the costs of issuance and sale of such bonds; fixing the
date, form, maturities, interest rates, terms and covenants of the bonds; establishing
a bond redemption fund; providing for and authorizing the purchase of certain
obligations out of the proceeds of the sale of the bonds herein authorized and for the
use and application of the money derived from those investments; authorizing the
execution of an agreement with First Interstate Bank of Washington, N.A. of
Seatfie,Washington, as refunding trustee; providing for the call, payment and
redemption of the outstanding bonds to be refunded; and approving the sale and
providing for the delivery of the bonds to Pacific Crest Securities of Seattle,
Washington.
WHEREAS, pursuant to Ordinance No. 89-50, the City of Winslow, Washington (now the
City of Balnbridge Island, Washington) heretofore issued its $2,400,000 par value Water and Sewer
Revenue Bonds, 1989 (the "1989 Bonds"), for the putpose of paying the cost of carrying out a
system or plan of additions to and betterments and extensions of the waterworks utility of the City
and capitalizing a reserve for those bonds, and by that ordinance reserved the right to redeem the
1989 Bonds prior to their maturity on November 1, 1999, at a price of par plus accrued interest to
the date fixed for redemption; and
WHEREAS, there are presently outstanding $2,400,000 par value of 1989 Bonds maturing
on November 1 of each of the years 1998 through 2003, inclusive, and in 2009, and bearing various
interest rates from 7.10% to 7.60% (the "Refunded Bonds"); and
WHEREAS, after due consideration, it appears to the City Council that the Refunded Bonds
may be refunded by the issuance and sale of the limited tax general obligation refunding bonds
authorized herein (the "Bonds") so that a substantial savings will be effected by the difference
between the principal and interest cost over the life of the Bonds and the principal and interest cost
over the life of the Refunded Bonds but for such refunding, which refunding will be effected by:
(a)
The issuance of the Bonds and the payment of the costs of the issuance of the
Bonds and the costs of the refunding;
(b)
The payment of principal of and interest on the Refunded Bonds when due up
to and including November 1, 1999, and the call, payment and redemption
on November 1, 1999, of all of the then-outstanding Refunded Bonds at a
price of par;
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and
WHEREAS, to effect that refunding in the manner that will be most advantageous to the City
it is found necessary and advisable that certain Acquired Obligations (hereinafter defined) bearing
interest and maturing at such time or times as necessary to accomplish the refunding as aforesaid be
purchased out of the proceeds of the Bonds and other money of the City; and
WHEREAS, the City deems it to be in the best interests of the City to issue and sell the
Bonds to pay pan of the cost of advance refunding the Refunded Bonds and to pay the administrative
costs of such refunding and the costs of issuance and sale of the Bonds; NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON, DO
ORDAIN as follows:
Section 1. Debt Capacity. The assessed valuation of the taxable property within the City
as ascertained by the last preceding assessment for City purposes for the calendar year 1994 is
$1,858,795,349, and the City has outstanding general indebtedness evidenced by limited tax general
obligation bonds (excluding the amount of Refunded Bonds) in the principal amount of $1,915,000
incurred within the limit of up to 1-1/2% of the value of the taxable property within the City
permitted for general municipal purposes without a vote of the qualified voters therein, and the
amount of indebtedness for which bonds are authorized herein to be issued is $2,450,000.
Section 2. Authorization of Bonds. The City shall borrow money on the credit of the City
and issue negotiable limited tax general obligation refunding bonds evidencing that indebtedness in
the amount of $2,450,000 to provide the funds to pay the cost of accomplishing the following (the
"Refunding Plan"):
(a) the placement of sufficient proceeds of the Bonds which, with other
money of the City, if necessary, will acquire those United States Treasury
Certificates of Indebtedness, Notes and Bonds -- State and Local Government Series
and other direct, noncallable obligations of the United States of America (the
"Acquired Obligations") to be deposited, with cash, if necessary, with the Refunding
Trustee;
Co) the payment of the principal of and interest on the Refunded Bonds
when due up to and including November 1, 1999, and the call, payment and
redemption on November 1, 1999, of all of the then-outstanding Refunded Bonds at
a price of par;
(c) the payment of the costs of issuing the Bonds and the costs of carrying
out the foregoing elements of the Refunding Plan.
The general indebtedness to be incurred shall be within the limit of up to 1-1/2% of the value of the
taxable property within the City permitted for general municipal purposes without a vote of the
qualified voters therein.
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$~ction 3. Description of Bonds. The bonds shall be called Limited Tax General Obligation
Refunding Bonds, 1995, of the City (the "Bonds"); shall be in the aggregate principal amount of
$2,450,000; shall be dated December 1, 1995; shall be in the denomination of $5,000 or any integral
multiple thereof within a single maturity; shall be numbered separately in the manner and with any
additional designation as the Bond Registrar (collectively, the fiscal agencies of the State of
Washington located in Seattle, Washington, and New York, New York) deems necessary for
purposes of identification; shall bear interest (computed on the basis of a 360-day year of twelve
30-day months) payable semiannually on each May 1 and November 1, commencing May 1, 1996,
to the maturity or earlier redemption of the Bonds; and shall mature on November 1 in years and
amounts and bear interest at the rates per annum as follows:
Maturity Interest
Years Amounts Rates
1996 $ 40,000 3.80%
1997 20,000 4.00
1998 35,000 4.10
1999 145,000 4.15
2000 180,000 4.25
2001 180,000 4.35
2002 190,000 4.45
2003 205,000 4.55
2004 210,000 4.65
2005 225,000 4.75
2006 235,000 4.85
2007 250,000 4.95
2008 260,000 5.05
2009 275,000 5.15
Section 4. Registration and Transfer of Bonds. The Bonds shall be issued only in registered
form as to both principal and interest and shall be recorded on books or records maintained by the
Bond Registrar (the "Bond Register"). The Bond Register shall contain the name and mailing
address of the owner of each Bond and the principal amount and number of each of the Bonds held
by each owner.
Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized
denomination of an equal aggregate principal mount and of the same interest rate and maturity.
Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to the
Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee. The
Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days preceding
any principal payment or redemption date.
Section 5. Payment of Bonds. 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 paid by checks or
drafts of the Bond Registrar mailed on the interest payment date to the registered owners at the
addresses appearing on the Bond Register on the 15th day of the month preceding the interest
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payment date. Principal of the Bonds shall be payable upon presentation and surrender of the Bonds
by the registered owners at either of the principal offices of the Bond Registrar at the option of the
owners.
Section 6. Optional Redemption and Open Market Purchase of Bonds. Bonds maturing in
the years 1996 through 2005, inclusive, shall be issued without the right or option of the City to
redeem those Bonds prior to their stated maturity dates. The City reserves the right and option to
redeem Bonds maturing on or after November 1, 2006, prior to their stated maturity dates on or alter
November 1, 2005, as a whole at any time or in part on any interest payment date within one or
more maturities selected by the City (and by lot within a maturity in such manner as the Bond
Registrar shall determine), at par plus accrued interest to the date fixed for redemption.
Portions of the principal amount of any Bond, in installments of $5,000 or any integral
multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is
redeemed, upon surrender of that Bond at either of the principal offices of the Bond Registrar, there
shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds, at the option
of the registered owner) of the same maturity and interest rate in any of the denominations authorized
by this ordinance in the aggregate principal amount remaining unredeemed.
The City further reserves the right and option to purchase any or all of the Bonds in the open
market at any time at any price acceptable to the City plus accrued interest to the date of purchase.
All Bonds purchased or redeemed under this section shall be caneeled.
Section 7. Notice of Redemption. The City shall cause notice of any intended redemption
of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed for redemption
by first-class mall, postage prepaid, to the registered owner of any Bond to be redeemed at the
address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and the
requirements of this sentence shall be deemed to have been ful~lled when notice has been mailed as
so provided, whether or not it is actually received by the owner of any Bond. Interest on Bonds
called for redemption shall cease to accrue on the date fixed for redemption unless the Bond or
Bonds called are not redeemed when presented pursuant to the call. In addition, the redemption
notice shall be mailed within the same period, postage prepaid, to Moody's Investors Service, Inc.,
and Standard & Poor's at their offices in New York, New York, or their successors, to Pacific Crest
Securities, at its principal office in Seattle, Washington, or its successor, and to such other persons
and with such additional information as the City Director of Finance and Administrative Services
shall determine, but these additional mailings shall not be a condition precedent to the redemption
of Bonds.
Section 8. Failure to Redeem Bonds. If any Bond is not redeemed when properly presented
at its maturity or call date, the City shall be obligated to pay interest on that Bond at the same rate
provided in the Bond from and after its maturity or call date until that Bond, both principal and
interest, is paid in full or until sufficient money for its payment in full is on deposit in the bond
redemption fund bereinafter created and the Bond has been called for payment by giving notice of
that call to the registered owner of each of those unpaid Bonds.
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Section 9. Hedge of Taxes. For as long as any of the Bonds are outstanding, the City
irrevocably pledges to include in its budget and levy taxes annually within the constitutional and
statutory tax limitations provided by law without a vote of the electors of the City on all of the
taxable property within the City in an amount sufficient, together with other money legally available
and to be used therefor, including gross revenue of the Waterworks Utility of the City, after the
payment of maintenance and operation expenses and any obligations the payment of which is pledged
to be made from such gross revenue, to pay when due the principal of and interest on the Bonds,
and the full faith, credit and resources of the City are pledged irrevocably for the annual levy and
collection of those taxes and the prompt payment of that principal and interest.
Section 10. Foan and Execution of Bonds. The Bonds shall be printed or lithographed on
good bond paper in a form consistent with the provisions of this ordinance and state law and shall
be signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in
facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed
thereon.
Only Bonds bearing a Certificate of Authentication in the following form, manually signed
by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this
ordinance:
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Balnbridge Island,
Washington, Limited Tax General Obligation Refunding Bonds, 1995, described in
the Bond Ordinance.
WASHINGTON STATE HSCAL AGENCY
Bond Registrar
By
Authorized Signer
The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bonds
so authenticated have been duly executed, authenticated and delivered and are entitled to the benefits
of this ordinance.
If any officer whose facsimile signature appears on the Bonds ceases to be an officer of the
City authorized to sign bonds before the Bonds bearing his or her facsimile signature are
authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless may
be authenticated, issued and delivered and, when authenticated, issued and delivered, shall be as
binding on the City as though that person had continued to be an officer of the City authorized to
sign bonds. Any Bond also may be signed on behalf of the City by any person who, on the actual
date of signing of the Bond, is an officer of the City authorized to sign bonds, although he or she
did not hold the required office on the date of issuance of the Bonds.
Section 11. Bond Fund and Deposit of Bond Proceeds. All of the proceeds of the Bonds,
together with other money of the City referred to in Section 12 below, and exclusive of the accrued
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interest, shall be deposited with the Refunding Trustee in accordance with provisions of Section 12
herein. There is created and established in the office of the Director of Finance and Administrative
Services a special fund designated as the Limited Tax General Obligation Refunding Bond Fund,
1995 (the 'Bond Fund'). Accrued interest on the Bonds, if any, received from the sale and delivery
of the Bonds shall be paid into the Bond Fund. Until needed to pay the cost of issuance, the City
may invest those remaining principal proceeds of the Bonds temporarily in any legal investment, and
the investment earnings may be retained in the Bond Fund and spent for the purposes of that fund.
All taxes collected for and allocated to the payment of the principal of and interest on the Bonds shall
be deposited in the Bond Fund.
Section 12. Authorization of Transfer of Funds. The Director of Finance and Administrative
Services of the City is authorized and directed to transfer a sufficient amount of proceeds of the
Reserve Account allocable to the Refunded Bonds to the Refunding Trustee appointed below for the
purposes as described in Section 13 below.
Section 13. Refunding of the Refunded Bonds.
(a) Appointment of Refunding Trustee. First Interstate Bank of Washington, N.A. of
Seattle, Washington, is appointed Refunding Trustee.
Co) use of Bond Proceeds: Acquisition and Substitution of Acquired Obligations. All of
the proceeds of the sale of the Bonds, wgether with a portion of the City's Reserve Account allocable
to the Refunded Bonds, shall be deposited immediately upon the receipt thereof with the Refunding
Trustee and used to discharge the obligations of the City relating to the Refunded Bonds under
Ordinance No. 89-50 by providing for the payment of the amounts required to be paid by the
Refunding Plan. To the extent practicable, such obligations shall be discharged fully by the
Refunding Trustee's simultaneous purchase of the Acquired Obligations, bearing such interest and
maturing as to principal and interest in such mounts and at such times so as to provide, together
with a beginning cash balance, if necessary, for the payment of the amount required to be paid by
the Refunding Plan. The Acquired Obligations are listed and more particularly described in
Schedule A attached to the Refunding Trust Agreement between the City and the Refunding Trustee,
but are subject to substitution as set forth below. Any Bond proceeds deposited with the Refunding
Trustee that are not needed to purchase the Acquired Obligations and provide a beginning cash
balance, if any, and pay the costs of issuance of the Bonds shall be returned to the City at the time
of delivery of the Bonds for deposit in the Bond Fund.
Prior to the purchase of any such Acquired Obligations, the City reserves the right to
substitute other Government Obligations for any of the Acquired Obligations and to use any savings
created thereby for any lawful City purpose if, (a) in the opinion of Foster Pepper & Shefelman, the
City's bond counsel, the interest on the Bonds and the Refunded Bonds will remain excluded from
gross income for federal income tax purposes under Sections 103, 148 and 149(d) of the Code, and
Co) such substitution shall not impair the timely payment of the amounts required to be paid by the
Refunding Plan, as verified by a nationally recognized firm of independent certified public
accountants.
After the purchase of the Acquired Obligations by the Refunding Trustee, the City reserves
the right to substitute therefor cash or Government Obligations subject to the conditions that such
0211114.02
money or securities held by the Refunding Trustee shall be sufficient to carry out the Refunding
Plan, that such substitution will not cause the Bonds and the Refunded Bonds to be arbitrage bonds
within the meaning of Section 148 of the Code and regulations thereunder in effect on the date of
such substitution and applicable to obligations issued on the issue date of the Bonds, and that it
obtain, at its expense: (1) verification by a nationally recognized independent certified public
accounting firm acceptable to the Refunding Trustee confirming that the payments of principal of and
interest on the Government Obligations, if paid when due, and any other money held by the
Refunding Trustee will be sufficient to carry out the Refunding Plan; and (2) an opinion from Foster
Pepper & Shefelman, bond counsel to the City, its successor, or other nationally recognized bond
counsel to the City, to the effect that the disposition and substitution or purchase of such securities,
under the statutes, rules and regulations then in force and applicable to the Bonds, will not cause the
interest on the Bonds or the Refunded Bonds to be included in gross income for federal income tax
purposes and that such disposition and substitution or purchase is in compliance with the statutes and
regulations applicable to the Bonds. Any surplus money resulting from the sale, transfer, other
disposition or redemption of the Acquired Obligations and the substitutions therefor shall be released
from the trust estate and transferred to the City to be used for any lawful City purpose.
(c) Administration of Refunding Plan. The Refunding Trustee is authorized and directed
to purchase the Acquired Obligations (or substitute obligations) and to make the payments required
to be made by the Refunding Plan from the Acquired Obligations (or substitute obligations) and
money deposited with the Refunding Trustee pursuant to this ordinance. All Acquired Obligations
(or substitute obligations) and the money deposited with the Refunding Trustee and any income
therefrom shall be held irrevocably, invested and applied in accordance with the provisions of
Ordinance No. 89-50, this ordinance, chapter 39.53 RCW and other applicable statutes of the State
of Washington and the Refunding Trust Agreement. All necessary and propor fees, compensation
and expenses of the Refunding Trustee for the Bonds and all other costs incidental to the setting up
of the escrow to accomplish the refunding of the Refunded Bonds and costs related to the issuance
and delivery of the Bonds, including bond printing, verification fees, bond counsel's fees and other
related expenses, shall be paid out of the proceeds of the Bonds.
(d) Authorization for Refunding Trust Agreement. To carry out the Refunding Plan
provided for by this ordinance, the Mayor or Director of Finance and Administrative Services of the
City is authorized and directed to execute and deliver to the Refunding Trustee a Refunding Trust
Agreement substantially in the form on file with the City Clerk and by this reference made a part
hereof setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection
with the payment, redemption and retirement of the Refunded Bonds as provided herein and stating
that the provisions for payment of the fees, compensation and expenses of such Refunding Trustee
set forth therein are satisfactory to it. Prior to executing the Refunding Trust Agreement, the Mayor
or City Clerk of the City is authorized to make such changes therein which do not change the
substance and purpose thereof or which assure that the escrow provided therein and the Bonds are
in compliance with the requirements of federal law governing the exclusion of interest on the Bonds
from gross income for federal income tax purposes.
Section 14. Call for Redemption of the Refunded Bonds. The City calls for redemption on
November 1, 1999, all then-outstanding Refunded Bonds at a price of par plus accrued interest.
Such call for redemption shall be irrevocable after the delivery of the Bonds to the initial purchaser
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thereof. The date on which the Refunded Bonds are called for redemption is the earliest date on
which the those bonds may be called for redemption.
The proper officials of the City are authorized and directed to give or cause to be given such
notices as required, at the times and in the manner required pursuant to Ordinance No. 89-50 in
order to effect the redemption prior to their maturity of the Refunded Bonds.
Section 15. City Findings with Respect to Refunding. The City Council finds and
deteunines that the issuance and sale of the Bonds at this time will effect a savings to the City and
is in the best interest of the City and in the public interest. In making such finding and
deteunination, the City Council has given consideration to the fixed maturities of the Bonds and the
Refunded Bonds, the costs of issuance of the Bonds and the known earned income from the
investment of the proceeds of the issuance and sale of the Bonds and other money of the City used
in the Refunding Plan pending payment and redemption of the Refunded Bonds.
The City Council further Finds and determines that the money to be deposited with the
Refunding Trustee for the Refunded Bonds in accordance with Section 13 of this ordinance will
discharge and satisfy the obligations of the City under Ordinance No. 89-50 with respect to the
Refunded Bonds, and the pledges, charges, trusts, covenants and agreements of the City therein made
or provided for as to the Refunded Bonds, and that the Refunded Bonds shall no longer be deemed
to be outstanding under such ordinance immediately upon the deposit of such money with the
Refunding Trustee.
Section 16. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, at its
principal corporate trust office, sufficient books for the registration and transfer of the Bonds, which
shall be open to inspection by the City at all times. The Bond Registrar is authorized, on behalf of
the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the
provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds and
to carry out all of the Bond Registrar's powers and duties under this ordinance and City Ordinance
No. 83-10 establishing a system of registration for the City's bonds and obligations.
The Bond Registrar shall be responsible for ks representations contained in the Bond
Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the owner
of Bonds with the same rights it would have if it were not the Bond Registrar and, to the extent
permitted by law, may act as depository for and permit any of its officers or directors to act as
members of, or in any other capacity with respect to, any committee formed to protect the rights of
Bond owners.
Section 17. Preservation of Tax Exemption for Interest on Bonds. The City covenants that
it will take all actions necessary to prevent interest on the Bonds from being included in gross income
for federal income tax purposes, and it will neither take any action nor make or permit any use of
proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds at any time during
the term of the Bonds which will cause interest on the Bonds to be included in gross income for
federal income tax purposes. The City certifies that it has not been notified of any listing or
proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage
certifications may not be relied upon.
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Section 18. Small Governmental Issuer Arbitrage Rebate Exception and Designation of
Bonds as "Oualified Tax-Exempt Obligations." The City finds and declares that (a) it is a duly
organized and existing governmental unit of the State of Washington and has general taxing power;
(b) no Bond which is part of this issue of Bonds is a "private activity bond" within the meaning of
Section 141 of the United States Internal Revenue Code of 1986, as amended (the "Code"); (c) at
least 95 % of the net proceeds of the Bonds will be used for local governmental activities of the City
(or of a governmental unit the jurisdiction of which is entirely within the jurisdiction of the City);
(d) the aggregate face amount of all tax-exempt obligations (other than private activity bonds and
other obligations not required to be included in such calculation) issued by the City and all entities
subordinate to the City (including any entity which the City controls, which derives its authority to
issue tax-exempt obligations from the City or which issues tax-exempt obligations on behalf of the
City) during the calendar year in which the Bonds are issued is not reasonably expected to exceed
$5,000,000; and (e) the amount of tax-exempt obligations, including the Bonds, designated by the
City as "qualified tax-exempt obligations" for the purposes of Section 265(0)(3) of the Code during
the calendar year in which the Bonds are issued does not exceed $10,000,000. The City therefore
certifies that the Bonds are eligible for the arbitrage rebate exception under Section 148(0(4)(D) of
the Code and designates the Bonds as "qualified tax-exempt obligations" for the purposes of
Section 265(0)(3) of the Code.
Section 19. Bonds Negotiable. The Bonds shall be negotiable instruments to the extent
provided by RCW 62A.8-102 and 62A.8-105.
Section 20. Refunding or Defeasance of the Bonds. The City may issue refunding bonds
pursuant to the laws of the State of Washington or use money available from any other lawful source
to pay when due the principal of and interest on the Bonds, or any portion thereof included in a
refunding or defeasance plan, and to redeem and retire, refund or defease all such then-outstanding
Bonds (hereinafter collectively called the "defeased Bonds") and to pay the costs of the refunding
or defeasance. If money and/or direct obligations of the United States of America maturing at a
time or times and bearing interest in amounts (together with money, if necessary) sufficient to
redeem and retire, refund or defease the defeased Bonds in accordance with their terms are set aside
in a special trust fund or escrow account irrevocably pledged to that redemption, retirement or
defeasance of defeased Bonds (hereinafter called the "trust account"), then all right and interest of
the owners of the defeased Bonds in the covenants of this ordinance and in the funds and accounts
obligated to the payment of the defeased Bonds shall cease and become void. The owners of
defeased Bonds shall have the right to receive payment of the principal of and interest on the
defeased Bonds from the trust account. The City shall include in the refunding or defeasance plan
such provisions as the City deems necessary for the random selection of any defeased Bonds that
constitute less than all of a particular maturity of the Bonds, for notice of the defeasance to be given
to the owners of the clefeased Bonds and to such other persons as the City shall determine, and for
any required replacement of Bond certificates for defeased Bonds. The defeased Bonds shall be
deemed no longer outstanding, and the City may apply any money in any other fund or account
established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall
determine.
Section 21. Approval of Bond Purchase Contract. Pacific Crest Securities of Seattle,
Washington, has presented a purchase contract (the "Bond Purchase Contract") to the City offering
to purchase the Bonds under the terms and conditions provided in the Bond Purchase Contract, which
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written Bond Purchase Contract is on file with the City Clerk and is incorporated herein by this
reference. The City Council finds that entering into the Bond Purchase Contract is in the City's best
interest and therefore accepts the offer contained therein and authorizes its execution by City
officials.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with the Bond Purchase Contract, with the approving legal opinion of Foster Pepper &
Shefelman, municipal bond counsel of Seattle, Washington, regarding the Bonds printed on each
Bond. Bond counsel shall not be required to review and shall express no opinion concerning the
completeness or accuracy of any official statement, offering circular or other sales material issued
or used in connection with the Bonds, and bond counsel's opinion shall so state.
The proper City officials are authorized and directed to do everything necessary for the
prompt delivery of the Bonds to the purchaser and for the proper application and use of the proceeds
of the sale thereof.
Section 22. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated November 24, 1995, as amended as
of the date of passage of this ordinance, (the "Preliminary Official Statement"), prepared in
connection with the sale of the Bonds. For the sole purpose of the Bond purchaser's compliance
with Securities and Exchange Commission Rule 15c2-12(b)(1), the City "deems final" that
Preliminary Official Statement as of its date, except for the omission of information as to offering
prices, interest rates, selling compensation, aggregate principal amount, principal amount per
maturity, maturity dates, options of redemption, delivery dates, ratings and other terms of the Bonds
dependent on such matters.
Section 23. Undertaking to Provide Continuing Disclosure. To meet the requirements of
United States Securities and Exchange Commission CSEC') Rule 15c2-12(b)(5) (the "Rule"), as
applicable to a participating underwriter for the Bonds, the City makes the following written
undertaking (the "Undertaking ") for the benefit of holders of the Bonds:
(a) Undertaking to Provide Annual Financial Information and Notice of
Material Events. The City undertakes to provide or cause to be provided, either
directly or through a designated agent:
(i) To each nationally recognized municipal securities information
repository designated by the SEC in accordance with the Rule CNRMSIR")
and to a state information depository, if any, established in the state of
Washington (the "SID") annual financial information and operating data of the
type included in the final official statement for the Bonds and described in
Section 23(b) ("annual financial information");
(ii) To each NRMSIR or the Municipal Securities Rulemaking Board
CMSRB'), and to the SID, timely 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;
o2nn4.o2 -10-
(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 m-exempt status of the Bonds;
(7) modifications to rights of holders of the Bonds; (8) Bond calls (other than
scheduled mandatory redemptions of Term Bonds); (9) defeasances; (10)
release, substitution, or sale of property securing repayment of the Bonds;
and (11) rating changes; and
(iii) To each NRMSIR or to the MSRB, and to the SID, timely notice
of a failure by the City to provide required annual financial information on
or before the dam specified in Section 23Co).
(b) Type of Annual Financial Information Undertaken to be Provided.
The annual financial information that the City undertakes to provide in Section 23(a):
(i) Shall consist of (1) authorized, issued and outstanding balance
of limited tax general obligation bonds; (2) authorized issued and outstanding
balance of waterworks utility bonds; (3) debt service coverage for waterworks
utility debt; (4) assessed valuation for the fiscal year; (5) regular property tax
levy rate and regular property tax levy rate limit for the fiscal year; and (6)
Annual Financial Statements for the City;
(ii) Shall be prepared in accordance with applicable generally
accepted accounting principles promulgated by the Government Accounting
Standards Board CGASB"), as such principles may be changed from time to
time by GASB or its successor;
(iii) Shall not be audited, except, however, that if and when audited
financial statements are otherwise prepared and available to the City they will
be provided from the Director of Finance and Administrative Services of the
City;
(iv) Shall be provided to each NRMSIR and the SID, not later than
the last day of the ninth month after the end of each fiscal year of the City
(currently, a fiscal year ending December 31, as such fiscal year may be
changed as required or permitted by State law, commencing with the City's
fiscal year ending December 31, 1996; and
(v) May be provided in a single or multiple documents, and may
be incorporated by reference to other documents that have been filed with
each NRMSIR and the SID, or, if the document incorporated by reference is
a "final official statement" with respect to other obligations of the City, that
has been filed with the MSRB.
(c) Amendment of Undertaking. The Undertaking is subject to
amendment after the primary offering of the Bonds without the consent of any holder
of any Bond, or of any broker, dealer, municipal securities dealer, participating
- 11-
underwriter, rating agency, NRMSIR, the SID or the MSRB, under the circumstances
and in the manner permitted by the Rule.
The City will give notice to each NRMSIR or the MSRB, and the SID, of the
substance (or provide a copy) of any amendment to the Undertaking and a brief
statement of the reasons for the amendment. If the amendment changes the type of
annual financial inforiFtation to be provided, the notice also will include a narrative
explanation of the effect of that change on the type of information to be provided.
(d) Beneficiaries. The Undertaking evidenced by this Section 23 shall
inure to the benefit of the City and any holder of Bonds, and shall not inure to the
benefit of or create any rights in any other person.
(e) Termination of Undertaking. The City's obligations under this
Undertaking shall terminate upon the legal defeasance of all of the Bonds. In
addition, the City's obligations under this Undertaking shall terminate if those
provisions of the Rule which require the City to comply with this Undertaking
become legally inapplicable in respect of the Bonds for any reason, as confirmed by
an opinion of nationally recognized bond counsel or other counsel familiar with
federal securities laws delivered to the City, and the City provides timely notice of
such termination to each NRMSIR or the MSRB and the SID.
(0 Remedy for Failure to Comply with Undertaking. As soon as
practicable after the City learns of any failure to comply with the Undertaking, the
City will proceed with due diligence to cause such noncompliance to be corrected.
No failure by the City or other obligat~l person to comply with the Undertaking shall
constitute a default in respect of the Bonds. The sole remedy of any holder of a
Bond shall be to take such actions as that holder deems necessary, including seeking
an order of specific performance from an appropriate court, to compel the City or
other obligated person to comply with the Undertaking.
(g) Designation of Official Responsible to Administer Undertaking. The
Director of Finance and Administrative Services the City or his or her designee (or
such other officer of the City who may in the future perform the duties of the
Director of Finance and Administrative Services) is authorized and directed in his or
her discretion to take such further actions as may be necessary, appropriate or
convenient to carry out the Undertaking of the City in respect of the Bonds set forth
in this Section 23 and in accordance with the Rule, including, without limitation, the
following actions:
(i) Preparing and filing the annual financial information undertaken
to be provided;
(ii) Determining whether any event specified in Section 23(a) has
occurred, assessing its materiality with respect to the Bonds, and, if material,
preparing and disseminating notice of its occurrence;
o2nn4.o2 -12-
(iii)'Determining whether any person other than the City is an
"obligated person" within the meaning of the Rule with respect to the Bonds,
and obtaining from such person an undertaking to provide any annual
f'mancial information and notice of material events for that person in
accordance with the Rule;
(iv) Selecting, engaging and compensating designated agents and
consultants, including but not limited to financial advisors and legal counsel,
to assist and advise the City in canying out the Undertaking; and
(v) Effecting any necessary amendment of the Undertaking.
Section 24. Temporary Bond. Pending the printing, execution and delivery to the purchaser
of definitive Bonds, the City may cause to be executed and delivered to the purchaser a single
temporary Bond in the total principal amount of the Bonds. The temporary Bond shall bear the same
date of issuance, interest rates, principal payment dates and terms and covenants as the definitive
Bonds, shall be issued as a fully registered Bond in the name of the purchaser, and otherwise shall
be in a forlit acceptable to the purchaser. The temporary Bond shall be exchanged for definitive
Bonds as soon as they are printed, executed and available for delivery.
Section 25. Effective Date of Ordinance. This ordinance shall take effect and be in force
five days from and after its passage, approval and publication as required by law.
PASSED by the City Council this 7th day of December, 1995.
APPROVED by the Mayor this 8thday of December, 1995.
ATTES T/AUTHENTICATED
City Clerk ~ ~'
Mayor
APPROVED AS TO FORM:
City Attorney
FILED WITH CITY CLERK:
PASSED BY THE CITY COUNCIL:
PUBLISHED:
EFFECTIVE DATE:
ORDINANCE NO.:
November 13, 1995
December 7, 1995
December 13, 1995
December 18, 1995
95-53
o2nn4.o2 -13-
I, SUSAN P. KASPER, City Clerk of the City of Bainbridge Island, Washington, certify that
the attached copy of Ordinance No. 95-53 is a true and correct copy of the original ordinance passed
on the 7th day of December, 1995, as that ordinance appears on the Minute Book of the City.
DATED this 8thday of December, 1995.
REFUNDING TRUST AGREEMENT
THIS AGREEMENT is made and entered into as of the 21st day of
December, 1995, by and between the CITY OF BAINBRIDGE ISLAND,
WASHINGTON (the "City"), a municipal corporation, and FIRST
INTERSTATE BANK OF WASHINGTON, N. A. of Seattle, Washington (the
"Refunding Trustee").
WHEREAS, the City now has outstanding $2,400,000 par value of
its Water and Sewer Revenue Bonds, 1989, maturing on November i of
each of the years 1998 through 2003, inclusive, and in 2009, and
bearing interest at various rates ranging from 7.10% to 7.60% (the
"Refunded Bonds"); and
WHEREAS, pursuant to Ordinance No. 95-53 of the City (the
"Bond Ordinance"), the City has determined that the Refunded Bonds
be refunded out of the proceeds of the sale of its Limited Tax
General Obligation Refunding Bonds, 1995 (the "Bonds"), for the
purpose of realizing a debt service savings for the City, which
refunding will be effected by:
(a) The issuance of the Bonds and the payment of the
costs of the issuance of the Bonds and the costs of
the refunding; and
(b) The payment of the principal of and interest on the
Refunded Bonds when due up to and including
November 1, 1999, and on November 1, 1999, the
call, payment and redemption of all of the then-
outstanding Refunded Bonds at a price of par;
and
WHEREAS, the payment, through advance refunding of the
Refunded Bonds will be accomplished pursuant to this Refunding
Trust Agreement (including Schedule A attached hereto) and the Bond
Ordinance, which doc~,ments provide for and, for the purpose of
Sections 103, 148 and 149(d) of the Internal Revenue Code of 1986,
as amended (the "Code"), are to be considered as the Refunding
Plan, by:
(a) The delivery by the City. to the Refunding
Trustee of the proceeds of the Bonds, together with a
portion of the Reserve Account allocable to the Refunded
Bonds;
(b) The purchase by the Refunding Trustee of the
noncallable direct obligations of the United States of
America listed on Schedule A attached hereto and made a
part hereof by this reference or substituted obligations
purchased pursuant to Section 2 of this Agreement (the
"Acquired Obligations") at or prior to the date the Bonds
are delivered to the original purchaser thereof and the
021~,~09.01
City receives full payment therefor (the "Date of
Closing"), which Acquired Obligations satisfy the
requirements of the Verification described in
paragraph (c);
(c) The delivery to the City and the Refunding
Trustee of a verification (the "Verification") by a
nationally recognized independent certified public
accounting firm verifying the mathematical accuracy of
the computations (which computations shall be attached to
that report) showing that the Acquired Obligations to be
purchased by the Refunding Trustee pursuant to the Bond
Ordinance and this Refunding Trust Agreement, together
with the specified beginning cash balance, if any, and
the maturing principal of and interest on such Acquired
Obligations, will provide sufficient money (assuming that
all principal of and interest on the Acquired Obligations
are paid on the due dates thereof and assuming no
reinvestment of such maturing principal and interest) to
pay principal of and interest on the Refunded Bonds when
due up to and including November 1, 1999, and on
November 1, 1999, call, pay and redeem all of the
outstanding Refunded Bonds at a price of par; and
(d) The receipt by the Refunding Trustee of the
maturing installments of principal of and interest on the
Acquired Obligations; and
(e) The Refunding Trustee's payment to the fiscal
agencies of the State of Washington of money sufficient
to make the payments on the Refunded Bonds set forth
herein;
and
WHEREAS, upon the issuance of the Bonds to carry out the
Refunding Plan under the authority of chapter 39.53 RCW and other
laws of the State of Washington (collectively, the "Refunding Bond
Act"), the principal amount of the Refunded Bonds no longer shall
be considered outstanding pursuant to the defeasance provisions of
the ordinance that authorized the issuance of the Refunded Bonds;
and
WHEREAS, the City Council of the City has found that the
refunding of the Refunded Bonds, through the issuance of the Bonds,
is beneficial and will realize a debt service savings to the City
and its tax and rate payers; and
WHEREAS, the City Council of the City, pursuant to the Bond
Ordinance, has duly and validly authorized the execution and
delivery of this Refunding Trust Agreement, the delivery of the
proceeds of the Bonds to the Refunding Trustee, the purchase bythe
Refunding Trustee of the Acquired Obligations and the carrying out
of the Refunding Plan;
021i~09.01
-2-
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter contained and for the benefit of the City, the parties
hereto agree as follows:
Section 1. Delivery of Money to Refunding Trustee. On the
Date of Closing, the City shall cause to be delivered to the
Refunding Trustee all of the proceeds of the Bonds and $269,440.00
of money of the City on deposit in the Reserve Account of the Water
and Sewer Revenue Refunding Bond Fund, 1987.
Section 2. Investment and Expenditure of Money. On the Date
of Closing, the Refunding Trustee shall apply $2,508,220.65 to pay
on behalf of the City the purchase and/or subscription prices of
the Acquired Obligations, from the sources, in the principal
amounts, with the dates of maturity and bearing the interest rates
or yields set forth in Schedule A, and to establish a beginning
cash balance. Upon receipt thereof, the Refunding Trustee shall
deliver tothe City copies of the doc~,ments evidencing the purchase
of and payment for the Acquired Obligations. Investments in mutual
funds and unit investment trusts are prohibited.
The City reserves the right at or prior to the Date of Closing
to substitute other noncallable, nonprepayable direct obligations
of the United States of America and/or obligations unconditionally
guaranteed by the United States of America as to full and timely
payment of principal and interest authorized to be acquired with
the proceeds of Bonds under the Refunding Bond Act ("Government
Obligations"), or cash, for any of the Acquired Obligations and to
use any savings created thereby for any lawful City purpose if
(a) in the opinion of Foster Pepper & Shefelman, bond counsel to
the City, the interest on the Bonds will remain excluded from gross
income for federal income tax purposes under Sections 103, 148 and
149(d) of the Code, and (b) a verification by a nationally
recognized independent certified public accounting firm acceptable
to the Refunding Trustee is obtained by the City verifying that
such substitution shall not impair the timely payment of the
amounts required to be paid under the Refunding Plan.
On the Date of Closing, the Refunding Trustee shall pay the
costs of issuance and sale of the Bonds from the Bond proceeds
deposited with the Refunding Trustee and not needed to refund the
Refunded Bonds, and shall transfer all remaining proceeds to the
City for application in accordance with the Bond Ordinance.
Section 3. Sufficiency of Acquired Obliaations. Based upon
the Verification, the City represents that the Acquired Obligations
and the maturing principal thereof' and the interest thereon, if
paid when due, together with the beginning cash balance, shall be
sufficient to make when due the payments required by the Refunding
Plan. Such amounts coming due are sometimes referred to
hereinafter as the "payments described in Section 3." The
schedules oft he sources, amounts, maturities and interest rates or
yields of the Acquired Obligations and of the Refunded Bonds which
0215509.01
-3-
will fulfill the foregoing requirements are set forth in the
Verification.
Section 4. Collection of Proceeds of Acquired Obligations and
Application of Such Proceeds and Money. The Refunding Trustee
shall present for payment and shall collect and receive on the due
dates thereof the maturing installments of the principal of and the
interest on the Acquired Obligations and any Substitute Obligations
(defined hereinafter). The Refunding Trustee shall make payments,
but only in the amounts received pursuant to this section, in a
timely manner to the Fiscal Agency of the State of Washington (the
"Fiscal Agency") of the amounts to be paid on the Refunded Bonds as
shown in the Verification. Those payments shall be made by check,
wire transfer or such other method of transfer of funds as shall be
agreed upon by the Refunding Trustee and the Fiscal Agency. The
Refunding Trustee [shall notify the City not more than 80 nor less
than 60 days prior to the call date of the Refunded Bonds to give
the required notice of the call for redemption of the Refunded
Bonds, and the City] shall cause timely notice of call for
redemption of the Refunded Bonds to be given to the owners of those
bonds. The cost of giving the notice shall be paid by the City.
Section 5. All Obligations and Money and Proceeds Thereof
Held in Trust. The Refunding Trustee irrevocably agrees to hold
the Acquired Obligations, the Substitute Obligations, if any, the
principal thereof and interest thereon and any other money which it
may receive pursuant to this Refunding Trust Agreement and any
reinvestments thereof made pursuant to Sections 7 and 8 hereof, in
trust and separate at all times from all other funds and
investments held by the Refunding Trustee, solely for the purpose
of making the payments described in Section 3. The City
irrevocably conveys, transfers and assigns to the Refunding Trustee
the Acquired Obligations, any Substitute Obligations, the principal
thereof and the interest thereon and any other money and
investments deposited with the Refunding Trustee pursuant to this
Refunding Trust Agreement, for the purpose of making such pa.yments.
The Refunding Trustee shall not sell, transfer, assign or
hypothecate any Acquired Obligations, reinvestments, or Substitute
Obligations except pursuant to Sections 7, 8, 12 and 14 hereof.
Section 6. Reports and Notice of Insufficiency. The
Refunding Trustee shall submit a report to the City, at least
semiannually, which report shall set forth the cash, Acquired
Obligations and any Substitute Obligations held hereunder by the
Refunding Trustee, the obligations which have matured and amounts
received by the Refunding Trustee by reason of such maturity, the
interest earned on such obligations, a list of any investments or
reinvestments made by the Refunding Trustee in other obligations
and the interest and/or principal derived therefrom, the amounts
paid to the Fiscal Agency and any other transaction of the
Refunding Trustee pertaining to its duties and obligations as set
forth herein.
0215509.01
-4-
If the maturing principal of and interest on the Acquired
Obligations, any Substitute Obligations and other money held bythe
Refunding Trustee pursuant to this Refunding Trust Agreement shall
be insufficient or shall be projected to become insufficient at any
time in the future to make the payments described in Section 3, the
Refunding Trustee shall give the City prompt notice of such
insufficiency or projected insufficiency.
Section 7. Substitution of Different Government Obliaations
or Other Investments. The City reserves the right to substitute
from time to time for Acquired Obligations initially purchased in
accordance with Section 2 hereof, or for obligations purchased
under this section, other Government Obligations (the "Substitute
Obligations"). Prior to effecting any such substitution, the City
shall have obtained at its expense and delivered to the Refunding
Trustee:
(a) A verification by a nationally recognized
independent certified public accounting firm acceptable
to the Refunding Trustee confirming that the maturing
principal of and interest on the Substitute Obligations
and any remaining Acquired Obligations to be held by the
Refunding Trustee in the refunding escrow, if paid when
due and assuming no reinvestment thereof, together with
any other cash then held by the Refunding Trustee, will
be sufficient to carry out the Refunding Plan and make
all remaining payments described in Section 3; and
(b) An opinion from Foster Pepper & Shefelman, bond
counsel to the City, its successor or other nationally
recognized bond counsel to the City, that the disposition
and substitution or purchase of such securities, under
the statutes, rules and regulations then in force and
applicable to the Bonds, will not cause the interest on
the Bonds or the Refunded Bonds to be included in gross
income for federal income tax purposes and that such
disposition and substitution or purchase is in compliance
with the statutes and regulations applicable to the
Bonds.
If the verification delivered to the Refunding Trustee pursuant to
Section 7(a) shows that surplus money not needed to make the
payments described in Section 3 will result from the sale, transfer
or other disposition of Acquired Obligations and the substitution
of Substitute Obligations therefor, that surplus money at the
request of the City shall be released from the trust estate and
shall be transferred to the City to be used for any lawful City
purpose, subject to any restrictions stated in the opinion of bond
counsel required by Section 7(b).
Section 8. Reinvestment of Proceeds of Acquired and/or
Substitute Obligations. The proceeds (principal and interest) and
reinvestment proceeds of any Acquired Obligations and/or Substitute
Obligations held by the Refunding Trustee in accordance with this
0215509.01
-5-
Refunding Trust Agreement which are not needed within five business
days of the receipt thereof to make the payments described in
Section 3 may be reinvested by the Refunding Trustee on such date
of receipt, subject to the following conditions:
(a) Except as provided in subsection (c) below, the
proceeds of such Acquired Obligations and/or Substitute
Obligations shall be reinvested in Government Obligations
at a yield which will not cause the composite yield on
the refunding escrow to exceed 4.78305% during its term
or such higher yield as may be directed by letter of
instructions from the City to the Refunding Trustee, but
if the composite yield on the directed investments made
pursuant to this Refunding Trust Agreement would exceed
4.78305%, such letter of instructions shall contain a
verification of such composite yield and shall be based
upon and accompanied by the opinion of Foster Pepper &
Shefelman, bond counsel to the City, its successor, or
other nationally recognized bond counsel to the City,
approving reinvestment of such proceeds at such higher
yield.
(b) The obligations in which such proceeds are
reinvested shall mature in an amount at least equal to
their purchase price on the date or dates directed bythe
City, but not later than the date (as shown by the then
most recent certified public accountant verification) the
principal thereof is needed to make the payments
described in Section 3;
(c) If such proceeds, together with other funds
remaining in trust, are insufficient to reinvest in the
smallest denomination of such obligations or are required
to be used to make payments described in Section 3 sooner
than the shortest maturity available for such
obligations, then those proceeds and funds either shall
be converted to United States currency and retained or
shall remain uninvested in the refunding escrow and
carried on the books of the Refunding Trustee until
required to make the payments described in Section 3, or
until sufficient money is accumulated to permit the
investment thereof; and
(d) "Yield," as used in paragraph (a) of this
section with respect to the Acquired Obligations and
Substitute Obligations, means that yield computed in
accordance with and permitted by the Code applicable to
the Bonds and the trust under this Refunding Trust
Agreement so as to preserve the exclusion from gross
income for federal income tax purposes of the interest on
the Bonds.
021~9.01
-6-
The Refunding Trustee may make any and all investments permitted by
the provisions of this Section 8 through its own investment
department or the investment departments of any of its affiliates.
Section 9. Amendments to Refunding Trust Agreement. The
Refunding Trustee and the City recognize that the owners of the
Refunded Bonds and the Bonds from time to time have a beneficial
interest in the Acquired Obligations, the Substitute Obligations
and money to be held by the Refunding Trustee as herein provided.
Therefore, this Refunding Trust Agreement is irrevocable and shall
not be subject to amendment except for the purpose of clarifying
any ambiguity herein, increasing the protection of the rights of
the owners of the Refunded Bonds or the Bonds, or preserving the
exclusion of the interest on the Refunded Bonds and the Bonds from
gross income for federal income tax purposes, and only if such
amendment is accompanied by an opinion addressed to the City and
the Refunding Trustee from Foster Pepper & Shefelman, its successor
or other nationally recognized bond counsel to the City, to the
effect that such change is necessary for one of the above reasons
and does not detrimentally affect the owners of the outstanding
Refunded Bonds and the Bonds or that it strengthens the protection
of the owners of the Refunded Bonds and the Bonds and does not
detrimentally affect the owners of the Refunded Bonds and the
Bonds. If such amendment affects the amount of money and
investments in the escrow account or the application thereof, prior
to the amendment's taking effect there also shall be a verification
by a nationally recognized independent certified public accounting
firm satisfactory to the Refunding Trustee to the effect that after
such amendment the Acquired Obligations, Substitute Obligations and
other money in the escrow account will be sufficient to make the
payments described in Section 3.
Section 10. Limitation of LiabilitV of Refundin~ Trustee.
None of the provisions contained in this Refunding Trust Agreement
shall require the Refunding Trustee to use or advance its own funds
in the performance of any of its duties or the exercise of any of
its rights or powers hereunder. The Refunding Trustee shall be
under no liability for the payment of interest on any funds or
other property received by it hereunder except to the extent the
Refunding Trustee is required by the express terms of this
Refunding Trust Agreement to invest such funds.
The Refunding Trustee's liabilities and obligations in
connection with this Refunding Trust Agreement are confined to
those specifically described herein. The Refunding Trustee is
authorized and directed to comply with the provisions of this
Refunding Trust Agreement and is relieved from all liability for so
doing notwithstanding any demand or notice to the contrary by any
party hereto. The Refunding Trustee shall not be responsible or
liable for the sufficiency, correctness, genuineness or validity of
the Acquired Obligations or the Substitute Obligations deposited
with it; the performance or compliance by any party other than the
Refunding Trustee with the terms or conditions of any such
instruments; or any loss which may occur by reason of forgeries,
0~1~509.01
-7-
false representations or the exercise of the Refunding Trustee's
discretion in any particular manner unless such exercise is
negligent or constitutes willful misconduct.
If any controversy arises between the City and any third
person, the Refunding Trustee shall not be required to determine
the same or to take any action in the premises, but it may
institute, in its discretion, an interpleader or other proceedings
in connection therewith as it may deem proper, and in following
either course, it shall not be liable.
~ection 11. City Deposit of Additional Money. The City
agrees that it will deposit promptly with the Refunding Trustee the
additional money specified in the Refunding Trustee's notice of
insufficiency given pursuant to Section 6 hereof.
Section 12. Remittance of Funds When Refunded Bonds Paid in
Full. At such time as the Refunding Trustee has received the
representation of the City that all of the payments described in
Section 3 have been made and the confirmation of such
representation by the Fiscal Agency, together with such other
evidence of such payments as shall be satisfactory to the City and
the Refunding Trustee, the Refunding Trustee shall deliver
forthwith or remit to the City any remaining Acquired Obligations,
Substitute Obligations and money held pursuant to this Refunding
Trust Agreement.
Section 13. Compensation of Refundin~ Trustee. The payment
arrangement heretofore made between the Refunding Trustee and the
City on compensation and expenses of the Refunding Trustee for
services rendered by it pursuant to the provisions of this
Refunding Trust Agreement is satisfactory to it and to the City,
and no further payment to the Refunding Trustee shall be required
for such purpose. Such arrangement for compensation and expenses
is intended as compensation for the ordinary services as
contemplated by this Refunding Trust Agreement, and if the
Refunding Trustee renders any service hereunder not provided for in
this Refunding Trust Agreement, or the Refunding Trustee is made a
party to or intervenes in any litigation pertaining to this
Refunding Trust Agreement or institutes interpleader proceedings
relative hereto, the Refunding Trustee shall be compensated
reasonably by the City for such extraordinary services and
reimbursed for all fees, costs, liability and expenses (including
reasonable attorneys' fees) occasioned thereby. The Refunding
Trustee shall not have a lien against or otherwise be compensated
for its services and expenses from the money, Acquired Obligations
and Substitute Obligations held pursuant to this Refunding Trust
Agreement to make the payments described in Section 3.
Section 14. Successor Refundinu Trustee. The obligations
ass~,med by the Refunding Trustee pursuant to this Refunding Trust
Agreement may be transferred by the Refunding Trustee to a
successor if (a) the Refunding Trustee has presented evidence
satisfactory to the City and to Foster Pepper & Shefelman, its
-~-
successor or other nationally recognized bond counsel to the City
that the successor trustee meets the requirements of RCW39.53.070,
as now in effect or hereafter amended; (b) the City approves the
appointment of the successor trustee; (c) the successor trustee has
assumed all of the obligations of the Refunding Trustee under this
Refunding Trust Agreement and has been compensated; and (d) all of
the Acquired Obligations, reinvestments, Substitute Obligations and
money then held by the Refunding Trustee pursuant to this Refunding
Trust Agreement have been duly transferred to such successor
trustee.
Notwithstanding anything to the contrary contained in this
Agreement, any company into which the Refunding Trustee may be
merged or converted or with which it may be consolidated or any
company resulting from any merger, conversion or consolidation to
which the Refunding Trustee is a party, or any company to which the
Refunding Trustee may sell or transfer all or substantially all of
its corporate trust business shall be the successor to the
Refunding Trustee without execution or filing of any paper or
further act, if such company is eligible to serve as Refunding
Trustee under RCW 39.53.070.
Section 15. Miscellaneous. This Refunding Trust Agreement is
governed by Washington law and may not be modified except by a
writing signed by the parties and subject to the limitations of
Section 9. If any one or more of the provisions contained in this
Refunding Trust 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 Refunding Trust Agreement, but this Refunding
Trust Agreement shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein.
Section 16. Notice to Ratin~ A~encies. The Refunding Trustee
shall notify Moody's Investors Service, Inc., and any other
national rating agency maintaining (at the request of the City) a
rating on the Refunded Bonds or the Bonds, in writing upon timely
receipt of notice or evidence of either of the following
circumstances:
(a) Prior to the taking effect of any amendments to
this Refunding Trust Agreement under Section 9, enclosing
the proposed amendatory documents; and
(b) The holding (referred to in Section 15) that
one or more provisions of this Refunding Trust Agreement
is invalid, illegal or unenforceable in any respect,
enclosing a copy of that holding.
Such notices shall be sent to Moody's Investors Service, Inc.
by first class mail to:
021~09.01
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Moody's Investors Service, Inc.
Attn: Public Finance Rating Desk/Refunded Bonds
99 Church Street
New York, New York 10007
Such notices shall be sent to the other applicable rating
agencies by first class mail to the addresses advised by those
rating agencies.
IN WITNESS WHEREOF, the parties have executed and delivered
this Refunding Trust Agreement pursuant to due and proper
authorization, all as of the date and year first above written.
CITY OF BAINBRIDGE ISLAND,
WASHINGTON
FIRST INTERSTATE BANK OF
WASHINGTON, N. A.,
Refunding Trustee
By Title:~~Mayor
0215509.01
SCHEDULE A
ACQUIRED OBLIGATIONS
MATURITY PAR INTEREST PURCHASE
TYPE* DATE AMOUNT RATE PRICE
TNote 10/31/96 $ 2,000 6,875% 101.5000%
TNote 04/30/97 6,000 6.500 101.6562
TNote 04/30/98 3,000 5,125 99.6406
TNote 10/31/98 17,000 4,750 98.5312
TNote 04/15/99 2,477,000 7,000 104.8906
*TNote - U. S. Treasury Note
NOTE:
Upon the maturity of the TNote maturing on April 15,
1999, all available proceeds in the escrow to the
nearest $100 shall he reinvested 4mmediately in United
States Treasury Certificates of Indebtedness--State and
Local Government Series ("SLGS") with a 0% yield and
maturing on November 1, 1999.
In the event SLGS securities are not available when
needed, such proceeds shall be converted to United
states currency as described in Section 8(c) of the
Refunding Trust Agreement.
~Y21~).O1
FOSTER PEPPER & SHEFELMAN
A LAW PARTNERSHIP INCLUDING
pROFESSLONAL SERVICE CORPORATIONS
DIRECT DIAL 206-447-8961
December 7, 1995
VIA HAND DELIVERY
Mr. Ralph W. EelIs
Director of Finance and Administrative Services
City of Bainbridge Island
625 Winslow Way East
Bainbridge Island, WA 98110
Re: Limited Tax General Obligation Refunding Bonds, 1995
Dear Ralph:
Enclosed in final form is Ordinance No. 95-53 authorizing the issuance and sale of the above-
referenced bonds, together with a form of Refunding Trust Agreemere and approving legal opinion.
Enclosed for convenience are fifteen blacklined copies of Ordinance No. 95-53 for distribution to the
Council and the original and five clean copies. The Refunding Trust Agreement should be retained
in the records of the City Clerk as referenced in Section 13(d) of the ordinance. I invite comments
on the Refunding Trust Agreement by you or any of the parties to this financing listed below.
If the ordinance is passed, please return five certified copies, together with certified excerpts
of the minutes of the Council meeting showing its passage and affidavit of publication of the
ordinance, with the usual language a copy in its entirety may be obtained upon request. We would
also appreciate receiving five certified copies of the Bond Purchase Contract prepared by Pacific Crest
Securities.
We will proceed with ordering the printing of the bonds and will be contacting you shortly
concerning information necessary to complete the closing documents.
Sincerely,
FOSTER PEPPER & SHEFELMAN
George M. Mack
Enclosures
1111 THIRD AVENUE, SUITE 3400
SEATTLE, WASHINGTON 98101-3299
TEL. 206 447-4400 FACSIMILE 206 447-9700
ANCHORAGE, ALASKA BELLEVUE, WASHINGTON PORTLAND. OREGON SEATTLE, WASHINGTON
Mr. Ralph W. EelIs
December 6, 1995
Page 2
cc (w/encl.):
Rod P. Kaseguma
Susan P. Kasper
Steve Galdos
Michael Jones
Perry Tobe
Alice Garrett
0215539.WP
ORDINANCE NO. 95-53
AN ORDINANCE of the City of Bainbridge Island, Washington, relating to
contracting indebtedness; providing for the issuance of $2,505,000 $2.450.000 par
value of Limited Tax General Obligation Refunding Bonds, 1995, of the City to
provide part of the funds with which to pay the cost of advance refunding the callable
portion of the City 's outstanding $2,400,000 Water and Sewer Revenue Bonds, 1989,
and paying the administrative costs of such refunding and the costs of issuance and
sale of such bonds; f'txing the date, form, maturities, interest rates, terms and
covenants of the bonds; establishing a bond redemption fund; providing for and
authorizing the purchase of certain obligations out of the proceeds of the sale of the
bonds herein authorized and for the use and application of the money derived from
those investments; authorizing the execution of an agreement with of, First Interstate
Bank of Washington. N.A. of Seattle.Washington, as refunding trustee; providing for
the call, payment and redemption of the outstanding bonds to be refunded; and
approving the sale and providing for the delivery of the bonds to Pacific Crest
Securities of Seattle, Washington.
WHEREAS, pursuant to Ordinance No. 89-50, the City of Winslow, Washington (now the
City of Bainbridge Island, Washington) heretofore issued its $2,400,00 $2.400.000 par value Water
and Sewer Revenue Bonds, 1989 (the "1989 Bonds"), for the purpose of paying the cost of carrying
out a system or plan of additions to and betterments and extensions of the waterworks utility of the
City and capitalizing a reserve for those bonds, and by that ordinance reserved the right to redeem
the 1989 Bonds prior to their maturity on November 1, 1999, at a price of par plus accrued interest
to the date fixed for redemption; and
WHEREAS, there are presently outstanding $2,260,000 $2,400,000 par value of 1989 Bonds
maturing on November 1 of each of the years 2~Q~2~ 1998 through 2003, inclusive, and in 2009, and
bearing various interest rates from 7.25,% 7.10% to 7.60% (the "Refunded Bonds"); and
WHEREAS, after due consideration, it appears to the City Council that the Refunded Bonds
may be refunded by the issuance and sale of the limited tax general obligation refunding bonds
authorized herein (the "Bonds") so that a substantial savings will be effected by the difference
between the principal and interest cost over the life of the Bonds and the principal and interest cost
over the life of the Refunded Bonds but for such refunding, which refunding will be effected by:
(a)
The issuance of the Bonds and the payment of the costs of the issuance of the
Bonds and the costs of the refunding;
(b)
The payment of ~e, I!rincival of and interest on the Refunded Bonds when due
up to and including November 1, 2~nee~ 199=_=29, and the call, payment and
redemption on November 1, 2~nee~ 199--9, of all of the then-outstanding
Refunded Bonds at a price of par;
0211114.02 -1-
and
WHEREAS, to effect that refunding in the manner that will be most advantageous to the City
it is found necessary and advisable that certain Acquired Obligations (hereinafter defined) bearing
interest and maturing at such time or times as necessary to accomplish the refunding as aforesaid be
purchased out of the proceeds of the Bonds and other money of the City; and
WHEREAS, the City decms it to be in the best interests of the City to issue and sell the
Bonds to pay part of the cost of advance refunding the Refunded Bonds and to pay the administrative
costs of such refunding and the costs of issuance and sale of the Bonds; NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON, DO
ORDAIN as follows:
Section 1. Debt Capacity. The assessed valuation of the taxable property within the City
as ascertained by the last preceding assessment for City purposes for the calendar year 1994 is
$1,858,795,349, and the City has outstanding general indebtedness evidenced by limited tax general
obligation bonds (excluding the amount of Refunded Bonds) in the principal amount ors $1.915.000
incurred within the limit of up to 1-1/2% of the value of the taxable property within the City
permitted for general municipal purposes without a vote of the qualified voters therein, and the
amount of indebtedness for which bonds are authorized herein to be issued is $2,505,000
$2.450.000.
Section 2. Authorization of Bonds. The City shall borrow money on the credit of the City
and issue negotiable limited tax general obligation refunding bonds evidencing that indebtedness in
the amount of $2,505,000 $2.450.000 to provide the funds to pay the cost of accomplishing the
following (the "Refunding Plan'):
(a) the placement of sufficient proceeds of the Bonds which, with other
money of the City, if necessary, will acquire those United States Treasury
Certificates of Indebtedness, Notes and Bonds -- State and Local Government Series
and other direct, noncallable obligations of the United States of America (the
"Acquired Obligations") to be deposited, with cash, if necessary, with the Refunding
Trustee;
(b) the payment of the Drincioai of and interest on the Refunded Bonds
when due up to and including November 1, 1999, and the call, payment and
redemption on November 1, 1999, of all of the then-outstanding Refunded Bonds at
a price of par;
(c) the payment of the costs of issuing the Bonds and the costs of carrying
out the foregoing elements of the Refunding Plan.
The general indebtedness to be incurred shall be within the limit of up to 1-1/2% of the value of the
taxable property within the City permitted for general municipal purposes without a vote of the
qualified voters therein.
0211114.02
Section 3. Description of Bonds. The bonds shall be called Limited Tax General Obligation
Refunding Bonds, 1995, of the City (the "Bonds"); shall be in the aggregate principal mount of
$2,505,000 $2.450.000; shall be dated December 1, 1995; shall be in the denomination of $5,000
or any integral multiple thereof within a single maturity; shall be numbered separately in the manner
and with any additional designation as the Bond Registrar (collectively, the fiscal agencies of the
State of Washington located in Seattle, Washington, and New York, New York) deems necessary
for purposes of identification; shall bear interest (computed on the basis of a 360-day year of twelve
30-day months) payable semiannually on each ;::re May 1 and Docombor November 1, commencing
J--,,r;, May 1, 1996, to the maturity or earlier redemption of the Bonds; and shall mature on Docombor
November 1 in years and amounts and bear interest at the rates per annum as follows:
Maturity Interest
Years Amounts Rates
199725,000
199825,000
199930,000
2000190,000
2001190,000
2002205,000
2003220,000
2004230,000
2005245,000
2006255,000
2007275,000
2008290,000
2009300,000
1996
3,80%
1997 20,000 4.00
1998 35.000 4.10
1999 145,000 4.15
2000 180.000 4.25
2001 180,000 4.35
2002 190,000 4.45
2003 205.000 4.55
2004 210,000 4.65
2005 225,000 4,75
2006 235,000 4,85
2007 250,000 4,95
2008 260,000 5.05
2009 275,000 5.15
Section 4. Registration and Transfer of Bonds. The Bonds shall be issued only in registered
form as to both principal and interest and shall be recorded on books or records maintained by the
Bond Registrar (the "Bond Register"). The Bond Register shall contain the name and mailing
0211114.02 -3-
address of the owner of each Bond and the principal amount and number of each of the Bonds held
by each owner.
Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized
denomination of an equal aggregate principal amount and of the same interest rate and maturity.
Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to the
Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee. The
Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days preceding
any principal payment or redemption date.
Section 5. Payment of Bonds. 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 paid by checks or
drafts of the Bond Registrar mailed on the interest payment date to the registered owners at the
addresses appearing on the Bond Register on the 15th day of the month preceding the interest
payment date. Principal of the Bonds shall be payable upon presentation and surrender of the Bonds
by the registered owners at either of the principal offices of the BOnd Registrar at the option of the
owners.
Section 6. Optional Redemption [. Mandatory Redemption] and Open Market Purchase of
BondS. Bonds maturing in the years 1996 through 2005, inclusive, shall be issued without the right
or option of the City to redeem those Bonds prior to their stated maturity dates. The City reserves
the right and option to redeem Bonds maturing on or after December November 1, 2006, prior to
their stated maturity dates on or after D~ombcr November 1, 2005, as a whole at any time or in part
at any time on any interest payment date within one or more maturities selected by the City (and by
lot within a maturity in such manner as the Bond Registrar shall determine), at par plus accrued
interest to the date fixed for redemption.
[ADD FOR TERM BONDS]
[Bonds maturing in are Term Bonds and, if not rcd~.xmcd under the optional redemption provisions
sot forth above or purchased in the open market under the provisions set forth below, shall be called
for redemption by lot (in such manner aa the Bond Registrar shall determine) at par plus accrued
interest on Dcu~xmber 1 in years and amounts as follo~vs:
Mandatory Mandatory
Redemption Redemption
Years Amounts
[Insert redemption schedule]
[If tho City shall redoom Term Bondn under the optional redemption provisions sot forth above or
purchaso Torm Bonds in thc opon markot as sot forth below, thc par amount of tho Tcrm Bonds so
redccrnod or purchased (irrcspc-ctivc of thcir actual redcmption or purchasc priccs) shall b~ creditod
against onc or morc scheduled mandatory redcmption amount~ for thooc Tcrm Bonds (as allocatod
o211114.02 ..4-
by the City) beginning not earlier than 60 days after the dat~ of the optional redemption or purehag,
and the City shall promptly notify the Bond Registrar in ~vriting of the manner in which the credit
for the Team Bonds so redeemed or purchased has boon allocated.]
Portions of the principal amount of any Bond, in installments of $5,000 or any integral
multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is
redeemed, upon surrender of that Bond at either of the principal offices of the Bond Registrar, there
shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds, at the option
of the registered owner) of the same maturity and interest rate in any of the denominations authorized
by this ordinance in the aggregate principal amount remaining unredeemed.
The City further reserves the right and option to purchase any or all of the Bonds in the open
market at any time at any price acceptable to the City plus accrued interest to the date of purchase.
All Bonds purchased or redeemed under this section shall be canceled.
Section 7. Notice of Redemption. The City shall cause notice of any intended redemption
of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed for redemption
by first-class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the
address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and the
requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed as
so provided, whether or not it is aaually received by the owner of any Bond. Interest on Bonds
called for redemption shall cease to accrue on the date fixed for redemption unless the Bond or
Bonds called are not redeemed when presented pursuant to the call. In addition, the redemption
notice shall be mailed within the same period, postage prepaid, to Moody's Investors Service, Inc.,
and Standard & Poor's at their offices in New York, New York, or their successors, to Pacific Crest
Securities, at its principal office in Seattle, Washington, or its successor, and to such other persons
and with such additional information as the City gnan~ DirecWr of Finance and Administrative
~ervices shall determine, but these additional mailings shall not be a condition precedent to the
redemption of Bonds.
Section 8. Failure to Redeem Bonds. If any Bond is not redeemed when properly presented
at its maturity or call date, the City shall be obligated to pay interest on that Bond at the same rate
provided in the Bond from and after its maturity or call date until that Bond, both principal and
interest, is paid in full or until sufficient money for its payment in full is on deposit in the bond
redemption fund hereinafter created and the Bond has been called for payment by giving notice of
that call to the registered owner of each of those unpaid Bonds.
Section 9. Pledge of Taxes. For as long as any of the Bonds are outstanding, the City
irrevocably pledges to include in its budget and levy taxes annually within the constitutional and
statutory tax limitations provided by law without a vote of the electors of the City on all of the
taxable property within the City in an amount sufficient, together with other money legally available
and to be used therefor, including gross revenue of the Waterworks Utility of the City, after the
payment of maintenance and operation expenses and any obligations the payment of which is pledged
to be made from such gross revenue, to pay when due the principal of and interest on the Bonds,
and the full faith, credit and resources of the City are pledged irrevocably for the annual levy and
collection of those taxes and the prompt payment of that principal and interest.
0211114.0'2 '5-
Section 10. Form and Execution of Bonds. The Bonds shall be printed or lithegraphed on
good bond paper in a form consistent with the provisions of this ordinance and state law and shall
be signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in
facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed
thereon.
Only Bonds bearing a Certificate of Authentication in the following form, manually signed
by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this
ordinance:
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Balnbridge Island,
Washington, Limited Tax General Obligation Refunding Bonds, 1995, described in
the Bond Ordinance.
WASHINGTON STATE FISCAL AGENCY
Bond Registrar
Authorized Signer
The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bonds
so authenticated have been duly executed, authenticated and delivered and are entitled to the benefits
of this ordinance.
If any officer whose facsimile signature appears on the Bonds ceases to be an officer of the
City authorized to sign bonds before the Bonds bearing his or her facsimile signature are
authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless may
be authemicated, issued and delivered and, when authenticated, issued and delivered, shall be as
binding on the City as though that person had continued to be an officer of the City authorized to
sign bonds. Any Bond also may be signed on behalf of the City by any person who, on the actual
date of signing of the Bond, is an officer of the City authorized to sign bonds, although he or she
did not hold the required office on the date of issuance of the Bonds.
Section 11. Bond Fund and Deposit of Bond Proceeds. All of the proceeds of the Bonds,
together with other money of the City referred to in Section 12 below, and exclusive of the accrued
interest, shall be deposited with the Refunding Trustee in accordance with provisions of Section 12
herein. There is created and established in the office of the F-i~mee Director of Finance and
Administrative Services a special fund designated as the Limited Tax General Obligation Refunding
Bond Fund, 1995 (the "Bond Fund"). Accrued interest on the Bonds, if any, received from the sale
and delivery of the Bonds shall be paid into the Bond Fund. Until needed to pay the cost of
issuance, the City may invest those remaining principal proceeds of the Bonds temporarily in any
legal investment, and the investment earnings may be retained in the Bond Fund and spent for the
purposes of that fund. All taxes collected for and allocated to the payment of the principal of and
interest on the Bonds shall be deposited in the Bond Fund.
(Y211114.02 -6'
Section 12. Authorization of Transfer of Funds. The ~ Director of Finance and
Administrative Services of the City is authorized and directed to transfer a sufficient amount of
proceeds of the Reserve Account allotable to the Refunded Bonds to the Refunding Trustee appointed
below for the purposes as described in Section 13 below.
Section 13. Refunding of the Refunded Bonds.
(a) Appointment of Refunding Trustee. of, First Interstate Bank of Washin~on. N.A.
of Seattle. Washington, is appointed Refunding Trustee.
Co) use of Bond Proceeds: Acquisition and Substitution of Acquired Obligations. All of
the proceeds of the sale of the BoMs, together with a portion of the City' s Reserve Account allocable
to the Refunded Bonds, shall be deposited immediately upon the receipt thereof with the Refunding
Trustee and used to discharge the obligations of the City relating to the Refunded Bonds under
Ordinance No. 89-50 by providing for the payment of the amounts required to be paid by the
Refunding Plan. To the extent practicable, such obligations shall be discharged fully by the
Refunding Trustee's simultaneous purchase of the Acquired Obligations, bearing such interest and
maturing as to principal and interest in such amounts and at such times so as to provide, together
with a beginning cash balance, if necessary, for the payment of the amount required to be paid by
the Refunding Plan. The Acquired Obligations are listed and more particularly described in
Schedule A attached to the Refunding Trust Agreement between the City and the Refunding Trustee,
but are subject to substitution as set forth below. Any Bond proceeds deposited with the Refunding
Trustee that are not needed to purchase the Acquired Obligations and provide a beginning cash
balance, if any, and pay the costs of issuance of the Bonds shall be returned to the City at the time
of delivery of the Bonds for deposit in the Bond Fund.
Prior to the purchase of any such Acquired Obligations, the City reserves the right to
substitute other Government Obligations for any of the Acquired Obligations and to use any savings
created thereby for any lawful City purpose if, (a) in the opinion of Foster Pepper & Shefelman, the
City's bond counsel, the interest on the Bonds and the Refunded Bonds will remain excluded from
gross income for federal income tax purposes under Sections 103, 148 and 149(d) of the Code, and
(b) such substitution shall not impair the timely payment of the amounts required to be paid by the
Refunding Plan, as verified by a nationally recognized fi~m of independent certified public
accountants.
After the purchase of the Acquired Obligations by the Refunding Trustee, the City reserves
the right to substitute therefor cash or Government Obligations subject to the conditions that such
money or securities held by the Refunding Trustee shall be sufficient to carry out the Refunding
Plan, that such substitution will not cause the Bonds and the Refunded Bonds to be arbitrage bonds
within the meaning of Section 148 of the Code and regulations thereunder in effect on the date of
such substitution and applicable to obligations issued on the issue date of the Bonds, and that it
obtain, at its expense: (1) verification by a nationally recognized independent certified public
accounting firm acceptable to the Refunding Trustee confirming that the payments of principal of and
interest on the Government Obligations, if paid when due, and any other money held by the
Refunding Trustee will be sufficient to carry out the Refunding Plan; and (2) an opinion from Foster
Pepper & Sbefelman, bend counsel to the City, its successor, or other nationally recognized bond
counsel to the City, to the effect that the disposition and substitution or purchase of such securities,
0211114,02 -7-
under the statutes, rules and regulations then in force and applicable to the Bonds, will not cause the
interest on the Bonds or the Refunded Bonds to be included in gross income for federal income tax
purposes and that such disposition and substitution or purchase is in compliance with the statutes and
regulations applicable to the Bonds. Any surplus money resulting from the sale, transfer, other
disposition or redemption of the Acquired Obligations and the substitutions therefor shall be released
from the trust estate and transferred to the City to be used for any lawful City purpose.
(c) Administration of Refunding Plan. The Refunding Trustee is authorized and directed
to purchase the Acquired Obligations (or substitute obligations) and to make the payments required
to be made by the Refunding Plan from the Acquired Obligations (or substitute obligations) and
money deposited with the Refunding Trustee pursuant to this ordinance. All Acquired Obligations
(or substitute obligations) and the money deposited with the Refunding Trustee and any income
therefrom shall be held irrevocably, invested and applied in accordance with the provisions of
Ordinance No. 89-50, this ordinance, chapter 39.53 RCW and other applicable statutes of the State
of Washington and the Refunding Trust Agreement. All necessary and proper fees, compensation
and expenses of the Refunding Trustee for the Bonds and all other costs incidental to the setting up
of the escrow to accomplish the refunding of the Refunded Bonds and costs related to the issuance
and delivery of the Bonds, including bond printing, verification fees, bond counsel's fees and other
related expenses, shall be paid out of the proceeds of the Bonds.
(d) Authorization for Refunding Trust Agreement. To carry out the Refunding Plan
provided for by this ordinance, the Mayor or City Clerk Director of Finance and Administrative
Services of the City is authorized and directed to execute and deliver to the Refunding Trustee a
Refunding Trust Agreement substantially in the form on file with the City Clerk and by this reference
made a part hereof setting forth the duties, obligations and responsibilities of the Refunding Trustee
in connection with the payment, redemption and retirement of the Refunded Bonds as provided herein
and stating that the provisions for payment of the fees, compensation and expenses of such Refunding
Trustee set forth therein are satisfactory to it. Prior to executing the Refunding Trust Agreement,
the Mayor or City Clerk of the City is authorized to make such changes therein which do not change
the substance and purpose thereof or which assure that the escrow provided therein and the Bonds
are in compliance with the requirements of federal law governing the exclusion of interest on the
Bonds from gross income for federal income tax purposes.
Section 14. Call for Redemption of the Refunded Bonds. The City calls for redemption on
November 1, 1999, all then-outstanding Refunded Bonds at a price of par plus accrued interest.
Such call for redemption shall be irrevocable after the delivery of the Bonds to the initial purchaser
thereof. The date on which the Refunded Bonds are called for redemption is the earliest date on
which the those bonds may be called for redemption.
The proper officials of the City are authorized and directed to give or cause to be given such
notices as required, at the times and in the manner required pursuant to Ordinance No. 89-50 in
order to effect the redemption prior to their maturity of the Refunded Bonds.
Section 15. City Findings with ReSpect to Refunding. The City Council finds and
determines that the issuance and sale of the Bonds at this time will effect a savings to the City and
is in the best interest of the City and in the public interest. In making such finding and
determination, the City Council has given consideration to the fixed maturities of the Bonds and the
0211114.02 -8-
Refunded Bonds, the costs of issuance of the Bonds and the known earned income from the
investment of the proce.~s of the issuance and sale of the Bonds and other money of the City used
in the Refunding Plan pending payment and redemption of the Refunded Bonds.
The City Council further finds and determines that the money to be deposited with the
Refunding Trustee for the Refunded Bonds in accordance with Section 13 of this ordinance will
discharge and satisfy the obligations of the City under Ordinance No. 89-50 with respect to the
Refunded Bonds, and the pledges, charges, trusts, covenants and agreements of the City therein made
or provided for as to the Refunded Bonds, and that the Refunded Bonds shall no longer be deemed
to be outstanding under such ordinance immediately upon the deposit of such money with the
Refunding Trustee.
Section 16. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, at its
principal corporate trust office, sufficient books for the registration and transfer of the Bonds, which
shall be open to inspection by the City at all times. The Bond Registrar is authorized, on behalf of
the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the
provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds and
to carry out all of the Bond Registrar's powers and duties under this ordinance and City Ordinance
No. 83-10 establishing a system of registration for the City's bonds and obligations.
The Bond Registrar shall be responsible for its representations contained in the Bond
Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the owner
of Bonds with the same rights it would have if it were not the Bond Registrar and, to the extent
permitted by law, may act as depository for and permit any of its officers or directors to act as
members of, or in any other capacity with respect to, any committee formed to protect the rights of
Bond owners.
Section 17. Preservation of Tax Exemption for Interest on Bonds. The City cov6nants that
it will take all actions necessary to prevent interest on the Bonds from being included in gross income
for federal income tax purposes, and it will neither take any action nor make or permit any use of
proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds at any time during
the term of the Bonds which will cause interest on the Bonds to be included in gross income for
federal income tax purposes. The City certifies that it has not been notified of any listing or
proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage
certifications may not be relied upon.
Section 18. Small Governmental Issuer Arbitrage Rebate Exception and Designation of
Bonds as "Oualified Tax-Exempt Obligations." The City finds and declares that (a) it is a duly
organized and existing governmental unit of the State of Washington and has general taxing power;
(b) no Bond which is part of this issue of Bonds is a "private activity bond" within the meaning of
Section 141 of the United States Internal Revenue Code of 1986, as amended (the "Code"); (c) at
least 95 % of the net proceeds of the Bonds will be used for local governmental activities of the City
(or of a governmental unit the jurisdiction of which is entirely within the jurisdiction of the City);
(d) the aggregate face amount of all tax-exempt obligations (other than private activity bonds and
other obligations not required to be included in such calculation) issued by the City and all entities
subordinate to the City (including any entity which the City controls, which derives its authority to
issue tax-exempt obligations from the City or which issues tax-exempt obligations on behalf of the
0211114.02 -9-
City) during the calendar year in which the Bonds are issued is not reasonably expected to exceed
$5,000,000; and (e) the amount of m-exempt obligations, including the Bonds, designated by the
City as "qualified m-exempt obligations" for the purposes of Section 265(b)(3) of the Code during
the calendar year in which the Bonds are issued does not exceed $10,000,000. The City therefore
certifies that the Bonds are eligible for the arbitrage rebate exception under Section 148(0(4)(13) of
the Code and designates the Bonds as "qualified tax-exempt obligations" for the purposes of
Section 265(b)(3) of the Code.
Section 19. Bonds Negotiable. The Bonds shall be negotiable instruments to the extent
provided by RCW 62A. 8-102 and 62A.8-105.
Section 20. Refunding or Defeasance of the Bonds. The City may issue refunding bonds
pursuant to the laws of the State of Washington or use money available from any other lawful source
to pay when due the principal of and interest on the Bonds, or any portion thereof included in a
refunding or defeasance plan, and to redeem and retire, refund or clefease all such then-outstanding
Bonds (hereinafter collectively called the "clefeased Bonds") and to pay the costs of the refunding
or defeasance. If money and/or direct obligations of the United States of America maturing at a
time or times and bearing interest in amounts (together with money, if necessary) sufficient to
redeem and retire, refund or defease the defeased Bonds in accordance with their terms are set aside
in a special trust fund or escrow account irrevocably pledged to that redemption, retirement or
defeasance of clefeased Bonds (hereinafter called the "trust account"), then all right and interest of
the owners of the clefeased Bonds in the covenants of this ordinance and in the funds and accounts
obligated to the payment of the clefeased Bonds shall cease and become void. The owners of
defeased Bonds shall have the right to receive payment of the principal of and interest on the
defeased Bonds from the trust account. The City shall include in the refunding or defeasance plan
such provisions as the City deems necessary for the random selection of any clefeased Bonds that
constitute less than all of a particular maturity of the Bonds, for notice of the defeasance to be given
to the owners of the defeased Bonds and to such other persons as the City shall determine, and for
any required replacement of Bond certificates for clefeased Bonds. The defeased Bonds shall be
deemed no longer outstanding, and the City may apply any money in any other fund or account
established for the payment or redemption of the clefeased Bonds to any lawful purposes as it shall
determine.
Section 21. Approval of Bond Purchase Contract. Pacific Crest Securities of Seattle,
Washington, has presented a purchase contract (the 'Bond Purchase Contract") to the City offering
to purchase the Bonds under the terms and conditions provided in the Bond Purchase Contract, which
written Bond Purchase Contract is on file with the City Clerk and is incorporated herein by this
reference. The City Council finds that entering into the Bond Purchase Contract is in the City's best
interest and therefore accepts the offer contained therein and authorizes its execution by City
officials.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with the Bond Purchase Contract, with the approving legal opinion of Foster Pepper &
Shefelman, municipal bond counsel of Seattle, Washington, regarding the Bonds printed on each
Bond. Bond counsel shall not be required to review and shall express no opinion concerning the
completeness or accuracy of any official statement, offering circular or other sales material issued
or used in connection with the Bonds, and bond counsel's opinion shall so state.
-10-
The proper City officials are authorized and directed to do everything necessary for the
prompt delivery of the Bonds to the purchaser and for the proper application and use of the proceeds
of the sale thereof.
Section 22. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated November 24, 1995. as mended as
of the date of Passage of this ordinance. (the "Preliminary Official Statement"), prepared in
connection with the sale of the Bonds. For the sole purpose of the Bond purchaser's compliance
with Securities and Exchange Commission Rule 15c2-12Co)(1), the City "deems final" that
Preliminary Official Statement as of its date, except for the omission of information as to offering
prices, interest rates, selling compensation, aggregate principal mount, principal mount per
maturity, maturity dates, options of redemption, delivery dates, ratings and other teims of the Bonds
dependent on such matters.
Section 23. Undertaking to Provide Continuing Disclosure. To meet the requirements of
United States Securities and Exchange Commission ("SEC") Rule 15c2-12(b)(5) (the "Rule"), as
applicable to a participating underwriter for the Bonds, the City makes the following written
undertaking (the "Undertaking") for the benefit of holders of the Bonds:
(a) Undertaking to Provide Annual Financial Information and Notice of
Material Events. The City undertakes to provide or cause to be provided, either
directly or through a designated agent:
(i) To each nationally recognized municipal securities information
repository designated by the SEC in accordance with the Rule CNILMSIR")
and to a state information depository, if any, established in the state of
Washington (the "SID") annual financial information and operating data of the
type included in the final official statement for the Bonds and described in
Section 23(b) ("annual financial information");
(ii) To each NRMSIR or the Municipal Securities Rulemaking Board
CMSRB"), and to the S1D, timely 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) nnscheduled 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 m-exempt status of the Bonds;
(7) modifications to rights of holders of the Bonds; (8) Bond calls (other than
scheduled mandatory redemptions of Term Bonds); (9) defeasances; (10)
release, substitution, or sale of property securing repayment of the Bonds;
and (11) rating changes; and
(iii) To each NRMSIR or to the MSRB, and to the SID, timely notice
of a failure by the City to provide required annual financial information on
or before the date specified in Section 23(b).
-11-
(13) Typ~ of Annual Financial Information Undertaken to be Provided.
The annual financial information that the City undertakes to provide in Section 23(a):
(i) Shall consist of (1) authorized, issued and outstanding balance
of limited tax general obligation bonds; (2) authorized issued and outstanding
balance of waterworks utility .~,'a~m bonds; (3) debt service coverage for
Wator~vork~ Utility waterworks utility debt; (4) assessed valuation for the
fiscal year; (5) General Fund regular DrODert'v tax levy rate and re~,ular
DroDertv tax levy rate limit for the fiscal year; and (6) Annual Financial
Statements for the City;
(ii) Shall be prepared in accordance with applicable generally
accepted accounting principles promulgated by the Government Accounting
Standards Board ("GASB'), as such principles may be changed from time to
time by GASB or its successor;
(iii) Shall not be audited, except, however, that if and when audited
financial statements are otherwise prepared and available to the City they will
be provided from the Director of Finance and Administrative Services of the
City;
(iv) Shall be provided to each NRMSIR and the SID, not later than
the last day of the six',-~- ninth month after the end of each fiscal year of the
City (currently, a fiscal year ending December 31, as such fiscal year may
be changed as required or permitted by State law, commencing with the
City's fiscal year ending December 31, 1996; and
(v) May be provided in a single or multiple documents, and may
be incorporated by reference to other documents that have been filed with
each NRMS1R and the SID, or, if the document incorporated by reference is
a "final official sta~ment" with respect to other obligations of the City, that
has been filed with the MSRB.
(c) Amendment of Undertaking. The Undertaking is subject to
amendment after the primary offering of the Bonds without the consent of any holder
of any Bond, or of any broker, dealer, municipal securities dealer, participating
underwriter, rating agency, NRMSIR, the SID or the MSRB, under the circumstances
and in the manner permitted by the Rule.
The City will give notice to each NRMSIR or the MSRB, and the SID, of the
substance (or provide a copy) of any amendment to the Undertaking and a brief
staremerit of the reasons for the amendment. If the amendment changes the type of
annual f'mancial information to be provided, the notice also will include a narrative
explanation of the effect of that change on the type of information to be provided.
-12-
(d) Beneficiaries. The Undertaking evidenced by this Section 23 shall
inure to the benefit of the City and any holder of Bonds, and shall not inure to the
benefit of or cream any rights in any other person.
(e) Termination of Undertaking. The City's obligations under this
Undertaking shall terminate upon the legal defeasance of all of the Bonds. In
addition, the City's obligations under this Undertaking shall terminate if those
provisions of the Rule which require the City to comply with this Undertaking
be.c, ome legally inapplicable in respect of the Bonds for any reason, as confumed by
an opinion of nationally recognized bond counsel or other counsel familiar with
federal securities laws delivered to the City, and the City provides timely notice of
such te, t,dnation to each NRMSIR or the MSRB and the SID.
(t) Remedy for Failure to Comply with Undertaking. As soon as
practicable after the City learns of any failure to comply with the Undertaking, the
City will proceed with due diligence to cause such noncompliance to be corrected.
No failure by the City or other obligated person to comply with the Undertaking shall
constitute a default in respect of the Bonds. The sole remedy of any holder of a
Bond shall be to take such actions as that holder deems necessary, including seeking
an order of specific performance from an appropriate court, to compel the City or
other obligated person to comply with the Undertaking.
(g) Designation of Official Responsible to Administer Undertaking. The
Finance Director of Finance and Administrative Services the City or his or her
designee (or such other officer of the City who may in the future perform the duties
of the Director of Finance D'~c, etzr) and Administrative Services) is authorized and
directed in his or her discretion to take such further actions as may be necessary,
appropriate or convenient to carry out the Undertaking of the City in respect of the
Bonds set forth in this Section 23 and in accordance with the Rule, including, without
lirm'tation, the following actions:
(i) Preparing and filing the annual financial information undertaken
to be provided;
(ii) Determining whether any event specified in Section 23(a) has
occurred, assessing its materiality with respect to the Bonds, and, if material,
preparing and disseminating notice of its occurrence;
(iii) Determining whether any person other than the City is an
"obligated person" within the meaning of the Rule with respect to the Bonds,
and obtaining from such person an undertaking to provide any annual
financial information and notice of material events for that person in
accordance with the Rule;
(iv) Selecting, engaging and compensating designated agents and
consultants, including but not limited to financial advisors and legal counsel,
to assist and advise the City in carrying out the Undertaking; and
0mm. o~ -13-
(v) Effecting any necessary amendment of the Undertaking.
Section 24. Temporary Bond. Pending the printing, execution and delivery to the purchaser
of definitive Bonds, the City may cause to be executed and delivered to the purchaser a single
temporary Bond in the total principal amount of the Bonds. The temporary Bond shall bear the same
date of issuance, interest rates, principal payment dates and terms and covenants as the definitive
Bonds, shall be issued as a fully registered Bond in the name of the purchaser, and otherwise shall
be in a form acceptable to the purchaser. The temporary Bond shall be exchanged for definitive
Bonds as soon as they are printed, executed and available for delivery.
Section 25. Effective Date of Ordinance. This ordinance shall take effect and be in force
five days from and after its passage, approval and publication as required by law.
PASSED by the City Council this 7th day of December, 1995.
APPROVED by the Mayor this __ day of December, 1995.
ATTEST/AUTHENTICATED:
Mayor
City Clerk
APPROVED AS TO FORM:
City Attorney
FILED WITH CITY CLERK:
PASSED BY THE CITY COUNCIL:
PUBLISHED:
EFFECTIVE DATE:
ORDINANCE NO.:
02nn4.0~ -14-
I, SUSAN P. KASPER, City Clerk of the City of Bainbridge Island, Washington, certify that
the attached copy of Ordinance No. 95-53 is a true and correct copy of the original ordinance passed
on the 7th day of December, 1995, as that ordinance appears on the Minute Book of the City.
DATED this day of December, 1995.
SUSAN P. KASPER, City Clerk
FOSTER PEPPER & SHEFELMAN
A LAW PARTNERSHIP INCLUDING
[FORM OF APPROVING ! .~,GAL OPINION]
City of Bahabridge Island, Washington
Re'.
City of Bainbridge Island, Washington, $2,450,000 Limited Tax General Obligation
Refunding Bonds, 1995
We have examined a certified transcript of proceedings had by the City of Bainbridge Island,
Washington (the "City"), relating to its issuance of the above-referenced bonds (the "Bonds") and
also have examined an executed and authenticated Bond or a facsimile thereof.
The Bonds are issued pursuant to law for the purpose of providing the funds required to
advance refund the City's outstanding Water and Sewer Revenue Bonds, 1989, and to pay the costs
of issuance and sale of the Bonds, all as set forth in the Ordinance No. 95-53 {the 'Bond
Ordinance") and under and in accordance with the Constitution and laws of the State of Washington
and ordinances of the City.
The Bonds are fully registered; are in the denomination of $5,000 or any integral multiple
thereof within a single maturity; are numbered separately; are dated December 1, 1995; and bear
interest at the rates set forth below, payable semiannually on each May 1 and November 1,
commencing May I, 1996, to the maturity or earlier redemption of the Bonds. The Bonds are
payable at the principal office of either of the fiscal agencies of the State of Washington in Seattle,
Washington, or New York, New York (collectively, the 'Bond Registrar*). The Bonds mature on
November I in years and mounts and bear interest at the rates per annum as follows:
Maturity Interest
years Amounts Rates
1996 $ 40,000 3.80%
1997 20,000 4.00
1998 35,000 4.10
1999 145,000 4.15
2000 180,000 4.25
SEATTLE, WASHINGTON 98101-3299
TEL. 206-447-4400 FacsiMile 206-447-9700
ANCHORAGE, ALASKA BELLEVUE, WASHINGTON PORTLAND, OREGON SEATTLE, WASHINGTON
City of Bainbridge Island, Washington
Page 2
Maturity Interest
Years Amounts Rates
2001 $180,000 4.35%
2002 190,000 4.45
2003 205,000 4.55
2004 210,000 4.65
2005 225,000 4.75
2006 235,000 4.85
2007 250,000 4.95
2008 260,000 5.05
2009 275,000 5.15
Bonds maturing in the years 1996 through 2005, inclusive, are issued without the right or
option of the City to redeem those Bonds prior to their statexi maturity dates. The City has reserved
the right and option to redeem Bonds maturing on or after November 1, 2006, prior to their stated
maturity dates on or after November 1, 2005, as a whole at any time or in pan on any interest
payment date within one or more maturities selected by the City (and by lot within a maturity in such
manner as the Bond Registrar shall determine), at par plus accrued interest to the date fixed for
redemption and in the manner set forth in the Bonds.
For as long as any of the Bonds are outstanding, the City irrevocably has pledged to include
in its budget and to levy taxes annually within the constitutional and statutory tax limitations provided
by law without a vote of the electors of the City on all of the taxable property within the City in an
mount sufficient, together with other money legally available and to be used therefor, to pay when
due the principal of and interest on the Bonds, and the full faith, credit and resources of the City
have been pledged irrevocably for the annual levy and collection of those taxes and the prompt
payment of that principal and interest. The City has also pledged the Gross Revenue of the
Waterworks Uffiity subject to Maintenance and Operation Expenses and any Future Parity Bonds,
all as defined in Ordinance No. 89-50 of the City.
We have not reviewed and thus express no opinion concerning the completeness or accuracy
of any official statement, offering circular or other sales material rel_n_tlng to the issuance of the
Bonds or otherwise used in connection with the Bonds.
Under the Internal Revenue Code of 1986, as amended (the "Code"), issuers of m-exempt
obligations arc required to calculate and rebate to the United States certain investment earnings on
gross proceeds of those obligations in the event that all gross proceeds have not been spent within
02119~4.01
City of Bainbridge Island, Washington
Page 3
Under the Internal Revenue Code of 1986, as amended (the *Code*), issuers of tax-exempt
obligations are required to calculate and rebate to the United States certain investment earnings on
gross proceeds of those obligations in the event that all gross proceeds have not been spent within
certain periods prescribed by the Code. There is an exception to this rebate requirement available
to a governmental unit with general taxing powers in connection with the issuance of obligations
other than "private activity bonds" as def'med in the Code, if the governmental unit, together with
all subordinate governmental units, does not reasonably anticipate issuing more than $5,000,000 of
tax-exempt obligations (other than private activity bonds and other obligations not required to be
included in such calculation) during the calendar year in which the obligations are issued. The City
has certified in the Bond Ordinance that it is an issuer which qualifies for this arbitrage rebate
exception in connection with the issuance of the Bonds.
As of the date of initial delivery of the Bonds to the purchaser thereof and full payment
therefor, it is our opininnthat (1) the City is a duly organized and legally existing non-chartered code
city under the laws of the State of Washington; (2) the Bonds are issued in full compliance with the
provisions of the Constitution and laws of the State of Washington and the ordinances of the City
relating thereto; (3) the Bonds constitute valid general obligations of the City payable from annual
ad valorem taxes to be levied within the constitutional and statutory tax linfit_a_tions provided by law
without a vote of the electors of the City on all of the taxable property within the City, together with
Gross Revenue of the Waterworks Utility, except only to the extent that enforcement of payment may
be limited by bankruptcy, insolvency or other laws affecting creditors' rights and principles of equity
if equitable remedies are sought; and (4) assuming compliance by the City after the date of issuance
of the Bonds with applicable requirements of the Code, including arbitrage requirements, under
existing federal law the interest on the Bonds is excluded from gross income of the registered owners
for federal income tax purposes and is not an item of tax preference for purposes of the alternative
minimum tax applicable to individuals; however, while interest on the Bonds also is not an item of
tax preference for purposes of the alternative minimum tax applicable to corporations, interest on the
Bonds received by corporations is to be taken into account in the computation of adjusted current
earnings for purposes of the alternative minimum tax applicable to corporations, interest on the
Bonds received by certain corporations may be subject to an environmental tax, interest on the Bonds
received by certain S corporations may be subject to tax, and interest on the Bonds received by
foreign corporations with United States branches may be subject to a foreign branch profits tax. We
express no opinion regarding any other federal tax consequences of receipt of interest on the Bonds.
Respectfully submitted,
0211934.01
01-Dec-95
12:55 pm Prepared by Pac,,ic Crest Securities
TABLE OF CONTENTS
City of Bainbridge Island
LTGO Refunding Bonds, 1995
(Fi,,,nce 2.300 BAINBRDG:SCENA,REVENUE'A)
Page
Report
1
Sources and Uses of Funds .................................
2
Sun~nary of Refunding Results ................................
3
Sugary of Bonds Refunded .................................
4
Savings ..........................................
5
Prior Bond Debt Service ..................................
6
Escrow Requirements ....................................
7
Form 8038 Statistics Report ................................
9
Bond Summary Statistics ..................................
10
Bond Pricing ........................................
11
Detailed Bond Debt Service .................................
12
Proof of Arbitrage Yield ..................................
13
Escrow Descriptions Detail .................................
14
Escrow Cost Detail .....................................
15
Escrow Cash Flow ......................................
17
Escrow Sufficiency .....................................
18
Escrow Statistics .....................................
19
Proof of Composite Escrow Yield ..............................
20
Average Takedown ......................................
21
Cost of Issuance ......................................
01-Dec-95
12:55 pm
prepared by Pacl,ic Crest Securities (Finance 2.3Uu BAINBRDG:SCENA,REVENUE-A)
SOURCES AND USES OF FUNDS
City of Bainbridge Island
LTGO Refunding Sonds, 1995
Page 1
Sources of Funds
Bond Proceeds:
1996 to 2009
Other Sources of Funds:
Reserve Fund
Par Plus: Less:
Amount Accrued Discount
2,450,000.00 6,364.02
269,440.00
2,719,440.00
6,364.02
Total
2,456,364.02
269,440.00
2,725,804.02
Uses of Funds
Refunding Escrow Deposits:
Cash Deposit
Open Market Purchases
Other Fund Deposits:
General Fund
Delivery Date Expenses:
Cost of Issuance
Underwriter's Discount
Other Uses of Funds:
Additional Proceeds
Par Plus: Less:
Amount Accrued Discount
Total
3,220.65 3,220.65
2,505,000.00 31,949.38 -121,009.69 2,657,959.07
2,508,220.65 31,949.38 -121,009.69 2,661,179.72
6,364.02
20,320.00
36,750.00
57,070.00
6,364.02
1,190.28
2,572,844.95
20,320.00
36,750.00
57,070.00
1,190.28
31,949.38 '121,009.69 2,725,804.02
Note: General Fund includes deposit of 6,364.02 of bond accrued interest.
01 -Dec-95
12:55 pm
Prepared by Pacific Crest Securities (Finance 2.30U BAINBRDG:SCENA,REVENUE-A)
SUMMARY OF REFUNDING RESULTS
City of Bainbridge Island
LTGO Refunding Bonds, 1995
Page 2
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 12/21/1995 8 4.783056%
Net PV Savings
Percentage savings of refunded bonds
Percentage savings of refunding bonds
12/01/1995
12/21/1995
4.783056%
4.690329%
2,450,000.00
4.994534%
4.964567%
4.800986%
9.114
2,400,000.00
7.539383%
9.624
2,919,419.27
201,169.55
8.382065%
8.211002%
01 -Dec-95
12:55 pm
Prepared by Pacific Crest Securities
(Finance 2.300 BAINBRDG:SCENA,REVENUE-A)
SUMMARY OF BONDS REFUNDED
City of Bainbridge Island
LTGO Refunding Bonds, 1995
1989 - 1989 Bonds
Bond
Maturity Interest
Date Rate
Par
An~unt
Call
Date
Call
Price
$2,400,000 WS
SERIALS
SERIALS
SERIALS
SERIALS
SERIALS
SERIALS
SERIALS
SERIALS
SERIALS
SERIALS
SERIALS
SERIALS
Revenue Bonds, 1989:
11/01/1998 7.100%
11/01/1999 7.200%
11/01/2000 7.250%
11/01/2001 7.300%
11/01/2002 7.350%
11/01/2003 7.400%
11/01/2004 7.600%
11/01/2005 7.500%
11/01/2006 7.600%
11/01/2007 7.600%
11/01/2008 7.600%
11/01/2009 7.600%
15,000.00
125000.00
160 O00.O0
165 000.00
180 000.00
200 000.00
210 000.00
230 000.00
245 000.00
270000.00
290 OOO.O0
310,000.00
11/01/1999
11/01/1999
11/01/1999
11/01/1999
11/01/1999
11/01/1999
11/01/1999
11/01/1999
11/01/1999
11/01/1999
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
Page 3
2,400,000.00
01-Dec-95
12:55 pin Prepared by Pacific Crest Securities (Finance 2.300 BAINBRDG:SCENA,REVENUE-A)
PRIOR BOND DEBT SERVICE
City of Bainbridge Island
LTGD Refunding Bonds, 1995
S2,400,000 ~/S Revenue Bonds (1989)
Period Annual
Ending Principal Coupon Interest Debt Service Debt Service
Dec 21, 1995
May 1, 1996
Nov 1, 1996
May 1, 1997
Nov 1, 1997
May lr 1998
NOV 1, 1998
May 1, 1999
Nov 1, 1999
May 1, 2000
Nov 1, 2000
May 1, 2001
Nov 1, 2001
May 1, 2002
Nov 1w 2002
May 1, 2003
Nov 1, 2003
May 1, 2004
Nov 1, 2004
May 1, 2005
Nov lr 2005
May 1, 2006
Nov 1m 2006
May 1, 2007
Nov 1, 2007
May 1, 2008
Nov 1, 2008
May 1, 2009
Nov 1, 2009
15,000.00
125,000.00
160,000.00
165,000.00
180,000.00
200,000.00
210,000.00
230,000.00
245w000.00
270,000.00
290,000.00
310,000.00
7.100%
7.200%
7.250%
7.300%
7.350%
7.400%
7.600%
7.600%
7.600%
7.600%
7.600%
7.600%
89,960.00 89,960.00
89,960.00 89,960.00 179,920.00
89,960.00 89,960.00
89,960.00 89,960.00 179,920.00
89,960.00 89,960.00
89,960.00 104,960.00 194,920.00
89~427.50 89,427.50
89,427.50 214,427.50 303,855.00
84,927.50 84,927.50
84,927.50 244,927.50 329,855.00
79,127.50 79,127.50
79,127.50 244,127.50 323,255.00
73,105.00 73,105.00
73r105.00 253,105.00 326,210.00
66r490.00 66,490.00
66,490.00 266,490.00 332,980.00
59,090.00 59,090.00
59,090.00 269,090.00 328,180.00
51,110.00 51,110.00
51,110.00 281,110.00 332,220.00
42,370.00 42,370.00
42f370.00 287,370.00 329,740.00
33,060.00 33,060.00
33,060.00 303,060.00 336,120.00
22,800.00 22,800.00
22,800.00 312,800.00 335,600.00
11,780.00 11,780.00
11,780.00 321,780.00 333,560.00
1,766,335.00 4,166,335.00 4,166,335.00
2,400,000.00
Page 5
01-Dec-95 12:55 pm Prepared by PaC~TiC Crest Securities
(Finance 2.3bu BAINBRDG:SCENA,REVENUE-A) Page 6
ESCROW REQUIREMENTS
City of Sainbridge Island
LTGO Refunding Bonds, 1995
$2,400,000 W/S Revenue Bonds (1989)
Period
Ending
Principal
Principal Interest Redeemed
Totat
May 1, 1996
Nov 1, 1996
May 1, 1997
Nov 1, 1997
May 1, 1998
Nov 1, 1998
May 1, 1999
NOV 1, 1999
15,000.00
125,000.00
89,960.00
89,960.00
89,960.00
89,960.00
89,960.00
89,960.00
89,427.50
89,960.00
89,960.00
89,960.00
89,960.00
89,960.00
104,960.00
89,427.50
89,427.50 2,260,000.00 2,474,427.50
140,000.00 718,615.00 2,260,000.00 3,118,615.00
01 ~Dec-95
12:55 ~n
prepared by PaClTiC Crest Securities (Finance 2.30u SAINBRDG:SCENA,REVENUE-A)
FORM 8038 STATISTICS REPORT
City of Bainbridge Island
LTGO Refunding Bonds, 1995
Page 7
Dated Date 12/01/1995
Delivery Date 12/21/1995
Bond Component
1996 to 2009:
Date Principal Coupon Price
11/01/1996 40,000.00 3.800%
11/01/1997 20,000.00 4,000%
11/01/1998 35,000.00 4.100%
11/01/1999 145,000.00 4.150%
11/01/2000 180,000.00 4.250%
11/01/2001 180,000.00 4.350%
11/01/2002 190,000.00 4.450%
11/01/2003 205,000.00 4.550%
11/01/2004 210,000.00 4.650%
11/01/2005 225,000.00 4.750%
11/01/2006 235,000.00 4.850%
11/01/2007 250,000.00 4.950%
11/01/2008 260,000.00 5.050%
11/01/2009 275,000.00 5.150%
2,450,000.00
Redemption
Issue Price at Maturity
100.000 40,000.00 40,000.00
100.000 20,000.00 20,000.00
100.000 35,000.00 35,000.00
100.000 145,000.00 145,000.00
100.000 180,000.00 180,000.00
100.000 180,000.00 180,000.00
100.000 190r000.00 190,000.00
100.000 205,000.00 205,000.00
100.000 210,000.00 210,000.00
100.000 225,000.00 225,000.00
100.000 235,000.00 235,000.00
100.000 250,000.00 250,000.00
100.000 260,000.00 260,000.00
100.000 275,000.00 275,000.00
2,450r000.00 2,450,000.00
Final Maturity
Entire Issue
Maturity
Date
11/01/2009
Interest
Rate
5.150%
Issue
Price
275,000.00
2,450,000.00
Stated Weighted Net
Redemption Average Interest
at Maturity Maturity Yield Cost
275,000.00
2,450,000.00 9.114 4.783% 4.802%
01-Dec-95 12:55 pm Prepared by Pacltic Crest Securities (Finance 2.300 BAINBRDG:SCENA,REVENUE-A) Page 8
FORM 8038 STATISTICS REPORT
City of Bainbridge Island
LTGO Refunding Bonds, 1995
Refunded Bonds
Bond
Component
Date
Principal Coupon Price
Issue Price
$2,400,000 W/B Revenue Bonds:
SERIALS 11/01/1998
SERIALS 11/01/1999
SERIALS 11/01/2000
SERIALS 11/01/2001
SERIALS 11/01/2002
SERIALS 11/01/2003
SERIALS 11/01/2004
SERIALS 11/01/2005
SERIALS 11/01/2006
SERIALS 11/01/2007
SERIALS 11/01/2008
SERIALS 11/01/2009
15,000.00
125 000.00
160 000.00
165 000.00
180 000.00
200 000.00
210 000.00
230 000.00
245 000.00
270,000.00
290,000.00
310,000.00
7.100%
7.200%
7.250%
7.300%
7.350%
7.400%
7.600%
7.600%
7,600%
7.600%
7.600%
7,600%
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
15,000~00
125,000.00
160,000.00
165,000.00
180,000.00
200,000,00
210,000.00
230,000.00
245,000.00
270,000.00
290,000.00
310,000.00
2,400,000.00
2,400,000,00
$2,400,000 W/S Revenue Bonds
AlL Refunded Issues
Last
Call
Date
11/01/1999
11/01/1999
Issue
Date
11/01/1995
Remaining
Weighted
Average
Maturity
9.624
9.624
01-Dec-95 12:55 pm Prepared by Pacific Crest Securities (Finance 2.300 BAINBRDG:SCENA,REVENUE-A)
BOND SUMMARY STATISTICS
City of Bainbridge Island
LTGO Refunding Bonds, 1995
Page 9
Dated Date
Delivery Date
First Coupon
Last Maturity
Arbitrage Yield
True Interest Cost (TIC)
Net Interest Cost (NIC)
All-In TIC
Average Coupon
Average Life (years)
Duration of Issue (years)
Par Amount
Bond Proceeds
Total Interest
Net Interest
Total Debt Service
Maximum Annual Debt Service
Average Annual Debt Service
Underwriter's Fees (per $1000)
Average Takedown
Other Fee
Total Underwriter's Discount
Bid Price
12/01/1995
12/21/1995
5/01/1996
11/01/2009
4.783056%
4.994534%
4.964567%
5.113328%
4.800986%
9.114
7.287
2,450,000.00
2,456,364.02
1,078,581.45
1,115,331.45
3,528,581.45
289,667.50 .
254,107.87
15.000000
15.000000
98.500000
Bond Component
1996 to 2009
Par
Value
2,450,000.00
2,450,000.00
Price
100.000
Average
Coupon
4.B01%
Average
Life
9.114
9.114
Par Value + Accrued Interest
+ Premium (Discount)
- Underwriter's Discount
- Cost of Issuance Expense
- Other Amounts
Target Value
Target Date
Yield
TIC
2,450,000.00
6,364.02
-36,750.00
2,419,614.02
12/21/1995
4.994534%
All-in
TIC
2,450,000.00
6,564.02
'56,750.00
'Z0,320.00
2,399,294.02
12/21/1995
5.113328%
Arbitrage
Yield
2,450,000.00
6,364.02
2,456,364.02
12/21/1995
4.783086%
01-Dec-95 12:55 pm Page 10
Prepared by Pacific Crest Securities (Finance 2.30b BAINBRDG:SCENA,REVENUE-A)
BOND PRICING
City of Bainbridge Island
LTGO Refunding Bonds, 1995
Bond Component
1996 to 2009:
Maturity
Date Amount Rate Yield Price
11/01/1996
11/01/1997
11/01/1998
11/01/1999
11/01/2000
11/01/2001
11/01/2002
11/01/2003
11/01/2004
11/01/2005
11/01/2006
11/01/2007
11/01/2008
11/01/2009
40,000
20,000
35,000
145,000
180,000
180,000
190 000
205 000
210 000
225 000
235 000
250 000
260 000
275 000
2,450,000
3.800% 3.800% 100.000
4.000% 4.000% 100.000
4.100% 4.100% 100.000
4.150% 4.150% 100.000
4.250% 4.250% 100.000
4.350% 4.350% 100.000
4.450% 4.450% 100.000
4.550% 4.550% 100.000
4.650% 4.650% 100.000
4.750% 4.750% 100.000
4.850% 4.850% 100.000
4.950% 4.950% 100.000
5.050% 5.050% 100.000
5.150% 5.150% 100.000
Dated Date
De(ivery Date
First Coupon
Par Amount
Discount
Production
Underwriter's Discount
Purchase Price
Accrued Interest
12/01/1995
12/21/1995
5/01/1996
2,450,000.00
2,450,000.00
-36,750.00
2,413,250.00
6,364.02
100.000000%
-1.500000%
98.500000%
Net Proceeds 2,419,614.02
01-Dec-95 12:55 pm Prepared by Pacific Crest Securities (Finance 2.300 BAINBRDG:SCENA,REVENUE-A)
DETAILED BOND DEBT SERVICE
City of Bainbridge [stand
LTGO Refunding Bonds, 1995
Period
Ending Principal
Dec 21, 1995
May 1, 1996
Nov 1, 1996 40,000.00
May 1, 1997
NOv 1, 1997 20,000.00
May 1, 1998
Nov 1, 1998 35,000.00
May 1, 1999
NOV 1, 1999 145,000.00
May 1, 2000
NOV 1, 2000 180,000.00
May 1, 2001
NOV 1, 2001 180,000.00
May 1, 2002
Nov 1, 2002 190,000.00
May 1, 2003
Nov 1, 2003 205,000.00
May 1, 2004
Nov 1, 2004 210,000.00
May 1, 2005
Nov 1, 2005 225,000.00
May 1, 2006
Nov 1, 2006 235,000.00
May 1, 2007
Nov 1, 2007 250,000.00
May 1, 2008
Nov 1, 2008 260,000.00
May 1, 2009
Nov 1, 2009 275,000.00
2,450,000.00
1996 to 2009 (SERIALS}
Coupon Interest Debt Service
47,730.20
3.800% 57,276.25
56,516.25
4.000% 56,516.25
56,116.25
4.100% 56,116.25
55,398.75
4.150% 55,398.75
52,390.00
4.250% 52,390.00
48,565.00
4.350% 48,565.00
44,650.00
4.450% 44,650.00
40,422.50
4.550% 40,422.50
35,758.75
4.650% 35,758.75
30,876.25
4.750% 30,876.25
25,532.50
4.850% 25,532.50
19,833.75
4.950% 19,833.75
13,646.25
5.050% 13,646.25
7,081.25
5.150% 7,081.25
1,078,581.45
Annual
Debt Service
47,730.20
97,276.25 145,006.45
56,516.25
76,516.25 133,032.50
56,116.25
91,116.25 147,232.50
55,398.75
200,398.75 255,797.50
52,390.00
232,390.00 284,780.00
48,565.00
228,565.00 277,130.00
44,650.00
234,650.00 279,300.00
40,422.50
245,422.50 285,845.00
35,758.75
245,758.75 281,517.50
30,876.25
255,876.25 286,752.50
25,532.50
260,532.50 286,065.00
19,833.75
269,833.75 289,667.50
13,646.25
273,646.25 287,292.50
7,081.25
282,081.25 289,162.50
3,528,581.45 3,528,581.45
Page 11
01-Dec-95 Page 12
12:55 pin Prepared by Pacific Crest Securities (Finance 2.300 BAINBRDG:SCENA,REVENUE-A)
PROOF OF ARBITRAGE YIELD
City of Bainbridge island
LTGO Refunding Bonds, 1995
Date Debt Service
Present Value
to 12/21/1995
a 4.783055P~
May 1, 1996 47,730.20 46,922.41
Nov 1, 1996 97,276.25 93,396.35
May 1, 1997 56,516.25 52,994.69
Nov 1~ 1997 76,516.25 70,072.68
May 1# 1998 56#116.25 50,190.28
Nov 1# 1998 91,116.25 79,590.79
May 1, 1999 55,398.75 47,261.00
Nov 1, 1999 200,398.75 166,968.27
May 1, 2000 52,390.00 42,630,78
Nov 1, 2000 232,390.00 184,683.59
May 1, 2001 48~565.00 37,693.83
Nov 1# 2001 228,565.00 173,257.71
May 1, 2002 44#650.00 33,055.24
Nov 1, 2002 234,650.00 169,658.39
May 1, 2003 40,422.50 28,543.94
Nov 1, 2003 245,422.50 169,254.85
May 1, 2004 35,758.75 24,084.91
Nov 1, 2004 245,758.75 161,661.90
May 1, 2005 30,876.25 19,836.23
Nov 1, 2005 255,876.25 160,546.42
May 1, 2006 25~532.50 15,645.88
Nov 1, 2006 260,532.50 155,920.96
May 1, 2007 19,833.75 11,592.67
Nov 1, 2007 269~833.75 154,031.95
May 1, 2008 13,646.25 7,607.88
Nov 1~ 2008 273,646.25 148,996.48
May 1, 2009 7,081.25 3,765.58
Nov 1, 2009 282,081.25 146~498.33
3~528,581.45 2,456,364.02
Proceeds Summary
Delivery date
Par Value
Accrued interest
Target for yield calculation
12/21/1995
2,450,000.00
6,364.02
2,456,364.02
00000
01-Dec-95 12:55 pm Prepared by Pacific Crest Securities (Finance 2.300 BAINBRDG:SCENA,REVENUE-A)
ESCROW4 COST DETAIL
City of BainOridge Island
LTGO Refunding Bonds, 1995
Page 14
Type of Maturity Par Accrued Total
Security Date Amount Rate Yield Price Cost Interest Cost
Global Proceeds Escrow:
TNote 10/31/1996 2,000 6.875% 5.060% 101.500000 2,030.00 19.27 2,049.27
TNote 4/30/1997 6,000 6.500% 5.216% 101.656250 6,099.38 54.64 6,154.02
TNote 4/30/1998 3,000 5.125% 5.286% 99.640625 2,989.22 21.54 3,010.76
TNote 10/31/1998 17,000 4.750% 5.308% 98.531250 16,750.31 113.14 t6,863.45
TNote 4/15/1999 2m477,000 7.000% 5.367~. 104.890625 2,598,140.78 31,740.79 2,529,881.57
2,505,000 2,626~009.69 3t,949.38 2,657,959.07
Purchase Cost of Cash
Date Securities Deposit
Global Proceeds Escrow:
12/21/1995 2,657,959.07 3,220.65
2,657,959.07 3,220.65
Total
Escrow Cost
2,661,179.72
2,661,179.72
Yield
4.690329%
01-Dec-95 12:55 pm Prepared by Pacific Crest Securities (Finance 2.300 BAINBRDG:SCENA,REVENUE-A) Page 15
ESCROW4 CASH FLO~
City of Bainbridge Island
LTGO Refunding Bonds, 1995
1989 Bonds (1989) - Allocation of Global
Date
Present Value
Other Net Escrow to 12/21/1995
Cash Flows Receipts @ 4.6903286%
Dec
Apr
Apt
Oct
Oct
Apr
Apt
Oct
Oct
Apt
Apt
Oct
Oct
Apr
Nov
21, 1995 3,220.65 3,220,65 3,220.65
15, 1996 86,695.00 86f695.00 85,431.51
30, 1996 744.38 744.38 732.11
15, 1996 86,695.00 86,695.00 83,473.91
31, 1996 2,744.38 2,744.38 2,636.97
15, 1997 86,695.00 86,695.00 81,561.17
30, 1997 6,675.63 6f675.63 6,268.19
15, 1997 86,695.00 86,695.00 79,692.25
31, 1~97 480.63 480.63 440.89
15, 1998 86,695.00 86,695.00 77,866.16
30, 1998 3,480.63 3,480.63 3,120.13
15, 1998 86,695.00 86,695.00 76,081.92
31, 1998 17,403.75 17,403.75 15,241.77
15, 1999 89,295.00 89,295.00 76,567.98
1, 1999 2,474~400.00 2,474,400.00 2,068,844.11
3,118,615.03 3,118,615.03 2,661,179.72
Escrow Cost Sunmary
Purchase date
Purchase cost of securities
Target for yield calculation
12/21/1995
2,661,179.72
2,661,179.72
01-Dec-95
Date
Apr 15,
Apr
Oct 15,
Oct 31,
Apr 15,
Apr 30,
Oct 15,
Oct 31,
Apr 15,
Apt 30,
Oct 15,
Oct 31,
Apr 15,
Nov 10
12:55 pm Prepared by Pacific Crest Securities (Finance 2,300 BAINBRDG:SCENA,REVENUE-A) Page 16
ESCROW CASH FLOW
City of Bainbridge Island
LTGO Refunding Bonds, 1995
Global Proceeds Escrow
Principal Interest RotLovers
19~6 86,695. O0
1996 744.38
1996 86,695. O0
1996 2, OOO. O0 744.38
1997 ~,695.00
1997 6,000. O0 675.63
1997 86,695.00
1997 480.63
1998 86,695.00
1998 3,000. O0 480 · 63
1998 86,695. O0
1998 17, DO0. O0 403.75
1999 2,47'/,000.00 86,695.00
1999
2,505,000.00 610,394.38
-2,474,400.00
2,474,400.00
Present Value
Net Escrow to 12/21/1995
Receipts ~ 4.6903286%
86,695.00 85,431.51
744.38 732.11
86,695.00 83,473.91
21744.38 2,636.97
86,695.00 81#561.17
6#675.63 6,268.19
86,695.00 79,692.25
480.63 440.89
86#695.00 77,866.16
3,480.63 3t120.13
86t695.00 76,081.92
17,403.75 15f241.77
89,295.00 76#567.98
2,474#400.00 2,068,844.11
3,115,394.38 2,657,959.07
Escrow Cost Summary
Purchase date
Purchase cost of securities
Target for yield calculation
12/21/1995
21657,959.07
2,657,959.07
01-Dec-95 12:55 pm Prepared by Pacific Crest Securities (Finance 2.300 BAINBRDG:SCENA,REVENUE-A) Page 17
ESCROW SUFFICIENCY
Date
Dec 21, 1995
Apr 15, 1996
Apr 30, 1996
May 1, 1996
Oct 15, 1996
Oct 31, 1996
Nov 1, 1996
Apr 15, 1997
Apr 30, 1997
May 1, 1997
Oct 15, 1997
Oct 31, 1997
Nov 1, 1997
Apr 15, 1998
Apr 30, 1998
May 1, 1998
Oct 15, 1998
Oct 31, 1998
Nov 1, 1998
Apt 15, 1999
May 1, 1999
NOV 1, 1999
City of Rainbridge Island
LTGO Refunding Bonds, 1995
1989 Bonds (1989)
Escrow Net Escrow Excess Excess
Requirement Receipts Receipts Balance
89,960.00
89,960.00
89,960.00
89,960.00
89,960.00
104,960.00
89,427.50
2,474,427.50
3,220.65
86,695.00
744.38
86,695.00
2,744.38
86,695.00
6,675.63
86,695.00
480.63
86,695.00
3,480.63
86,695.00
17,403.75
89,295.00
2,474,400.00
3,220.65 3,220.65
86,695.00 89,915.65
744.38 90,660.03
-89,960.00 700.03
86,695.00 87,395.03
2,744.38 90,139.40
-89,960.00 179.40
86,695.00 86,874.40
6,675.63 93,550.03
-89,960.00 3,590.03
86,695.00 90,285.03
480.63 90,765.65
'89,960.00 805.65
86,695.00 87,500.65
3,480.63 90,981.28
-89,960.00 1,021.28
86,695.00 87,716.28
17,403.75 105,120.03
-104,960.00 160.03
89,295.00 89,455.03
-89,427.50 27.53
-27.50 0.03
3,118,615.00 3,118,615.03 0.03
01-Dec-95
12:55 pm
Prepared by Pacific Crest Securities (Finance 2.300 BAINBRDG:SCENA,REVENUE-A)
ESCROW STATISTICS
City of Bainbridge Island
LTGO Refunding Bonds, 1995
Page 18
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:
2,661,179.72 3.326
2,661,179.72
4.690329% 4.6757'35%
2,651,626.85 8,181.18 1,371.69
2,651,626.85 8,181.18 1,371.69
Delivery date 12/21/1995
Arbitrage yield 4.783056%
01-Dec-95
12:55 pm Prepared by Pacific Crest Securities
(Finance 2.300 8AINBRDG:SCENA,REVENUE-A)
PROOF OF COMPOSITE ESCROU YIELD
City of Bainbridge [stand
LTGO Refunding Bonds, 1995
ALl restricted escrows funded by bond proceeds
Date
Security Net Escrow
Receipts Rol(overs Receipts
Present Value
to 12/21/1995
~ 4.6903286%
Apr
Apr
Oct
Oct
Apr
Apr
Oct
Oct
Apr
Apr
Oct
Oct
Apr
Nov
15, 1996
30, 1996
15, 1996
31, 1996
15, 1997
30, 1997
15, 1997
31, 1997
15, 1998
30, 1998
15, 1998
31, 1998
15, 1999
1, 1999
86,695.00
744.38
86,695.00
2,744.38
86,695.00
6,675.63
86,695.00
480.63
86,695.00
3,480.63
86,695.00
17,403.75
2,563,695.00
'2,474,400.00
2,474,400.00
86,695.00 85,431.51
744.38 732.11
86,695.00 83,473.91
2,744.38 2,636.97
86,695.00 81,561.17
6,675.63 6,268.19
86,695.00 79,692.25
480.63 440.89
86,695.00 77,866.16
3,480.63 3,120.13
86,695.00 76,081.92
17,403.75 15,241.77
89,295.00 76,567.98
2,474,400.00 2,068,844.11
3,115,394.38
3,115,394.38 2,657,959.07
Page 19
Escrow Cost SLm~nary
Purchase date
Purchase cost of securities
Target for yield calculation
12/21/1995
2,657,959.07
2,657,959.07
01-Dec-95
12:55 pm
Prepared by Pacific Crest Securities
(Finance 2.300 BAINBRDG:SCENA,REVENUE-A)
AVERAGE TAKEDOWN
City of Bainbridge IsLand
LTGO Refunding Bonds, 1995
Page 20
Dated Date 12/01/1995
Oetivery Date 12/21/1995
Bond Component
1996 to 2009:
Maturity Par Takedown Takedown
Date Amount S/Bond Amount
11/01/1996 40,000 5.00000 200.00
11/01/1997 20,000 5.00000 100.00
11/01/1998 35,000 5.00000 175.00
11/01/1999 145,000 3.75000 543.75
11/01/2000 180,000 3.75000 675.00
11/01/2001 180,000 5.00000 900.00
11/01/2002 190,000 5.00000 950.00
11/01/2003 205,000 5.00000 1,025.00
11/01/2004 210,000 5.00000 1,050.00
11/01/2005 225,000 5.00000 1,125.00
11/01/2006 235,000 6.25000 1,468.7~
11/01/2007 250,000 6.25000 1,562.50
11/01/2008 260,000 6.25000 1,625.00
11/01/2009 275,000 6.25000 1,718.75
2,450,000 5.35459 13,118.75
Rounded Takedown
S/Bond 5.35
Total amount 13,107.50
01-Dec-95
12:55 pm
Prepared by Pacific Crest Securities
(Finance 2.300 BAINBRDG:SCENA,REVENUE-A)
COST OF ISSUANCE
City of Bainbridge Island
LTGO Refunding Bonds, 1995
Page 21
Cost of Issuance
Bond Counsel
Bond Printing
Trustee
Escrow Verification
Hoody's
$/1000
3.67347
0,70204
0.57143
1.22449
2.12245
Amount
9,000.00
1,720.00
1,400.00
3,000.00
5,200.00
8.29388 20,320.00
REPRESENTATIONS
Neither the City nor the Underwriters has authorized any dealer, broker, salesperson or other persons to
given any information or make any representations other than those made in this Official Statement,
and, if given or made, such other information or representations must not be relied upon as having been
authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell,
or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any
jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.
The information contained in this Official Statement has been obtained from City Officials and other
sources believed to be reliable. Neither a representation, warranty nor guarantee is made by the
Underwriter as to the accuracy or completeness of any information in this Official Statement and
nothing contained in this Official Statement is or shall be relief upon as a promise or representation by
the Underwriter. The delivery of this Official Statement does not imply that the information contained
herein is correct as of any time subsequent to the date of the Official Statement as shown on the cover
page.
Disclosure Statement
The City will deliver to the Underwriter at the time of delivery of the Bonds a signed statement
substantially to the effect that this Official Statement, as of its date and as of the date of the Bonds,
neither contains any untrue statement of a material fact nor omits to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were made, not misleading
in any material respect and that there has not been any material adverse change in the normal operations
or financial condition of the City nor, to the best of the City 's knowledge, in the general economy of the
City since the date of the Official Statement.
Securities Act of 1933
The Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon
specific exemptions contained in such act. The registration or qualification of the Bonds in accordance
with applicable provisions of securities laws of the state in which the Bonds have been registered or
qualified and the exemption from registration or qualification in other states cannot be regarded as a
recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of
the Bonds nor the accuracy or completeness of this Official Statement. Any representation to the
contrary may be a criminal offense.
Secondary Market
It has been the practice of the Underwriter to maintain a secondary market in municipal bonds which it
sells. The Underwriter intends to engage in secondary market trading of the Bonds, subject to
applicable securities laws. The Underwriter, however, is neither obligated to engage in secondary
trading nor to repurchase any of the Bonds at the request of the registered owners thereof and no
assurance can be given that a secondary market for the Bonds will be available.
In connection with the offering of the Bonds, the Underwriter may over-allot or effect transactions that
stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in
the open market. Such stabilizing, if commenced, may be discontinued at anytime.
ii
City of Bainbridge Island, Washington
Page 3
certain periods prescribed by the Code. There is an exception to this rebate requirement available
to a governmental unit with general taxing powers in connection with the issuance of obligations
other than "private activity bonds" as defined in the Code, if the governmental unit, together with
all subordinate governmental units, does not reasonably anticipate issuing more than $5,000,000 of
tax-exempt obligations (other than private activity bonds and other obligations not required to be
included in such calculation) during the calendar year in which the obligations are issued. The City
has certified in the Bond Ordinance that it is an issuer which qualifies for this arbitrage rebate
exception in connection with the issuance of the Bonds.
As of the date of initial delivery of the Bonds to the purchaser thereof and full payment
therefor, it is our opinion that (1) the City is a duly organized and legally existing non-chartered code
city under the laws of the State of Washington; (2) the Bonds are issued in full compliance with the
provisions of the Constitution and laws of the State of Washington and the ordinances of the City
relating thereto; (3) the Bonds constitute valid general obligations of the City payable from annual
ad valorera taxes to be levied within the constitutional and statutory tax limitations provided by law
without a vote of the electors of the City on all of the taxable property within the City, together with
Gross Revenue of the Waterworks Utility, except only to the extent that enforcement of payment may
be limited by bankruptcy, insolvency or other laws affecting creditors' rights and principles of equity
if equitable remedies are sought; and (4) assuming compliance by the City after the date of issuance
of the Bonds with applicable requirements of the Code, including arbitrage requirements, under
existing federal law the interest on the Bonds is excluded from gross income of the registered owners
for federal income tax purposes and is not an item of tax preference for purposes of the alternative
minimum tax applicable to individuals; however, while interest on the Bonds also is not an item of
tax preference for purposes of the alternative minimum tax applicable to corporations, interest on the
Bonds received by corporations is to be taken into account in the computation of adjusted current
earnings for purposes of the alternative minimum tax applicable to corporations, interest on the
Bonds received by certain corporations may be subject to an environmental tax, interest on the Bonds
received by certain S corporations may be subject to tax, and interest on the Bonds received by
foreign corporations with United States branches may be subject to a foreign branch profits tax. We
express no opinion regarding any other federal tax consequences of receipt of interest on the Bonds.
Respectfully submitted,
0211934.01
TABLE OF CONTENTS
Page
Introduction ..................................................................................................
1
Description of the Bonds ........................................................................................
The Advance Refunding Plan .............................................. .3
Verification of Mathematical Calculations ...................................................................4
Administration of Refunding Plan ................................................... 4
.5
Purpose .............................................................................................................
...................... 5
Sources and Uses of Funds ................................................................
Debt Payment Record ......................................................................................5
5
Future Financing ..................................................................................................
..5
Security ..................................................... 5
Litigation ..................................................... . ..................... 6
Assessed Valuation Determination .................................... 6
Tax Collection Procedure .......................................................................................
6
Initiative 601 ............................................................................ .7
Authorization of Debt ...........................................................................................
· .7
General Obligation Indebtedness ...................................................
Limits on Amount of General Obligation Indebtedness ........................ 7
Computation of Statutory Debt Limitations ..................................................................9
Net Direct and Overlapping General Obligation Debt .....................................................9
Bonded Debt Ratios ............................................................... .10
Major Taxpayers Within the City ........................................................ l0
Taxing Powers and Limitations ................................................22222222222......................lo
.11
Tax Collection Record of the City ...........................................................~7" ... 12
Levy Amounts and Rates of the City ............................................
Representative City Property Tax Rates ......................................................................12o
Comparative Statement of Combined Tax Supported Fund Revenues and Expenditures ............ 1 ~
Combined Tax Supported Fund Revenues and Expenditures, 1995 Budget ........................... 13
Schedule of General Obligation Bonded Indebtedness of the City .......................................14
Historical Combined Waterworks Utility Operations ......................... .15
.16
The City ........................................................... .17
General and Economic ..........................................................................................
Preservation of Tax Exemption ..................................................................18
......... 26
Tax Exemption ............................................................................. .26
Certain Other Federal Tax Consequences ..................................................................
Approval of Bond Counsel ......................................................................................277
co.mcts of Interest .........................................................................................222222:2a
Rating ..........................................
............................................................... 28
Underwriting ..................................................... . ......... 28
Continuing Disclosure Undertaking ............................................. . .30
CUSIP Numbers .................................................................................................
· .30
Miscellaneous ....................................................................................................
Form of Counsel Opinion ..........................................................................Appendix A
iv
FOSTER PEPPER & SHEFELMAN
[FORM OF APPROVING LEGAL OPINION]
City of Bainbridge Island, Washington
City of Bainbridge Island, Washington, $2,455,000 Limited Tax General Obligation
Refunding Bonds, 1995
We have examined a certified transcript of proceedings had by the City of Bainbridge Island,
Washington (the "City"), relating to its issuance of the above-referenced bonds (the "Bonds") and
also have examined an executed and authenticated Bond or a facsimile thereof.
The Bonds are issued pursuant to law for the purpose of providing the funds required to
refund the City's outstanding Water and Sewer Revenue Bonds, 1989, and to pay the costs of
issuance and sale of the Bonds, all as set forth in the Ordinance No. (the "Bond
Ordinance") and under and in accordance with the Constitution and laws of the State of Washington
and ordinances of the City.
The Bonds are fully registered; are in the denomination of $5,000 or any integral multiple
thereof within a single maturity; are numbered separately; are dated December 1, 1995; and bear
interest at the rates set forth below, payable semiannually on each May 1 and November 1,
commencing May 1, 1996, to the maturity or earlier redemption of the Bonds. The Bonds are
payable at the principal office of either of the fiscal agencies of the State of Washington in Seattle,
Washington, or New York, New York (collectively, the "Bond Registrar"). The Bonds mature on
November 1 in years and amounts and bear interest at the rates per annum as follows:
Maturity Interest
Years Amounts Rates
1996 $ 35,000
1997 20,000
1998 35,000
1999 145,000
2000 180,000
Notice of Redemption
Notice of any such early redemption of the Bonds will be given not less than 30 nor more than 60 days
prior to the date fixed for redemption, by first-class mail, postage prepaid, to the Owners of each Bond
to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares
the notice. The requirements of notification will be deemed to be complied with when notice is mailed
as provided by the Bond Ordinance, whether or not it is actually received by the Owner of any Bond.
In addition, such redemption notice shall be mailed within the same period, postage prepaid, to such
other persons, including registered securities depositories, and with such additional information as the
City Director of Finance and Administrative Services shall deem appropriate, but such mailings shall
not be a condition precedent to the redemption of such Bonds.
If such notice shall have been given and the City shall have set aside, on the date fixed for redemption,
sufficient money for the payment of all Bonds called for redemption, the Bonds so called shall cease to
accrue interest after such redemption date, and all such Bonds shall be deemed not to be outstanding
hereunder for any purposes, except that the Owners thereof shall be entitled to receive payment of the
redemption price and accrued interest to the redemption date from the money set aside for such
purpose.
If any Bond is not paid upon proper presentment at its maturity or earlier redemption. the City shall be
obligated to pay interest at the same rate for such Bond until such Bond, both principal and interest, is
paid in full.
Purchase of the Bonds by the City
The City further reserves the right and option to purchase any or all of the Bonds in the open market at
any time at any price acceptable to the City plus accrued interest to the date of purchase when the
Bonds are available for purchase. All Bonds so purchased or redeemed shall be canceled.
Registrar, Paying Agent and Transfer Agent
Both principal of and interest on the Bonds are payable in lawful money of the United States of
America. Principal of the Bonds will be paid by the Fiscal Agency of the State of Washington (the
"Registrar," the "Paying Agent" and the "Transfer Agent") upon presentation and surrender of the
Bonds, at maturity or earlier redemption, at either of the principal corporate trust offices of the
Registrar in Seattle, Washington or New York, New York. Interest on the Bonds will be paid by check
or draft of the Paying Agent mailed on the interest payment date to the registered owners at the
addresses appearing on the Bond Register on the fifteenth day of the month preceding the interest
payment date. Currently, the Fiscal Agency of the State of Washington is First Interstate Bank of
Washington, N.A., Seattle, Washington, and The Bank of New York, New York, New York.
Transferability
The Bonds may be transferred only on the Bond Register maintained by the Registrar for that purpose
and only if endorsed in writing in the manner provided thereon and surrendered by the Registered
Owner or Registered Owner's nominee to the Registrar for re-registration upon the Bond Register and
on the Registration Certificate on the Bonds. Such transfer shall be without cost to the Registered
Owner or transferee.
The City and the Registrar may deem the person in whose name each Bond is registered to be the
absolute owner thereof for the purposes of securing payment of the principal of and interest on such
Bond and for any and all other purposes whatsoever. Upon surrender thereof to the Registrar, the
Bonds are interchangeable for Bonds in any authorized denomination of an equal aggregate principal
amount and of the same interest rate and maturity.
The Registrar shall not be obligated to exchange or transfer any Bond during the fifteen days preceding
any principal payment or redemption date.
CUSIP NUNIBERS
It is anticipated that CUSIP identification numbers will be printed on the Bonds l but neither the failure
to print such numbers on any Bonds or any error with respect thereto shall constitute cause for a failure
or refusal by the purchaser hereof to accept delivery of and pay for said Bonds in accordance with the
terms of the purchase contract. All expenses in relation to the printing of CUSIP numbers on said
Bonds shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the
assignment of said numbers shall be the responsibility of and shall be paid for by said purchaser.
MISCELLANEOUS
The descriptions of the Ordinance and other documents are brief summaries of certain provisions
thereof. Such summaries do not purport to be complete, and reference is made to such documents and
contracts, copies of which are on file with the City, for full and complete statements of their provisions.
All estimates and projections included in this Preliminary Official Statement, whether or not so stated,
are not to be construed as representations that the same will be realized. Section headings, tables
headings and captions are included for convenience only and should not be construed as modifying the
text of this Preliminary Official Statement.
The City's financial statements for fiscal years 1990 and 1991 have been audited by the Washington
State Auditor's Office.
Information concerning the City contained in this Preliminary Official Statement has been furnished by
the City.
All projections and other statements in this Preliminary Official Statement involving matters of opinion,
whether or not expressly so stated, are intended as such and not as representations of fact. This
Preliminary Official Statement is not to be construed as a contract or agreement between the City and
the purchasers or holders of any of the Bonds.
The execution and delivery of this Preliminary Official Statement has been duly authorized by the City.
Dated: , 1995
THE CITY OF BAINBRIDGE ISLAND, WASHINGTON
By: \s\
Director of Finance and Administrative Services
3O
VERIFICATION OF MATHEMATICAL COMPUTATIONS
Ernst & Young LLP, a firm of independent public accountants, will deliver to the City its attestation
report indicating that it has examined, in accordance with standards established by the American
Institute of Certified Public Accountants, the information and assertions provided by the City and its
representative. Included in the scope of its examination will be a verification of the mathematical
accuracy of (a) the mathematical computation of the adequacy of the cash and the maturing principal of
and interest on the Acquired Obligations deposited in the Escrow Fund to pay when due, maturing
principal of, principal redemption of and interest on the Refunded Bonds; and (b) the mathematical
computations supporting the conclusions of Bond Counsel that the Bonds are not "arbitrage bonds"
under the Code and the regulations promulgated thereunder.
ADMINISTRATION OF THE REFUNDING PLAN
The Escrow Agent is authorized and directed to purchase the Acquired Obligations (or substitute
obligations) and to make the payments required to be made by the Refunding Plan from the Acquired
Obligations (or substitute obligations) and money deposited with the Escrow Agent pursuant to the
Ordinance. All Acquired Obligations (or substitute obligations) and the money deposited with the
Escrow Agent and any income therefrom shall be held irrevocably, invested and applied in accordance
with the provisions of the Ordinance, Chapter 39.53 RCW and other applicable statutes of the State of
Washington, and the Escrow Agreement. All necessary and proper fees, compensation and expenses of
the Escrow Agent for the Bonds and all other costs incidental to establishing the escrow to accomplish
the refunding of the outstanding Refunded Bonds and costs related to the issuance and delivery of the
Bonds, including bond printing, rating service fees, verification fees, bond counsel's fees and other
related expenses, shall be paid out of the proceeds of the Bonds.
Authorization for Escrow Agreement
In order to carry out the Refunding Plan provided for by the Ordinance, the Mayor or the Director of
Finance and Administrative Services is authorized and directed to execute and deliver to the Escrow
Agent, an Escrow Agreement setting forth the duties, obligations and responsibilities of the Escrow
Agent in connection with the payment, redemption and retirement of the Refunded Bonds, as provided
in the Ordinance and stating that the provisions for payment of the fees, compensation and expenses of
such Escrow Agent set forth therein are satisfactory to the Escrow Agent.
Prior to executing the Escrow Agreement, the Director of Finance and Administrative Services is
authorized to make sure such changes therein which do not change the substance and purpose thereof
or which assure that the escrow provided therein and the Bonds are in compliance with the
requirements of federal law governing the exclusion of interest on the Bonds from gross income for
federal income tax purposes.
All money and the Acquired Obligations on deposit with the Escrow Agent, including interest to be
earned thereon, are pledged solely and irrevocably for the benefit of the holders of the Refunded Bonds
and are not available for payment of the Bonds.
The advance refunding will defease the Refunded Bonds, and they will no longer be considered
outstanding obligations of the City.
The Escrow Agent
First Interstate Bank of Washington, N.A., is serving as the Escrow Agent for the purpose of managing
the cash and investments which comprise the Acquired Obligations for the Refunded Bonds, which will
pay the principal of, interest on and redemption premium, if any, on the Refunded Bonds, as the same
become due and payable.
CONFLICTS OF INTEREST
Some or all of the fees of the Underwriter and Bond Counsel are contingent upon the issuance and sale
of the Bonds. Furthermore, Bond Counsel from time to time serves as counsel to the Underwriter with
respect to issuers other than the City and transactions other than the issuance of the Bonds. None of
the Councilmembers or other officials of the City have an interest in the issuance of the Bonds that are
prohibited by applicable law.
RATING
The Bonds have been rated "A" by Moody's Investors Service.. The rating reflects only the view of
the rating agency and an explanation of the significance of the rating may be obtained from Moody's
Investors Service. 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, suspended or withdrawn entirely by the rating agency if,
in their judgment, circumstances so warrant. Any such downward revision, suspension or withdrawal
of the rating will be likely to have an adverse effect on the market price of the Bonds.
UNDERWRITING
The Bonds are being purchased by the Underwriter, Pacific Crest Securities, Inc. The Underwriter has
agreed to purchase the Bonds at an underwriting discount of $ from the initial offering
prices reflected on the cover page. The Purchase Contract for the Bonds provides that the Underwriter
will purchase all the Bonds, if any are purchased. The public offering prices for the Bonds set forth on
the cover page hereof may be changed after the initial offering by the Underwriter. The City has
agreed to indemnify the Underwriter against certain liabilities.
CONTINUING DISCLOSURE UNDERTAKING
Basic Undertaking to Provide Annual Financial Information and Notice of Material Events. Because it
will have outstanding less than $10,000,000 of obligations after the issuance of the Bonds, the City is
currently exempt from the requirements of United States Securities and Exchange Commission (SEC)
Rule 15c2-12(b)(5) (the "Rule"), as applicable to a participating underwriter for the Bonds, however,
the City will undertake (the "Undertaking") for the benefit of holders of the Bonds to provide or cause
to be provided, either directly or through a designated agent, to each nationally recognized municipal
securities information repository designated by the SEC in accordance with the Rule CNRMSIR") and
to a state information depository, if any, established in the state of Washington (the "SID") annual
financial information and operating data of the type included in this Official Statement as generally
described below Cannual financial information"); and to each NRMSIR or the Municipal Securities
Rulemaking Board CMSRB"), and to the SID, timely notice of the occurrence of any of the following
events with respect to the Bonds, if material: (i) principal and interest payment delinquencies; (ii)
non-payment related defaults: (iii) unscheduled draws on debt service reserves reflecting financial
difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties: (v)
substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or
events affecting the tax-exempt status of the Bonds; (vii) modifications to rights of holders of the
Bonds; (viii) Bond calls (other than scheduled mandatory redemptions of Term Bonds); (xi)
defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds; and (xi)
rating changes. The City also will provide to each NRMSIR or to the MSRB, and to the SID, timely
notice of a failure by the City to provide required annual financial information on or before the date
specified below.
28
ASSESSED VALUATION DETERMINATION
In the State of Washington, the County Assessor (the "Assessor") determines the value of all real and
personal property throughout the County (including the City), which is subject to ad vaIorem taxation.
The Assessor' s duties and methods of determining value are prescribed and controlled by statute and by
detailed regulations promulgated by the Department of Revenue of the State of Washington. For tax
purposes the assessed value of property is set at 100% of its actual value. By state statute all property
is subject to re-evaluation at least every four years. The property is listed by the Assessor on a tax roll
at its current assessed value and the tax roll is filed in the Assessor' s office.
The Assessor's determinations are subject to revision by the County Board of Equalization and, for
certain property, subject to further revision by the State Board of Equalization. After all administrative
procedures are completed, the taxing unit receives the Assessor's final certificate of assessed value of
property within the taxing unit.
TAX COLLECTION PROCEDURE
Property taxes are levied in specific amounts, and the rate for all taxes levied for all taxing districts in
the County (including the City) are determined, calculated and fixed by the Assessor based upon the
assessed valuation of the property within the various taxing districts. The Assessor extends the taxes to
be levied within each taxing district upon a tax roll which contains the total amount of taxes to be so
levied and collected and assigns a tax account number to each tax lot. The tax roll is delivered to the
Kitsap County Treasurer by December 15 of each year, and an abstract of the tax roll, showing the
total amount of taxes collectible in each of the taxing districts for the year, is delivered to the Board of
County Commissioners at the same time. All taxes are due and payable on the 30th of April of each
year, but if the amount due from a taxpayer exceeds thirty dollars ($30.00), one-half may be paid then
and the balance no later than October 31 of each year.
The method of giving notice of pay. ment of taxes due, accounting for the money collected, the division
of the taxes among the various taxing districts, giving notice of delinquency, and collection procedure
are all covered by detailed statutes. The lien for ad valorem property taxes which have been levied
prior to the filing of federal tax liens is prior to such federal tax liens.
In other respects, and subject to the possible "Homestead Exemption," the lien for delinquent property
taxes is prior to all other liens or encumbrances of any kind on real or personal property subject to
taxation. By law (Chapter 6.13 RCW) the taxing district may commence foreclosure of a tax lien on
real property after three (3) years have passed since the first delinquency. Washington State's courts
have not decided whether the Homestead Exemption gives the occupying homeowner a right to retain
the first $30,000 proceeds of a forced sale of a family residence for delinquent general property taxes.
INITIATIVE 601
Initiative 601 was approved by the voters of the state on November 2, 1993. On July 1, 1995,
Initiative 601 began limiting spending from the State's general fund by a "fiscal growth factor" based
on the rate of inflation and the rate of population growth in the State. Increases in State taxes up to the
spending limit must now be approved by a 2/3 vote in each house of the legislature. Increases in tax
revenues above the spending limit must be approved by a 2/3 vote of the legislature and by a majority
of voters at the next election. State fees may not be increased at a rate greater than the "fiscal growth
factor" without prior legislative approval. Additionally, the legislature may not mandate new programs
or increased levels of service in existing programs by local governments without appropriating enough
money to reimburse such costs fully.
Initiative 601 does not, by its terms, effect the authority of the City or other cities to authorize or issue
general obligation bonds or to levy and collect taxes for the payment of general obligation bonds. The
City does not believe that Initiative 601 will have any material effect on the finances of the City nor the
ability of the City to pay debt service on the Bonds.
PRESERVATION OF TAX EXEMPTION
The City covenants that it will take all actions necessary to prevent interest on the Bonds from being
included in gross income for federal income tax purposes, and it will neither take any action nor make
or permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds
at any time during the term of the Bonds which will cause interest on the Bonds to be included in gross
income for federal income tax purposes. The City certifies that it has not been notified of any listing or
proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage
certifications may not be relied upon.
TAX EXEMPTION
Exclusion from Gross Income
In the opinion of Bond Counsel, assuming compliance by the City with applicable requirements of the
Code, including arbitrage requirements under Section 148 of the Code, interest on the Bonds is
excluded from gross income of registered owners for federal income tax purposes under existing
federal law and is not an item of tax preference for purposes of the alternative mininmm tax applicable
to individuals.
Corporate Alternative Minimum Tax
While interest on the Bonds also is not an item of tax preference for purposes of the alternative
minimum tax applicable to corporations, under Section 55 of the Code, tax-exempt interest, including
interest on the Bonds, received by corporations is taken into account in the computation of adjusted
current earnings for purposes of the alternative minimum tax applicable to corporations (as defined for
federal income tax purposes). Under the Code, alternative minimum taxable income of a corporation
will be increased by 75 percent of the excess of the corporation's adjusted current earnings (including
any tax-exempt interest) over the corporation' s alternative minimum taxable income determined without
regard to such increase. A corporation's alternative minimum taxable income, so computed, that is in
excess of an exemption of $40,000, which exemption will be reduced (but not below zero) by 25
percent of the amount by which the corporation's alternative minimum taxable income exceeds
$150,000, is then subject to a 20 percent minimum tax.
Corporate Environmental Tax
Section 59A of the Code imposes for taxable years beginning on or before January 1, 1996, an
environmental tax of 0.12 percent ($1.20 per $1,000) on the amount of a corporation's alternative
minimum taxable income (increased for certain book income and adjusted current earnings, including
any tax-exempt interest) that exceeds $2,000,000.
Tax on Certain Passive Investment Income of S Corporations
Under Section 1375 of the Code, certain excess net passive investment income, including interest on
the Bonds, received by an S corporation (a corporation treated as a partnership for most federal tax
purposes) that has Subchapter C earnings and profits at the close of the taxable year may be subject to
federal income taxation at the highest rate applicable to corporations if more than 25 percent of the
gross receipts of such S corporation is passive investment income.
Foreign Branch Profits Tax
Interest on the Bonds may be subject to the foreign branch profits tax imposed by Section 884 of the
Code when the Bonds are owned by, and effectively connected with a trade or business of, a United
States branch of a foreign corporation.
26
and park facilities - 2-1/2%. The combination of unlimited tax and limited tax general obligation debt
for all purposes cannot exceed 7.5 % of the City's assessed valuation.
The State statutory limks on City general obligation indebtedness described in this section are more
restrictive than those contained in the State Constitution. Both the Constitutional and statutory debt
limits may be exceeded if necessary to meet obligations made mandatory by State law or, if necessary,
to maintain the corporate existence of the City.
In computing total general obligation indebtedness, the following "assets" may be deducted against the
principal amount of indebtedness outstanding: (a) money and invesUnents on deposit in general
obligation bond retirement funds; (b)taxes (both current and delinquent) levied for the payment of
general obligation indebtedness; and (c) delinquent (but not current) taxes due the general fund.
In addition to limits on the total principal amount of general obligation indebtedness described in this
section, the Constitution and statutes of the State impose other limitations on the City's levy of taxes
upon real and personal property. (See section herein entitled "TAXING POWERS AND
LIMITATIONS" .)
BREMERTON PMSA (KITSAP COUNTY)
AVERAGE ANNUAL RESIDENT CIVILIAN LABOR FORCE DATAIs
1994 1993 1992 1991 1990 1989 1988 1987
Civilian Labor Force
Total Employment
Unemployment
Unemployment as a percent of labor force
89,500 90,100 88,900 85,600 84,300 79,900 76,400 72,900
84,100 84,100 83,500 81,400 80,900 75,600 72,300 68,500
5,400 6,000 5,400 4,200 3,400 4,300 4,100 4,400
6.0% 6.7% 6.1% 4.9% 4.0% 5.4% 5.4% 6.0%
BREMERTON PMSA (KITSAP COUNTY)
NON-AGRICULTURAL WAGE AND SALARY WORK. ERS19
1994 1993 1992
TOTAL WAGE AND SALARY WORKERS 67,300 67,900 67,800
TOTAL MANUFACTURING 1,900 1,800 1,800
MINING &MISCELLANEOUS 600 700 500
CONSTRUCTION 3,100 3,300 3,300
TRANSPORTATION, COMMUNICATIONS
&PUBLIC UTILITIES 1,800 1,800 1,800
WHOLESALE AND RETAIL TRADE 14,800 14,900 14,700
FINANCE, INSURANCE AND REAL ESTATE 2,700 2,700 2,500
SERVICE S 15,000 14,900 13,500
GOVERNMENT 27,300 27,800 29,400
WORKERS IN LABOR-MANAGEMENT DISPUTES 45 0 0
1991 1990
66,800 65,000
1,700 1,900
500 500
3,100 3,200
1,700 1,700
14,300 13,700
2,400 2,300
14,400 13,400
28,700 28,400
0 0
Source: Washington State Employment Security Department
Source: Washington State Employment Security Department
24
CITY OF BAINBRIDGE ISLAND
BONDED DEBT RATIOS
1995 Assessed Valuation
City Population
Ratio of: Net Direct Debt to Assessed Value
Net Direct and Estimated Overlapping Debt to Assessed Value
Per Capita:
Net Direct Debt
Net Direct and Estimated Overlapping Debt
Assessed Valuation
$1,858,795,349
17,910
0.23%
3.19%
$238
$3,309.72
$103,785
MAJOR TAXPAYERS WITHIN THE CITY
Name of TaxDaver
Port Blakely Tree Farms
Puget Sound Power & Light
U.S. West Communications
Country Club of Seattle
Alexander & Baldwin, Inc.
Crystal Springs Property Devel.
North Washington Associates
Harding Fletcher Company
Grahame & Barbara Watson
Madison Ave Retirement Center
Winslow Cohousing
Totem Storage
Curtis F. Kingsbury
Edgewood Villa Associates
Totals
Timber land
Electric utility
Telephone utility
Country club
Property management
Property management
Property management
Manufacturer
Retirement center
Apartments
Storage facility
Marina condominiums
Apartments
Assessed~
Valuation~
536,689,890
12,761,549
7,594,441
6,003,861
5,893,000
3,599,660
3,551,080
3,000,000
2,857,070
2,631,000
2,420,880
2,384,000
2,001,000
2.000,000
$93,387,431
Percent of
Citv AV
1.97%
0.69%
0.41%
0.32%
0.32%
0.19%
0.19%
0.16%
0.15%
0.14%
0.13%
0.13%
0.11%
0.11%
5.02 %
2 1994 Assessed Valuation for 1995 taxes.
10
The following contain economic indicators for the City of Bainbridge Island Kitsap County and King
County.
pOpULATION~2
CRy of Kitsap King
Bainbridge Island County County
1995 17,910 220,600 1,613,600
1994 17,510 213,210 1,599,500
1993 17,200 210,000 1,587,700
1992 16,850 205,600 1,564,486
1991 16,390 196,500 1,542,286
1990 census 15,846 189,731 1,507,305
1989 14,495 183,150 1,463,301
1988 14,253 179,365 1,428,605
1987 14,010 172,008 1,400,194
1986 13,768 167,429 1,376,073
1985 13,526 168,709 1,356,552
City of Bainbridge Island
CITY OF BAINBRIDGE ISLAND
NUMBER OF HOUSING UNITS BY STRUCTURE TYPE~3
Mobile Homes,
Total One-Unit Two or More Trailers, &
Housing Units Structures Unit Structures Special Units
1990 1995 1990 1995 1990 1995 1990 1995
1,596 7,805 665 6,049 776 1,300 155 456
ASSESSED VALUATION~4
Year CRy of Bainbridge Island Kitsap County King County
1995 $1,858,795,349 $10,670,426,158 $120,828,946,549
1994 1,812,935,103 10,190,219,955 118,222,725,598
1993 1,757,272,419 9,236,571,898 117,625,404,009
1992 1,686,414,209 8,251,019,186 104,292,255,110
1991 204,993,587 6,661,235,888 102,212,020,082
1990 153,396,054 5,947,069,239 73,097,889,390
~2 Source: City of Bainbridge Island Population for Bainbridge Island from 1987-1991 is Winslow and
formerly unincorporated area of Bainbridge Island.
~3 Source: Washington State Office of Financial Managemere. Effective February 28, 1991 the entire land area
of Bainbridge Island was incorporated as the City of Winslow. On November 5, 1991, the name of
the City was changed to Bainbridge Island.
14 Source: Kitsap County Assessor's Office (1991 and 1990 are Assessed Valuations prior to annexation)
22
TAX COLLECTION RECORD OF THE CITY3
(As of October 31, 1995)
Collected
Year
1995
1994
1993
1992
1991
1990
Taxable Collected Collected as of
Assessed Tax Year of Levy October 31, 1995
Valuation Levy Amount Percent Amount Percent
$1,858,795,349 $2,468,560 $1,633,842 66.19% $1,633.842 66.19%
1,812,935,103 2,408,772 1,643,088 68.21% 2,376,342 98.65%
1,757,272,419 2,334,446 2,228,650 95.47% 2,317,514 99.27%
1,686,414,209 2,240,642 2,142,470 95.62% 2,237,146 99.84%
204,993,587 478.053 455,439 95.27% 477,726 99.93%
153,396,054 414,054 396,584 95.75% 413,344 99.83%
NOTE:
Taxes are due and payable on April 30, of each year. At least one half of the tax amount due must be paid on or
before April 30, or else the total amount becomes delinquent on May 1. The second half of the tax due is payable on
or before October 31, becoming delinquent November 1.
LEVY AMOUNTS AND RATES OF THE CITY4
LEVY AMOUNT LEVY RATE
Year Regular EMS Bond Total Regular EMS Bond Total
1995 $2,468,560 0 0 $2,468,560 $1.328 0 0 $1.328
1994 2,407,659 0 0 2,407,659 1.328 0 0 1.328
1993 2,333,700 0 0 2,333,700 1.328 0 0 1.328
1992 2,239,633 0 0 2,239.633 1.328 0 0 1.328
1991 477,786 0 0 477,786 2.331 0 0 2.331
1990 413,873 0 16,050 429,973 2.698 0 .106 2.804
REPRESENTATIVE OVERLAPPING PROPERTY TAX RATES5
For City Residents
(Rates in Dollars per $1,000 of Assessed Valuation for 1995 Collection)
State Schools $3.5508
Kitsap County 1.2249
City of Bainbridge Island 1.3280
Bainbridge Island School District 4.6214
Kitsap County Rural Library 0.4595
Fire Protection District No. 2 1.0822
Bainbridge Island Park & Rec District 1.4012
Public Utility District 0.0940
Total $13.7620
Source: Kitsap County Treasurer's Office.
Source: Kitsap County Assessor's Office.
Source: Kitsap County Assessor's Office.
12
Kitsap County
Kitsap County is located in western Washington on the western side of Puget Sound and covers 398
square miles of land, including the northern portion of Kitsap Peninsula and Bainbridge Island. The
County has 211 miles of salt water shoreline: Hood Canal to the west, Admiralty Inlet to the north and
Puget Sound to the east. The topography is mostly low, fiat-topped rolling hills separated by valleys
and bays, with altitudes from sea level to 600 feet above, except for Green and Gold mountains, which
rise to 1,761 feet above sea level. The climate is moderate, with mild, wet winters and cool, dry
summers. Mean annual precipitation ranges from 26 inches in the north to nearly 80 inches in the
mountains.
Kitsap County is divided into two distinct sections: the Kitsap Peninsula and Bainbridge Island. The
Kitsap Peninsula is home to several naval installations. Much of this area is rural and includes the
Hood Canal area. Hood Canal is a major recreation area and has attracted many seasonal residents
who own homes on the shore. The region's natural resources include extensive shoreline, fish,
shellfish, and timber.
The economy of the County is based primarily on the U.S. Naval installations, which employ over
16,000 civilians and 15,700 military personnel.
Population
Kitsap County has been one of the fastest growing counties in the Puget Sound Region since 1970. The
population of the County has increased 86.5% since 1970, nearly 90,000 new residents. The State
population only grew 42.6% during the same time. Between 1980 and 1990, Kitsap County had an
annual growth rate of 2.89% while the State was 1.77%. By the year 2012, the population is projected
to be 269,700. The largest city in the County is Bremerton, with 39,610 residents. The other
incorporated areas are Bainbridge Island (17,910), Port Orchard (6,240), and Poulsbo (5,756).
Employment
Kitsap County is defined as the Bremerton Metropolitan Statistical Area (MSA) for employment and
unemployment statistics. In 1994, the labor force in the MSA numbered 89,500. The rate of
unemployment was 6.0 %, compared with 6.4 % for Washington State.
Non-manufacturing employment in the MSA for 1994 accounted for 97.2% of wage and salary jobs,
while manufacturing accounted for 2.8% of employment. Government (federal, state and local)
continues to be the largest employer in Kitsap County accounting for 40.6 % of employment.
Transportation
The peninsula is accessible by land from highways located at the southern end of Puget Sound.
Interstate 5 and Highway 101 are connected by a six-mile leg near Olympia, and State Highway 3
branches off Highway 101 and heads north to Bremerton. A bridge across Puget Sound at south
Tacoma carries State Highway 16 to Kitsap County.
Washington State Ferries connect with Kitsap County at four points. Regular ferry service carries
vehicles, foot passengers and cargo between Edmonds and Kingston, Seattle and Bainbridge Island,
between Seattle and Bremenon, and between Fauntleroy, in west Seattle and Southworth on the Kitsap
Peninsula.
The Kitsap County Public Transportation Benefit Area Authority was established by the voters in I982
to provide public transportation in the most heavily populated portions of the County. The system,
called Kitsap Transit, provides four types of services: regular public transit, commuter bus transit,
transportation of the elderly or handicapped, and carpool and vanpool services.
Bremerton National Airport is the largest airport in the County. The airport can handle all general
aviation aircraft and most transport and military planes. Charter passenger and air freight services are
available at SeaTac Airport in the Seattle-Tacoma area, the major international airport serving the
Puget Sound area.
2O
COMBINED TAX-SUPPORTED FUND
REVENUES AND EXPENDITURESa
1995 BUDGET
(Fiscal Year Ending December 31)
Estimated Beginning Fund Balance
Revenues: Taxes
Fees & Service Charges
Intergovernmental
Fines & Forfeits
Miscellaneous
Investment Interest
Total Revenues
Operating Transfers In & Other Sources
Sale of Bonds
LID 13 Interfund Loan Repayment
From Other Funds
Total Non-Revenues
Total Resources
Expenditures:
Salaries
Benefits
Supplies
Professional Services
Other Services and Charges
Intergovernment
Capital
Debt Service
Other Expenditures
Total Expenditures
Operating Transfers Out
To Other Funds
Total Non-Expenditures
Budgeted Ending Fund Balance
Total Uses
$1,600,000
255,000
2.460.862
$2,838.933
$ 3,924,158
$ 4,621,093
598,100
2,088,567
109,500
327,858
121.432
$ 7,866,550
$ 4.315,862
$I6,106.570
$ 3,088,152
927,212
254, I47
1,284,032
1,035,020
539,489
3,542,760
46,689
466.031
$ i1,183.532
$ 2.838.933
$ 2,084,105
$16.106,570
Source: City of Bainbridge Island
14
The City Director of Finance and Administrative Services maintains general supervision over financial
transactions of all City funds and supervises all accounting. The accounts of the City are organized by
fund and account group, each of which is considered a separate accounting entity. Each fund has a
separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and
expenditures or expenses, as appropriate. The City's resources are allocated to, and accounted for in,
individual funds according to the purposes for which they are spent and the means b.y which spending
activities are controlled. The full annual basis of accounting is employed for all proprietary funds.
Labor Relations
The City currently employs 108 full-time, part-time and temporary employees and approximately 85 %
of the employees are represented by two bargaining units, both represented by District Lodge 160 of
the International Association of Machinists and Aerospace Workers. Contracts are in place through
1996 for police and 1997 for all other represented employees.
The City strives to be fair with all employees, consistent with all applicable state law, to ensure equity,
and promote labor relation policies mutually beneficial to management and employees.
Pension System
Pensions for the City employees are provided through the Washington State Department of Retirement
Systems by other the Public Employees Retirement System (PERS I and PERS II) or the Law
Enforcement Officers and Fire Fighters (LiEOFF I & II). The City's contributions to all retirement
systems are current.
Insurance
The City is a member of the Washington Cities Insurance Authority which pools insurance risk among
82 Washington cities. Liability coverage is self-funded and limits are layered with $1 million per loss
in the primary layer, and an additional $4 million per lnss in the excess layer (subject to a $16 million
aggregate limit).
GENERAL AND ECONOMIC
City of Bainbridge Island
The City of Bainbridge Island is approximately eight miles west of the City of Seattle across Elliott Bay
and Puget Sound on Bainbridge Island. Bainbridge Island is primarily a residential community, which
has a mix of suburban and rural neighborhoods. There are a few industrial concerns and some
commercial areas as well. The extensive waterfront and view property on Bainbridge Island and its
close proximity to Seattle have made it particularly appealing. Bainbridge Island, which is twelve miles
long and four miles wide, is connected to the county mainland and the Olympia Peninsula by the Agate
Pass Bridge. Seattle can be accessed via a State-operated ferry.
The City of Winslow was the only incorporated area on Bainbridge Island until November 6, 1990,
when the voters approved annexation of the unincorporated area of the Island. Effective February 28,
1991 the entire land area of Bainbridge Island became incorporated as the City of Winslow. On
November 5, 1991, the voters of the incorporated City of Winslow agreed to change the name of the
City to Bainbridge Island.
Extensive waterfronts, view property and close proximity to Seattle has contributed to making
Bainbridge Island a predominantly residential community with high property values. As a result of the
short commute to downtown Seattle, a disproportionately large percentage of the population are
financial and legal professionals who work in Seattle. Based on the 1990 Census data, half of the
work-force commutes to jobs outside the community. Roughly one4hird commute by ferry to Seattle.
18
The City has pledged to pay the debt service of the Bonds from available revenues of the Waterworks
Utility of the City (see "SECURITY" herein).
CITY OF BAINBRIDGE ISLAND
HISTORICAL COMBINED WATERWORKS U~JLITY OPERATIONS
(Year Ending December 3 1)9t
UNAUDITED UNAUDITED UNAUDITED AUDITED
1994 1993 1992 1991
Operating Revenues
Water Sales and Services
Sewer Services
Storm Drain Services
Other Fees/Charges
Total Operating Revenues
Operating Expenses
Cost of Sales and Services
Administration
Total Operating Expenses
Non-Operating
Revenues & Expenses Imerest Revenue
Special Assessment Principal
Interest & Penalties on ULID's
Other Revenue
Amortization Expense
Total Non-Operating Revenues &
& Expenses
Required Capital Contributions
Net Revenue Available for Debt Service
Annual Debt Service
Annual Debt Service Coverage
Junior Lien Debt
Balance
$578,257 $386,568 $349,964 $377,680
618,196 623,684 547,944 552,362
364,367 356,386 230,536 115,125
0 0 2.505 0
$1,560,820 $1,366,638 $1,130,959 $1,045,167
$905,070 $687,176 $497,273 $414,173
306,286 422,766 519,167 405,956
$1,211,356 $1,109,942 $1,016,440 $820,129
$201,461 $227,807 $165,723 $281,733
20,166 50,382 38,901 56,981
10,622 21,983 15,350 29,577
311 -- 9,286 10,427
(7,814) (6,631) (533) (8,460)
$224,746 $293,541 $228.727 $370,258
386,380 351,000 269,388 266,599
960,590 901,237 612,624 861,895
329,657 353,088 415,860 432,015
2.91 2.55 1.47 2.00
0 0 0 0
$630,933 $548,149 $196,764 $429,880
Source: City of Bainbridge Island Annual Financial Reports.
On January 1, 1994, Water rates were increased 42% and Sewer rates were increased by 3.0%. At the same
time, required system participation fees for water and sewer (accounted for as capital contributions) were
increased from $2,808 for a single family residence or equivalent to $5,000 (a 78% increase).
16
The City has pledged to pay the debt service of the Bonds from available revenues of the Waterworks
Utility of the City (see "SECURITY" herein).
CITY OF BAINBRIDGE ISLAND
HISTORICAL COMBINED WATERWORKS .U,~JLITY OPERATIONS
(Year Ending December 3 1)
UNAUDITED UNAUDITED tINAUDITED AUDITED
1994 1993 1992 1991
Operating Revenues
Water Sales and Services $578,257 $386,568
Sewer Services 618,196 623,684
Storm Drain Services 364,367 356,386
Other Fees/Charges 0 0
Total Operating Revenues $1,560,820 $1,366,638
Operating Expenses
Cost of Sales and Services $905,070 $687,176
Administration 306,286 422,766
Total Operating Expenses $1,211,356 $1,109,942
Non-Operating
Revenues & Expenses
Interest Revenue $201,461 $227,807
Special Assessment Principal 20,166 50,382
Interest &Penalties on ULID's 10,622 21,983
Other Revenue 311
Amortization Expense (7,814) ( 6,631
Total Non-Operating Revenues & $224,746 $293,541
& Expenses
Required Capital Contributions
Net Revenue Available for Debt Service
Annual Debt Service
Annual Debt Service Coverage
Junior Lien Debt
Balance
$349,964 $377,680
547,944 552,362
230,536 115,125
2,505 0
$1,130,959 $1,045,167
$497,273 $414,173
519,167 405,956
$1,016,440 $820,129
$165,723 $281,733
38,901 56,981
15,350 29,577
9,286 10,427
(533) (8,460)
$228,727 $370,258
386,380 351,000 269,388 266,599
960,590 901,237 612,624 861,895
329,657 353,088 415,860 432,015
2.91 2.55 1.47 2.00
0 0 0 0
$630,933 $548,149 $196,764 $429,880
10
Source: City of Bainbridge Island Annum Financial Reports.
On January 1, 1994, Water rates were increased 42% and Sewer rates were increased by 3.0%. At the same
time, required system participation fees for water and sewer (accounted for as capital contributions) were
increased from $2,808 for a single family residence or equivalent to $5,000 (a 78% increase).
16
The City. Director of Finance and Administrative Services maintains general supervision over financial
transacnons of all City funds and supervises all accounting. The accounts of the City are organized by
fund and account group, each of which is considered a separate accounting entity. Each fund has a
separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and
expenditures or expenses, as appropriate. The City's resources are allocated to, and accounted for in,
individual funds according to the purposes for which they are spent and the means by which spending
activities are controlled. The full annual basis of accounting is employed for all proprietary funds.
Labor Relations
The City currently employs 108 full-time, part-time and temporary employees and approximately 85 %
of the employees are represented by two bargaining units, both represented by District Lodge 160 of
the International Association of Machinists and Aerospace Workers. Contracts are in place through
1996 for police and 1997 for all other represented employees.
The City strives to be fair with all employees, consistent with all applicable state law, to ensure equity,
and promote labor relation policies mutually beneficial to management and employees.
Pension System
Pensions for the City employees are provided through the Washington State Departmere of Retirement
Systems by other the Public Employees Retirement System (PERS I and PERS II) or the Law
Enforcement Officers and Fire Fighters (LiEOFF I & II). The City's contributions to all retirement
systems are current.
Insurance
The City is a member of the Washington Cities Insurance Authority which pools insurance risk among
82 Washington cities. Liability coverage is self-funded and limits are layered with $1 million per loss
in the primary layer, and an additional $4 million per loss in the excess layer (subject to a $16 million
aggregate limit).
GENERAL AND ECONOMIC
City of Bainbridge Island
The City of Bainbridge Island is approximately eight miles west of the City of Seattle across Elliott Bay
and Puget Sound on Bainbridge Island. Bainbridge Island is primarily a residential community, which
has a mix of suburban and rural neighborhoods. There are a few industrial concerns and some
commercial areas as well. The extensive waterfront and view property on Bainbridge Island and its
close proximity to Seattle have made it particularly appealing. Bainbridge Island, which is twelve miles
long and four miles wide, is connected to the county mainland and the Olympia Peninsula by the Agate
Pass Bridge. Seattle can be accessed via a State-operated ferry.
The City of Winslow was the only incorporated area on Bainbridge Island until November 6, 1990,
when the voters approved annexation of the unincorporated area of the Island. Effective February 28,
1991 the entire land area of Bainbridge Island became incorporated as the City of Winslow. On
November 5, 1991, the voters of the incorporated City of Winslow agreed to change the name of the
City to Bainbridge Island.
Extensive waterfronts, view property and close proximity to Seattle has contributed to making
Bainbridge Island a predominantly residential community with high property values. As a result of the
short commute to downtown Seattle, a disproportionately large percentage of the population are
financial and legal professionals who work in Seattle. Based on the 1990 Census data, half of the
work-force commutes to jobs outside the community. Roughly one-third conm~ute by ferry to Seattle.
18
COMBINED TAX-SUPPORTED FUND
REVENUES AND EXPENDITURES8
1995 BUDGET
(Fiscal Year Ending December 31)
Estimated Beginning Fund Balance
Revenues: Taxes
Fees & Service Charges
Intergovernmental
Fines & Forfeits
Miscellaneous
Investment Interest
Total Revenues
Operating Transfers In & Other Sources
Sale of Bonds
LID 13 Interfund Loan Repayment
From Other Funds
Total Non-Revenues
Total Resources
Expenditures:
Salaries
Benefits
Supplies
Professional Services
Other Services and Charges
Intergovernment
Capital
Debt Service
Other Expenditures
Total Expenditures
Operating Transfers Out
To Other Funds
Total Non-Expenditures
Budgeted Ending Fund Balance
Total Uses
$1,600,000
255,000
2.460.862
$2.838.933
$ 3,924,158
$ 4,621,093
598,100
2,088,567
109,500
327,858
121.432
$ 7,866,550
$ 4,315.862
$16.106.570
$ 3,088,152
927,212
254,147
1,284,032
1,035,020
539,489
3,542,760
46,689
466.03I
$11,183,532
$ 2,838.933
$ 2,084,105
$16.106.570
s Source: City of Bainbridge Island
14
Kitsap County
Kitsap County is located in western Washington on the western side of Puget Sound and covers 398
square miles of land, including the northern portion of Kitsap Peninsula and Bainbridge Island. The
County has 211 miles of salt water shoreline: Hood Canal to the west, Admiralty Inlet to the north and
Puget Sound to the east. The topography is mostly low, flat-topped rolling hills separated by valleys
and bays, with altitudes from sea level to 600 feet above, except for Green and Gold mountains, which
rise to 1,761 feet above sea level. The climate is moderate, with mild, wet winters and cool, dry
summers. Mean annual precipitation ranges from 26 inches in the north to nearly 80 inches in the
mountains.
Kitsap County is divided into two distinct sections: the Kitsap Peninsula and Bainbridge Island. The
Kitsap Peninsula is home to several naval installations. Much of this area is rural and includes the
Hood Canal area. Hood Canal is a major recreation area and has attracted many seasonal residents
who own homes on the shore. The region's natural resources include extensive shoreline, fish,
shellfish, and timber.
The economy of the County is based primarily on the U.S. Naval installations, which employ over
16,000 civilians and 15,700 military personnel.
Popul~ion
Kitsap County has been one of the fastest growing counties in the Puget Sound Region since 1970. The
population of the County has increased 86.5% since 1970, nearly 90,000 new residents. The State
population only grew 42.6% during the same time. Between 1980 and 1990, Kitsap County had an
annual growth rate of 2.89% while the State was 1.77%. By the year 2012, the population is projected
to be 269,700. The largest city in the County is Bremerton, with 39,610 residents. The other
incorporated areas are Bainbridge Island (17,910), Port Orchard (6,240), and Poulsbo (5,756).
Employment
Kitsap County is defined as the Bremerton Metropolitan Statistical Area (MSA) for employment and
unemployment statistics. In 1994, the labor force in the MSA numbered 89,500. The rate of
unemployment was 6.0%, compared with 6.4% for Washington State.
Non-manufacturing employment in the MSA for 1994 accounted for 97.2 % of wage and salary jobs,
while manufacturing accounted for 2.8% of employment. Government (federal, state and local)
continues to be the largest employer in Kitsap County accounting for 40.6% of employment.
Transportation
The peninsula is accessible by land from highways located at the southern end of Puget Sound.
Interstate 5 and Highway 101 are connected by a six-mile leg near Olympia, and State Highway 3
branches off Highway 101 and heads north to Bremerton. A bridge across Puget Sound at south
Tacoma carries State Highway 16 to Kitsap County.
Washington State Ferries connect with Kitsap County at four points. Regular ferry service carries
vehicles, foot passengers and cargo between Edmonds and Kingston, Seattle and Bainbridge Island,
between Seattle and Bremenon, and between Fauntleroy, in west Seattle and Southworth on the Kitsap
Peninsula.
The Kitsap County Public Transportation Benefit Area Authority was established by the voters in 1982
to provide public transportation in the most heavily populated portions of the County. The system,
called Kitsap Transit, provides four types of services: regular public transit, commuter bus transit,
transportation of the elderly or handicapped, and carpool and vanpool services.
Bremerton National Airport is the largest airport in the County. The airport can handle all general
aviation aircraft and most transport and military planes. Charter passenger and air freight services are
available at SeaTac Airport in the Seattle-Tacoma area, the ' international airport serving the
major
Puget Sound area.
2O
TAX COLLECTION RECORD OF THE CITY3
(As of October 31, 1995)
Collected
Year
1995
1994
1993
1992
1991
1990
Taxable CoHe~ed Collected as of
Assessed Tax Year of Levy October 31, 1995
Valuation Levy Amount Percent Amount Percent
$1,858,795,349 $2,468,560 $1,633,842 66.19% $1,633,842 66.19%
1,812,935,103 2,408,772 1,643,088 68.21% 2,376.342 98.65%
1,757,272,419 2,334,446 2,228,650 95.47% 2,317,514 99.27%
1,686,414,209 2,240,642 2,142,470 95.62% 2,237,146 99.84%
204,993,587 478,053 455,439 95.27% 477,726 99.93%
153,396,054 414,054 396,584 95.75% 413.344 99.83%
NOTE:
Taxes are due and payable on April 30, of each year. At least one half of the tax amount due must be paid on or
before April 30, or else the total amount becomes delinquent on May 1. The second half of the tax due is payable on
or before October 31, becoming delinquent November 1.
LEVY AMOUNTS AND RATES OF THE CITY4
LEVYAMOUNT LEVYRATE
Year Regular EMS Bond Total Regular EMS Bond Total
1995 $2,468,560 0 0 $2,468,560 $1.328 0 0 $1.328
1994 2,407,659 0 0 2,407,659 1.328 0 0 1.328
1993 2,333,700 0 0 2,333,700 1.328 0 0 1,328
1992 2,239,633 0 0 2,239,633 1.328 0 0 1,328
1991 477,786 0 0 477,786 2.331 0 0 2.331
1990 413,873 0 16,050 429,973 2.698 0 .106 2.804
REPRESENTATIVE OVERLAPPING PROPERTY TAX RATES5
For City Residents
(Rates in Dollars per $1,000 of Assessed Valuation for 1995 Collection)
State Schools $3.5508
Kitsap County 1.2249
City of Bainbridge Island 1.3280
Bainbridge Island School District 4.6214
Kitsap County Rural Library 0.4595
Fire Protection District No. 2 1.0822
Bainbridge Island Park & Rec District 1.4012
Public Utility District 0,0940
Total $13.7620
Source: Kitsap County Treasurer's Office.
Source: Kitsap County Assessor's Office.
Source: Kitsap County Assessor'S Office.
12
The following contain economic indicators for the City of Bainbridge Island Kitsap County and King
pOpULATION12
County.
City of Kitsap King
Bainbridge Island County County
1995 17,910 220,600 1,613,600
1994 17,510 213,210 1,599,500
1993 17,200 210,000 1,587,700
1992 16,850 205,600 1.564,486
1991 16,390 196,500 1,542,286
1990 census 15,846 189,731 1,507,305
1989 14,495 183,150 1,463,301
1988 14,253 179,365 1,428,605
1987 14,010 172,008 1,400,194
1986 13,768 167,429 1,376,073
1985 13,526 168,709 1,356,552
City of Bainbridge Island
CITY OF BAINBRIDGE ISLAND
NUMBER OF HOUSING UNITS BY STRUCTURE TyPEx3
Mobile Homes,
Total One-Unit Two or More Trailers, &
Housing Units Structures Unit Structures Special Units
1990 1995 1990 1995 1990 1995 1990 1995
1,596 7,805 665 6,049 776 1300 155 456
ASSESSED VALUATION~4
Year City of Bainbridge Island Kitsap County King County
1995 $1,858,795,349 $10,670,426,158 $120,828,946,549
1994 1,812,935,103 10,190,219,955 118,222,725,598
1993 1,757,272,419 9,236,571,898 117,625,404,009
1992 1,686,414,209 8,251,019,186 104,292,255,110
1991 204,993,587 6,661,235,888 102,212,020,082
1990 153,396,054 5,947,069,239 73,097,889,390
~2 Source: City of Bainbridge Island population for Bainbridge Island from 1987-1991 is Winslow and
formerly unincorporated area of Bainbridge Island.
~3 Source: Washington State Office of Financial Management. Effective February 28, 1991 the entire land area
of Bainbridge Island was incorporated as the City of Winslow. On November 5, 1991, the name of
the City was changed to Bainbridge Island.
14 Source: Kitsap County Assessor's Office (1991 and 1990 are Assessed Valuations prior to annexation)
22
CITY OF BAINBRIDGE ISLAND
BONDED DEBT RATIOS
1995 Assessed Valuation
City Population
Ratio of: Net Direct Debt to Assessed Value
Net Direct and Estimated Overlapping Debt to Assessed Value
Per Capita:
Net Direct Debt
Net Direct and Estimated Overlapping Debt
Assessed Valuation
$1,858,795,349
17,910
0.23%
3.19%
$238
$3,309.72
$103,785
MAJOR TAXPAYERS WITHIN THE CITY
Name of Taxpayer
Port Blakely Tree Farms
Puget Sound Power & Light
U.S. West Communications
Country Club of Seattle
Alexander & Baldwin, Inc.
Crystal Springs Property Devel.
North Washington Associates
Harding Fletcher Company
Grahame & Barbara Watson
Madison Ave Retirement Center
Winslow Cohousing
Totem Storage
Curtis F. Kingsbury
Edgewood Villa Associates
Totals
Timber land
Electric utility
Telephone utility
Country club
Property management
Property management
Property management
Manufacturer
Retirement center
Apartments
Storage facility
Marina condominiums
Apartments
Assessed
Valuation2
$36,689,890
12,761,549
7,594,441
6,003,86I
5,893,000
3,599,660
3,551,080
3,000,000
2,857,070
2,631,000
2,420,880
2,384,000
2,001,000
2.000,000
$93,387,431
Percent of
Citv AV
1.97%
0.69%
0.41%
0.32%
0.32%
0.19%
0.19%
0.16%
0.15%
0.14%
0.13%
0.13%
0.11%
0.11%
5.02 %
2 1994 Assessed Valuation for 1995 taxes.
10
BREMERTON PMSA (KITSAP COUNTY)
AVERAGE ANNUAL RESIDENT CIVILIAN LABOR FORCE DATAis
1994 1993 1992 1991 1990 1989 1988 1987
Civilian Labor Force
Total Employment
Unemployment
Unemployment as a percent of labor force
89,500 90,100 88,900 85,600 84,300 79,900 76.400 72.900
84,100 84,100 83,500 81,400 80,900 75,600 72.300 68,500
5,400 6,000 5,400 4,200 3,400 4,300 4,100 4,400
6.0% 6.7% 6.1% 4.9% 4.0% 5.4% 5.4% 6.0%
BREMERTON PMSA (KITSAP COUNTY)
NON-AGRICULTURAL WAGE AND SALARY WORKERSt9
1994 1993 1992
TOTAL WAGE AND SALARY WORKERS 67,300 67,900 67,800
TOTAL MANUFACTURING 1,900 1.800 l. 800
MINING &MISCELLANEOUS 600 700 500
CONSTRUCTION 3,100 3,300 3,300
TRANSPORTATION, COMMUNICATIONS
&PUBLIC UTILITIES 1,800 1,800 1,800
WHOLESALE AND RETAIL TRADE 14,800 14,900 14,700
FINANCE. INSURANCE AND REAL ESTATE 2,700 2.700 2.500
SERVICES 15,000 14.900 13,500
GOVERNMENT 27,300 27,800 29.400
WORKERS IN LABOR-MANAGEMENT DISPUTES 45 0 0
1991 1990
66,800 65,000
1,700 1,900
500 500
3,100 3.200
1,700 1,700
14,300 13,700
2,400 2,300
14,400 13,400
28,700 28,400
0 0
Source: Washington State Employment Security Department
Source: Washington State Employment Security Department
24
and park facilities - 2-1/2%. The combination of unlimited tax and limited tax general obligation debt
for all purposes cannot exceed 7.5 % of the City's assessed valuation.
The State statutory limits on City general obligation indebtedness described in this section are more
restrictive than those contained in the State Constitution. Both the Constitutional and statutory debt
limits may be exceeded if necessary to meet obligations made mandatory by State law or, if necessary,
to maintain the corporate existence of the City.
In computing total general obligation indebtedness, the following "assets" may be deducted .against the
principal amount of indebtedness outstanding: (a) money and investments on deposit ~n general
obligation bond retirement funds; (b) taxes (both current and delinquent) levied for the payment of
general obligation indebtedness; and (c) delinquent (but not current) taxes due the general fund.
In addition to limits on the total principal amount of general obligation indebtedness described in this
section, the Constitution and statutes of the State impose other limitations on the City's levy of taxes
upon real and personal property. (See section herein entitled "TAXING POWERS AND
LIMITATIONS" .)
PRESERVATION OF TAX EXEMPTION
The City covenants that it will take all actions necessary to prevent interest on the Bonds from being
included in gross income for federal income tax purposes, and it will neither take any action nor make
or permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds
at any time during the term of the Bonds which will cause interest on the Bonds to be included in gross
income for federal income tax purposes. The City certifies that it has not been notified of any listing or
proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage
certifications may not be relied upon.
TAX EXEMPTION
Exclusion from Gross Income
In the opinion of Bond Counsel, assuming compliance by the City with applicable requirements of the
Code, including arbitrage requirements under Section 148 of the Code, interest on the Bonds is
excluded from gross income of registered owners for federal income tax purposes under existing
federal law and is not an item of tax preference for purposes of the alternative minimum tax applicable
to individuals.
Corporate Alternative Minimum Tax
While interest on the Bonds also is not an item of tax preference for purposes of the alternative
minimum tax applicable to corporations, under Section 55 of the Code, tax-exempt interest, including
interest on the Bonds, received by corporations is taken into account in the computation of adjusted
current earnings for purposes of the alternative minimum tax applicable to corporations (as defined for
federal income tax purposes). Under the Code, alternative minimum taxable income of a corporation
will be increased by 75 percent of the excess of the corporation's adjusted current earnings (including
any tax-exempt interest) over the corporation's alternative minimum taxable income determined without
regard to such increase. A corporation's alternative minimum taxable income, so computed, that is in
excess of an exemption of $40,000, which exemption will be reduced (but not below zero) by 25
percent of the amount by which the corporation's alternative minimum taxable income exceeds
$150,000, is then subject to a 20 percent minimum tax.
Corporate Enviromnental Tax
Section 59A of the Code imposes for taxable years beginning on or before January 1, 1996, an
environmental tax of 0.12 percent ($1.20 per $1,000) on the amount of a corporation's alternative
minimum taxable income (increased for certain book income and adjusted current earnings, including
any tax-exempt interest) that exceeds $2,000,000.
Tax on Certain Passive Investment Income of S Corporations
Under Section 1375 of the Code, certain excess net passive investment income, including interest on
the Bonds, received by an S corporation (a corporation treated as a partnership for most federal tax
purposes) that has Subchapter C earnings and profits at the close of the taxable year may be subject to
federal income taxation at the highest rate applicable to corporations if more than 25 percent of the
gross receipts of such S corporation is passive investment income.
Foreign Branch Profits Tax
Interest on the Bonds may be subject to the foreign branch profits tax imposed by Section 884 of the
Code when the Bonds are owned by, and effectively connected with a trade or business of, a United
States branch of a foreign corporation.
26
ASSESSED VALUATION DETERMINATION
In the State of Washington, the County Assessor (the "Assessor") determines the value of all real and
personal property throughout the County (including the City), which is subject to ad valorem taxation.
The Assessor' s duties and methods of determining value are prescribed and controlled by statute and by
detailed regulations promulgated by the Department of Revenue of the State of Washington. For tax
purposes the assessed value of property is set at 100% of its actual value. By state statute all property
is subject to re-evaluation at least every four years. The property is listed by the Assessor on a tax roll
at its current assessed value and the tax roll is filed in the Assessor' s office.
The Assessor's determinations are subject to revision by the County Board of Equalization and, for
certain property, subject to further revision by the State Board of Equalization. After all administrative
procedures are completed, the taxing unit receives the Assessor's final certificate of assessed value of
property within the taxing unit.
TAX COLLECTION PROCEDURE
Property taxes are levied in specific amounts, and the rate for all taxes levied for all taxing districts in
the County (including the City) are determined, calculated and fixed by the Assessor based upon the
assessed valuation of the property within the various taxing districts. The Assessor extends the taxes to
be levied within each taxing district upon a tax roll which contains the total amount of taxes to be so
levied and collected and assigns a tax account number to each tax lot. The tax roll is delivered to the
Kitsap County Treasurer by December 15 of each year, and an abstract of the tax roll, showing the
total amount of taxes collectible in each of the taxing districts for the year, is delivered to the Board of
County Commissioners at the same time. All taxes are due and payable on the 30th of April of each
year, but if the amount due from a taxpayer exceeds thirty dollars ($30.00), one-half may be paid then
and the balance no later than October 31 of each year.
The method of giving notice of payment of taxes due, accounting for the money collected, the division
of the taxes among the various taxing districts, giving notice of delinquency, and collection procedure
are all covered by detailed statutes. The lien for ad valorem property taxes which have been levied
prior to the filing of federal tax liens is prior to such federal tax liens.
In other respects, and subject to the possible "Homestead Exemption," the lien for delinquent property
taxes is prior to all other liens or encumbrances of any kind on real or personal property subject to
taxation. By law (Chapter 6.13 RCW) the taxing district may commence foreclosure of a tax lien on
real property after three (3) years have passed since the first delinquency. Washington State's courts
have not decided whether the Homestead Exemption gives the occupying homeowner a right to retain
the first $30,000 proceeds of a forced sale of a family residence for delinquent general property taxes.
INITIATIVE601
Initiative 601 was approved by the voters of the state on November 2, 1993. On July 1, 1995,
Initiative 601 began limiting spending from the State's general fund by a "fiscal growth factor" based
on the rate of inflation and the rate of population growth in the State. Increases in State taxes up to the
spending limit must now be approved by a 2/3 vote in each house of the legislature. Increases in tax
revenues above the spending limit must be approved by a 2/3 vote of the legislature and by a majority
of voters at the next election. State fees may not be increased at a rate greater than the "fiscal growth
factor" without prior legislative approval. Additionally, the legislature may not mandate new programs
or increased levels of service in existing programs by local governments without appropriating enough
money to reimburse such costs fully.
Initiative 601 does not, by its terms, effect the authority of the City or other cities to authorize or issue
general obligation bonds or to levy and collect taxes for the payment of general obligation bonds. The
City does not believe that Initiative 601 will have any material effect on the finances of the City nor the
ability of the City to pay debt service on the Bonds.
CONFLICTS OF INTEREST
Some or all of the fees of the Underwriter and Bond Counsel are contingent upon the issuance and sale
of the Bonds. Furthermore, Bond Counsel from time to time serves as counsel to the Underwriter with
respect to issuers other than the City and transactions other than the issuance of the Bonds. None of
the Councilmembers or other officials of the City have an interest in the issuance of the Bonds that are
prohibited by applicable law.
RATING
The Bonds have been rated "A" by Moody's Investors Service.. The rating reflects only the view of
the rating agency and an explanation of the significance of the rating may be obtained from Moody's
Investors Service. 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, suspended or withdrawn entirely by the rating agency if,
in their judgment, circumstances so warrant. Any such downward revision, suspension or withdrawal
of the rating will be likely to have an adverse effect on the market price of the Bonds.
UNDERWRITING
The Bonds are being purchased by the Underwriter, Pacific Crest Securities, Inc. The Underwriter has
agreed to purchase the Bonds at an underwriting discount of $ from the initial offering
prices reflected on the cover page. The Purchase Contract for the Bonds provides that the Underwriter
will purchase all the Bonds, if any are purchased. The public offering prices for the Bonds set forth on
the cover page hereof may be changed after the initial offering by the Underwriter. The City has
agreed to indemnify the Underwriter against certain liabilities.
CONTINUING DISCLOSURE UNDERTAKING
Basic Undertaking to Provide Annual Financial Information and Notice of Material Events. Because it
will have outstanding less than $10,000,000 of obligations after the issuance of the Bonds, the City is
currently exempt from the requirements of United States Securities and Exchange Commission (SEC)
Rule 15c2-12(b)(5) (the "Rule"), as applicable to a participating underwriter for the Bonds, however,
the City will undertake (the "Undertaking") for the benefit of holders of the Bonds to provide or cause
to be provided, either directly or through a designated agent, to each nationally recognized municipal
securities information repository designated by the SEC in accordance with the Rule CNRMSIR") and
to a state information depository, if any, established in the state of Washington (the "SID") annual
financial information and operating data of the type included in this Official Statement as generally
described below ("annual financial information"): and to each NRMSIR or the Municipal Securities
Rulemaking Board CMSRB"), and to the SID, timely notice of the occurrence of any of the following
events with respect to the Bonds, if material: (i) principal and interest payment delinquencies; (ii)
non-payment related defaults: (iii) unscheduled draws on debt service reserves reflecting financial
difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties: (v)
substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or
events affecting the tax-exempt status of the Bonds; (vii) modifications to rights of holders of the
Bonds; (viii) Bond calls (other than scheduled mandatory redemptions of Term Bonds); (xi)
defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds; and (xi)
rating changes. The City also will provide to each NRMSIR or to the MSRB, and to the SID, timely
notice of a failure by the City to provide required annual financial information on or before the date
specified below.
28
VERIFICATION OF MATHEMATICAL COMPUTATIONS
Ernst & Young LLP, a firm of independe. nt public accountants, will deliver to the City its attestation
report indicating that it has examined, ~n accordance with standards established by the American
Institute of Certified Public Accountants, the information and assertions provided by the City and its
representative. Included in the scope of its examination will be a verification of the mathematical
accuracy of (a) the mathematical computation of the adequacy of the cash and the maturing principal of
and interest on the Acquired Obligations deposited in the Escrow Fund to pay when due, maturing
principal of, principal redemption of and interest on the Refunded Bonds; and (b) the mathematical
computations supporting the conclusions of Bond Counsel that the Bonds are not "arbitrage bonds"
under the Code and the regulations promulgated thereunder.
ADMINISTRATION OF THE REFUNDING PLAN
The Escrow Agent is authorized and directed to purchase the Acquired Obligations (or substitute
obligations) and to make the payments required to be made by the Refunding Plan from the Acquired
Obligations (or substitute obligations) and money deposited with the Escrow Agent pursuant to the
Ordinance. All Acquired Obligations (or substitute obligations) and the money deposited with the
Escrow Agent and any income therefrom shall be held irrevocably, invested and applied in accordance
with the provisions of the Ordinance, Chapter 39.53 RCW and other applicable statutes of the State of
Washington, and the Escrow Agreement. All necessary and proper fees, compensation and expenses of
the Escrow Agent for the Bonds and all other costs incidental to establishing the escrow to accomplish
the refunding of the outstanding Refunded Bonds and costs related to the issuance and delivery of the
Bonds, including bond printing, rating service fees, verification fees, bond counsel's fees and other
related expenses, shall be paid out of the proceeds of the Bonds.
Authorization for Escrow Agreement
In order to carry out the Refunding Plan provided for by the Ordinance, the Mayor or the Director of
Finance and Administrative Services is authorized and directed to execute and deliver to the Escrow
Agent, an Escrow Agreement setting forth the duties, obligations and responsibilities of the Escrow
Agent in connection with the payment, redemption and retirement of the Refunded Bonds, as provided
in the Ordinance and stating that the provisions for payment of the fees, compensation and expenses of
such Escrow Agent set forth therein are satisfactory to the Escrow Agent.
Prior to executing the Escrow Agreement, the Director of Finance and Administrative Services is
authorized to make sure such changes therein which do not change the substance and purpose thereof
or which assure that the escrow provided therein and the Bonds are in compliance with the
requirements of federal law governing the exclusion of interest on the Bonds from gross income for
federal income tax purposes.
All money and the Acquired Obligations on deposit with the Escrow Agent, including interest to be
earned thereon, are pledged solely and irrevocably for the benefit of the holders of the Refunded Bonds
and are not available for payment of the Bonds.
The advance refunding will defease the Refunded Bonds, and they will no longer be considered
outstanding obligations of the City.
The Escrow Agent
First Interstate Bank of Washington, N.A., is serving as the Escrow Agent for the purpose of managing
the cash and investments which comprise the Acquired Obligations for the Refunded Bonds, which will
pay the principal of, interest on and redemption premium, if any, on the Refunded Bonds, as the same
become due and payable.
CUSIP NUMBERS
It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure
to print such numbers on any Bonds or any error with respect thereto shall constitute cause for a failure
or refusal by the purchaser hereof to accept delivery of and pay for said Bonds in accordance with the
terms of the purchase contract. All expenses in relation to the printing of CUSIP numbers on said
Bonds shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the
assignment of said numbers shall be the responsibility of and shall be paid for by said purchaser.
MISCELLANEOUS
The descriptions of the Ordinance and other documents are brief summaries of certain provisions
thereof. Such summaries do not purport to be complete, and reference is made to such documents and
contracts, copies of which are on file with the City, for full and complete statements of their provisions.
All estimates and projections included in this Preliminary Official Statement, whether or not so stated,
are not to be construed as representations that the same will be realized. Section headings, tables
headings and captions are included for convenience only and should not be construed as modifying the
text of this Preliminary Official Statement.
The City's financial statements for fiscal years 1990 and 1991 have been audited by the Washington
State Auditor's Office.
Information concerning the City contained in this Preliminary Official Statement has been furnished by
the City.
All projections and other statements in this Preliminary Official Statement involving matters of opinion,
whether or not expressly so stated, are intended as such and not as representations of fact. This
Preliminary Official Statement is not to be construed as a contract or agreement between the City and
the purchasers or holders of any of the Bonds.
The execution and delivery of this Preliminary Official Statement has been duly authorized by the City.
Dated: , 1995
THE CITY OF BAINBRIDGE ISLAND, WASHINGTON
By: \s\
Director of Finance and Administrative Services
30
Notice of Redemption
Notice of any such early redemption of the Bonds will be given not less than 30 nor more than 60 days
prior to the date fixed for redemption, by first-class mail, postage prepaid, to the Owners of each Bond
to be redeemed at the address appearing on the Bond Register at the time the Bond Regist. rar .prepares
the notice. The requirements of notification will be deemed to be complied with when notme ts mailed
as provided by the Bond Ordinance, whether or not it is actually received by the Owner of any Bond.
In addition, such redemption notice shall be mailed within the same period, postage prepaid, to such
other persons, including registered securities depositories, and with such additional information as the
City Director of Finance and Administrative Services shall deem appropriate, but such mailings shall
not be a condition precedent to the redemption of such Bonds.
If such notice shall have been given and the City shall have set aside, on the date fixed for redemption,
sufficient money for the payment of all Bonds called for redemption, the Bonds so called shall cease to
accrue interest after such redemption date, and all such Bonds shall be deemed not to be outstanding
hereunder for any purposes, except that the Owners thereof shall be entitled to receive payment of the
redemption price and accrued interest to the redemption date from the money set aside for such
purpose.
If any Bond is not paid upon proper presentment at its maturity or earlier redemption, the City shall be
obligated to pay interest at the same rate for such Bond until such Bond, both principal and interest, is
paid in full.
Purchase of the Bonds by the City
The City further reserves the right and option to purchase any or all of the Bonds in the open market at
any time at any price acceptable to the City plus accrued interest to the date of purchase when the
Bonds are available for purchase. All Bonds so purchased or redeemed shall be canceled.
Registrar, Paying Agent and Transfer Agent
Both principal of and interest on the Bonds are payable in lawful money of the United States of
America. Principal of the Bonds will be paid by the Fiscal Agency of the State of Washington (the
"Registrar," the "Paying Agent" and the "Transfer Agent") upon presentation and surrender of the
Bonds, at maturity or earlier redemption, at either of the principal corporate trust offices of the
Registrar in Seattle, Washington or New York, New York. Interest on the Bonds will be paid by check
or draft of the Paying Agent mailed on the interest payment date to the registered owners at the
addresses appearing on the Bond Register on the fifteenth day of the month preceding the interest
payment date. Currently, the Fiscal Agency of the State of Washington is First Interstate Bank of
Washington, N.A., Seattle, Washington, and The Bank of New York, New York, New York.
Transferability
The Bonds may be transferred only on the Bond Register maintained by the Registrar for that purpose
and only if endorsed in writing in the manner provided thereon and surrendered by the Registered
Owner or Registered Owner's nominee to the Registrar for re-registration upon the Bond Register and
on the Registration Certificate on the Bonds. Such transfer shall be without cost to the Registered
Owner or transferee.
The City and the Registrar may deem the person in whose name each Bond is registered to be the
absolute owner thereof for the purposes of securing payment of the principal of and interest on such
Bond and for any and all other purposes whatsoever. Upon surrender thereof to the Registrar, the
Bonds are interchangeable for Bonds in any authorized denomination of an equal aggregate principal
amount and of the same interest rate and maturity.
The Registrar shall not be obligated to exchange or transfer any Bond during the fifteen days preceding
any principal payment or redemption date.
FOSTER PEPPER & SHEFELMAN
[FORM OF APPROVING LEGAL OPINION]
City of Bainbridge Island, Washington
Re:
City of Bainbridge Island, Washington, $2,455,000 Limited Tax General Obligation
Refunding Bonds, 1995
We have examined a certified transcript of proceedings had by the City of Balnbridge Island,
Washington (the "City"), relating to its issuance of the above-referenced bonds (the "Bonds") and
also have examined an executed and authenticated Bond or a facsimile thereof.
The Bonds are issued pursuant to law for the purpose of providing the funds required to
refund the City's outstanding Water and Sewer Revenue Bonds, 1989, and to pay the costs of
issuance and sale of the Bonds, all as set forth in the Ordinance No. (the "Bond
Ordinance") and under and in accordance with the Constitution and laws of the State of Washington
and ordinances of the City.
The Bonds are fully registered; are in the denomination of $5,000 or any integral multiple
thereof within a single maturity; are numbered separately; are dated December 1, 1995; and bear
interest at the rates set forth below, payable semiannually on each May 1 and November 1,
commencing May 1, 1996, to the maturity or earlier redemption of the Bonds. The Bonds are
payable at the principal office of either of the fiscal agencies of the State of Washington in Seattle,
Washington, or New York, New York (collectively, the "Bond Registrar"). The Bonds mature on
November 1 in years and amounts and bear interest at the rates per annum as follows:
Maturity Interest
Years Amounts Rates
1996 $ 35,000
1997 20,000
1998 35,000
1999 145,000
2000 180,000
ANCHORAGE, ALASKA BELLEVUE, WASHINGTON PORTLAND, OREGON SEATTLE, WASHINGTON
TABLE OF CONTENTS
Page
Introduction ........................................................................................................1
Description of the Bonds ........................................................................................1
The Advance Refunding Plan ...................................................................................3
Verification of Mathematical Calculations ...................................................................4
Administration of Refunding Plan .............................................................................4
Purpose ..............................................................................................................5
Sources and Uses of Funds ......................................................................................5
Debt Payment Record ............................................................................................5
Future Financing ..................................................................................................5
Security .............................................................................................................5
Litigation ...........................................................................................................5
Assessed Valuation Determination .............................................................................6
Tax Collection Procedure .......................................................................................6
Initiative 601 .......................................................................................................6
Authorization of Debt ............................................................................................7
General Obligation Indebtedness ...............................................................................7
Limits on Amount of General Obligation Indebtedness ....................................................7
Computation of Statutory Debt Limitations ..................................................................9
Net Direct and Overlapping General Obligation Debt .....................................................9
Bonded Debt Ratios ...............................................................................................10
Major Taxpayers Within the City ..............................................................................10
Taxing Powers and Limitations .................................................................................10
Tax Collection Record of the City .............................................................................11
Levy Amounts and Rates of the City ..........................................................................12
Representative City Property Tax Rates ......................................................................12
Comparative Statement of Combined Tax Supported Fund Revenues and Expenditures ............ 12
Combined Tax Supported Fund Revenues and Expenditures, 1995 Budget ...........................13
Schedule of General Obligation Bonded Indebtedness of the City .......................................14
Historical Combined Waterworks Utility Operations ......................................................15
The City .............................................................................................................16
General and Economic ...........................................................................................17
Preservation of Tax Exemption .................................................................................18
Tax Exemption ....................................................................................................26
Certain Other Federal Tax Consequences ....................................................................26
Approval of Bond Counsel ......................................................................................27
Conflicts of Interest ...............................................................................................27
Rating ...............................................................................................................28
Underwriting .......................................................................................................28
Continuing Disclosure Undertaking ...........................................................................28
CUSIP Numbers ...................................................................................................30
.30
Miscellaneous .....................................................................................................
Form of Counsel Opinion ..........................................................................Appendix A
iv
City of Bainbridge Island, Washington
Page 3
certain periods prescribed by the Code. There is an exception to this rebate requirement available
to a governmental unit with general taxing powers in connection with the issuance of obligations
other than "private activity bonds" as defined in the Code, if the governmental unit, together with
all subordinate governmental units, does not reasonably anticipate issuing more than $5,000,000 of
tax-exempt obligations (other than private activity bonds and other obligations not required to be
included in such calculation) during the calendar year in which the obligations are issued. The City
has certified in the Bond Ordinance that it is an issuer which qualifies for this arbitrage rebate
exception in connection with the issuance of the Bonds.
As of the date of initial delivery of the Bonds to the purchaser thereof and full payment
therefor, it is our opinion that (1) the City is a duly organized and legally existing non-chartered code
city under the laws of the State of Washington; (2) the Bonds are issued in full compliance with the
provisions of the Constitution and laws of the State of Washington and the ordinances of the City
relating thereto; (3) the Bonds constitute valid general obligations of the City payable from annual
ad valorem taxes to be levied within the constitutional and statutory tax limitations provided by law
without a vote of the electors of the City on all of the taxable property within the City, together with
Gross Revenue of the Waterworks Utility, except only to the extent that enforcement of payment may
be limited by bankruptcy, insolvency or other laws affecting creditors' rights and principles of equity
if equitable remedies are sought; and (4) assuming compliance by the City after the date of issuance
of the Bonds with applicable requirements of the Code, including arbitrage requirements, under
existing federal law the interest on the Bonds is excluded from gross income of the registered owners
for federal income tax purposes and is not an item of tax preference for purposes of the alternative
minimum tax applicable to individuals; however, while interest on the Bonds also is not an item of
tax preference for purposes of the alternative minimum tax applicable to corporations, interest on the
Bonds received by corporations is to be taken into account in the computation of adjusted current
earnings for purposes of the alternative minimum tax applicable to corporations, interest on the
Bonds received by certain corporations may be subject to an environmental tax, interest on the Bonds
received by certain S corporations may be subject to tax, and interest on the Bonds received by
foreign corporations with United States branches may be subject to a foreign branch profits tax. We
express no opinion regarding any other federal tax consequences of receipt of interest on the Bonds.
Respectfully submitted,
0211934.01
REPRESENTATIONS
Neither the City nor the Underwriters has authorized any dealer, broker, salesperson or other persons to
given any information or make any representations other than those made in this Official Statement,
and, if given or made, such other information or representations must not be relied upon as having been
authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell,
or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any
jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.
The information contained in this Official Statement has been obtained from City Officials and other
sources believed to be reliable. Neither a representation, warranty nor guarantee is made by the
Underwriter as to the accuracy or completeness of any information in this Official Statement and
nothing contained in this Official Statement is or shall be relief upon as a promise or representation by
the Underwriter. The delivery of this Official Statement does not imply that the information contained
herein is correct as of any time subsequent to the date of the Official Statement as shown on the cover
page.
Disclosure Statement
The City will deliver to the Underwriter at the time of delivery of the Bonds a signed statement
substantially to the effect that this Official Statement, as of its date and as of the date of the Bonds,
neither contains any untrue statement of a material fact nor omits to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were made, not misleading
in any material respect and that there has not been any material adverse change in the normal operations
or financial condition of the City nor, to the best of the City's knowledge, in the general economy of the
City since the date of the Official Statement.
Securities Act of 1933
The Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon
specific exemptions contained in such act. The registration or qualification of the Bonds in accordance
with applicable provisions of securities laws of the state in which the Bonds have been registered or
qualified and the exemption from registration or qualification in other states cannot be regarded as a
recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of
the Bonds nor the accuracy or completeness of this Official Statement. Any representation to the
contrary may be a criminal offense.
Secondary Market
It has been the practice of the Underwriter to maintain a secondary market in municipal bonds which it
sells. The Underwriter intends to engage in secondary market trading of the Bonds, subject to
applicable securities laws. The Underwriter, however, is neither obligated to engage in secondary
trading nor to repurchase any of the Bonds at the request of the registered owners thereof and no
assurance can be given that a secondary market for the Bonds will be available.
bz connection with the offering of the Bonds, the Underwriter may over-allot or effect transactions that
stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in
the open market. Such stabilizing, if commenced, may be discontitzued at anytime.