HomeMy WebLinkAboutCity Council Committees - Operations Committee - 11/07/2017 (2)
Unless otherwise noted, the Operations Committee meets at 4 p.m. on the first and third
Tuesday of each month in Kent City Hall, Council Chambers East, 220 Fourth Ave S, Kent, WA
98032.
For additional information please contact Jennifer Hays at 253-856-5700, or via email at
jhays@KentWA.gov.
Any person requiring a disability accommodation should contact the City Clerk’s
Office at 253-856-5725 in advance. For TDD relay service call Washingto n
Telecommunications Relay Service at 1-800-833-6388.
Operations Committee Agenda
Councilmembers: Bill Boyce – Les Thomas – Dana Ralph, Chair
November 7, 2017
4 p.m.
Item Description Action Speaker Time Page
1. Call to order Chair Ralph 1
2. Roll Call Chair Ralph 1
3. Changes to the Agenda Chair Ralph 1
4. Approval of Check Summary Report dated
10/1/17 thru 10/15/17
YES Chair Ralph
5. Approval of Minutes dated October 17,
2017
YES Chair Ralph 2 1
6. Emergency Management Performance
Grant - Recommend
YES John Madson 5 5
7. Medical, Dental, Vision, Basic Life,
Voluntary Life, and Long Term Disability
Insurance Vendor Contracts – Recommend
YES Laura Horea
Chris Hills
10 43
8. Consolidating Budget Adjustment
Ordinance for Adjustments between July
1, 2017 and September 30, 2017 -
Recommend
YES Barbara Lopez 5 47
9. Write-offs of Uncollectable Accounts -
Recommend
YES Aaron BeMiller 5 53
10. 2017 Refunding of Outstanding 2009
Utility Revenue Bonds - Recommend
YES Aaron BeMiller 5 57
11. Square Footage Tax Increase -
Recommend
YES Aaron BeMiller 5 131
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Operations Committee
Minutes
Approval Pending
Page 1 of 3
Date: October 17, 2017
Time: 4:00 p.m.
Place: Chambers East
Attending: Bill Boyce, Les Thomas and Dana Ralph, Chair
Agenda:
1. Call to Order.
2. Roll Call.
3. Changes to the Agenda.
There were no changes to the agenda.
4. Approval of Check Summary Reports dated 9/16/2017 thru
9/30/2017.
L. Thomas moved to approve the check summary report dated 9/16/2017
thru 9/30/2017. B. Boyce seconded the motion, which passed 3-0.
5. Approval of Meeting Minutes dated October 3, 2017.
B. Boyce moved to approve the Operations Committee meeting minutes dated
October 3, 2017. L. Thomas seconded the motion, which passed 3-0.
6. Port of Seattle Partnership Agreement - Recommend.
Human Services Planner Lori Guilfoyle asked members to move forward the
Port of Seattle’s established Economic Development Partnership Program and
Aerospace Joint Apprenticeship Committee grant award of $65,000. The grant
requires a 50 percent match that will be provided by Kent’s Economic and
Community Development department.
The grant will be used to establish a Manufacturing Resource Center in Kent to
prepare low income residents for careers in advanced manufacturing. The
grant will implement a one stop center for manufacturing job seekers and
employers in Kent’s industrial valley; create coordinated intake, screening, and
referral; provide tuition-free training; engage employers; and, establish a suite
of services for logistics. There are 200 adults and 20 young people registered
in the seven-month program which is slated to end June 2018.
L. Thomas moved to recommend Council authorize the Mayor to enter into a
Partnership Agreement with the Port of Seattle and a Consultant Services
Agreement with the Aerospace Joint Apprenticeship Committee to accomplish
the scope of work and deliverables in Exhibit A of the agreements. B. Boyce
seconded the motion, which passed 3-0.
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Operations Committee
Minutes
Approval Pending
Page 2 of 3
7. 3rd Quarter Procurement Report – Information Only.
Chief Administrative Officer Derek Matheson reported on the third quarter
procurement report. Although there were no significant highlights, clarification
was provided for two contracts, they are:
The $60,000 contract between Economic and Community Development
contract and 4Leaf, Inc. is to augment the high volume of permit
applications the City is receiving. The term will expire November 21,
2017.
The $35,000 contract between Public Works and Anchor QEA LLC is to
determine what direction the storm water will go for the Naden Avenue
site improvements.
8. Square Footage Tax Increase – Information Only.
Finance Director Aaron BeMiller informed members of the Mayor’s proposed
square footage tax increase that will affect approximately 680 city businesses.
The square footage tax would be doubled, garnering an estimated $3 million
annually.
Business and Occupation Tax (B&O), implemented January 2013, is comprised
of two components: gross receipts and square footage. It is structured so that
the tax due is based on the larger of these two components. The square
footage component was included largely to address the destination-based
sourcing requirements established by the state in 2008, whereby most of the
B&O taxes generated from manufacturing, wholesaling and warehousing
activities are typically sourced outside of Kent.
The draft ordinance will be brought back to the Operations committee
November 7th as an action item to move forward to full council November
21st.
9. August Financial Report – Information Only.
Mr. BeMiller reported an overall positive budget variance of $3.9 million. The
2017 budget reflects an expected use of $2.4 million of fund balance, including
$2 million for Parks capital projects. The budgeted use of fund balance is offset
by the positive budget variance of $3.9 million, creating a net surplus of
$1.424 million. General Fund Reserves are estimated to end the year at $18.6
million, or 19.4 percent of estimated 2017 expenditures. The following
highlights were reported:
Revenues are estimated to end the year at nearly $3.4 million or 3.6 percent
higher than budgeted.
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Operations Committee
Minutes
Approval Pending
Page 3 of 3
Expenditures through July show all departments are remaining fairly close to
budget with an overall favorable budget variance of $469,000 or 0.5 percent.
10. Director’s Report – Information Only.
Mr. BeMiller provided an update to members regarding refunding 2009
revenue bonds. It was mentioned during the last Operations committee that an
ordinance would be brought forward for action. Due to more research, finance
staff has determined it would be to the City’s advantage to move forward with
a full bonding rather than private placement. After double checking numbers it
has been determined by using a full bond would give the City about $900,000,
an approximate $300,000 increase if private placement was used.
The ordinance will be brought to the November 7th Operations committee for
action.
11. Adjournment.
The meeting was adjourned at 4:37 p.m. by D. Ralph.
J. Hays
Jennifer Hays
Operations Committee Secretary
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Office of Emergency Management
John Madson, Division Chief
Phone: 253-856-4316
Fax: 253-856-6319
Address: 24611 116th Ave SE
Kent, WA. 98030
DATE: November 7, 2017
TO: Operations Committee
FROM: John Madson, Division Chief
SUBJECT: Emergency Management Performance Grant - Recommend
SUMMARY: The Kent Office of Emergency Management applied for and received a
grant in the amount of $70,697 from the Washington Military Department’s
Emergency Management Division and the U.S. Department of Homeland Security.
The purpose of the grant is to assist with the enhancement, sustainment and
improvement of state, local, and tribal emergency management programs.
Activities conducted using grant funds should relate directly to the five elements of
emergency management: prevention, protection, response, recovery, and
mitigation.
The program areas that will benefit from these grant funds include: Public
Education and Community Training; Community Emergency Response Team; Kent
Communication Support Team; Crisis Communications; Public Education and
Information; Community Events; Operational Communication; Exercises, Testing
and Training; School Exercises, Trainings and Professional Development; Planning;
Upgrades and Improvements; Public Information and Warning; Hazard Mitigation;
Marketing and Information Support; Office of Emergency Management Vehicles;
and for the Local Emergency Planning Committee.
Exhibits: Grant Agreement
Budget Impact: No Impact, this is a pass through grant. Incurred cost will be
paid by the Kent Fire Department Regional Fire Authority Operating budget and
reimbursed from the State.
MOTION: Recommend Council authorize the Mayor to accept and sign the
Emergency Management Performance Grant from the Washington Military
Department/Emergency Management Division and the U.S. Department of
Homeland Security, in the amount of $70,697, sign all necessary grant
documents and authorize expenditure of the funds in accordance with final
grant terms and conditions acceptable to the city attorney.
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DHS-FEMA-EMPG-FY 17 Page 1 of 35 City of Kent EMD, E18-099
Form 05/12/2015
Washington State Military Department
EMERGENCY MANAGEMENT PERFORMANCE GRANT AGREEMENT FACE SHEET
1. Subrecipient Name and Address:
City of Kent
Emergency Management Division
24611 116th Ave SE
Kent, WA 98030-4939
2. Grant Agreement Amount:
$70,697
3. Grant Agreement Number:
E18-099
4. Subrecipient Contact, phone/email:
Jennifer Keizer, (253) 856-4342
jdkeizer@pugetsoundfire.org
5. Grant Agreement Start Date:
June 1, 2017
6. Grant Agreement End Date:
August 31, 2018
7. Department Contact, phone/email:
Gary Stumph, (253) 512-7483
gary.stumph@mil.wa.gov
8. Data Universal Numbering System (DUNS):
020253613
9. UBI # (state revenue):
173-000-002
10. Funding Authority:
Washington State Military Department (the “DEPARTMENT”) and the U.S. Department of Homeland Security (DHS)
11. Federal Funding Identification #:
EMS-2017-EP-00004-S01
12. Federal Award Date:
08/24/2017
13. Catalog of Federal Domestic Assistance (CFDA) # & Title:
97.042 (17EMPG)
14. Total Federal Amount #:
$7,306,624
15. Program Index # & OBJ/SUB-OBJ:
773PT NZ
16. TIN:
N/A
17. Service Districts:
(BY LEGISLATIVE DISTRICT): 11, 33, 47
(BY CONGRESSIONAL DISTRICT): 8, 9
18. Service Area by County(ies):
King
19. Women/Minority-Owned, State
Certified?: X N/A NO YES, OMWBE #_________
20. Agreement Classification
Personal Services Client Services X Public/Local Gov’t
Research/Development A/E Other_______
21. Contract Type (check all that apply):
Contract X Grant X Agreement
Intergovernmental (RCW 39.34) Interagency
22. Subrecipient Selection Process:
X “To all who apply & qualify” Competitive Bidding
Sole Source A/E RCW N/A
Filed w/OFM? Advertised? YES NO
23. Subrecipient Type (check all that apply)
Private Organization/Individual For-Profit
X Public Organization/Jurisdiction Non-Profit
CONTRACTOR X SUBRECIPIENT OTHER
24. PURPOSE & DESCRIPTION:
The purpose of the Fiscal Year (FY) 2017 Emergency Management Performance Grant (17EMPG) is to provide U.S. Department of
Homeland Security (DHS)/Federal Emergency Management Agency (FEMA) Federal award funds to local jurisdictions and tribes
with emergency management programs to assist in preparing for all hazards through sustainment and enhancement of those
programs as described in the Work Plan.
The Department is the Recipient and Pass-through Entity of the 17EMPG Award EMS-2017-EP-00004-S01, which is incorporated in
and attached hereto as Attachment #1, and has made a subaward of Federal award funds to the Subrecipient pursuant to this
Agreement. The Subrecipient is accountable to the Department for use of Federal award funds provided under this Agreement
and the associated matching funds.
IN WITNESS WHEREOF, the Department and Subrecipient acknowledge and accept the terms of this Agreement, including all referenced
Exhibits and Attachments which are hereby incorporated in and made a part hereof, and have executed this Agreement as of the date below.
This Agreement Face Sheet; Special Terms & Conditions (Exhibit A); General Terms and Conditions (Exhibit B); Work Plan (Exhib it C);
Timeline (Exhibit D); Budget (Exhibit E); and all other documents, exhibits and attachments expressly r eferenced and incorporated herein
contain all the terms and conditions agreed upon by the parties and govern the rights and obligations of the parties to this Agreement. No
other understandings, oral or otherwise, regarding the subject matter of this Agreement shall be deemed to exist or to bind any of the parties
hereto.
In the event of an inconsistency in this Agreement, unless otherwise provided herein, the inconsistency shall be resolved by giving
precedence in the following order:
1. Applicable Federal and State Statutes and Regulations 4. Special Terms and Conditions
2. DHS/FEMA Award and program documents 5. General Terms and Conditions, and,
3. Work Plan 6. Other provisions of the Agreement incorporated by reference
WHEREAS, the parties hereto have executed this Agreement on the day and year last specified below.
FOR THE DEPARTMENT:
_____________________________________________
Signature Date
Dan Swisher, Chief Financial Officer
Washington State Military Department
BOILERPLATE APPROVED AS TO FORM:
(Signature on file 9/12/2017)
Brian E. Buchholz, Sr. Assistant Attorney General
FOR THE SUBRECIPIENT:
_____________________________________________
Signature Date
Suzette Cooke, Mayor
_____________________________________________
Signature Date
Matthew Morris, Fire Chief
APPROVED AS TO FORM (if applicable):
_____________________________________________
Applicant’s Legal Review Date
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DHS-FEMA-EMPG-FY 17 Page 2 of 35 City of Kent EMD, E18-099
Exhibit A
SPECIAL TERMS AND CONDITIONS
ARTICLE I. KEY PERSONNEL
The individuals listed below shall be considered key personnel for point of contact under this Agreement. Any
substitution of key personnel by either party shall be made by written notification to the current key personnel.
SUBRECIPIENT MILITARY DEPARTMENT
Name Jennifer Keizer Name Gary Stumph
Title EM Specialist Title Program Coordinator
E-Mail jdkeizer@pugetsoundfire.org E-Mail gary.stumph@mil.wa.gov
Phone 253-856-4342 Phone 253-512-7483
Name Matthew Morris Name Tirzah Kincheloe
Title Fire Chief Title Program Manager
E-Mail mlmorris@pugetsoundfire.org E-Mail tirzah.kincheloe@mil.wa.gov
Phone 253-856-4311 Phone 253-512-7456
Name John Madson Name Dalton Gamboa
Title Division Chief - Emergency
Management
Title Program Assistant
E-Mail jmadson@pugetsoundfire.org E-Mail dalton.gamboa@mil.wa.gov
Phone 253-856-4316 Phone 253-512-7044
ARTICLE II. ADMINISTRATIVE AND/OR FINANCIAL REQUIREMENTS
The Subrecipient shall comply with all applicable state and federal laws, rules, regulations, requirements and
program guidance identified or referenced in this Agreement and the informational documents published by
DHS/FEMA applicable to the 17EMPG Program, including, but not limited to, all criteria, restrictions, and
requirements of the “Department of Homeland Security (DHS) Notice of Funding Opportunity (NOFO) Fiscal
Year (FY) 2017 Emergency Management Performance Grant (EMPG)” document, the DHS Award Letter for
Grant No. EMS-2017-EP-00004-S01, and the federal regulations commonly applicable to DHS/FEMA grants, all
of which are incorporated herein by reference. The DHS Award Letter is incorporated in this Agreement as
Attachment 1.
The Subrecipient acknowledges that since this Agreement involves federal award funding, the period of
performance described herein may begin prior to the availability of appropriated federal funds. The Subrecipient
agrees that it will not hold the Department, the State of Washington, or the United States liable for any damages,
claim for reimbursement, or any type of payment whatsoever for services performed under this Agreement prior
to distribution of appropriated federal funds, or if federal funds are not appropriated or in a particular amount.
A. STATE AND FEDERAL REQUIREMENTS FOR DHS/FEMA PREPAREDNESS GRANTS:
The following requirements apply to all DHS/FEMA Preparedness Grants administered by the
Department.
1. SUBAWARDS & CONTRACTS BY SUBRECIPIENT
a. The Subrecipient must make a case-by-case determination whether each agreement it
makes for the disbursement of 17EMPG funds received under this Agreement casts the
party receiving the funds in the role of a subrecipient or contractor in accordance with 2
CFR 200.330.
b. If the Subrecipient becomes a pass-through entity by making a subaward to a non-federal
entity as its subrecipient:
i. The Subrecipient must comply with all federal laws and regulations applicable to
pass-through entities of 17EMPG funds, including, but not limited to, those
contained in 2 CFR 200.
ii. The Subrecipient shall require its subrecipient to comply with all applicable state
and federal laws, rules, regulations, requirements, and program guidance
identified or referenced in this Agreement and the informational documents
published by DHS/FEMA applicable to the 17EMPG Program, including, but not
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DHS-FEMA-EMPG-FY 17 Page 3 of 35 City of Kent EMD, E18-099
limited to, all criteria, restrictions, and requirements of the “Department of
Homeland Security (DHS) Notice of Funding Opportunity (NOFO) Fiscal Year
2017 Emergency Management Performance Grant (EMPG)” document, the DHS
Award Letter for Grant No. EMS-2017-EP-00004-S01 in Attachment 1, and the
federal regulations commonly applicable to DHS/FEMA grants.
iii. The Subrecipient shall be responsible to the Department for ensuring that all
17EMPG federal award funds provided to its subrecipient are used in
accordance with applicable federal and state statutes and regulations, and the
terms and conditions of the federal award set forth in Attachment 1 of this
Agreement.
2. BUDGET & REIMBURSEMENT
a. Within the total Grant Agreement Amount, travel, sub-contracts, salaries, benefits,
printing, equipment, and other goods and services or other budget categories will be
reimbursed on an actual cost basis unless otherwise provided in this Agreement.
b. The maximum amount of all reimbursement requests permitted to be submitted under this
Agreement, including the final reimbursement request, is limited to and shall not exceed
the total Grant Agreement Amount.
c. If the Subrecipient chooses to include indirect costs within the Budget (Exhibit E), an
indirect cost rate agreement negotiated between the federal cognizant agency for indirect
costs and the Subrecipient establishing approved indirect cost rate(s) as described in 2
CFR 200.414 and Appendix VII to 2 CFR 200 must be submitted to the Department.
However, under 2 CFR 200.414(f), if the Subrecipient has never received a negotiated
indirect cost rate agreement establishing federally negotiated rate(s), the Subrecipient
may negotiate a rate with the Department or charge a de minimis rate of 10% of modified
total direct costs. The Subrecipient’s actual indirect cost rate may vary from the approved
rate, but must not exceed the approved negotiated indirect cost rate percentage for the
time period of the expenditures. If a Subrecipient chooses to charge the 10% de minimis
rate, but did not charge indirect costs to previous subawards, a request for approval to
charge indirect costs must be submitted to the Department Key Personnel for approval
with an explanation for the change.
d. For travel costs, the Subrecipient shall comply with 2 CFR 200.474 and should consult
their internal policies, state rates set pursuant to RCW 43.03.050 and RCW 43.03.060 as
now existing or amended, and federal maximum rates set forth at http://www.gsa.gov, and
follow the most restrictive. If travel costs exceed set state or federal limits, travel costs
shall not be reimbursed without written approval by Department Key Personnel.
e. Reimbursement requests will include a properly completed State A-19 Invoice Form and
Reimbursement Spreadsheet (in the format provided by the Department) detailing the
expenditures for which reimbursement is sought. Reimbursement requests must be
submitted to Reimbursements@mil.wa.gov no later than the due dates listed within the
Timeline (Exhibit D), but not more frequently than monthly.
Reimbursement request totals should be commensurate to the time spent processing by
the Subrecipient and the Department. If the reimbursement request isn’t substantial
enough, the Subrecipient should request prior written approval from Department Key
Personnel to waive the due date in the Timeline (Exhibit D) and instead submit those costs
on the next scheduled reimbursement due date contained in the Timeline.
f. Receipts and/or backup documentation for any approved items that are authorized under
this Agreement must be maintained by the Subrecipient consistent with recor d retention
requirements of this Agreement and be made available upon request by the Department
and auditors.
g. Any request for extension of a due date in the Timeline (Exhibit D) will be treated as a
request for Amendment of the Agreement and must be submitted to the Department Key
Personnel sufficiently in advance of the due date to provide adequate time for Department
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DHS-FEMA-EMPG-FY 17 Page 4 of 35 City of Kent EMD, E18-099
review and consideration, and can be granted or denied within the Department’s sole
discretion.
h. All work under this Agreement must end on or before the Grant Agreement End Date, and
the final reimbursement request must be submitted to the Department within 45 days after
the Grant Agreement End Date, except as otherwise authorized by written amendment of
this Agreement and issued by the Department.
i. No costs for purchases of equipment/supplies will be reimbursed until the related
equipment/supplies have been received by the Subrecipient, its contractor, or any non-
federal entity to which the Subrecipient makes a subaward and is invoiced by the vendor.
j. Failure to timely submit complete reports and reimbursement requests as required by this
Agreement (including, but not limited to, those reports in the Timeline) will prohibit the
Subrecipient from being reimbursed until such complete reports and reimbursement
requests are submitted and the Department has had reasonable time to conduct its review.
k. Final reimbursement requests will not be approved for payment until the Subrecipient is
current with all reporting requirements contained in this Agreement.
l. A written amendment will be required if the Subrecipient expects cumulative transfers to
budget categories, as identified in the Budget (Exhibit E), to exceed 10% of the Grant
Agreement Amount. Any changes to budget category totals not in compliance with this
paragraph will not be reimbursed without approval from the Department.
m. Subrecipients shall only use federal award funds under this Agreement to supplement
existing funds, and will not use them to replace (supplant) non-federal funds that have
been budgeted for the same purpose. The Subrecipient may be required to demonstrate
and document that a reduction in non-federal resources occurred for reasons other than
the receipt or expected receipt of federal funds.
3. REPORTING
a. With each reimbursement request, the Subrecipient shall report how the expenditures, for
which reimbursement is sought, relate to the Work Plan (Exhibit C) activities in the format
provided by the Department.
b. With the final reimbursement request, the Subrecipient shall submit to the Department Key
Personnel a final report describing all completed activities under this Agreement.
c. In conjunction with the final report, the Subrecipient shall submit a separate report detailing
how the EMPG Training and Exercise requirements were met for all personnel funded by
federal or matching funds under this Agreement.
d. The Subrecipient shall comply with the Federal Funding Accountability and Transparency
Act (FFATA) and related OMB Guidance consistent with Public Law 109-282 as amended
by section 6202(a) of Public Law 110-252 (see 31 U.S.C. 6101 note) and complete and
return to the Department the FFATA Form located at http://mil.wa.gov/emergency-
management-division/grants/requiredgrantforms, which is incorporated by reference and
made a part of this Agreement.
e. The Subrecipient shall participate in the State’s annual capabilities assessment for the
State Preparedness Report.
4. EQUIPMENT AND SUPPLY MANAGEMENT
a. The Subrecipient and any non-federal entity to which the Subrecipient makes a subaward
shall comply with 2 CFR 200.318 – 200.326 when procuring any equipment or supplies
under this Agreement, 2 CFR 200.313 for management of equipment, and 2 CFR 200.314
for management of supplies, to include, but not limited to:
i. Upon successful completion of the terms of this Agreement, all equipment and
supplies purchased through this Agreement will be owned by the Subrecipient,
or a recognized non-federal entity to which the Subrecipient has made a
subaward, for which a contract, subrecipient grant agreement, or other means of
legal transfer of ownership is in place.
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DHS-FEMA-EMPG-FY 17 Page 5 of 35 City of Kent EMD, E18-099
ii. All equipment, and supplies as applicable, purchased under this Agreement will
be recorded and maintained in the Subrecipient’s inventory system.
iii. Inventory system records shall include:
A. description of the property
B. manufacturer’s serial number, model number, or other identification
number
C. funding source for the equipment, including the Federal Award
Identification Number (FAIN)
D. Catalog of Federal Domestic Assistance (CFDA) number
E. who holds the title
F. acquisition date
G. cost of the equipment and the percentage of federal participation in the cost
H. location, use and condition of the equipment at the date the information
was reported
I. disposition data including the date of disposal and sale price of the
property.
iv. The Subrecipient shall take a physical inventory of the equipment, and supplies
as applicable, and reconcile the results with the property records at least once
every two years. Any differences between quantities determined by the physical
inspection and those shown in the records shall be investigated by the
Subrecipient to determine the cause of the difference. The Subrecipient shall, in
connection with the inventory, verify the existence, current utilization, and
continued need for the equipment.
v. The Subrecipient shall be responsible for any and all operational and
maintenance expenses and for the safe operation of their equipment and supplies
including all questions of liability. The Subrecipient shall develop appropriate
maintenance schedules and procedures to ensure the equipment, and supplies
as applicable, are well maintained and kept in good operating condition.
vi. The Subrecipient shall develop a control system to ensure adequate safeguards
to prevent loss, damage, and theft of the property. Any loss, damage, or theft
shall be investigated and a report generated and sent to the Department.
vii. The Subrecipient must obtain and maintain all necessary certifications and
licenses for the equipment.
viii. If the Subrecipient is authorized or required to sell the property, proper sales
procedures must be established and followed to ensure the highest possible
return.
A. For disposition, if upon termination or at the Grant Agreement End Date,
when original or replacement supplies or equipment acquired under a
federal award are no longer needed for the original project or program or
for other activities currently or previously supported by a federal awarding
agency, the Subrecipient must comply with the following procedures:
B. For Supplies: If there is a residual inventory of unused supplies exceeding
$5,000 in total aggregate value upon termination or completion of the
project or program and the supplies are not needed for any other federal
award, the Subrecipient must retain the supplies for use on other activities
or sell them, but must, in either case, compensate the federal government
for its share. The amount of compensation must be computed in the same
manner as for equipment.
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For Equipment:
1) Items with a current per-unit fair-market value of $5,000 or less may
be retained, sold, or otherwise disposed of with no further obligation
to the federal awarding agency.
2) Items with a current per-unit fair-market value in excess of $5,000
may be retained or sold. The Subrecipient shall compensate the
federal awarding agency in accordance with the requirements of 2
CFR 200.313 (e) (2)
ix. Records for equipment shall be retained by the Subrecipient for a period of six
years from the date of the disposition, replacement, or transfer. If any litigation,
claim, or audit is started before the expiration of the six-year period, the records
shall be retained by the Subrecipient until all litigation, claims, or audit findings
involving the records have been resolved.
b. The Subrecipient shall comply with the Department’s Purchase Review Process, which is
incorporated by reference and made part of this Agreement. No reimbursement will be
provided unless the appropriate approval has been received.
c. Allowable equipment categories for the EMPG Program are listed on the Authorized
Equipment List (AEL) located on the FEMA website at http://www.fema.gov/authorized-
equipment-list. It is important the Subrecipient and any non-federal entity to which the
Subrecipient makes a subaward regard the AEL as an authorized purchasing list
identifying items allowed under the specific grant program, and includes items that may
not be categorized as equipment according to the federal, state, local, and tribal definitions
of equipment. The Subrecipient is solely responsible for ensuring and documenting
purchased items under this Agreement are authorized as allowed items by the AEL at time
of purchase.
If the item is not identified on the AEL as allowable under EMPG, the Subrecipient must
contact the Department Key Personnel for assistance in seeking FEMA approval prior to
acquisition.
d. Unless expressly provided otherwise, all equipment must meet all mandatory regulatory
and/or DHS/FEMA adopted standards to be eligible for purchase using federal award
funds.
e. The Subrecipient must pass on equipment and supply management requirements that
meet or exceed the requirements outlined above to any non-federal entity to which the
Subrecipient makes a subaward under this Agreement.
5. ENVIRONMENTAL AND HISTORICAL PRESERVATION
a. The Subrecipient shall ensure full compliance with the DHS/FEMA Environmental
Planning and Historic Preservation (EHP) program. EHP program information can be
found at https://www.fema.gov/office-environmental-planning-and-historic-preservation,
all of which are incorporated in and made a part of this Agreement.
b. Projects that have historical impacts or the potential to impact the environment,
including, but not limited to, construction of communication towers; modification or
renovation of existing buildings, structures and facilities; or new construction including
replacement of facilities, must participate in the DHS/FEMA EHP review process prior to
initiation. Modification of existing buildings, including minimally invasive improvements
such as attaching monitors to interior walls, and training or exercises occurring outside in
areas not considered previously disturbed, also require a DHS/FEMA EHP review before
project initiation.
c. The EHP review process involves the submission of a detailed project description that
includes the entire scope of work, including any alternatives that may be under
consideration, along with supporting documentation so FEMA may determine whether
the proposed project has the potential to impact environmental resources and/or historic
properties.
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d. The Subrecipient agrees that to receive any federal preparedness funding, all EHP
compliance requirements outlined in applicable guidance must be met. The EHP review
process must be completed and approval received by the Subrecipient before any
work is started for which reimbursement will be later requested. Expenditures for
projects started before completion of the EHP review process and receipt of approval by
the Subrecipient will not be reimbursed.
6. PROCUREMENT
a. The Subrecipient shall comply with all procurement requirements of 2 CFR Part 200.318
through 200.326 and as specified in the General Terms and Conditions, Exhibit B, A.9.
b. For all sole source contracts expected to exceed $150,000, the Subrecipient must submit
to the Department for pre-procurement review and approval the procurement documents,
such as requests for proposals, invitations for bids and independent cost estimates. This
requirement must be passed on to any non-federal entity to which the Subrecipient makes
a subaward, at which point the Subrecipient will be responsible for reviewing and
approving sole source justifications of any non-federal entity to which the Subrecipient
makes a subaward.
7. SUBRECIPIENT MONITORING
a. The Department will monitor the activities of the Subrecipient from award to closeout. The
goal of the Department’s monitoring activities will be to ensure that agencies receiving
federal pass-through funds are in compliance with this Agreement, federal and state audit
requirements, federal grant guidance, and applicable federal and state financial
regulations, as well as 2 CFR Part 200 Subpart F.
b. To document compliance with 2 CFR Part 200 Subpart F requirements, the Subrecipient
shall complete and return to the Department the “2 CFR Part 200 Subpart F Audit
Certification Form” located at http://mil.wa.gov/emergency-management-
division/grants/requiredgrantforms with the signed Agreement and each fiscal year
thereafter until the Agreement is closed, which is incorporated by reference and made a
part of this Agreement.
c. Monitoring activities may include, but are not limited to:
i. review of financial and performance reports
ii. monitoring and documenting the completion of Agreement deliverables
iii. documentation of phone calls, meetings, e-mails and correspondence
iv. review of reimbursement requests and supporting documentation to ensure
allowability and consistency with Agreement work plan, budget, and federal
requirements
v. observation and documentation of Agreement related activities, such as exercises,
training, funded events, and equipment demonstrations
vi. on-site visits to review equipment records and inventories, to verify source
documentation for reimbursement requests and performance reports, and to verify
completion of deliverables.
d. The Subrecipient is required to meet or exceed the monitoring activities, as outlined
above, for any non-federal entity to which the Subrecipient makes a subaward as a pass-
through entity under this Agreement.
e. Compliance will be monitored throughout the performance period to assess risk.
Concerns will be addressed through a Corrective Action Plan.
8. LIMITED ENGLISH PROFIENCY (CIVIL RIGHTS ACT OF 1964 TITLE VI)
a. The Subrecipient must comply with the Title VI of the Civil Rights Act of 1964 (Title VI)
prohibition against discrimination on the basis of national origin, which requires that
subrecipients of federal financial assistance take reasonable steps to provide meaningful
access to persons with limited English proficiency (LEP) to their programs and services.
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Providing meaningful access for persons with LEP may entail providing language
assistance services, including oral interpretation and written translation. Executive Order
13166, Improving Access to Services for Persons with Limited English Proficiency (August
11, 2000), requires federal agencies to issue guidance to recipients, assisting such
organizations and entities in understanding their language access obligations. DHS
published the required recipient guidance in April 2011, DHS Guidance to Federal
Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin
Discrimination Affecting Limited English Proficient Persons, 76 Fed. Reg. 21755-21768,
(April 18, 2011). The Guidance provides helpful information such as how a recipient can
determine the extent of its obligation to provide language services, selecting language
services, and elements of an effective plan on language assistance for LEP persons. For
additional assistance and information regarding language access obligations, please refer
to the DHS Recipient Guidance at https://www.dhs.gov/guidance-published-help-
department-supported-organizations-provide-meaningful-access-people-limited and
additional resources on http://www.lep.gov.
9. NIMS COMPLIANCE
a. The National Incident Management System (NIMS) identifies concepts and principles that
answer how to manage emergencies from preparedness to recovery regardless of their
cause, size, location, or complexity. NIMS provides a consistent, nationwide approach
and vocabulary for multiple agencies or jurisdictions to work together to build, sustain, and
deliver the core capabilities needed to achieve a secure and resilient nation.
b. Consistent implementation of NIMS provides a solid foundation across jurisdictions and
disciplines to ensure effective and integrated preparedness, planning, and response.
NIMS empowers the components of the National Preparedness System, a requirement of
Presidential Policy Directive 8, to guide activities within the public and private sector and
describes the planning, organizational activities, equipping, training and exercising
needed to build and sustain the core capabilities in support of the National Preparedness
Goal.
c. In order to receive Federal Fiscal Year 2017 federal preparedness funding, to include
EMPG, the Subrecipient will ensure all NIMS objectives have been initiated and/or are in
progress toward completion. NIMS Implementation Objectives are located at
https://www.fema.gov/media-library/assets/documents/130743.
B. EMPG PROGRAM SPECIFIC REQUIREMENTS
1. The Department receives EMPG Program funding from DHS/FEMA, which is provided to assist
state, local, and tribal governments to enhance and sustain all-hazards emergency management
capabilities as authorized by Robert T. Stafford Disaster Relief and Emergency Assistance Act,
as amended (42 U.S.C. §§ 5121 et seq.) and Section 662 of the Post Katrina Emergency
Management Act (6 U.S.C. § 762).
2. A portion of the 17EMPG is passed through to local jurisdictions and tribes with emergency
management programs to supplement their local/tribal operating budgets to help sustain and
enhance emergency management capabilities pursuant to Washington Administrative Code
(WAC) 118-09.
3. The Subrecipient shall use the EMPG funds authorized under this Agreement only to perform
tasks as described in the Work Plan of the Subrecipient’s application for funding, as approved by
the Department and incorporated into this Agreement.
4. Funding may not be used to replace or supplant existing local or tribal government funding of
emergency management programs
5. The Subrecipient shall provide a fifty percent match of $70,697 of non-federal origin. To meet
matching requirements, the Subrecipient cash matching contributions must be considered
reasonable, allowable, allocable, and necessary under the grant program and must comply with
all Federal requirements and regulations, including, but not limited to, 2 CFR Part 200. An
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appropriate mechanism must be in place to capture, track, and document matching funds. In the
final report, the Subrecipient shall identify how the match was met and documented.
6. All personnel funded in any part through federal award or matching funds under this Agr eement
shall:
a. participate in no less than three exercises in a 12-month period. The Subrecipient will
report exercise participation along with the final report;
b. complete and record proof of completion for the NIMS training requirements outlined in
the NIMS Training Program located at
https://www.fema.gov/pdf/emergency/nims/nims_training_program.pdf (to include ICS
100, ICS 200, IS 700, and IS 800 for most personnel). The Subrecipient will report training
course completion by individual personnel along with the final report; and
c. complete either (1) the FEMA Professional Development Series IS 120, IS 230, IS 235, IS
240, IS 241, IS 242, and IS 244, or (2) the National Emergency Management Basic
Academy. The Subrecipient will report training course completion by individual personnel
along with the final report.
C. DHS TERMS AND CONDITIONS
As a subrecipient of 17EMPG program funding, the Subrecipient shall comply with all applicable DHS
terms and conditions of the 17EMPG Award Letter and its incorporated documents for DHS Grant No.
EMS-2017-EP-00004-S01, which are incorporated and made a part of this Agreement as Attachment 1.
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Exhibit B
Washington State Military Department
GENERAL TERMS AND CONDITIONS
Department of Homeland Security (DHS)/
Federal Emergency Management Agency (FEMA)
Grants
A.1 DEFINITIONS
As used throughout this Agreement, the terms will have the same meaning as defined in 2 CFR 200
Subpart A (which is incorporated herein by reference), except as otherwise set forth below:
a. “Agreement” means this Grant Agreement.
b. “Department” means the Washington State Military Department, as a state agency, any division,
section, office, unit or other entity of the Department, or any of the officers or other officials lawfully
representing that Department. The Department is a recipient of a federal award directly from a
federal awarding agency and is the pass-through entity making a subaward to a subrecipient
under this Agreement.
c. “Subrecipient” when capitalized is primarily used throughout this Agreement in reference to the
non-federal entity identified on the Face Sheet of this Agreement that has received a subaward
from the Department. However, the definition of “subrecipient” is the same as in 2 CFR 200.93
for all other purposes.
d. “Monitoring Activities” means all administrative, financial, or other review activities that are
conducted to ensure compliance with all state and federal laws, rules, regulations, authorities and
policies.
e. “Investment” means the grant application submitted by the Subrecipient describing the project(s)
for which federal funding is sought and provided under this this Agreement. Such grant
application is hereby incorporated into this Agreement by reference.
A.2 ADVANCE PAYMENTS PROHIBITED
The Department shall make no payments in advance or in anticipation of goods or services to be provided
under this Agreement. Subrecipient shall not invoice the Department in advance of delivery and invoicing
of such goods or services.
A.3 AMENDMENTS AND MODIFICATIONS
The Subrecipient or the Department may request, in writing, an amendment or modification of this
Agreement. However, such amendment or modification shall not be binding, take effect or be
incorporated herein until made in writing and signed by the authorized representatives of the Department
and the Subrecipient. No other understandings or agreements, written or oral, shall be binding on the
parties.
A.4 AMERICANS WITH DISABILITIES ACT (ADA) OF 1990, PUBLIC LAW 101-336, 42 U.S.C. 12101 ET
SEQ. AND ITS IMPLEMENTING REGULATIONS ALSO REFERRED TO AS THE “ADA” 28 CFR Part
35.
The Subrecipient must comply with the ADA, which provides comprehensive civil rights protection to
individuals with disabilities in the areas of employment, public accommodations, state and local
government services, and telecommunication.
A.5 ASSURANCES
The Department and Subrecipient agree that all activity pursuant to this Agreement will be in accordance
with all the applicable current federal, state and local laws, rules and regulations.
A.6 CERTIFICATION REGARDING DEBARMENT, SUSPENSION, OR INELIGIBILITY
As federal funds are a basis for this Agreement, the Subrecipient certifies that the Subrecipient is not
presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from
participating in this Agreement by any federal department or agency.
The Subrecipient shall complete, sign, and return a Certification Regarding Debarment, Suspension,
Ineligibility, and Voluntary Exclusion form located at http://mil.wa.gov/emergency-management-
division/grants/requiredgrantforms. Any such form completed by the Subrecipient for this Agreement
shall be incorporated into this Agreement by reference.
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Further, the Subrecipient agrees to comply with all applicable federal regulations concerning the federal
debarment and suspension system, including 2 CFR Part 180. The Subrecipient certifies that it will
ensure that potential contractors or subrecipients or any of their principals are not debarred, suspended,
proposed for debarment, declared ineligible, or voluntarily excluded from participation in “covered
transactions” by any federal department or agency. “Covered transactions” include procurement
contracts for goods or services awarded under a non-procurement transaction (e.g. grant or cooperative
agreement) that are expected to equal or exceed $25,000, and subawards to subrecipients for any
amount. With respect to covered transactions, the Subrecipient may comply with this provision by
obtaining a certification statement from the potential contractor or subrecipient or by checking the System
for Award Management (http://www.sam.gov) maintained by the federal government. The Subrecipient
also agrees not to enter into any arrangements or contracts with any party on the Washington State
Department of Labor and Industries’ “Debarred Contractor List”
(https://secure.lni.wa.gov/debarandstrike/ContractorDebarList.aspx). The Subrecipient also agrees not
to enter into any agreements or contracts for the purchase of goods and services with any party on the
Department of Enterprise Services’ Debarred Vendor List
(http://www.des.wa.gov/services/ContractingPurchasing/Business/Pages/Vendor-Debarment.aspx).
A.7 CERTIFICATION REGARDING RESTRICTIONS ON LOBBYING
As required by 44 CFR Part 18, the Subrecipient hereby certifies that to the best of its knowledge and
belief: (1) no federally appropriated funds have been paid or will be paid by or on behalf of the
Subrecipient to any person for influencing or attempting to influence an officer or employee of an agency,
a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress
in connection with the awarding of any federal contract, the making of any federal grant, the making of
any federal loan, the entering into of any cooperative agreement, and the extension, continuation,
renewal, amendment, or modification of any federal contract, grant, loan, or cooperative agreement; (2)
that if any funds other than federal appropriated funds have been paid or will be paid to any person for
influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an
officer or employee of Congress, or an employee of a Member of Congress in connection with this
Agreement, grant, loan, or cooperative agreement, the Subrecipient will complete and submit Standard
Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions; (3) and that, as
applicable, the Subrecipient will require that the language of this certification be included in the award
documents for all subawards at all tiers (including sub-contracts, sub-grants, and contracts under grants,
loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly. This
certification is a material representation of fact upon which reliance was placed when this transaction was
made or entered into, and is a prerequisite for making or entering into this transaction imposed by section
1352, title 31, U.S. Code.
A.8 CONFLICT OF INTEREST
No officer or employee of the Department; no member, officer, or employee of the Subrecipient or its
designees or agents; no member of the governing body of the jurisdiction in which the project is
undertaken or located; and no other official of the Subrecipient who exercises any functions or
responsibilities with respect to the project during his or her tenure, shall have any personal or pecuniary
gain or interest, direct or indirect, in any contract, subcontract, or the proceeds thereof, for work to be
performed in connection with the project assisted under this Agreement.
The Subrecipient shall incorporate, or cause to incorporate, in all such contracts or subawards, a
provision prohibiting such interest pursuant to this provision.
A.9 COMPLIANCE WITH APPLICABLE STATUTES, RULES AND DEPARTMENT POLICIES
The Subrecipient and all its contractors and subrecipients shall comply with, and the Department is not
responsible for determining compliance with, any and all applicable federal, state, and local laws,
regulations, executive orders, OMB Circulars, and/or policies. This obligation includes, but is not limited
to: nondiscrimination laws and/or policies, Energy Policy and Conservation Act (PL 94-163, as amended),
the Americans with Disabilities Act (ADA), Age Discrimination Act of 1975, Title VI of the Civil Rights Act
of 1964, Civil Rights Act of 1968, the Robert T. Stafford Disaster Relief and Emergency Assistance Act,
(PL 93-288, as amended), Ethics in Public Service (RCW 42.52), Covenant Against Contingent Fees (48
CFR Section 52.203-5), Public Records Act (RCW 42.56), Prevailing Wages on Public Works (RCW
39.12), State Environmental Policy Act (RCW 43.21C), Shoreline Management Act of 1971 (RCW 90.58),
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State Building Code (RCW 19.27), Energy Related Building Standards (RCW 19.27A), Provisions in
Buildings for Aged and Handicapped Persons (RCW 70.92), and safety and health regulations.
In the event of noncompliance or refusal to comply with any applicable law, regulation, executive order,
OMB Circular or policy by the Subrecipient, its contractors or subrecipients, the Department may rescind,
cancel, or terminate the Agreement in whole or in part in its sole discretion. The Subrecipient is
responsible for all costs or liability arising from its failure, and that of its contractors and subrecipients, to
comply with applicable laws, regulations, executive orders, OMB Circulars or policies.
A.10 CONTRACTING & PROCUREMENT
a. The Subrecipient shall use a competitive procurement process in the procurement and award of
any contracts with contractors or sub-contractors that are entered into under the original contract
award. The procurement process followed shall be in accordance with 2 CFR Part 200.318
General procurement standards through 200.326 Contract Provisions.
As required by Appendix II to 2 CFR Part 200, all contracts entered into by the Subrecipient under
this Agreement must include the following provisions, as applicable:
1) Contracts for more than the simplified acquisition threshold currently set at $150,000, which
is the inflation adjusted amount determined by the Civilian Agency Acquisition Council and
the Defense Acquisition Regulations Council (Councils) as authorized by 41 U.S.C. 1908,
must address administrative, contractual, or legal remedies in instances where contractors
violate or breach contract terms, and provide for such sanctions and penalties as appropriate.
2) All contracts in excess of $10,000 must address termination for cause and for convenience
by the non-federal entity including the manner by which it will be effected and the basis for
settlement.
3) Equal Employment Opportunity. Except as otherwise provided under 41 CFR Part 60, all
contracts that meet the definition of “federally assisted construction contract” in 41 CFR Part
60-1.3 must include the equal opportunity clause provided under 41 CFR 60-1.4(b), in
accordance with Executive Order 11246, “Equal Employment Opportunity” (30 FR 12319,
12935, 3 CFR Part, 1964-1965 Comp., p. 339), as amended by Executive Order 11375,
“Amending Executive Order 11246 Relating to Equal Employment Opportunity,” and
implementing regulations at 41 CFR part 60, “Office of Federal Contract Compliance
Programs, Equal Employment Opportunity, Department of Labor.”
4) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program
legislation, all prime construction contracts in excess of $2,000 awarded by non-federal
entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-
3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part
5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and
Assisted Construction”). In accordance with the statute, contractors must be required to pay
wages to laborers and mechanics at a rate not less than the prevailing wages specified in a
wage determination made by the Secretary of Labor. In addition, contractors must be
required to pay wages not less than once a week. The non-federal entity must place a copy
of the current prevailing wage determination issued by the Department of Labor in each
solicitation. The decision to award a contract or subcontract must be conditioned upon the
acceptance of the wage determination. The non-federal entity must report all suspected or
reported violations to the federal awarding agency. The contracts must also include a
provision for compliance with the Copeland “Anti-Kickback” Act (40 U.S.C. 3145), as
supplemented by Department of Labor regulations (29 CFR Part 3, “Contractors and
Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or
Grants from the United States”). The Act provides that each contractor or subrecipient must
be prohibited from inducing, by any means, any person employed in the construction,
completion, or repair of public work, to give up any part of the compensation to which he or
she is otherwise entitled. The non-federal entity must report all suspected or reported
violations to the federal awarding agency.
5) Contract Work Hours and Safety Standards Act (40 U.S.C. 3701-3708). Where applicable,
all contracts awarded by the non-federal entity in excess of $100,000 that involve the
employment of mechanics or laborers must include a provision for compliance with 40 U.S.C.
3702 and 3704, as supplemented by Department of Labor regulations (29 CFR Part 5). Under
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40 U.S.C. 3702 of the Act, each contractor must be required to compute the wages of every
mechanic and laborer on the basis of a standard work week of 40 hours. Work in excess of
the standard work week is permissible provided that the worker is compensated at a rate of
not less than one and a half times the basic rate of pay for all hours worked in excess of 40
hours in the work week. The requirements of 40 U.S.C. 3704 are applicable to construction
work and provide that no laborer or mechanic must be required to work in surroundings or
under working conditions which are unsanitary, hazardous or dangerous. These
requirements do not apply to the purchases of supplies or materials or articles ordinarily
available on the open market, or contracts for transportation or transmission of intelligence.
6) Rights to Inventions Made Under a Contract or Agreement. If the federal award meets the
definition of “funding agreement” under 37 CFR §401.2 (a) and the recipient or subrecipient
wishes to enter into a contract with a small business firm or nonprofit organization regarding
the substitution of parties, assignment or performance of experimental, developmental, or
research work under that “funding agreement,” the recipient or subrecipient must comply with
the requirements of 37 CFR Part 401, “Rights to Inventions Made by Nonprofit Organizations
and Small Business Firms Under Government Grants, Contracts and Cooperative
Agreements,” and any implementing regulations issued by the awarding agency.
7) Clean Air Act (42 U.S.C. 7401-7671q.) and the Federal Water Pollution Control Act (33
U.S.C. 1251-1387), as amended—Contracts and subgrants of amounts in excess of
$150,000 must contain a provision that requires the non-federal award to agree to comply
with all applicable standards, orders or regulations issued pursuant to the Clean Air Act (42
U.S.C. 7401-7671q) and the Federal Water Pollution Control Act as amended (33 U.S.C.
1251-1387). Violations must be reported to the federal awarding agency and the Regional
Office of the Environmental Protection Agency (EPA).
8) Debarment and Suspension (Executive Orders 12549 and 12689)—A contract award (see 2
CFR 180.220) must not be made to parties listed on the government-wide exclusions in the
System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180
that implement Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR
part 1989 Comp., p. 235), “Debarment and Suspension.” SAM Exclusions contains the
names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties
declared ineligible under statutory or regulatory authority other than Executive Order 12549.
9) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)—Contractors that apply or bid for an award
exceeding $100,000 must file the required certification. Each tier certifies to the tier above
that it will not and has not used federal appropriated funds to pay any person or organization
for influencing or attempting to influence an officer or employee of any agency, a member of
Congress, officer or employee of Congress, or an employee of a member of Congress in
connection with obtaining any federal contract, grant or any other award covered by 31
U.S.C. 1352. Each tier must also disclose any lobbying with non-federal funds that takes
place in connection with obtaining any federal award. Such disclosures are forwarded from
tier to tier up to the non-federal award.
10) Procurement of recovered materials -- As required by 2 CFR 200.322, a non-federal entity
that is a state agency or agency of a political subdivision of a state and its contractors must
comply with section 6002 of the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act. The requirements of Section 6002 include procuring only
items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR part
247 that contain the highest percentage of recovered materials practicable, consistent with
maintaining a satisfactory level of competition, where the purchase price of the item exceeds
$10,000 or the value of the quantity acquired during the preceding fiscal year exceeded
$10,000; procuring solid waste management services in a manner that maximizes energy
and resource recovery; and establishing an affirmative procurement program for
procurement of recovered materials identified in the EPA guidelines.
11) Notice of awarding agency requirements and regulations pertaining to reporting.
12) Federal awarding agency requirements and regulations pertaining to copyrights and rights in
data.
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13) Access by the Department, the Subrecipient, the federal awarding agency, the Comptroller
General of the United States, or any of their duly authorized representatives to any books,
documents, papers, and records of the contractor which are directly pertinent to that specific
contract for the purpose of making audit, examination, excerpts, and transcriptions.
14) Retention of all required records for six years after the Subrecipient has made final payments
and all other pending matters are closed.
15) Mandatory standards and policies relating to energy efficiency which are contained in the
state energy conservation plan issued in compliance with the Energy Policy and
Conservation Act (Pub. L. 94–163, 89 Stat. 871).
b. The Department reserves the right to review the Subrecipient procurement plans and documents,
and require the Subrecipient to make changes to bring its plans and documents into compliance
with the requirements of 2 CFR Part 200.318 through 200.326. The Subrecipient must ensure
that its procurement process requires contractors and subcontractors to provide adequate
documentation with sufficient detail to support the costs of the project and to allow both the
Subrecipient and Department to make a determination on eligibility of project costs.
c. All contracting agreements entered into pursuant to this Agreement shall incorporate this
Agreement by reference
A.11 DISCLOSURE
The use or disclosure by any party of any information concerning the Department for any purpose not
directly connected with the administration of the Department's or the Subrecipient's r esponsibilities with
respect to services provided under this Agreement is prohibited except by prior written consent of the
Department or as required to comply with the state Public Records Act, other law or court order.
A.12 DISPUTES
Except as otherwise provided in this Agreement, when a bona fide dispute arises between the parties
and it cannot be resolved through discussion and negotiation, either party may request a dispute
resolution panel to resolve the dispute. A request for a dispute resolution board shall be in writing, state
the disputed issues, state the relative positions of the parties, and be sent to all parties. The panel shall
consist of a representative appointed by the Department, a representative appointed by the Subrecipient
and a third party mutually agreed upon by both parties. The panel shall, by majority vote, resolve the
dispute. Each party shall bear the cost for its panel member and its attorney fees and costs, and share
equally the cost of the third panel member.
A.13 LEGAL RELATIONS
It is understood and agreed that this Agreement is solely for the benefit of the parties to the Agreement
and gives no right to any other party. No joint venture or partnership is formed as a result of this
Agreement.
To the extent allowed by law, the Subrecipient, its successors or assigns, will protect, save and hold
harmless the Department, the State of Washington, and the United States Government and their
authorized agents and employees, from all claims, actions, costs, damages or expenses of any nature
whatsoever by reason of the acts or omissions of the Subrecipient, its sub-contractors, subrecipients,
assigns, agents, contractors, consultants, licensees, invitees, employees or any person whomsoever
arising out of or in connection with any acts or activities authorized by this Agreement.
To the extent allowed by law, the Subrecipient further agrees to defend the Department and the State of
Washington and their authorized agents and employees in any litigation; including payment of any costs
or attorneys' fees for any claims or action commenced thereon arising out of or in connection with acts
or activities authorized by this Agreement.
This obligation shall not include such claims, costs, damages or expenses which may be caused by the
sole negligence of the Department; provided, that if the claims or damages are caused by or result from
the concurrent negligence of (1) the Department, and (2) the Subrecipient, its agents, or employees, this
indemnity provision shall be valid and enforceable only to the extent of the negligence of the Subrecipient,
or Subrecipient's agents or employees.
Insofar as the funding source, the Department of Homeland Security (DHS)/Federal Emergency
Management Agency (FEMA), is an agency of the Federal government, the following shall apply:
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44 CFR 206.9 Non-liability. The Federal government shall not be liable for any claim based upon the
exercise or performance of, or the failure to exercise or perform a discretionary function or duty on the
part of a federal agency or an employee of the Federal government in carrying out the provisions of the
Stafford Act.
A.14 LIMITATION OF AUTHORITY – AUTHORIZED SIGNATURE
The signatories to this Agreement represent that they have the authority to bind their respective
organizations to this Agreement. Only the Department’s Authorized Signature representative and the
Authorized Signature representative of the Subrecipient or Alternate for the Subrecipient, formally
designated in writing, shall have the express, implied, or apparent authority to alt er, amend, modify, or
waive any clause or condition of this Agreement. Any alteration, amendment, modification, or waiver of
any clause or condition of this Agreement is not effective or binding unless made in writing and signed
by both parties’ Authorized Signature representatives.
Further, only the Authorized Signature representative or Alternate for the Subrecipient shall have
signature authority to sign reimbursement requests, time extension requests, amendment and
modification requests, requests for changes to projects or work plans, and other requests, certifications
and documents authorized by or required under this Agreement.
A.15 LOSS OR REDUCTION OF FUNDING
In the event funding from state, federal, or other sources is withdrawn, reduced, or limited in any way
after the effective date of this Agreement and prior to normal completion or end date, the Department
may unilaterally reduce the scope of work and budget or unilaterally terminate all or part of the Agreement
as a “Termination for Cause” without providing the Subrecipient an opportunity to cure. Alternatively, the
parties may renegotiate the terms of this Agreement under “Amendments and Modifications” to comply
with new funding limitations and conditions, although the Department has no obligation to do so.
A.16 NONASSIGNABILITY
Neither this Agreement, nor any claim arising under this Agreement, shall be transferred or assigned by
the Subrecipient.
A.17 NONDISCRIMINATION
The Subrecipient shall comply with all applicable federal and state non-discrimination laws, regulations,
and policies. No person shall, on the grounds of age, race, creed, color, sex, sexual orientation, religion,
national origin, marital status, honorably discharged veteran or military status, or disability (physical,
mental, or sensory) be denied the benefits of, or otherwise be subjected to discrimination under any
project, program, or activity, funded, in whole or in part, under this Agreement.
A.18 NOTICES
The Subrecipient shall comply with all public notices or notices to individuals required by applicable local,
state and federal laws and regulations and shall maintain a record of this compliance.
A.19 OCCUPATIONAL SAFETY/HEALTH ACT and WASHINGTON INDUSTRIAL SAFETY/ HEALTH ACT
(OSHA/WISHA)
The Subrecipient represents and warrants that its work place does now or will meet all applicable federal
and state safety and health regulations that are in effect during the Subrecipient's performance under this
Agreement. To the extent allowed by law, the Subrecipient further agrees to indemnify and hold harmless
the Department and its employees and agents from all liability, damages and costs of any nature,
including, but not limited to, costs of suits and attorneys' fees assessed against the Department, as a
result of the failure of the Subrecipient to so comply.
A.20 OWNERSHIP OF PROJECT/CAPITAL FACILITIES
The Department makes no claim to any capital facilities or real property improved or constructed with
funds under this Agreement, and by this subaward of funds does not and will not acquire any ownership
interest or title to such property of the Subrecipient. The Subrecipient shall assume all liabilities and
responsibilities arising from the ownership and operation of the project and agrees to indemnify and hold
the Department, the state of Washington and the United States government harmless from any and all
causes of action arising from the ownership and operation of the project.
A.21 POLITICAL ACTIVITY
No portion of the funds provided herein shall be used for any partisan political activity or to further the
election or defeat of any candidate for public office or influence the approval or defeat of any ballot issue.
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A.22 PROHIBITION AGAINST PAYMENT OF BONUS OR COMMISSION
The assistance provided under this Agreement shall not be used in payment of any bonus or commission
for the purpose of obtaining approval of the application for such assistance or any other approval or
concurrence under this Agreement provided, however, that reasonable fees or bona fide technical
consultant, managerial, or other such services, other than actual solicitation, are not hereby prohibited if
otherwise eligible as project costs.
A.23 PUBLICITY
The Subrecipient agrees to submit to the Department prior to issuance all advertising and publicity
matters relating to this Agreement wherein the Department’s name is mentioned or language used from
which the connection of the Department’s name may, in the Department’s judgment, be inferred or
implied. The Subrecipient agrees not to publish or use such advertising and publicity matters without the
prior written consent of the Department. The Subrecipient may copyright original work it develops in the
course of or under this Agreement; however, pursuant to 2 CFR Part 200.315, FEMA reserves a royalty-
free, nonexclusive, and irrevocable license to reproduce, publish or otherwise use, and to authorize
others to use the work for government purposes.
Publication resulting from work performed under this Agreement shall include an acknowledgement of
FEMA’s financial support, by CFDA number, and a statement that the publication does not constitute an
endorsement by FEMA or reflect FEMA’s views.
A.24 RECAPTURE PROVISION
In the event the Subrecipient fails to expend funds under this Agreement in accordance with applicable
federal, state, and local laws, regulations, and/or the provisions of the Agreement, the Department
reserves the right to recapture funds in an amount equivalent to the extent of noncompliance. Such right
of recapture shall exist for the life of the project following Agreement termination. Repayment by the
Subrecipient of funds under this recapture provision shall occur within 30 days of demand. In the event
the Department is required to institute legal proceedings to enforce the recapture provision, the
Department shall be entitled to its costs and expenses thereof, including attorney fees from the
Subrecipient.
A.25 RECORDS
a. The Subrecipient agrees to maintain all books, records, documents, receipts, invoices and all
other electronic or written records necessary to sufficiently and properly reflect the Subrecipient's
contracts, subawards, grant administration, and payments, including all direct and indirect
charges, and expenditures in the performance of this Agreement (the “records”).
b. The Subrecipient's records related to this Agreement and the projects funded may be inspe cted
and audited by the Department or its designee, by the Office of the State Auditor, DHS, FEMA or
their designees, by the Comptroller General of the United States or its designees, or by other
state or federal officials authorized by law, for the purpos es of determining compliance by the
Subrecipient with the terms of this Agreement and to determine the appropriate level of funding
to be paid under the Agreement.
c. The records shall be made available by the Subrecipient for such inspection and audit, together
with suitable space for such purpose, at any and all times during the Subrecipient's normal
working day.
d. The Subrecipient shall retain and allow access to all records related to this Agreement and the
funded project(s) for a period of at least six (6) years following final payment and closure of the
grant under this Agreement. Despite the minimum federal retention requirement of three (3)
years, the more stringent State requirement of six (6) years must be followed.
A.26 RESPONSIBILITY FOR PROJECT/STATEMENT OF WORK/WORK PLAN
While the Department undertakes to assist the Subrecipient with the project/statement of work/work plan
(project) by providing federal award funds pursuant to this Agreement, the project itself remains the sole
responsibility of the Subrecipient. The Department undertakes no responsibility to the Subrecipient, or
to any third party, other than as is expressly set out in this Agreement.
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The responsibility for the design, development, construction, implementation, operation and maintenance
of the project, as these phrases are applicable to this project, is solely that of the Subrecipient, as is
responsibility for any claim or suit of any nature by any third party related in any way to the project.
Prior to the start of any construction activity, the Subrecipient shall ensure that all applicable federal,
state, and local permits and clearances are obtained, including, but not limited to, FEMA compliance with
the National Environmental Policy Act, the National Historic Preservation Act, the Endangered Species
Act, and all other environmental laws, regulations, and executive orders.
The Subrecipient shall defend, at its own cost, any and all claims or suits at law or in equity, which may
be brought against the Subrecipient in connection with the project. The Subrecipient shall not look to the
Department, or to any state or federal agency, or to any of their employees or agents, for any
performance, assistance, or any payment or indemnity, including, but not limited to, cost of defense
and/or attorneys’ fees, in connection with any claim or lawsuit brought by any third party related to any
design, development, construction, implementation, operation and/or maintenance of a project.
A.27 SEVERABILITY
If any court of rightful jurisdiction holds any provision or condition under this Agreement or its application
to any person or circumstances invalid, this invalidity does not affect other provisions, terms or conditions
of the Agreement, which can be given effect without the invalid provision. To this end, the terms and
conditions of this Agreement are declared severable.
A.28 SINGLE AUDIT ACT REQUIREMENTS (including all AMENDMENTS)
Non-federal entities, as subrecipients of a federal award, that expend $750,000 or more in one fiscal year
of federal funds from all sources, direct and indirect, are required to have a single or a program -specific
audit conducted in accordance with 2 CFR Part 200 Subpart F. Non-federal entities that spend less than
$750,000 a year in federal awards are exempt from federal audit requirements for that year, except as
noted in 2 CFR Part 200 Subpart F. As defined in 2 CFR Part 200, the term “non-federal entity” means
a State, local government, Indian tribe, institution of higher education, or non-profit organization that
carries out a federal award as a recipient or subrecipient.
Subrecipients that are required to have an audit must ensure the audit is performed in accordance with
Generally Accepted Government Auditing Standards (GAGAS) as found in the Government Auditing
Standards (the Revised Yellow Book) developed by the United States Comptroller General and the OMB
Compliance Supplement. The Subrecipient has the responsibility of notifying its auditor and requesting
an audit in compliance with 2 CFR Part 200 Subpart F, to include the Washington State Auditor’s Office,
a federal auditor, or a public accountant performing work using GAGAS, as appropriate. Costs of the
audit may be an allowable grant expenditure as authorized by 2 CFR Part 200.425.
The Subrecipient shall maintain auditable records and accounts so as to facilitate the audit requirement
and shall ensure that any sub-contractors also maintain auditable records. The Subrecipient is
responsible for any audit exceptions incurred by its own organization or that of its sub-
contractors. Responses to any unresolved management findings and disallowed or questioned costs
shall be included with the audit report. The Subrecipient must respond to Department requests for
information or corrective action concerning audit issues or findings within 30 days of the date of
request. The Department reserves the right to recover from the Subrecipient all disallowed costs
resulting from the audit.
After the single audit has been completed, and if it includes any audit findings, the Subrecipient must
send a full copy of the audit and its corrective action plan to the Department at the following address no
later than nine (9) months after the end of the Subrecipient’s fiscal year(s):
Contracts Office
Washington Military Department
Finance Division, Building #1 TA-20
Camp Murray, WA 98430-5032
If the Subrecipient claims it is exempt from the audit requirements of 2 CFR Part 200 Subpart F, the
Subrecipient must send a completed “2 CFR Part 200 Subpart F Audit Certification Form”
(https://www.mil.wa.gov/emergency-management-division/grants/requiredgrantforms) to the Department
at the address listed above identifying this Agreement and explaining the criteria for exemption no later
than nine (9) months after the end of the Subrecipient’s fiscal year(s).
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The Department retains the sole discretion to determine whether a valid claim for an exemption from the
audit requirements of this provision has been established.
The Subrecipient shall include the above audit requirements in any subawards.
Conducting a single or program-specific audit in compliance with 2 CFR Part 200 Subpart F is a material
requirement of this Agreement. In the absence of a valid claim of exemption from the audit requirements
of 2 CFR Part 200 Subpart F, the Subrecipient’s failure to comply with said audit requirements may result
in one or more of the following actions in the Department’s sole discretion: a percentage of federal awards
being withheld until the audit is completed in accordance with 2 CFR Part 200 Subpart F; the withholding
or disallowing of overhead costs; the suspension of federal awards until the audit is conducted and
submitted; or termination of the federal award.
A.29 SUBRECIPIENT NOT EMPLOYEE
The parties intend that an independent contractor relationship will be created by this Agreement. The
Subrecipient, and/or employees or agents performing under this Agreement are not employees or agents
of the Department in any manner whatsoever. The Subrecipient will not be presented as, nor claim to
be, an officer or employee of the Department by reason of this Agreement, nor will the Subrecipient make
any claim, demand, or application to or for any right or privilege applicable to an officer or employee of
the Department or of the State of Washington by reason of this Agreement, including, but not limited to,
Workmen's Compensation coverage, unemployment insurance benefits, social security benefits,
retirement membership or credit, or privilege or benefit which would accrue to a civil service employee
under Chapter 41.06 RCW.
It is understood that if the Subrecipient is another state department, state agency, state university, state
college, state community college, state board, or state commission, that the officers and employees a re
employed by the state of Washington in their own right and not by reason of this Agreement.
A.30 TAXES, FEES AND LICENSES
Unless otherwise provided in this Agreement, the Subrecipient shall be responsible for, pay and maintain
in current status all taxes, unemployment contributions, fees, licenses, assessments, permit charges and
expenses of any other kind for the Subrecipient or its staff required by statute or regulation that are
applicable to Agreement performance.
A.31 TERMINATION FOR CONVENIENCE
Notwithstanding any provisions of this Agreement, the Subrecipient may terminate this Agreement by
providing written notice of such termination to the Department Key Personnel identified in the Agreement,
specifying the effective date thereof, at least thirty (30) days prior to such date.
Except as otherwise provided in this Agreement, the Department, in its sole discretion and in the best
interests of the State of Washington, may terminate this Agreement in whole or in part by providing ten
(10) calendar days written notice, beginning on the second day after mailing to the Subrecipient. Upon
notice of termination for convenience, the Department reserves the right to suspend all or part of the
Agreement, withhold further payments, or prohibit the Subrecipient from incur ring additional obligations
of funds. In the event of termination, the Subrecipient shall be liable for all damages as authorized by
law. The rights and remedies of the Department provided for in this section shall not be exclusive and
are in addition to any other rights and remedies provided by law.
A.32 TERMINATION OR SUSPENSION FOR CAUSE
In the event the Department, in its sole discretion, determines the Subrecipient has failed to fulfill in a
timely and proper manner its obligations under this Agreement, is in an unsound financial condition so
as to endanger performance hereunder, is in violation of any laws or regulations that render the
Subrecipient unable to perform any aspect of the Agreement, or has violated any of the covenants,
agreements or stipulations of this Agreement, the Department has the right to immediately suspend or
terminate this Agreement in whole or in part.
The Department may notify the Subrecipient in writing of the need to take corrective action and provide
a period of time in which to cure. The Department is not required to allow the Subrecipient an opportunity
to cure if it is not feasible as determined solely within the Department’s discretion. Any time allowed for
cure shall not diminish or eliminate the Subrecipient’s liability for damages or otherwise affect any other
remedies available to the Department. If the Department allows the Subrecipient an opportunity to cure,
the Department shall notify the Subrecipient in writing of the need to take corrective action. If the
corrective action is not taken within ten (10) calendar days or as otherwise specified by the Department,
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or if such corrective action is deemed by the Department to be insufficient, the Agreement may be
terminated in whole or in part.
The Department reserves the right to suspend all or part of the Agreement, withhold further payments,
or prohibit the Subrecipient from incurring additional obligations of funds during investigation of the
alleged compliance breach, pending corrective action by the Subrecipient, if allowed, or pending a
decision by the Department to terminate the Agreement in whole or in part.
In the event of termination, the Subrecipient shall be liable for all damages as authorized by law, including,
but not limited to, any cost difference between the original Agreement and the replacement or cover
Agreement and all administrative costs directly related to the replacement Agreement, e.g., cost of
administering the competitive solicitation process, mailing, advertising and other associated staff time.
The rights and remedies of the Department provided for in this section shall not be exclusive and are in
addition to any other rights and remedies provided by law.
If it is determined that the Subrecipient: (1) was not in default or material breach, or (2) failure to perform
was outside of the Subrecipient’s control, fault or negligence, the termination shall be deemed to be a
“Termination for Convenience”.
A.33 TERMINATION PROCEDURES
In addition to the procedures set forth below, if the Department terminates this Agreement, the
Subrecipient shall follow any procedures specified in the termination notice. Upon termination of this
Agreement and in addition to any other rights provided in this Agreement, the Department may require
the Subrecipient to deliver to the Department any property specifically produced or acquired for the
performance of such part of this Agreement as has been terminated.
If the termination is for convenience, the Department shall pay to the Subrecipient as an agreed upon
price, if separately stated, for properly authorized and completed work and services rendered or goods
delivered to and accepted by the Department prior to the effective date of Agr eement termination, the
amount agreed upon by the Subrecipient and the Department for (i) completed work and services and/or
equipment or supplies provided for which no separate price is stated, (ii) partially completed work and
services and/or equipment or supplies provided which are accepted by the Department, (iii) other work,
services and/or equipment or supplies which are accepted by the Department, and (iv) the protection and
preservation of property.
Failure to agree with such amounts shall be a dispute within the meaning of the "Disputes" clause of this
Agreement. If the termination is for cause, the Department shall determine the extent of the liability of
the Department. The Department shall have no other obligation to the Subrecipient for termination. The
Department may withhold from any amounts due the Subrecipient such sum as the Department
determines to be necessary to protect the Department against potential loss or liability.
The rights and remedies of the Department provided in this Agreement shall not be exclusive and are in
addition to any other rights and remedies provided by law.
After receipt of a notice of termination, and except as otherwise directed by the Department in writing,
the Subrecipient shall:
a. Stop work under the Agreement on the date, and to the extent specified, in the notice;
b. Place no further orders or contracts for materials, services, supplies, equipment and/or facilities
in relation to this Agreement except as may be necessary for completion of such portion of the
work under the Agreement as is not terminated;
c. Assign to the Department, in the manner, at the times, and to the extent directed by the
Department, all of the rights, title, and interest of the Subrecipient under the orders and contracts
so terminated, in which case the Department has the right, at its discretion, to settle or pay any
or all claims arising out of the termination of such orders and contracts;
d. Settle all outstanding liabilities and all claims arising out of such termination of orders and
contracts, with the approval or ratification of the Department to the extent the Department may
require, which approval or ratification shall be final for all the purposes of this clause;
e. Transfer title to the Department and deliver in the manner, at the times, and to the extent directed
by the Department any property which, if the Agreement had been completed, would have been
required to be furnished to the Department;
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f. Complete performance of such part of the work as shall not have been terminated by the
Department in compliance with all contractual requirements; and
g. Take such action as may be necessary, or as the Department may require, for the protection and
preservation of the property related to this Agreement which is in the possession of the
Subrecipient and in which the Department has or may acquire an interest.
A.34 UTILIZATION OF MINORITY AND WOMEN BUSINESS ENTERPRISES (MWBE)
The Subrecipient is encouraged to utilize business firms that are certified as minority-owned and/or
women-owned in carrying out the purposes of this Agreement. The Subrecipient may set utilization
standards, based upon local conditions or may utilize the state of Washington MWBE goals, as identified
in WAC 326-30-041.
A.35 VENUE
This Agreement shall be construed and enforced in accordance with, and the validity and performance
shall be governed by, the laws of the state of Washington. Venue of any suit between the parties arising
out of this Agreement shall be the Superior Court of Thurston County, Washington. The Subrecipient,
by execution of this Agreement acknowledges the jurisdiction of the courts of the State of Washington.
A.36 WAIVERS
No conditions or provisions of this Agreement can be waived unless approved in advance by the
Department in writing. The Department's failure to insist upon strict performance of any provision of the
Agreement or to exercise any right based upon a breach thereof, or the acceptance of any performance
during such breach, shall not constitute a waiver of any right under this Agreement.
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Exhibit C
WORK PLAN
FY 2017 Emergency Management Performance Grant
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Exhibit D
TIMELINE
FY 2017 Emergency Management Performance Grant
DATE TASK
June 1, 2017 Grant Agreement Start Date
May 31, 2018 Submit reimbursement request
July 31, 2018 Submit reimbursement request
August 31, 2018 Grant Agreement End Date
October 15, 2018 Submit final reimbursement request, final report, Training and
Exercise Requirement report, and/or other deliverables.
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Exhibit E
BUDGET
FY 2017 Emergency Management Performance Grant
17EMPG AWARD 70,697.00$
SOLUTION
AREA CATEGORY EMPG AMOUNT Match AMOUNT
Salaries & Benefits -$ -$
Overtime/Backfill -$ -$
Consultants/Contractors -$ -$
Goods & Services -$ -$
Travel/Per Diem -$ -$
Subtotal -$ -$
Salaries & Benefits -$ 70,697$
Overtime/Backfill -$ -$
Consultants/Contractors -$ -$
Goods & Services 23,500$ -$
Travel/Per Diem -$ -$
Subtotal 23,500$ 70,697$
Salaries & Benefits -$ -$
Overtime/Backfill -$ -$
Consultants/Contractors -$ -$
Goods & Services -$ -$
Travel/Per Diem -$ -$
Subtotal -$ -$
Salaries & Benefits -$ -$
Overtime/Backfill 3,000$ -$
Consultants/Contractors 4,397$ -$
Goods & Services 800$ -$
Travel/Per Diem 3,500$ -$
Subtotal 11,697$ -$
Equipment 35,500$ -$
Subtotal 35,500$ -$
Salaries & Benefits -$ -$
Overtime/Backfill -$ -$
Consultants/Contractors -$ -$
Goods & Services -$ -$
Travel/Per Diem -$ -$
Subtotal -$ -$
Indirect -$ -$
Indirect Cost Rate on file 0%
TOTAL Grant Agreement AMOUNT:70,697$ 70,697$
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• The Subrecipient will provide a match of $70,697 of non-federal origin, 50% of the total project cost (Local budget plus
EMPG award).
• Cumulative transfers to budget categories in excess of 10% of the grant agreement amount will not be reimbursed
without prior written authorization from the Department.
Funding Source: U.S. Department of Homeland Security - PI# 773PT – EMPG
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Attachment 1
17EMPG Award Document
EMS-2017-EP-00004-S01
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HUMAN RESOURCES DEPARTMENT
Marty Fisher, Director
Phone: 253-856-5270
Fax: 253-856-6270
Address: 400 West Gowe
Kent, WA. 98032-5895
DATE: November 7, 2017
TO: Operations Committee
FROM: Laura Horea, Benefits Manager and Chris Hills, Risk Manager
SUBJECT: Medical, Dental, Vision, Basic Life, Voluntary Life, and Long Term
Disability Insurance Vendor Contracts – Recommend
SUMMARY: The City of Kent contracts with Premera Blue Cross, Delta Dental of
Washington (DDW) and Vision Service Plan (VSP), to be third party administrators to
process medical, dental, and vision claims, and provide access to their networks of
doctors, hospitals, dentists, optometrists and ophthalmologists. The City is self-insured for
these programs and wires funds to cover the weekly claims cost for medical, prescription,
dental, and vision expenses. The City also contracts with Kaiser Permanente (formerly
Group Health Cooperative) for the City’s insured health maintenance organization (HMO).
After conducting separate request for proposal processes for each of these services, staff
recommends renewal of these contracts with the current vendors.
After holding a request for proposal process, and discussions with the City’s Healthcare
Board, staff recommends a move from our current vendor for long-term disability services
and basic life, AD&D and voluntary life insurance to Cigna.
Although all core contract terms have been resolved with these providers, the City and the
providers are still in the process of winding up final contract language. These vendors also
have their own lengthy internal approval process, so authorization is sought now to get
approval for next year’s budget cycle.
Exhibit: Memo to Operations Committee
Budget Impact: Premera - $1,345,000 for a three (3)-year contract; Delta Dental -
$165,330 for a three (3)-year contract; Vision Service Plan (VSP) - $56,100 for a three
(3)-year contract; Kaiser Permanente - $420,000 for a one (1)-year contract; and Cigna -
$705,000 for a three (3)-year contract.
MOTION: Recommend Council authorize the Mayor to approve renewal of the
City’s contracts for medical, vision, and dental benefits with Premera, Vision
Service Plan (VSP), and Delta Dental for three years, and Kaiser Permanente
(formerly Group Health) for one year, and to approve switching from Standard
Insurance to Cigna for a new 3-year contract for Basic Life, Voluntary Life, and
Long Term Disability insurance, subject to approval of final terms and conditions
by the Human Resources Director and the City Attorney.
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44
HUMAN RESOURCES DEPARTMENT
Marty Fisher, Director
Phone: 253-856-5270
Fax: 253-856-6270
Address: 400 West Gowe
Kent, WA 98032-5895
DATE: November 7, 2017
TO: Operations Committee
FROM: Laura Horea, HR Benefits Manager
SUBJECT: Medical, Dental, Vision, Basic Life, Voluntary Life, and Long Term
Disability Insurance Vendor Contracts
SUMMARY: The Benefits Division of the Human Resources Department conducted
separate Request for Proposal processes for 1) Medical, dental, and vision
insurance, and 2) Basic Life and Accidental Death & Dismemberment (AD&D),
Voluntary Life and Long Term Disability insurance between April and August 2017.
All bids were reviewed by the Human Resources Director, the Benefits Manager,
and discussed with members of the City’s Healthcare Board.
Medical, dental, and vision insurance bids were received from Premera, Aetna,
HMA, Regence, Kaiser Permanente (formerly Group Health), Delta Dental, and
Vision Service Plan (VSP). United Healthcare declined participation.
Our current providers, Premera, Delta Dental, and VSP are recommended to renew
for additional three-year contracts and Kaiser Permanente for a one-year renewal,
based on the strength of their plans, overall costs, customer service, discounts, and
overall administration and billing accuracy.
Basic Life and AD&D, Voluntary Life and Long Term Disability insurance bids were
received from our current vendor, Standard Insurance, and also from Cigna and
Mutual of Omaha.
The recommendation is to move from our current vendor, Standard Insurance, to
Cigna for long-term disability services, basic life insurance, AD&D, and employee
and dependent voluntary life insurance for the following reasons:
Savings of approximately $100k per year in each of the three years of the
proposed new contract; and
Increase in employee basic life insurance coverage from 1 x salary up to
$50,000 to 1 x salary up to $150,000.
45
Employees will have the opportunity to purchase additional voluntary life
insurance for themselves and their family members at a significantly lower
rate than is available through Standard.
Staff has received excellent feedback regarding Cigna from current customers
about their billing accuracy, systems, overall administration, and customer service.
Locally the City of Kirkland just moved to Cigna for these services.
All other contract features are identical to our current offering from Standard.
46
FINANCE DEPARTMENT
Aaron BeMiller Director
Phone: 253-856-5260
Fax: 253-856-6255
Address: 220 Fourth Avenue S.
Kent, WA. 98032-5895
DATE: November 7, 2017
TO: Operations Committee
FROM: Barbara Lopez, Deputy Director
SUBJECT: Consolidating Budget Adjustment Ordinance for Adjustments
between July 1, 2017 and September 30, 2017 - Recommend
SUMMARY: Authorization is requested to approve the technical gross budget
adjustment ordinance reflecting an overall budget increase of $3,117,760.
Adjustments totaling $1,620,760 have previously been approved by Council and are
summarized as follows:
$1,620,760 in grants for:
$782,200 Highway Safety Improvement Program (HSIP) Grant for the
Valley Signal System Project
$750,000 Transportation Improvement Board (TIB) grant for South 224th
Street Project
$50,000 CSEC Grant for CSEC (Commercially Sexually Exploited Children)
Taskforce Support
$36,560 King County Sheriff Grant for the WASPC Sex Offender Program
$1,000 Police Mini Grant for Heroes & Helpers Program
$1,000 WASPC grant for safety equipment
Adjustments totaling $1,497,000 have not been previously approved by Council.
Highlights include:
$750,000 transfer from the General Fund to the Health Care/Benefits Fund to
cover additional medical claim costs
MOTION: Recommend Council approve the consolidating budget
adjustment ordinance for adjustments made between July 1, 2017
and September 30, 2017, reflecting an overall budget increase of
$3,117,760.
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Consolidating Budget Adjustment Ordinance – continued
$300,000 in additional Criminal Justice budget for contracting bed space at
other prison facilities
$387,000 for various police equipment, including an evidence tracking
system, drying cabinet, firing range baffle support, handgun
flashlight/holsters, rifle suppressors, and a utility bucket truck
$60,000 to increase the marketing budget paid from lodging tax revenues, as
approved by the Lodging Tax Advisory Board
BUDGET IMPACT: These expenditures are funded by grants, existing fund
balance, or other new revenues.
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1 2017-2018 Budget Adjustment
Third Quarter 2017
ORDINANCE NO.
AN ORDINANCE of the City Council of the
City of Kent, Washington, approving the
consolidating budget adjustments made between
July 1, 2017 and September 30, 2017, reflecting
an overall budget increase of $3,117,760.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT,
WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS:
ORDINANCE
SECTION 1. – Budget Adjustments. The 2017-2018 biennial
budget is amended to include budget fund adjustments for the third
quarter of 2017 from July 1 to September 30, 2017, as summarized and
set forth in Exhibit “A,” which is attached and incorporated into this
ordinance. Except as amended by this ordinance, all terms and provisions
of the 2017-2018 biennial budget Ordinance No. 4230, as amended by
Ordinance Nos. 4245 and 4251 shall remain unchanged.
SECTION 2. – Severability. If any one or more section, subsection,
or sentence of this ordinance is held to be unconstitutional or invalid, such
decision shall not affect the validity of the remaining portion of this
ordinance and the same shall remain in full force and effect.
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2 2017-2018 Budget Adjustment
Third Quarter 2017
SECTION 3. – Corrections by City Clerk or Code Reviser. Upon
approval of the city attorney, the city clerk and the code reviser are
authorized to make necessary corrections to this ordinance, including the
correction of clerical errors; ordinance, section, or subsection numbering;
or references to other local, state, or federal laws, codes, rules, or
regulations.
SECTION 4. – Effective Date. This ordinance shall take effect and
be in force five days after publication, as provided by law.
SUZETTE COOKE, MAYOR Date Approved
ATTEST:
KIMBERLY A. KOMOTO, CITY CLERK Date Adopted
Date Published
APPROVED AS TO FORM:
TOM BRUBAKER, CITY ATTORNEY
P:\Civil\Ordinance\Budget Adjustment Ordinance Q3 2017 Supp.docx
50
Fund Title Previously
Approved
Approval
Requested
Total
Adjustment
Ordinance
General Fund 750,000 750,000
Lodging Tax Fund - 60,000 60,000
Criminal Justice Fund 88,560 687,000 775,560
Street Capital Projects Fund 1,532,200 - 1,532,200
Total 1,620,760 1,497,000 3,117,760
Exhibit A
City of Kent
Budget Adjustment Ordinance
Adjustments July 1, 2017 to September 30, 2017
51
Approval
Date or
Other Fund
Previously
Approved by
Council
Not
Previously
Approved by
Council
Total
Adjustment
Ordinance
General Fund
Transfer out to Health Care/Benefits Fund 750,000 750,000
Total General Fund - 750,000 750,000
Lodging Tax Fund
LTAC Budget Adj.60,000 60,000
Total Lodging Tax Fund - 60,000 60,000
Criminal Justice Fund
2017 CSEC Grant KCC 3.70 50,000 50,000
King County Sheriff Grant KCC 3.70 36,560 36,560
Pol Mini Grant-Heros&Helpers KCC 3.70 1,000 1,000
WASPC Safety Equip.KCC 3.70 1,000 1,000
Drying Cabinet & Refrig 34,000 34,000
EvidenceOnQ Equip 15,000 15,000
EvidenceOnQ Hardware 10,400 10,400
EvidenceOnQ Services 28,000 28,000
EvidenceOnQ Software 37,600 37,600
Firing Range Baffle Supp 20,000 20,000
Handgun flashlight/holster 42,000 42,000
Rifle Suppressors 135,000 135,000
Utility Bucket Truck 65,000 65,000
Contract for bed space at other facilities 300,000 300,000
Total Criminal Justice Fund 88,560 687,000 775,560
Street Capital Projects
HSIP Federal Grant 6/6/2017 782,200 782,200
TIB Grant 9/5/17 9/5/2017 750,000 750,000
Total Street Capital Projects Fund 1,532,200 - 1,532,200
Grand Total All Funds 1,620,760 1,497,000 3,117,760
Budget Adjustment Detail for Budget Changes
July 1, 2017 to September 30, 2017
52
Kent Council Operations Committee Uncollectable Accounts Receivable Write-off
FINANCE DEPARTMENT
Aaron BeMiller, Director
Phone: 253-856-5260
Fax: 253-856-6255
Address: 220 Fourth Avenue S.
Kent, WA. 98032-5895
DATE: November 7, 2017
TO: Operations Committee
FROM: Aaron BeMiller, Director
SUBJECT: Write-offs of Uncollectable Accounts - Recommend
SUMMARY: Authorization is requested to write-off $150,006.24 in uncollectable
accounts receivable. The accounts receivable balance as of October 31, 2017 was
$3,751,969.58 and the requested write-off represents four percent of the balance;
$28,602.57 of the requested write-off consists of interest and finance charges.
Of the $150,006.24 (all from 2007 through 2016):
$3,000 represents unpaid violations and fines;
$9,054.59 is for miscellaneous permits, tax and license fees;
$111,020.83 is for Parks fees and golf operations tenant debt; and
$26,930.82 is comprised of miscellaneous Public Works repairs and services.
EXHIBITS: 2017 Write-offs Summary
BUDGET IMPACT: There is no budget impact as a result of this motion as these
accounts have already been fully reserved as doubtful accounts and are not
included in the net accounts receivable amount.
MOTION: Recommend Council authorize the Mayor to write-off
uncollectable accounts owed to the City in the amount of $150,006.24,
subject to final approval of the Finance Director and City Attorney.
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54
Misc. Accounts Receivables Write-offs:
Year:Summary:Amount:Services, Fines & Fees:
2012-2014 Code Violations & Fines - uncollectable 3,000.00 Violaitons & Bankruptcy discharged
2013 Fire Permits - ARMI Collections - uncollectable 1,432.59 Permits / Closed Businesses
2013 Licenses, Taxes & Fees - uncollectable 461.26 Various uncollectable fees
2007 - 2009 Misc. Permits - ARMI Collections - uncollectable 7,160.74 Permit Fees
2013-2015 Parks/Golf Operations - ARMI Collections 98,653.21 Tenant Rent/Utilities/Penalties
2013-2016 Parks - Programs & Golf Operations- uncollectable 12,367.62 Program fee & Golf Rent Abatement
2012-2013 Public Works - ARMI Collections 26,930.82 Damage Repairs & Misc. Services
2017 WRITE-OFFS:$150,006.24
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56
Kent Council Operations Committee
FINANCE DEPARTMENT
Aaron BeMiller, Director
Phone: 253-856-5260
Fax: 253-856-6255
Address: 220 Fourth Avenue S.
Kent, WA. 98032-5895
DATE: November 7, 2017
TO: Operations Committee
FROM: Aaron BeMiller, Director
SUBJECT: 2017 Refunding of Outstanding 2009 Utility Revenue Bonds -
Recommend
MOTION: Move to recommend council adopt Ordinance No. ,
providing for the issuance of combined utility system revenue refunding
bonds in the aggregate principal amount of not to exceed $16,000,000 for
the purpose of refunding, on a crossover basis, a portion of the City’s
combined utility system revenue bonds series 2009B taxable (Build
America Bonds – Direct Payment); providing the form, terms and
covenants of the bonds; delegating certain authority to approve the final
terms of the bonds; and authorizing other matters related thereto, subject
to the approval of final terms by the city’s finance director and city
attorney.
SUMMARY: The finance department has been working with our financial advisor,
Piper Jaffray & Co, and Bond Counsel, Pacifica Law Group LLP, to refund the City’s
2009 Build America Bonds (Revenue Bonds). The refunding, called a “crossover”
refunding, includes the issuance of new Revenue Bonds whereby the cash is
deposited in an irrevocable escrow and will be held until December 1, 2019, the
date the Build America Bonds (BAB’s) are callable.
The City will continue to pay the debt service on our Build America Bonds until and
including the December 1, 2019 payment date. The interest payments on the newly
issued Revenue Bonds will be made from the escrow account until and including
December 1, 2019. On December 1, 2019 the remaining monies in the irrevocable
escrow account will be used to redeem the City’s Build America Bonds and the City
will make the remaining debt service payments, principal and interest, on the City’s
2017 issued Revenue Bonds.
The “crossover” refunding allows the City to capitalize on both the current low rates
in the bond market and BAB’s subsidy paid to the City from the Federal
Government. BAB’s are qualified bonds that provide a Federal subsidy through a
refundable tax credit on the interest paid by the issuer (the City).
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Kent Council Operations Committee
The bond market fluctuates and therefore the most favorable market conditions
may occur on a day other than a regular meeting of the Council. The refunding
ordinance allows for the designated representative to approve the final refunding as
long as the following conditions are met:
The aggregate principal amount of the Bonds does not exceed $16 million,
final maturity date is no later than December 1, 2029,
bonds are sold in the aggregate at a price not less than 97 percent and not
greater than 130 percent,
savings associated with the refunding is at least 3 percent, and
The true interest cost for the Bonds does not exceed 3.00 percent.
The proposed bonds are for refunding purposes (for savings) only; the City receives
no new money for project funding.
The refunding ordinance requires that the Finance Director provide a report to the
Council describing the final terms of the refunding. The authorization in the
ordinance extends to June 1, 2018. If the new Revenue Bonds are not sold by that
date, additional Council approval will be necessary. The anticipated closing date on
the refunding is December 28, 2017.
Revenue Bonds are used to finance construction or improvements to facilities of
enterprise systems operated by the City in accordance with the Capital
Improvement Program and are generally payable from the enterprise. No taxing
power or general fund pledge is provided as security. Revenue bonds are not
subject to the City’s statutory debt limitation and do not require voter approval.
BUDGET IMPACT: Current estimates (November 2017) on the refunding are a net
present value savings between $940,000 and $915,000 on the life of the bonds.
BACKGROUND: Proceeds from the 2009 Revenue Bonds were used to finance
capital improvements to the City’s water collection and distribution system, the
sanitary sewerage collection and disposal system, and the storm and surface water
utility. Projects include levee improvements, pipe replacements, pump station
improvements, and other capital improvements to the system.
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1 Combined Utility System
Revenue Refunding Bonds
ORDINANCE NO.
AN ORDINANCE of the City Council of the
City of Kent, Washington, authorizing the issuance
of combined utility system revenue refunding
bonds in the aggregate principal amount of not to
exceed $16,000,000 for the purpose of refunding,
on a crossover basis, a portion of the City’s
combined utility system revenue bonds series
2009B taxable (Build America Bonds – Direct
Payment); providing the form, terms and
covenants of the bonds; delegating certain
authority to approve the final terms of the bonds;
and authorizing other matters related thereto.
RECITALS
A. The City of Kent, Washington (the “City”) owns, operates and
maintains a water collection and distribution system (the “Water Utility”);
and
B. The City owns, operates and maintains a combined sanitary
sewage collection and disposal system and storm and surface water utility
(the “System of Sewerage”); and
C. The City Council has previously combined the Water Utility
and the System of Sewerage (hereinafter defined as the “System”) for the
purpose of debt issuance; and
D. The City currently has outstanding its Combined Utility
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2 Combined Utility System
Revenue Refunding Bonds
System Revenue Bonds, Series 2009A (the “2009A Bonds”) and its
Combined Utility System Revenue Bonds, Series 2009B Taxable (Build
America Bonds – Direct Payment) (the “2009B Bonds” and together with
the 2009A Bonds, the “Outstanding Parity Bonds”), issued on
September 3, 2009 pursuant to Ordinance No. 3925 passed by the City
Council on August 4, 2009 (the “2009 Bond Ordinance”); and
E. The 2009 Bond Ordinance provides that additional combined
utility system revenue bonds may be issued with a lien on Net Revenues
(as defined herein) on a parity with the lien of the Outstanding Parity
Bonds if certain conditions are met; and
F. The 2009 Bond Ordinance provides that the 2009B Bonds
maturing on December 1, 2024 and December 1, 2029 are subject to
optional redemption prior to maturity beginning on December 1, 2019, in
whole or in part at any time, at a price of par plus accrued interest to the
date of redemption; and
G. After due consideration it appears to the City Council that
such 2009B Bonds may be refunded on a crossover basis by proceeds of
combined utility system revenue bonds authorized herein (the “Bonds”) at
a savings to the City and its ratepayers; and
H. The City Council wishes to delegate authority to the Mayor
(the “Designated Representative”) for a limited time, to approve the
interest rates, maturity dates, redemption terms, and other terms for the
Bonds within the parameters set by this ordinance; and
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3 Combined Utility System
Revenue Refunding Bonds
I. The Bonds shall be sold by negotiated sale as set forth
herein;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT,
WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS:
ORDINANCE
SECTION 1. - Definitions and Interpretation of Terms.
(a) Definitions. As used in this ordinance, the following words
shall have the following meanings:
Accreted Value means (1) with respect to any Capital Appreciation
Bonds, as of any date of calculation, the sum of the amount set forth in
the ordinance authorizing their issuance as the amount representing the
initial principal amount of such Capital Appreciation Bonds plus the interest
accumulated, compounded and unpaid thereon as of the most recent
compounding date, or (2) with respect to Original Issue Discount Bonds,
as of the date of calculation, the amount representing the initial public
offering price of such Original Issue Discount Bonds plus the amount of
discounted principal that has accreted since the date of issue. In each
case, the Accreted Value shall be determined in accordance with the
provisions of the ordinance authorizing the issuance of such Balloon
Maturity Bonds.
Acquired Obligations means the Government Obligations acquired
by the City under the terms of this ordinance and the Escrow Agreement,
but only to the extent that the same are acquired at Fair Market Value.
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4 Combined Utility System
Revenue Refunding Bonds
Annual Debt Service means the total amount of Debt Service for
any Parity Bond or series of Parity Bonds or other evidences of
indebtedness payable from Revenue of the System in any fiscal year or
Base Period.
Balloon Maturity Bonds mean any evidences of indebtedness of the
City payable from Revenue of the System that are so designated in the
ordinance pursuant to which such indebtedness is incurred.
Base Period means any consecutive 12-month period selected by
the City out of the 24-month period next preceding the date of issuance of
an additional series of Future Parity Bonds.
Beneficial Owner means any person that has or shares the power,
directly or indirectly, to make investment decisions concerning ownership
of any Bonds (including persons holding Bonds through nominees,
depositories or other intermediaries).
Bond Counsel means Pacifica Law Group LLP or an attorney at law
or a firm of attorneys, selected by the City, of nationally recognized
standing in matters pertaining to the tax exempt nature of interest on
bonds issued by states and their political subdivisions.
Bond Fund means the City of Kent Revenue Bond Fund and also
shall include any fund established in the future for the payment of debt
service on Parity Bonds.
Bond Purchase Contract means the contract for the purchase of the
Bonds between the Underwriter and the City, executed pursuant to this
ordinance.
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5 Combined Utility System
Revenue Refunding Bonds
Bond Register means the registration books showing the name,
address and tax identification number of each Registered Owner of the
Bonds, maintained pursuant to Section 149(a) of the Code.
Bond Registrar means, initially, the fiscal agent of the State, for the
purposes of registering and authenticating the Bonds, maintaining the
Bond Register, effecting transfer of ownership of the Bonds and paying
interest on and principal of the Bonds.
Bonds mean the City’s Combined Utility System Revenue Refunding
Bonds, with such series designation as approved by the Designated
Representative, authorized to be issued by this ordinance.
Capital Appreciation Bonds mean any Future Parity Bonds all or a
portion of the interest on which is compounded, accumulated and payable
only upon redemption or on the maturity date of such Capital Appreciation
Bonds. If so provided in the ordinance authorizing their issuance, Future
Parity Bonds may be deemed to be Capital Appreciation Bonds for only a
portion of their term. On the date on which Future Parity Bonds no longer
are Capital Appreciation Bonds, they shall be deemed outstanding in a
principal amount equal to their Accreted Value.
Chief Administrative Officer means the Chief Administrative Officer
of the City or the successor to such officer.
City means the City of Kent, Washington, a municipal corporation
duly organized and existing under and by virtue of the Constitution and
laws of the State.
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6 Combined Utility System
Revenue Refunding Bonds
City Council or Council means the City Council as the general
legislative authority of the City, as duly and regularly constituted from
time to time.
Code means the Internal Revenue Code of 1986 as in effect on the
date of issuance of the Bonds or (except as otherwise referenced herein)
as it may be amended to apply to obligations issued on the date of
issuance of the Bond, together with applicable proposed, temporary and
final regulations promulgated, and applicable official public guidance
published, under the Code.
Commission means the Securities and Exchange Commission.
Common Reserve Bonds mean (a) the Outstanding Parity Bonds and
(b) those Future Parity Bonds designated in the ordinance authorizing their
issuance as Common Reserve Bonds secured by the Common Reserve
Account. The Bonds are not “Covered Bonds” (as that term is used in the
2009 Bond Ordinance) or Common Reserve Bonds.
Common Reserve Account means the Debt Service Reserve Account
maintained within the Bond Fund for the purpose of securing Common
Reserve Bonds.
Consultant means at any time an independent municipal financial
consultant appointed by the City to perform the duties of the Consultant
as required by this ordinance. For the purposes of delivering any
certificate required in connection with the issuance of Future Parity Bonds
and making the related calculations, the term Consultant shall also include
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7 Combined Utility System
Revenue Refunding Bonds
any independent public accounting firm or engineer appointed by the City
to make such calculation or to provide such certificate.
Continuing Disclosure Certificate means the written undertaking for
the benefit of the owners and Beneficial Owners of the Bonds as required
by Section (b)(5) of the Rule.
Contract Resource Obligation means an obligation of the City,
designated as a Contract Resource Obligation and entered into pursuant to
Section 6 of this ordinance, to make payments for water or sewer supply,
transmission or other commodity or service to another person or entity.
Costs of Maintenance and Operation means all reasonable expenses
incurred by the City in causing the System of the City to be operated and
maintained in good repair, working order and condition, deposits,
premiums, assessments or other payments for insurance, if any, on the
System; payments into pension funds; State-imposed taxes; amounts due
under Contract Resource Obligations (but only at the times described in
Section 6 of this ordinance); payments made to any other person or entity
for the receipt of water or sewer supply or transmission or other right,
commodity or service; payments made to any other person or entity that
are required in connection with the operation of the System or the
acquisition or transmission of water or sewer or storm water and that are
not subordinate to the lien of the Parity Bonds; and payments with respect
to any other expenses of the System that are properly treated as
operation and maintenance expenses under generally accepted accounting
principles applicable to municipal corporations, but shall not include any
65
8 Combined Utility System
Revenue Refunding Bonds
payments for principal or interest or into the Common Reserve Account or
any other Parity Bond Reserve Account, depreciation or taxes levied or
imposed by the City or payments to the City in lieu of taxes, or capital
additions or capital replacements to the System.
Coverage Stabilization Account means the account of that name
maintained by the City pursuant to this ordinance.
Crossover Date means December 1, 2019.
Debt Service means, for any period of time,
(a) with respect to any outstanding Original Issue Discount
Bonds or Capital Appreciation Bonds which are not designated as Balloon
Maturity Bonds in the ordinance authorizing their issuance, the principal
amount thereof shall be equal to the Accreted Value thereof maturing or
scheduled for redemption in such period, and the interest payable during
such period;
(b) with respect to any outstanding Fixed Rate Bonds, an amount
equal to (1) the principal amount of such Fixed Rate Bonds due or subject
to mandatory redemption during such period and for which no sinking fund
installments have been established, (2) the amount of any payments
required to be made during such period into any sinking fund established
for the payment of any such Fixed Rate Bonds, plus (3) all interest
payable during such period on any such outstanding Fixed Rate Bonds and
with respect to Fixed Rate Bonds with mandatory sinking fund
requirements, calculated on the assumption that mandatory sinking fund
installments will be applied to the redemption or retirement of such Fixed
66
9 Combined Utility System
Revenue Refunding Bonds
Rate Bonds on the date specified in the ordinance authorizing such Fixed
Rate Bonds; and
(c) with respect to all other series of Parity Bonds, other than
Fixed Rate Bonds, Original Issue Discount Bonds or Capital Appreciation
Bonds, specifically including but not limited to Balloon Maturity Bonds and
Parity Bonds bearing variable rates of interest, an amount for any period
equal to the amount which would have been payable for principal and
interest on such Parity Bonds during such period computed on the
assumption that the amount of Parity Bonds as of the date of such
computation would be amortized (1) in accordance with the mandatory
redemption provisions, if any, set forth in the ordinance authorizing the
issuance of such Parity Bonds, or if mandatory redemption provisions are
not provided, during a period commencing on the date of computation and
ending on the earlier of (i) the date 30 years after the date of issuance or
(ii) the final maturity (2) at an interest rate equal to the yield to maturity
set forth in the 40-Bond Index published in the edition of The Bond Buyer
(or comparable publication or such other similar index selected by the
City) and published within ten days prior to the date of calculation or, if
such calculation is being made in connection with the certificate required
by Section 9 hereof, then within ten days of such certificate, (3) to provide
for essentially level annual debt service of principal and interest over such
period.
Debt Service shall be calculated net of any interest funded out of
Parity Bond proceeds. From and after the date that the Outstanding Parity
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10 Combined Utility System
Revenue Refunding Bonds
Bonds are defeased, redeemed, or otherwise no longer outstanding, Debt
Service for purposes of the Parity Requirement and the Rate Covenant
shall be calculated net of any principal and interest scheduled to be paid
out of Parity Bond proceeds.
Debt Service shall include reimbursement obligations to providers of
credit facilities to the extent authorized by ordinance. It is the City’s intent
that regularly scheduled payments to be made by or received by the City
under Parity Derivative Products shall be added to and deducted from,
respectively, Debt Service with respect to Parity Bonds associated with
such Parity Derivative Product, to the extent authorized by ordinance.
Debt Service Offset means receipts of the City that are not included
in Revenue of the System and that are legally available to pay debt
service on Parity Bonds, including without limitation federal interest
subsidy payments pledged to pay Debt Service Offsets, designated as such
by the Designated Representative.
Designated Representative means the Mayor, or his or her
designee. If the Mayor is absent or otherwise unavailable and has not
designated another representative, the Mayor Pro Tempore of the City, or
his or her designee, shall serve as the Designated Representative.
DTC means The Depository Trust Company, New York, New York, a
limited purpose trust company organized under the laws of the State of
New York, as initial depository for the Bonds.
Escrow Agent means U.S. Bank National Association, Seattle,
Washington.
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11 Combined Utility System
Revenue Refunding Bonds
Escrow Agreement means the Escrow Deposit Agreement between
the City and the Escrow Agent to be dated as of the date of closing and
delivery of the Bonds.
Fair Market Value means the price at which a willing buyer would
purchase an investment from a willing seller in a bona fide, arm's-length
transaction, except for specified investments as described in Treasury
Regulation §1.148-5(d)(6), including United States Treasury obligations,
certificates of deposit, guaranteed investment contracts, and investments
for yield restricted defeasance escrows. Fair Market Value is generally
determined on the date on which a contract to purchase or sell an
investment becomes binding, and, to the extent required by the applicable
regulations under the Code, the term “investment” will include a hedge.
Federal Tax Certificate means the Federal Tax Certificate signed by
the Finance Director pertaining to the tax-exemption of interest on the
Bonds.
Finance Director means the Finance Director of the City, or any
successor to the functions of the Finance Director.
Fitch means Fitch, Inc., organized and existing under the laws of
the State of Delaware, its successors and their assigns, and, if such
organization shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency, Fitch shall be deemed to refer to
any other nationally recognized securities rating agency (other than S&P,
Moody’s or Kroll) designated by the Finance Director.
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12 Combined Utility System
Revenue Refunding Bonds
Fixed Rate Bonds mean those Parity Bonds other than Capital
Appreciation Bonds, Original Issue Discount Bonds or Balloon Maturity
Bonds issued under an ordinance in which the rate of interest on such
Parity Bonds is fixed and determinable through their final maturity or for a
specified period of time. If so provided in the ordinance authorizing their
issuance, Parity Bonds may be deemed to be Fixed Rate Bonds for only a
portion of their term.
Future Parity Bonds mean any combined utility system revenue
bonds which the City may hereafter issue having a lien upon the Revenue
of the System for the payment of the principal thereof and interest
thereon equal to the lien upon the Revenue of the System of the
Outstanding Parity Bonds and the Bonds.
Government Loans mean loans to the City from the Public Works
Trust Fund and any other subordinate lien revenue loans received by the
City in the future from the State or the United States of America.
Government Obligations means those obligations now or hereafter
defined as such in chapter 39.53 RCW constituting direct obligations of the
United States or obligations unconditionally guaranteed by the United
States, as such chapter may be hereafter amended or restated.
Kroll means Kroll Bond Rating Agency, its successors and assigns,
and, if such corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, Kroll shall be deemed
to refer to any other nationally recognized securities rating agency (other
than S&P, Fitch and Moody’s) designated by the Finance Director.
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13 Combined Utility System
Revenue Refunding Bonds
Letter of Representations means the Blanket Issuer Letter of
Representations from the City to DTC, as amended from time to time.
Maximum Annual Debt Service means highest dollar amount of
Annual Debt Service in any fiscal year or Base Period for all outstanding
Parity Bonds and/or for all subordinate lien evidences of indebtedness
secured by Revenue of the System, as the context requires.
Mayor means the duly elected Mayor of the City or the successor to
such officer.
Moody’s means Moody’s Investors Service, its successors and
assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, Moody’s shall
be deemed to refer to any other nationally recognized securities rating
agency (other than S&P, Fitch and Kroll) designated by the Finance
Director.
MSRB means the Municipal Securities Rulemaking Board or any
successors to its functions.
Net Revenue means Revenue of the System less Costs of
Maintenance and Operation.
Official Statement means the disclosure documents prepared and
delivered in connection with the issuance of the Bonds.
Original Issue Discount Bonds mean Parity Bonds which are sold at
an initial public offering price of less than 95% of their face value and
which are specifically designated as Original Issue Discount Bonds in the
ordinance authorizing their issuance.
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14 Combined Utility System
Revenue Refunding Bonds
Other Derivative Product means a payment agreement entered into
in connection with one or more series of Parity Bonds between the City
and a counterparty permitted under chapter 39.96 RCW, as amended from
time to time, or any successor statute, which is not a Parity Derivative
Product.
Outstanding Parity Bonds mean the outstanding 2009A Bonds and
2009B Bonds.
Parity Bond Reserve Account means any reserve fund or account
established by the City for the purpose of securing the payment of the
principal of and interest on one or more series of Parity Bonds. The
Common Reserve Account is a Parity Bond Reserve Account.
Parity Bonds means the Outstanding Parity Bonds, the Bonds and
any Future Parity Bonds.
Parity Derivative Product means a payment agreement between the
City and a counterparty satisfying the requirements of chapter 39.96 RCW,
as amended from time to time, or any successor statute, obligating the
City to make regularly scheduled payments to the counterparty on a parity
with the payment of debt service on Parity Bonds.
Parity Requirement means Net Revenues equal to or greater than:
(a) 120% of Maximum Annual Debt Service for all Parity Bonds
computed by deducting from Annual Debt Service the Annual Debt Service
for each series or issue of Parity Bonds that is covered by ULID
Assessments and any Debt Service Offsets, and
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15 Combined Utility System
Revenue Refunding Bonds
(b) 100% of Maximum Annual Debt Service for all subordinate
lien evidences of indebtedness secured by Revenue of the System.
In determining the amount of Annual Debt Service “covered by
ULID Assessments”, Annual Debt Service for each future year is reduced
by the dollar amount of ULID Assessments projected to be received during
such future year, and the remaining outstanding ULID Assessments are
assumed to be paid in the remaining number of annual installments with
no prepayments.
Qualified Insurance means any non-cancelable municipal bond
insurance policy or surety bond issued by any insurance company licensed
to conduct an insurance business in any state of the United States (or by a
service corporation acting on behalf of one or more such insurance
companies) which insurance company or companies, as of the time of
issuance of such policy or surety bond, are rated in one of the two highest
Rating Categories by any Rating Agency.
Qualified Letter of Credit means any irrevocable letter of credit
issued by a financial institution for the account of the City on behalf of
registered owners of the applicable Parity Bonds, which institution
maintains an office, agency or branch in the United States and as of the
time of issuance of such letter of credit, is rated in one of the two highest
Rating Categories by any Rating Agency.
Rate Covenant means Net Revenue in each fiscal year will be in an
amount at least equal to 120% of the amounts required in such fiscal year
to be paid as scheduled debt service (principal and interest) on all Parity
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Bonds, subtracting from scheduled debt service (1) the amount of ULID
Assessments collected in such year and (2) Debt Service Offsets.
Furthermore, in determining compliance with the Rate Covenant, Net
Revenues are subject to adjustment to reflect the following:
(a) It is the intent of the City that regularly scheduled net
payments under Parity Derivative Products be reflected in the calculation
of debt service with respect to the associated Parity Bonds and not as
adjustments to Revenue or Costs of Maintenance and Operation; and
(b) Revenue and Costs of Maintenance and Operation may be
adjusted, regardless of then applicable generally accepted accounting
principles, for certain items (e.g., to omit unrealized gains or losses in
investments) to reflect more fairly the System’s annual operating
performance.
Rating Agency means Moody’s, S&P or Fitch. From and after the
date that the Outstanding Parity Bonds are defeased, redeemed, or
otherwise no longer outstanding, the term Rating Agency shall mean
Moody’s, S&P, Fitch, Kroll, or any rating agency then maintaining a rating
for the Bonds.
Rating Category means the generic rating categories of the Rating
Agency, without regard to any refinement or gradation of such rating
category by a numerical modifier or otherwise.
Record Date means the close of business for the Bond Registrar that
is 15 days preceding any interest and/or principal payment or redemption
date.
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Refunded Bonds means the 2009B Bonds maturing after
December 1, 2019.
Refunding Account means the account by that name established
pursuant to Section 15.
Registered Owner means the person named as the registered owner
of a Bond in the Bond Register. For so long as the Bonds are held in book-
entry only form, DTC or its nominee shall be deemed to be the sole
Registered Owner.
Reserve Requirement is the dollar amount to be calculated with
respect to all Common Reserve Bonds and separately with respect to other
Parity Bonds.
(a) With respect to Common Reserve Bonds, the Reserve
Requirement shall be equal to the least of:
(1) Maximum Annual Debt Service for Common Reserve
Bonds,
(2) 10% of the initial principal amount of Common Reserve
Bonds of each series, and
(3) 125% of average annual debt service for Common
Reserve Bonds;
provided, however, that the dollar amount required to be contributed, if
any, as a result of the issuance of a series of Future Parity Bonds shall not
be greater than the Tax Maximum. If the dollar amount required to be
contributed at the time of issuance of a series exceeds the Tax Maximum,
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then the amount required to be contributed shall be equal to the Tax
Maximum.
(b) With respect to other series of Parity Bonds, the Reserve
Requirement shall be equal to the amount specified in the ordinance
authorizing the issuance of that series of Parity Bonds, which may be zero.
The Reserve Requirement shall be adjusted accordingly and remain
in effect until the earlier of (1) at the City’s option, a payment of principal
of Parity Bonds or (2) the issuance of a subsequent series of Future Parity
Bonds (when the Reserve Requirement shall be re-calculated).
Revenue Fund means, collectively, Water Fund and the Sewerage
Fund, each maintained by the City, and shall also include any other fund
of the City into which the Revenue of the System is deposited.
Revenue of the System or Revenue means all of the earnings and
revenues received by the City from the maintenance and operation of the
System and connection and capital improvement charges collected for the
purpose of defraying the cost of capital facilities of the System, including
investment earnings, but excluding government grants, proceeds from the
sale of System property, City taxes collected by or through the System,
principal proceeds of bonds and earnings or proceeds from any
investments in a trust, defeasance or escrow fund created to defease or
refund System obligations (until commingled with other earnings and
revenues of the System) or held in a special account for the purpose of
paying a rebate to the United States Government under the Code.
Revenue of the System shall also include any federal or state
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reimbursements of operating expenses to the extent such expenses are
included as Costs of Maintenance and Operation; provided, however, that
Revenue of the System shall not include ULID Assessments. Amounts
withdrawn from the Coverage Stabilization Account shall increase Revenue
for the period in which they are withdrawn, and amounts deposited in the
Coverage Stabilization Account shall reduce Revenue for the period during
which they are deposited. Credits to or from the Coverage Stabilization
Account that occur within 90 days after the end of a fiscal year may be
treated as occurring within such fiscal year.
Rule means the SEC’s Rule 15c2-12 under the Securities Exchange
Act of 1934, as the same may be amended from time to time.
S&P means S&P Global Ratings, its successors and assigns, and, if
such corporation shall be dissolved or liquidated or shall no longer perform
the functions of a securities rating agency, S&P shall be deemed to refer to
any other nationally recognized securities rating agency (other than
Moody’s, Fitch, and Kroll) designated by the Finance Director.
State means the State of Washington.
System means, for so long as any of the Parity Bonds are
outstanding: (a) the water collection and distribution system of the City,
as it now exists and including all additions, betterments and extensions at
any time made; (b) the sanitary sewage collection and disposal system of
the City, as it now exists and including all additions, betterments and
extensions at any time made; (c) the storm and surface water utility of
the City, as it now exists and including all additions, betterments and
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extensions at any time made; and (d) any other system or utility, that
may lawfully be combined with the foregoing.
Tax Maximum means the maximum dollar amount permitted by the
Code to be allocated to a bond reserve account from bond proceeds
without requiring a balance to be invested at a restricted yield.
Term Bonds means any Parity Bonds designated by the City as term
bonds that are payable as to principal, in part, by mandatory sinking fund
redemptions prior to their stated maturities.
ULID means a utility local improvement district of the City. The City
does not currently have any existing utility local improvement districts.
ULID Assessments means the assessments levied in all ULIDs, the
assessments in which are payable into the Bond Fund, and shall include
installments thereof and interest and any penalties thereon.
2009 Bond Ordinance means Ordinance No. 3925 passed by the
City Council on August 4, 2009 authorizing the issuance of the 2009A
Bonds and the 2009B Bonds.
2009A Bonds mean the City’s Combined Utility System Revenue
Bonds, Series 2009A issued on September 3, 2009 in the original
aggregate principal amount of $9,120,000 pursuant to the 2009 Bond
Ordinance.
2009B Bonds mean the City’s Combined Utility System Revenue
Bonds, Series 2009B Taxable (Build America Bonds – Direct Payment)
issued on September 3, 2009 in the original aggregate principal amount of
$15,880,000 pursuant to the 2009 Bond Ordinance.
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Underwriter means KeyBanc Capital Markets Inc., or its successors.
Rules of Interpretation. In this ordinance, unless the context
otherwise requires:
(a) The terms “hereby,” “hereof,” “hereto,” “herein, “hereunder”
and any similar terms, as used in this ordinance, refer to this ordinance as
a whole and not to any particular article, section, subdivision or clause
hereof, and the term “hereafter” shall mean after, and the term
“heretofore” shall mean before, the date of this ordinance;
(b) Words of the masculine or feminine gender shall mean and
include correlative words of any gender and words importing the singular
number shall mean and include the plural number and vice versa;
(c) Words importing persons shall include firms, associations,
partnerships (including limited partnerships), trusts, corporations and
other legal entities, including public bodies, as well as natural persons;
(d) Any headings preceding the text of the several sections of
this ordinance, and any table of contents or marginal notes appended to
copies hereof, shall be solely for convenience of reference and shall not
constitute a part of this ordinance, nor shall they affect its meaning,
construction or effect;
(e) All references herein to “articles,” “sections” and other
subdivisions or clauses are to the corresponding articles, sections,
subdivisions or clauses hereof; and
(f) Words importing the singular number include the plural
number and vice versa.
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SECTION 2. - Findings Regarding Parity Provisions. As required by
Section 10 of the 2009 Bond Ordinance, the City Council hereby finds that
the City has not been in default of the Rate Covenant for the immediately
preceding fiscal year, this ordinance contains the covenants required by
the 2009 Bond Ordinance, and prior to the issuance of the Bonds the City
will have on file a certificate demonstrating satisfaction of the Parity
Requirement and the other conditions for the issuance of Future Parity
Bonds set forth in such section.
The conditions contained in the 2009 Bond Ordinance having been
complied with or assured, the payments required herein to be made out of
the Revenue Fund into the Bond Fund to pay and secure the payment of
the principal of and interest on the Bonds shall constitute a lien and
charge upon the money in the Revenue Fund equal in rank with the lien
and charge thereon for the payments required to be made for the
Outstanding Parity Bonds.
SECTION 3. - Authorization and Description of Bonds. The City is
hereby authorized to issue combined utility system revenue refunding
bonds (the “Bonds”) in a principal amount of not to exceed $16,000,000
for the purpose of providing the funds necessary (a) to refund the
Refunded Bonds on a crossover basis, (b) to pay interest on the Bonds on
and prior to the Crossover Date, and (c) to pay all or a portion of the costs
incidental to the foregoing and to the issuance of the Bonds.
The Bonds shall be designated the “City of Kent, Washington,
Combined Utility System Revenue Refunding Bonds” with such series
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designation as set forth in the Bonds and approved by the Designated
Representative. The Bonds shall be dated as of the date of issuance and
delivery; shall be fully registered as to both principal and interest; shall be
in the denomination of $5,000 each, or any integral multiple thereof,
within a maturity; shall be numbered separately in such manner and with
any additional designation as the Bond Registrar deems necessary for
purposes of identification; shall bear interest from their date payable on
the dates and commencing as provided in the Bond Purchase Contract;
and shall mature on the dates and in the principal amounts set forth in the
Bond Purchase Contract, as approved and executed by the Designated
Representative pursuant to this ordinance.
SECTION 4. – Registration, Exchange and Payments.
(a) Bond Registrar/Bond Register. The City hereby specifies and
adopts the system of registration approved by the Washington State
Finance Committee from time to time through the appointment of state
fiscal agents. The City shall cause a bond register to be maintained by the
Bond Registrar. So long as any Bonds remain outstanding, the Bond
Registrar shall make all necessary provisions to permit the exchange or
registration or transfer of Bonds at its designated office. The Bond
Registrar may be removed at any time at the option of the Finance
Director upon prior notice to the Bond Registrar and a successor Bond
Registrar appointed by the Finance Director. No resignation or removal of
the Bond Registrar shall be effective until a successor shall have been
appointed and until the successor Bond Registrar shall have accepted the
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duties of the Bond Registrar hereunder. The Bond Registrar is authorized,
on behalf of the City, to authenticate and deliver Bonds transferred or
exchanged in accordance with the provisions of such Bonds and this
ordinance and to carry out all of the Bond Registrar’s powers and duties
under this ordinance. The Bond Registrar shall be responsible for its
representations contained in the Certificate of Authentication of the Bonds.
(b) Registered Ownership. The City and the Bond Registrar, each
in its discretion, may deem and treat the Registered Owner of each Bond
as the absolute owner thereof for all purposes (except as provided in the
Continuing Disclosure Certificate), and neither the City nor the Bond
Registrar shall be affected by any notice to the contrary. Payment of any
such Bond shall be made only as described in Section 4(g), but such Bond
may be transferred as herein provided. All such payments made as
described in Section 4(g) shall be valid and shall satisfy and discharge the
liability of the City upon such Bond to the extent of the amount or
amounts so paid.
(c) DTC Acceptance/Letters of Representations. The Bonds
initially shall be held by DTC acting as depository. The City has executed
and delivered to DTC a Blanket Issuer Letter of Representations. Neither
the City nor the Bond Registrar shall have any responsibility or obligation
to DTC participants or the persons for whom they act as nominees (or any
successor depository) with respect to the Bonds in respect of the accuracy
of any records maintained by DTC (or any successor depository) or any
DTC participant, the payment by DTC (or any successor depository) or any
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DTC participant of any amount in respect of the principal of or interest on
Bonds, any notice which is permitted or required to be given to Registered
Owners under this ordinance (except such notices as shall be required to
be given by the City to the Bond Registrar or to DTC (or any successor
depository)), or any consent given or other action taken by DTC (or any
successor depository) as the Registered Owner. For so long as any Bonds
are held by a depository, DTC or its successor depository or its nominee
shall be deemed to be the Registered Owner for all purposes hereunder,
and all references herein to the Registered Owners shall mean DTC (or any
successor depository) or its nominee and shall not mean the owners of
any beneficial interest in such Bonds.
(d) Use of Depository.
(1) The Bonds shall be registered initially in the name of
“Cede & Co.”, as nominee of DTC, with one Bond maturing on each of the
maturity dates for the Bonds in a denomination corresponding to the total
principal therein designated to mature on such date. Registered
ownership of such Bonds, or any portions thereof, may not thereafter be
transferred except (A) to any successor of DTC or its nominee, provided
that any such successor shall be qualified under any applicable laws to
provide the service proposed to be provided by it; (B) to any substitute
depository appointed by the Finance Director pursuant to subsection (2)
below or such substitute depository’s successor; or (C) to any person as
provided in subsection (4) below.
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(2) Upon the resignation of DTC or its successor (or any
substitute depository or its successor) from its functions as depository or a
determination by the Finance Director to discontinue the system of book
entry transfers through DTC or its successor (or any substitute depository
or its successor), the Finance Director may hereafter appoint a substitute
depository. Any such substitute depository shall be qualified under any
applicable laws to provide the services proposed to be provided by it.
(3) In the case of any transfer pursuant to clause (A) or
(B) of subsection (1) above, the Bond Registrar shall, upon receipt of all
outstanding Bonds together with a written request on behalf of the
Finance Director, issue a single new Bond for each maturity of that series
then outstanding, registered in the name of such successor or such
substitute depository, or their nominees, as the case may be, all as
specified in such written request of the Finance Director.
(4) In the event that (A) DTC or its successor (or
substitute depository or its successor) resigns from its functions as
depository, and no substitute depository can be obtained, or (B) the
Finance Director determines that it is in the best interest of the beneficial
owners of the Bonds that such owners be able to obtain physical Bond
certificates, the ownership of such Bonds may then be transferred to any
person or entity as herein provided, and shall no longer be held by a
depository. The Finance Director shall deliver a written request to the
Bond Registrar, together with a supply of physical Bonds, to issue Bonds
as herein provided in any authorized denomination. Upon receipt by the
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Bond Registrar of all then outstanding Bonds together with a written
request on behalf of the Finance Director to the Bond Registrar, new
Bonds of such series shall be issued in the appropriate denominations and
registered in the names of such persons as are requested in such written
request.
(e) Registration of Transfer of Ownership or Exchange; Change in
Denominations. The transfer of any Bond may be registered and Bonds
may be exchanged, but no transfer of any such Bond shall be valid unless
it is surrendered to the Bond Registrar with the assignment form
appearing on such Bond duly executed by the Registered Owner or such
Registered Owner’s duly authorized agent in a manner satisfactory to the
Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the
surrendered Bond and shall authenticate and deliver, without charge to
the Registered Owner or transferee therefor, a new Bond (or Bonds at the
option of the new Registered Owner) of the same date, maturity, and
interest rate and for the same aggregate principal amount in any
authorized denomination, naming as Registered Owner the person or
persons listed as the assignee on the assignment form appearing on the
surrendered Bond, in exchange for such surrendered and cancelled Bond.
Any Bond may be surrendered to the Bond Registrar and exchanged,
without charge, for an equal aggregate principal amount of Bonds of the
same date, maturity, and interest rate, in any authorized denomination.
The Bond Registrar shall not be obligated to register the transfer of or to
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exchange any Bond during the period from the Record Date to the
redemption or payment date.
(f) Bond Registrar’s Ownership of Bonds. The Bond Registrar
may become the Registered Owner of any Bond with the same rights it
would have if it were not the Bond Registrar, and to the extent permitted
by law, may act as depository for and permit any of its officers or directors
to act as a member of, or in any other capacity with respect to, any
committee formed to protect the right of the Registered Owners or
beneficial owners of Bonds.
(g) Place and Medium of Payment. Both principal of and interest
on the Bonds shall be payable in lawful money of the United States of
America. Interest on the Bonds shall be calculated on the basis of a year
of 360 days and twelve 30 day months. For so long as all Bonds are held
by a depository, payments of principal thereof and interest thereon shall
be made as provided in accordance with the operational arrangements of
DTC referred to in the Letter of Representations. In the event that the
Bonds are no longer held by a depository, interest on the Bonds shall be
paid by check or draft mailed to the Registered Owners at the addresses
for such Registered Owners appearing on the Bond Register on the Record
Date, or upon the written request of a Registered Owner of more than
$1,000,000 of Bonds (received by the Bond Registrar at least by the
Record Date), such payment shall be made by the Bond Registrar by wire
transfer to the account within the United States designated by the
Registered Owner. Principal of the Bonds shall be payable upon
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presentation and surrender of such Bonds by the Registered Owners at the
designated office of the Bond Registrar.
If any Bond is duly presented for payment and funds have not been
provided by the City on the applicable payment date, then interest will
continue to accrue thereafter on the unpaid principal thereof at the rate
stated on the Bond until the Bond is paid.
SECTION 5. – Redemption and Purchase of Bonds.
(a) Mandatory Redemption of Term Bonds and Optional
Redemption. The Bonds shall be subject to mandatory redemption to the
extent, if any, set forth in the Bond Purchase Contract and as approved by
the Designated Representative pursuant to this ordinance. The Bonds
shall be subject to optional redemption on the dates, at the prices and
under the terms set forth in the Bond Purchase Contract approved by the
Designated Representative pursuant to this ordinance.
(b) Purchase of Bonds. The City reserves the right to use at any
time (i) any surplus Revenue of the System available after providing for
the payments required by paragraphs First through Fifth of Section 6 of
this ordinance, or (ii) other legally available City funds, to purchase for
retirement any of the Bonds at any price deemed reasonable by the City.
To the extent that the City shall have purchased any Balloon
Maturity Bonds or Term Bonds since the last scheduled mandatory
redemption of such Balloon Maturity Bonds, the City may reduce the
principal amount of such Balloon Maturity Bonds or Term Bonds to be
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redeemed in like principal amount. Such reduction may be applied in the
year specified by the Finance Director.
(c) Selection of Bonds for Redemption. For as long as the Bonds
are held in book entry only form, the selection of particular Bonds within a
maturity to be redeemed shall be made in accordance with the operational
arrangements then in effect at DTC. If the Bonds are no longer held by a
depository, the selection of such Bonds to be redeemed and the surrender
and reissuance thereof, as applicable, shall be made as provided in the
following provisions of this subsection (c). If the City redeems at any one
time fewer than all of the Bonds having the same maturity date, the
particular Bonds or portions of Bonds of such maturity to be redeemed
shall be selected by lot (or in such manner determined by the Bond
Registrar) in increments of $5,000. In the case of a Bond of a
denomination greater than $5,000, the City and the Bond Registrar shall
treat each Bond as representing such number of separate Bonds each of
the denomination of $5,000 as is obtained by dividing the actual principal
amount of such Bond by $5,000. In the event that only a portion of the
principal sum of a Bond is redeemed, upon surrender of such Bond at the
designated office of the Bond Registrar there shall be issued to the
Registered Owner, without charge therefor, for the then unredeemed
balance of the principal sum thereof, at the option of the Registered
Owner, a Bond or Bonds of like maturity and interest rate in any of the
denominations herein authorized.
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(d) Notice of Redemption.
(1) Official Notice. For so long as the Bonds are held by a
depository, notice of redemption shall be given in accordance with the
operational arrangements of DTC as then in effect, and neither the City
nor the Bond Registrar shall provide any notice of redemption to any
beneficial owners. The notice of redemption may be conditional. Unless
waived by any owner of Bonds to be redeemed, official notice of any such
redemption (which redemption may be conditioned by the Bond Registrar
on the receipt of sufficient funds for redemption or otherwise) shall be
given by the Bond Registrar on behalf of the City by mailing a copy of an
official redemption notice by first class mail at least 20 days and not more
than 60 days prior to the date fixed for redemption to the Registered
Owner of the Bond or Bonds to be redeemed at the address shown on the
Bond Register or at such other address as is furnished in writing by such
Registered Owner to the Bond Registrar.
All official notices of redemption shall be dated and shall state:
(A) the redemption date,
(B) the redemption price,
(C) if fewer than all outstanding Bonds are to be
redeemed, the identification by series and maturity (and, in the case of
partial redemption, the respective principal amounts) of the Bonds to be
redeemed,
(D) any conditions to redemption,
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(E) that unless conditional notice of redemption has
been given and such conditions have either been satisfied or waived, on
the redemption date the redemption price shall become due and payable
upon each such Bond or portion thereof called for redemption, and that
interest thereon shall cease to accrue from and after said date, and
(F) the place where such Bonds are to be
surrendered for payment of the redemption price, which place of payment
shall be the designated office of the Bond Registrar.
On or prior to any redemption date, unless such redemption has
been rescinded or revoked, the City shall deposit with the Bond Registrar
an amount of money sufficient to pay the redemption price of all the
Bonds or portions of Bonds which are to be redeemed on that date. The
City retains the right to rescind any redemption notice and the related
optional redemption of Bonds by giving notice of rescission to the affected
registered owners at any time on or prior to the scheduled redemption
date. Any notice of optional redemption that is so rescinded shall be of no
effect, and the Bonds for which the notice of optional redemption has been
rescinded shall remain outstanding.
(2) Effect of Notice; Bonds Due. If notice of redemption
has been given and not rescinded or revoked, or if the conditions set forth
in a conditional notice of redemption have been satisfied or waived, the
Bonds or portions of Bonds to be redeemed shall, on the redemption date,
become due and payable at the redemption price therein specified, and
from and after such date such Bonds or portions of Bonds shall cease to
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bear interest. Upon surrender of such Bonds for redemption in accordance
with said notice, such Bonds shall be paid by the Bond Registrar at the
redemption price. Installments of interest due on or prior to the
redemption date shall be payable as herein provided for payment of
interest. All Bonds which have been redeemed shall be canceled by the
Bond Registrar and shall not be reissued.
(3) Additional Notice. In addition to the foregoing notice,
further notice shall be given by the City as set out below, but no defect in
said further notice nor any failure to give all or any portion of such further
notice shall in any manner defeat the effectiveness of a call for redemption
if notice thereof is given as above prescribed. Each further notice of
redemption given hereunder shall contain the information required above
for an official notice of redemption plus (A) the CUSIP numbers of all
Bonds being redeemed; (B) the date of issue of the Bonds as originally
issued; (C) the rate of interest borne by each Bond being redeemed;
(D) the series and maturity date of each Bond being redeemed; and
(E) any other descriptive information needed to identify accurately the
Bonds being redeemed. Each further notice of redemption may be sent at
least 20 days before the redemption date to each party entitled to receive
notice pursuant to this ordinance and the Continuing Disclosure Certificate
and with such additional information as the City shall deem appropriate,
but such mailings shall not be a condition precedent to the redemption of
such Bonds.
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(4) Amendment of Notice Provisions. The foregoing notice
provisions of this Section 5, including but not limited to the information to
be included in redemption notices and the persons designated to receive
notices, may be amended by additions, deletions and changes deemed
necessary in order to maintain compliance with duly promulgated
regulations and recommendations regarding notices of redemption of
municipal securities.
SECTION 6. - Priority and Payment from the Revenue Fund.
(a) Revenue Fund. The City maintains the Revenue Fund as a
separate enterprise fund of the City. Notwithstanding the foregoing, the
Finance Director may maintain such separate funds and accounts in such
names and under such additional designations as shall be required to
comply with the City practices and/or uniform system of accounting
established by the State Auditor from time to time.
(b) Priority of Payments from the Revenue Fund. The Revenue
Fund shall be held separate and apart from all other funds and accounts of
the City and the Revenue of the System deposited in such Fund shall be
used only for the following purposes and in the following order of priority:
First, to pay the Costs of Maintenance and Operation of the System;
Second, to pay the interest on any Parity Bonds, including
reimbursements to the issuer of a Qualified Letter of Credit or Qualified
Insurance if the Qualified Letter of Credit or Qualified Insurance secures
the payment of interest on Parity Bonds and the ordinance authorizing
such Parity Bonds provides for such reimbursement and, without
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duplication, to make regularly scheduled payments due with respect to
any Parity Derivative Product;
Third, to pay the principal of any Parity Bonds, including
reimbursements to the issuer of a Qualified Letter of Credit or Qualified
Insurance if the Qualified Letter of Credit or Qualified Insurance secures
the payment of principal of Parity Bonds and the ordinance authorizing
such Parity Bonds provides for such reimbursement;
Fourth, to make all payments required to be made into the Common
Reserve Account for Common Reserve Bonds and to any other Parity Bond
Reserve Account created in the future for the payment of debt service on
Future Parity Bonds, including reimbursements to the issuer of a Qualified
Letter of Credit or Qualified Insurance if the Qualified Letter of Credit or
Qualified Insurance has been issued to fund the Reserve Requirement
and/or the reserve requirement(s) for any Future Parity Bonds and the
ordinance authorizing such Parity Bonds provides for such reimbursement;
Fifth, to make all payments required to be made into any revenue
bond redemption fund or revenue warrant redemption fund and debt
service fund or reserve account created to pay and secure the payment of
the principal of and interest on Government Loans and any other revenue
bonds or revenue warrants of the City having a lien upon the Revenue of
the System junior and inferior to the lien thereon for the payment of the
principal of and interest on Parity Bonds; and
Sixth, to retire by redemption or purchase any outstanding revenue
bonds or revenue warrants of the City, to make necessary additions,
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betterments, improvements and repairs to or extensions and replacements
of the System, or
Seventh, for any other lawful City purposes.
The City may transfer any money from any funds or accounts of the
System legally available therefor, except bond redemption funds,
refunding escrow funds or defeasance funds, to meet the required
payments to be made into the Bond Fund.
Notwithstanding the foregoing, the obligations of the City to make
nonscheduled payments under a Parity Derivative Product (i.e., any
termination payment or other fees) and/or make any payment pursuant to
an Other Derivative Product may be payable from Revenue of the System
available after Sixth above, as set forth in such Parity Derivative Product
or Other Derivative Product.
(c) Coverage Stabilization Account. The Finance Director is
hereby authorized to create a Coverage Stabilization Account within the
Revenue Fund. The City hereby determines that the maintenance of a
Coverage Stabilization Account will moderate fluctuations in Net Revenues
and help to alleviate the need for short-term rate adjustments. Money in
the Coverage Stabilization Account will be transferred as determined from
time to time by the City. The City may make payments into the Coverage
Stabilization Account from the Revenue Fund at any time. Money in the
Coverage Stabilization Account may be withdrawn at any time and used
for the purpose for which the Revenue of the System may be used.
Amounts withdrawn from the Coverage Stabilization Account shall increase
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Revenue of the System for the period in which they are withdrawn, and
amounts deposited in the Coverage Stabilization Account shall reduce
Revenue of the System for the period during which they are deposited.
Credits to or from the Coverage Stabilization Account that occur within 90
days after the end of a fiscal year may be treated as occurring within such
fiscal year. Earnings on the Coverage Stabilization Account shall be
credited to the Revenue Fund.
(d) Contract Resource Obligations. The City may at any time
enter into one or more contracts or other obligations for the acquisition,
from facilities to be constructed, of water, sewer or storm water supply,
transmission, treatment or other commodity or service relating to the
System. The City may determine that such contract or other obligation is
a Contract Resource Obligation, and may provide that all payments under
that Contract Resource Obligation (including payments prior to the time
that water, sewer or storm water supply, transmission, treatment or other
commodity or service is being provided, or during a suspension or after
termination of supply or service) shall be Costs of Maintenance and
Operation if the following requirements are met at the time such Contract
Resource Obligation is entered into:
(1) The City shall not be in default with respect to any
obligations of it under this ordinance.
(2) There shall be on file a certificate of a Consultant
stating that (A) the payments to be made by the City in connection with
the Contract Resource Obligation are reasonable for the supply,
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transmission, treatment or other service rendered; (B) the source of any
new supply, and any facilities to be constructed to provide the supply,
transmission, treatment or other service, are sound from a water, sewer
or storm water or other commodity supply or transmission planning
standpoint, are technically and economically feasible in accordance with
prudent utility practice, and are likely to provide supply or transmission or
other service no later than a date set forth in the Consultant’s
certification; and (C) the Net Revenue (further adjusted by the
Consultant’s estimate of the payments to be made in accordance with the
Contract Resource Obligation) for the five fiscal years following the year in
which the Contract Resource Obligation is incurred, as such Net Revenue
is estimated by the Consultant (with such estimate based on such factors
as he or she considers reasonable), will be at least equal to the Parity
Requirement.
Payments required to be made under Contract Resource Obligations
shall not be subject to acceleration.
Nothing in this subsection (d) shall be deemed to prevent the City
from entering into other agreements for the acquisition of water supply,
transmission, treatment or other commodity or service from existing
facilities and from treating those payments as Costs of Maintenance and
Operation of the System so long as such service is actually being supplied.
Nothing in this subsection (d) shall be deemed to prevent the City from
entering into other agreements for the acquisition of water, sewer or
storm water supply, transmission, treatment or other commodity or
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service from facilities to be constructed and from agreeing to make
payments with respect thereto, such payments constituting a lien and
charge on Net Revenue subordinate to that of Parity Bonds.
SECTION 7. – Security for the Bonds.
(a) Pledge of Amounts on Deposit in the Escrow Fund. Until
proceeds of the Bonds and other funds on deposit in the Escrow Fund are
required to be used to redeem the Refunded Bonds on the Crossover Date,
proceeds of the Bonds and other funds, and the income therefrom shall be
used to pay and secure the payment of the principal of, if any, and
interest on the Bonds. The City hereby irrevocably pledges proceeds of
the Bonds and other funds, and the income therefrom to the payment of
the principal of, if any, and interest on the Bonds on and prior to the
Crossover Date. From and after the Crossover Date, without further
action on the part of the City or any Registered Owner of the Bonds, the
Bonds will be payable from and secured solely by amounts on deposit in
the Bond Fund as provided herein, and will no longer be payable from or
secured by any amounts remaining in the Escrow Fund (if any).
(b) Bond Fund. The City has previously established the Bond
Fund for the payment of the debt service on all Parity Bonds. The Bond
Fund shall be maintained for the purpose of paying the principal of and
interest on all Parity Bonds. As long as any Parity Bonds remain
outstanding and to the to the extent such Parity Bonds are not paid from
other sources, the City hereby irrevocably obligates and binds itself to set
aside and pay from the Revenue Fund into the Bond Fund those amounts
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necessary, together with such other funds as are on hand and available in
the Bond Fund, to pay the interest or principal and interest next coming
due on outstanding Parity Bonds and to pay regularly scheduled net
payments on Parity Derivative Products.
Such payments from the Revenue Fund to the Bond Fund shall be
made in a fixed amount without regard to any fixed proportion following
the closing and delivery of such Parity Bonds on or before each date on
which an installment of interest or principal and interest falls due on Parity
Bonds equal to the amount required to pay the installment of interest or
principal and interest then coming due and not payable from other
sources.
The Finance Director is hereby authorized and directed and the City
hereby obligates and binds itself to set aside and pay into the Bond Fund
all ULID Assessments (if any) as the same are collected.
(c) Payments into Common Reserve Account. The City has also
previously established the Common Reserve Account within the Bond Fund
as a common reserve, securing the repayment of those Parity Bonds that
are designated as Common Reserve Bonds in the ordinance authorizing
their issuance. The Bonds are not Common Reserve Bonds and are not
expected to be secured by any Parity Bond Reserve Account; provided,
however, the Designated Representative may, if determined to be in the
best interest of the City, establish a Parity Bond Reserve Account and the
associated Reserve Requirement and pledge such funds to the payment of
principal of and interest on the Bonds. Provisions related to any such
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Parity Bond Reserve Account shall be set forth in the Bond Purchase
Contract or certificate executed by the Designated Representative at the
time of issuance and delivery of the Bonds.
The Common Reserve Account shall be maintained for the purpose
of securing the payment of the principal of and interest on all Common
Reserve Bonds. The Reserve Requirement may be maintained by deposits
of cash, a Qualified Letter of Credit or Qualified Insurance, or a
combination of the foregoing. In computing the amount on hand in the
Common Reserve Account, Qualified Insurance and/or a Qualified Letter of
Credit shall be valued at the face amount thereof, and all other obligations
purchased as an investment of moneys therein shall be valued at cost. As
used herein, the term “cash” shall include U.S. currency, cash equivalents
and evidences thereof, including demand deposits, certified or cashier’s
check; and the deposit to the Common Reserve Account may be satisfied
initially by the transfer of qualified investments to such account.
In the event the City issues any Future Parity Bonds that are
Common Reserve Bonds, it will provide in the ordinance authorizing the
issuance of the same for payment into the Common Reserve Account out
of proceeds of such Future Parity Bonds, Revenue of the System or ULID
Assessments (or, at the option of the City, out of any other funds on hand
and legally available therefor) approximately equal quarterly installments
so that by the date that is three years from the date of issuance of such
Future Parity Bonds (or the date that such Future Parity Bonds become
Common Reserve Bonds, whichever is later) there will have been
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deposited into the Common Reserve Account an amount that, together
with the money already on deposit therein, will be at least equal to the
Reserve Requirement. Such quarterly payments into the Common Reserve
Account shall be made not later than January 1, April 1, July 1, and
October 1 of each year.
If the balances on hand in the Common Reserve Account are
sufficient to satisfy the Reserve Requirement, interest earnings shall be
applied as provided in the following sentences. Whenever there is a
sufficient amount in the Bond Fund, including the Common Reserve
Account to pay the principal of and interest on all outstanding Common
Reserve Bonds, the money in the Common Reserve Account may be used
to pay such principal and interest. As long as the money left remaining on
deposit in the Common Reserve Account is equal to the Reserve
Requirement, money in the Common Reserve Account may be transferred
to the Bond Fund and used to pay the principal of and interest on Common
Reserve Bonds as the same becomes due and payable. The City also may
transfer out of the Common Reserve Account any money required in order
to prevent any Parity Bonds from becoming “arbitrage bonds” under the
Code.
If a deficiency in the Bond Fund for the payment of debt service on
Common Reserve Bonds shall occur, such deficiency shall be made up
from the Common Reserve Account by the withdrawal of cash therefrom
for that purpose and by the sale or redemption of obligations held in the
Common Reserve Account, in such amounts as will provide cash in the
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Common Reserve Account sufficient to make up any such deficiency with
respect to Common Reserve Bonds, and if a deficiency still exists
immediately prior to an interest payment date and after the withdrawal of
cash, the City shall then draw from any Qualified Letter of Credit or
Qualified Insurance for Common Reserve Bonds in sufficient amount to
make up the deficiency. Such draw shall be made at such times and under
such conditions as the agreement for such Qualified Letter of Credit or
such Qualified Insurance shall provide.
In making the payments and credits to the Common Reserve
Account required by this Section 7(c), to the extent that the City has
obtained Qualified Insurance or a Qualified Letter of Credit for specific
amounts required pursuant to this section to be paid out of the Common
Reserve Account, such amounts so covered by Qualified Insurance or a
Qualified Letter of Credit shall be credited against the amounts required to
be maintained in the Common Reserve Account by this Section 7(c) to the
extent that such payments and credits to be made are insured by an
insurance company, or guaranteed by a letter of credit from a financial
institution.
Any deficiency created in the Common Reserve Account by reason
of any such withdrawal shall then be made up within three years of the
date of withdrawal from Net Revenues or from ULID Assessments (or out
of any other moneys on hand legally available for such purpose), in equal
quarterly installments on each January 1, April 1, July 1 and October 1,
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after making necessary provision for the payments required to be made
into the Bond Fund within such year.
Any Qualified Letter of Credit or Qualified Insurance shall not be
cancelable on less than 30 days’ notice to the City. In the event of any
cancellation, the Common Reserve Account shall be funded as if the
Common Reserve Bonds that remain outstanding had been issued on the
date of such notice of cancellation.
In the event that the City elects to meet the Reserve Requirement
through the use of a Qualified Letter of Credit, Qualified Insurance or other
equivalent credit enhancement device, the City may contract with the
entity providing such Qualified Letter of Credit, Qualified Insurance or
other equivalent credit enhancement device that the City’s reimbursement
obligation, if any, to such entity shall be made in accordance with the
priority of payments set forth in Section 6(b) of this ordinance.
(d) Priority of Lien of Payments. The amounts so pledged to be
paid into the Bond Fund and any Parity Bond Reserve Account from the
Revenue Fund are hereby declared to be a prior lien and charge upon the
Revenue of the System superior to all other charges of any kind or nature
whatsoever except the Costs of Maintenance and Operation of the System,
and except that the amounts so pledged are of equal lien to the charges
upon such Revenue of the System for the payment of the principal of and
interest on any Parity Bonds. Further, the amounts so pledged to be paid
into the Bond Fund and any Parity Bond Reserve Account from ULID
Assessments are hereby declared to be a prior lien and charge upon ULID
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Assessments superior to all other charges of any kind or nature, except
that the amounts so pledged are of equal lien to the charges upon such
ULID Assessments for the payment of the principal of and interest on any
Parity Bonds.
(e) Application and Investment of Moneys in the Bond Fund and
any Parity Bond Reserve Account. Money in the Bond Fund and any Parity
Bond Reserve Account may be kept in cash or invested as permitted by
law, but only to the extent that the same are acquired, valued and
disposed of at Fair Market Value. Investments in the Bond Fund shall
mature prior to the date on which such money shall be needed for
required interest or principal payments (for investments in the Bond Fund)
or having a guaranteed redemption price prior to maturity. Investments in
any Parity Bond Reserve Account shall mature not later than the last
maturity of any then outstanding Parity Bonds.
(f) Sufficiency of Revenues. The City Council hereby finds that
in fixing the amounts to be paid into the Bond Fund and any Parity Bond
Reserve Account out of the Revenue of the System, it has exercised due
regard for the Costs of Maintenance and Operation and has not obligated
the City to set aside and pay into the Bond Fund and any Parity Bond
Reserve Account a greater amount of such Revenue than in its judgment
will be available over and above the Costs of Maintenance and Operation.
(g) Special Obligations. The Bonds shall be special fund
obligations of the City payable solely from and secured solely by the
sources identified herein. The Bonds do not constitute an indebtedness or
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general obligation of the City or the State, either general or special, within
the meaning of the constitutional provisions and limitations of the State,
but are special obligations of the City payable solely out of the funds and
revenues identified herein. Owners of the Bonds shall not have any claim
for the payment thereof against the City except for payment from the
funds and revenues identified herein. Owners of the Bonds do not have
any claim against the State for the payment for the principal of or interest
on the Bonds. Tax revenues of the City shall not be used directly or
indirectly to secure or guarantee the payment of the principal of or
interest on the Bonds.
SECTION 8. - Covenants. The City covenants and agrees with the
Registered Owners of the Bonds as follows:
(a) Rate Covenant. The City will establish, maintain and collect
such rates and charges for service of the System for so long as any Parity
Bonds are outstanding as necessary to maintain the Rate Covenant.
(b) System Maintenance. The City will at all times maintain and
keep the System in good repair, working order and condition, and also will
at all times operate such utility and the business in connection therewith
in an efficient manner and at a reasonable cost.
(c) Disposal of Properties. The City will not mortgage, sell,
lease, or in any manner encumber or dispose of all or substantially all the
property of the System (voluntarily or involuntarily), unless provision is
made for payment into the Bond Fund of a sum sufficient to pay the
principal of, premium, if any, and interest on all outstanding bonds
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payable therefrom, nor will it mortgage, sell, lease, or in any manner
encumber or dispose of (including but not limited to a disposition by
transfer to another public or private organization) voluntarily or
involuntarily any part of the System that is used, useful and material to
the operation of the System unless
(1) the City certifies, based upon reasonable expectations,
that the remaining assets of the System shall be sufficient to continue
regular operations of the City on a financially sound basis for a period of at
least five years, and
(2) provision is made for replacement thereof or for
payment into the Bond Fund of the total amount of revenue received
which shall not be less than an amount which shall bear the same ratio to
the amount of outstanding Parity Bonds as the greater of
(A) the Net Revenue available for Debt Service for
such outstanding Parity Bonds for the 12 months preceding such sale,
lease, encumbrance or disposal from the portion of the System sold,
leased, encumbered or disposed of bears to the Net Revenue available for
Debt Service for such Parity Bonds from the entire System for the same
period;
(B) the Revenue of the System for the 12 months
preceding such sale, lease, encumbrance or disposal from the portion of
the System sold, leased, encumbered or disposed of bears to the Revenue
of the System for the same period;
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(C) the proportion of assets (on a depreciated basis)
allocable to the assets being sold, leased, encumbered or disposed of
bears to the total assets of the System; or
(D) the proportion of customers of the City allocable
to the assets being sold, leased, encumbered or disposed of bears to the
total number of customers of the System,
provided, however, that the City may dispose of any portion of the
facilities of the System up to an aggregate of ten percent of the book
value of the total assets of the System without the requirement for any
deposit to the Bond Fund as hereinabove provided.
Any such moneys so paid into the Bond Fund shall be used to retire
such outstanding Parity Bonds at the earliest possible date. Any money
received by the City as condemnation awards, insurance proceeds or the
proceeds of sale, if not deposited to the Bond Fund, shall be used for the
replacement of facilities of the System.
(d) Books and Records. The City will, while the Bonds remain
outstanding, keep proper and separate accounts and records in which
complete and separate entries shall be made of all transactions relating to
the System, and it will furnish the Registered Owners of the Bonds or any
subsequent owner or owners thereof, at the written request of such owner
or owners, complete operating and income statements of the System in
reasonable detail covering any fiscal year, showing the financial condition
of the water and sewer departments and compliance with the terms and
conditions of this ordinance, not more than 150 days after the close of
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such fiscal year, and it will grant any owner or owners of at least 25% of
the outstanding Bonds the right at all reasonable times to inspect the
entire System and all records, accounts and data of the City relating
thereto. Upon request of any owner of any of said Bonds, it will also
furnish to such owner a copy of the most recently completed audit of the
City’s accounts by the State Auditor of Washington or independent
certified public accountant.
(e) No Free Service. The City will not furnish water or sanitary
sewerage disposal service to any customer whatsoever free of charge
(except to aid the poor or infirm, to provide for resource conservation or
to provide for the proper handling of hazardous materials) and will
promptly take legal action to enforce collection of all delinquent accounts.
(f) Property Insurance. The City will at all times carry fire and
extended coverage and such other forms of insurance on the buildings,
equipment, facilities and properties of the System, if such insurance is
obtainable at reasonable rates and upon reasonable conditions, against
such risks, in such amounts, and with such deductibles as the City Council
shall deem necessary for the protection of the System and the owners of
all outstanding Parity Bonds.
(g) Liability Insurance. The City will at all times keep and
arrange to keep in full force and effect policies of public liability and
property damage insurance which will protect the City against anyone
claiming damages of any kind or nature arising out of the operation of the
System, if such insurance is obtainable at reasonable rates and upon
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reasonable conditions, in such amounts and with such deductibles as the
City Council shall deem necessary for the protection of the City and the
owners of the outstanding Parity Bonds.
(h) Delinquencies of Accounts. The City will, on or before
March 1 of each calendar year, determine all accounts that are delinquent
and will take all necessary action to enforce payment of any such
delinquencies.
(i) ULID Assessments. All ULID Assessments shall be paid into
the Bond Fund and shall be used to pay and secure the payment of the
principal of and interest on the Parity Bonds.
Nothing in this ordinance or this section shall be construed to
prohibit the City from issuing water, sewer or water and sewer revenue
bonds junior in lien to the Parity Bonds and pledging as security for their
payment assessments levied in any ULID which may have been specifically
created to pay part of the cost of improvements to the System for which
those junior lien bonds were specifically issued.
SECTION 9. - Tax Covenants. The City will take all actions
necessary to assure the exclusion of interest on the Bonds from the gross
income of the owners of the Bonds to the same extent as such interest is
permitted to be excluded from gross income under the Code as in effect
on the date of issuance of the Bonds, including but not limited to the
following:
(a) Private Activity Bond Limitation. The City will assure that the
proceeds of the Bonds are not so used as to cause the Bonds to satisfy the
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private business tests of Section 141(b) of the Code or the private loan
financing test of Section 141(c) of the Code.
(b) Limitations on Disposition of Projects. The City will not sell or
otherwise transfer or dispose of (i) any personal property components of
the projects refinanced with proceeds of the Bonds (the “Projects”) other
than in the ordinary course of an established government program under
Treasury Regulation 1.141-2(d)(4) or (ii) any real property components of
the Project, unless it has received an opinion of nationally recognized bond
counsel to the effect that such disposition will not adversely affect the
treatment of interest on the Bonds as excludable from gross income for
federal income tax purposes.
(c) Federal Guarantee Prohibition. The City will not take any
action or permit or suffer any action to be taken if the result of such action
would be to cause any of the Bonds to be “federally guaranteed” within
the meaning of Section 149(b) of the Code.
(d) Rebate Requirement. The City will take any and all actions
necessary to assure compliance with Section 148(f) of the Code, relating
to the rebate of excess investment earnings, if any, to the federal
government, to the extent that such section is applicable to the Bonds.
(e) No Arbitrage. The City will not take, or permit or suffer to be
taken, any action with respect to the proceeds of the Bonds which, if such
action had been reasonably expected to have been taken, or had been
deliberately and intentionally taken, on the date of issuance of the Bonds
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would have caused the Bonds to be “arbitrage bonds” within the meaning
of Section 148 of the Code.
(f) Registration Covenant. The City will maintain a system for
recording the ownership of each Bond that complies with the provisions of
Section 149 of the Code until all Bonds have been surrendered and
canceled.
(g) Record Retention. The City will retain its records of all
accounting and monitoring it carries out with respect to the Bonds for at
least three years after the Bonds mature or are redeemed (whichever is
earlier); however, if the Bonds are redeemed and refunded, the City will
retain its records of accounting and monitoring at least three years after
the earlier of the maturity or redemption of the obligations that refunded
the Bonds.
(h) Compliance with Federal Tax Certificate. The City will comply
with the provisions of the Federal Tax Certificate with respect to the
Bonds, which are incorporated herein as if fully set forth herein. The
covenants of this Section will survive payment in full or defeasance of the
Bonds.
SECTION 10. - Future Parity Bonds.
(a) Conditions upon the Issuance of Future Parity Bonds. As long
as the Bonds remain outstanding, the City hereby further covenants and
agrees that it will not issue any Future Parity Bonds except that the City
hereby reserves the right to issue additional combined utility system
revenue bonds, which shall constitute a charge and lien upon the Revenue
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of the System equal to the lien thereon of the Bonds. Except as provided
in subsection (b) below, the City shall not issue any series of Future Parity
Bonds or incur any additional indebtedness with a parity lien or charge on
Net Revenues (i.e., on a parity of lien with Parity Bonds at the time
outstanding) unless:
(1) The City shall not have been in default of its Rate
Covenant for the immediately preceding fiscal year;
(2) If the Future Parity Bonds are to be issued as Common
Reserve Bonds, the ordinance authorizing the issuance of such Future
Parity Bonds shall include the covenants provided in Section 7 hereof
related to the Common Reserve Account; and
(3) There shall have been filed a certificate (prepared as
described in subsection (c) or (d) below) demonstrating fulfillment of the
Parity Requirement, commencing with the first full fiscal year following the
date on which any portion of interest on the series of Future Parity Bonds
then being issued will not be paid from the proceeds of such series of
Future Parity Bonds.
(b) No Certificate Required. The certificate described in the
foregoing subsection (a)(3) shall not be required as a condition to the
issuance of Future Parity Bonds:
(1) if the Future Parity Bonds being issued are for the
purpose of refunding at or prior to their maturity any part or all of the
then outstanding Parity Bonds for debt service savings, and if the Finance
Director provides a provides a certificate stating that upon the issuance of
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such Future Parity Bonds (i) total debt service on all Parity Bonds
(including the refunding bonds but not including the bonds to be refunded
thereby) will decrease, and (ii) the Annual Debt Service for each year that
any Parity Bonds (including the refunding bonds but not including the
bonds to be refunded thereby) will be outstanding will not increase by
more than $5,000 by reason of the issuance of such Future Parity Bonds;
or
(2) if the Future Parity Bonds are being issued to pay costs
of construction of facilities of the System for which Future Parity Bonds
have been issued previously and the principal amount of such Future
Parity Bonds being issued for completion purposes does not exceed an
amount equal to an aggregate of 15% of the principal amount of Future
Parity Bonds theretofore issued for such facilities and reasonably allocable
to the facilities to be completed as shown in a written certificate of the
Finance Director, and there is delivered a certificate of the Designated
Representative stating that the nature and purpose of such facilities has
not materially changed.
(c) Certificate of the City Without A Consultant. If required
pursuant to the foregoing subsection (a)(3), a certificate may be delivered
by the City (executed by the Finance Director) without a Consultant if Net
Revenues for the Base Period (confirmed by an audit) conclusively
demonstrate that the Parity Requirement will be fulfilled commencing with
the first full fiscal year following the date on which any portion of interest
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on the series of Future Parity Bonds then being issued will not be paid
from the proceeds of such series of Future Parity Bonds.
(d) Certificate of a Consultant. Unless compliance with the
requirements of subsection (a)(3) have been otherwise satisfied (as
provided in (b) or (c) above), compliance with the Parity Requirement
shall be demonstrated conclusively by a certificate of a Consultant.
In making the computations of Net Revenues for the purpose of
certifying compliance with the Parity Requirement, the Consultant shall
use as a basis the Net Revenues (which may be based upon unaudited
financial statements of the City if the audit has not yet been completed)
for the Base Period. Such Net Revenues shall be determined by adding the
following:
(1) The historical net revenue (as defined below) of the
System for the Base Period as determined by a Consultant.
(2) The net revenue derived from those customers of the
System that have become customers during such 12-month period or
thereafter and prior to the date of such certificate, adjusted to reflect a full
year’s net revenue from each such customer to the extent such net
revenue was not included in (1) above.
(3) The estimated annual net revenue to be derived from
any person, firm, association, private or municipal corporation under any
executed contract for service, which net revenue was not included in any
of the sources of net revenue described in this subsection (d).
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(4) The estimated annual net revenue to be derived from
the operation of any additions or improvements to or extensions of the
System under construction but not completed at the time of such
certificate and not being paid for out of the proceeds of sale of such Future
Parity Bonds being issued, and which net revenue is not otherwise
included in any of the sources of net revenue described in this subsection
(d).
(5) The estimated annual net revenue to be derived from
the operation of any additions and improvements to or extensions of the
System being paid for out of the proceeds of sale of such Future Parity
Bonds being issued.
In the event the City will not derive any revenue as a result of the
construction of the additions, improvements or extensions being made or
to be made to the System within the provisions of subparagraphs (4) and
(5) immediately above, the estimated normal Costs of Maintenance and
Operation (excluding any transfer of money to other funds of the City and
license fees, taxes and payments in lieu of taxes payable to the City) of
such additions, improvements and extensions shall be deducted from
estimated annual net revenue.
The words “historical net revenue” or “net revenue” as used in this
subsection (d) shall mean the Revenue or any part or parts thereof less
the normal expenses of maintenance and operation of the System or any
part or parts thereof, but before depreciation. Such “historical net
revenue” or “net revenue” shall be adjusted to reflect the rates and
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charges effective on the date of such certificate if there has been any
change in such rates and charges during or after such 12-consecutive-
month period.
(e) Subordinate Lien Obligations. Nothing herein contained shall
prevent the City from issuing revenue bonds or other obligations which are
a charge upon the Revenue of the System junior or inferior to the
payments required by this ordinance to be made out of such Revenue to
pay and secure the payment of any outstanding Parity Bonds. Such junior
or inferior obligations shall not be subject to acceleration. This prohibition
against acceleration shall not be deemed to prohibit mandatory tender or
other tender provisions with respect to variable rate obligations or to
prohibit the payment of a termination amount with respect to an Other
Derivative Product or a Parity Derivative Product.
(f) Refunding Obligations. Nothing herein contained shall prevent
the City from issuing revenue bonds to refund maturing Parity Bonds for
the payment of which moneys are not otherwise available.
SECTION 11. - Derivative Products. The City hereby reserves the
right to enter into Parity Derivative Products and Other Derivative
Products. The City may amend this ordinance to accommodate new or
modified definitions of Debt Service in connection with a Parity Derivative
Product, to implement the City’s intent that regularly scheduled payments
made by or received by the City in connection with a Parity Derivative
Product be added to or deducted from, respectively, Debt Service on such
Parity Bonds. The City may amend this ordinance to reflect the lien
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position and priority of any payments made in connection with a Parity
Derivative Product; provided, however, that any lien to secure regularly
scheduled payments made in connection with a Parity Derivative Product
may not be prior to the lien of the Parity Bonds and that any lien to secure
nonregularly scheduled payments under Parity Derivative Products must
be subordinate to the lien of Parity Bonds. If the City enters into a Parity
Derivative Product, the City shall not be required to satisfy the conditions
set forth in Section 10 of this ordinance with respect to the Parity
Derivative Product provided that the conditions set forth in Section 10 of
this ordinance are satisfied with respect to the associated Parity Bonds.
Each Parity Derivative Product shall set forth the manner in which the
City’s and its counterparty’s payments are to be calculated and a schedule
of payment dates.
SECTION 12. - Form of Bonds. The Bonds shall be in substantially
the form set forth in Exhibit A, which is incorporated herein by this
reference.
SECTION 13. – Execution of Bonds. The Bonds shall be executed
on behalf of the City by the facsimile or manual signature of the Mayor
and shall be attested to by the facsimile or manual signature of the City
Clerk, and shall have the seal of the City impressed or a facsimile thereof
imprinted, or otherwise reproduced thereon.
In the event any officer who shall have signed or whose facsimile
signatures appear on any of the Bonds shall cease to be such officer of the
City before said Bonds shall have been authenticated or delivered by the
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Bond Registrar or issued by the City, such Bonds may nevertheless be
authenticated, delivered and issued and, upon such authentication,
delivery and issuance, shall be as binding upon the City as though said
person had not ceased to be such officer. Any Bond may be signed and
attested on behalf of the City by such persons who, at the actual date of
execution of such Bond shall be the proper officer of the City, although at
the original date of such Bond such persons were not such officers of the
City.
Only such Bonds as shall bear thereon a Certificate of
Authentication manually executed by an authorized representative of the
Bond Registrar shall be valid or obligatory for any purpose or entitled to
the benefits of this ordinance. Such Certificate of Authentication shall be
conclusive evidence that the Bonds so authenticated have been duly
executed, authenticated and delivered hereunder and are entitled to the
benefits of this ordinance.
SECTION 14. - Defeasance. In the event that the City, in order to
effect the payment, retirement or redemption of any Bond, sets aside in
the Bond Fund or in another special account, cash or noncallable
Government Obligations, or any combination of cash and/or noncallable
Government Obligations, in amounts and maturities which, together with
the known earned income therefrom, are sufficient to redeem or pay and
retire such Bond in accordance with its terms and to pay when due the
interest and redemption premium, if any, thereon, and such cash and/or
noncallable Government Obligations are irrevocably set aside and pledged
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for such purpose, then no further payments need be made into the Bond
Fund for the payment of the principal of and interest on such Bond. The
owner of a Bond so provided for shall cease to be entitled to any lien,
benefit or security of this ordinance except the right to receive payment of
principal, premium, if any, and interest from the Bond Fund or such
special account, and such Bond shall be deemed to be not outstanding
under this ordinance. The City shall give written notice of defeasance of
the Bonds in accordance with the Continuing Disclosure Certificate.
SECTION 15. – Sale of Bonds.
(a) Bond Sale. The Bonds shall be sold at negotiated sale to the
Underwriter pursuant to the terms of the Bond Purchase Contract. The
Council has determined that it would be in the best interest of the City to
delegate to the Designated Representative for a limited time the authority
to approve the final interest rates, aggregate principal amount, principal
amounts of each maturity of the Bonds, and redemption rights for the
Bonds.
The Designated Representative is hereby authorized to approve the
final interest rates, aggregate principal amount, principal amounts of each
maturity of the Bonds, and redemption rights for the Bonds in the manner
provided hereafter so long as:
(i) the aggregate principal amount of Bonds issued
pursuant to this ordinance does not exceed $16,000,000,
(ii) the final maturity date for the Bonds is no later than
December 1, 2029,
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(iii) the Bonds are sold (in the aggregate) at a price not
less than 97% and not greater than 130%,
(iv) the Bonds are sold for a price that results in a
minimum aggregate net present value debt service savings over the
Refunded Bonds (calculated by deducting scheduled federal subsidy
payments with respect to the Refunded Bonds from annual debt service
and assuming no future sequestration of such payments) of at least 3%,
(v) the true interest cost for the Bonds (in the aggregate)
does not exceed 3%, and
(vi) the Bonds conform to all other terms of this ordinance.
Subject to the terms and conditions set forth in this section, the
Designated Representative is hereby authorized to execute the Bond
Purchase Contract.
Following the execution of the Bond Purchase Contract, the Finance
Director shall provide a report to the Council describing the final terms of
the Bonds approved pursuant to the authority delegated in this section.
The authority granted to the Designated Representative by this Section 15
shall expire on June 1, 2018. If the Bonds authorized herein have not
been sold by June 1, 2018, the Bonds shall not be issued nor their sale
approved unless such Bonds shall have been re-authorized by ordinance of
the Council. The ordinance re-authorizing the issuance and sale of such
Bonds may be in the form of a new ordinance repealing this ordinance in
whole or in part or may be in the form of an amendatory ordinance
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approving a bond purchase contract or establishing terms and conditions
for the authority delegated under this Section 15.
(b) Delivery of Bonds; Documentation. Upon the passage and
approval of this ordinance, the proper officials of the City, including the
Designated Representative, the Finance Director and Chief Administrative
Officer, are authorized and directed to undertake all action necessary for
the prompt execution and delivery of the Bonds to the Underwriter and
further to execute all closing certificates and documents required to effect
the closing and delivery of each series of Bonds in accordance with the
terms of this ordinance and the Bond Purchase Contract. Such documents
may include, but are not limited to, documents related to a municipal bond
insurance policy delivered by an insurer to insure the payment when due
of the principal of and interest on the Bonds as provided therein, if such
insurance is determined by the Designated Representative to be in the
best interest of the City.
(c) Preliminary and Final Official Statements. The Finance
Director is hereby authorized to approve and to deem final the preliminary
Official Statement for the purposes of the Rule. The Finance Director is
further authorized to approve for purposes of the Rule, on behalf of the
City, the final Official Statement relating to the issuance and sale of the
Bonds and the distribution of the final Official Statement pursuant thereto
with such changes, if any, as may be deemed by him or her to be
appropriate.
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SECTION 16. – Application of Bond Proceeds.
(a) Distribution of Funds. Proceeds of the Bonds shall be
distributed as follows:
(1) The amount stated in the closing memorandum for the
Bonds shall be deposited with the Escrow Agent pursuant to the Escrow
Agreement and used to pay costs of issuance for the Bonds; and
(2) The remaining proceeds of the Bonds shall be
deposited with the Escrow Agent pursuant to the Escrow Agreement and
used as provided in subsection (b) below.
(b) Plan of Crossover Refunding. For the purpose of realizing an
aggregate debt service savings and benefiting the ratepayers of the City,
the City proposes to refund the Refunded Bonds on a crossover basis as
set forth herein.
Net proceeds of the Bonds and other available funds of the City, if
any, shall be deposited into the Escrow Fund held by the Escrow Agent
pursuant to the Escrow Agreement and invested in certain Government
Obligations, the principal of and interest on which shall be used, together
with other funds deposited with the Escrow Agent as cash, if any, (i) to
pay the interest due on the Bonds on and prior to the Crossover Date and
(ii) to pay the redemption price of the Refunded Bonds (but not any
interest due) on the Crossover Date.
The Refunded Bonds shall remain outstanding until the Crossover
Date and the City shall pay the principal and interest due on the Refunded
Bonds on each applicable payment date to and including the Crossover
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Date from the Bond Fund as provided in the 2009 Bond Ordinance. Prior
to the Crossover Date, the Refunded Bonds shall not be considered
reissued, defeased or redeemed for any purpose, including but not limited
to for purposes of federal tax law.
Acquired Obligations shall be purchased at a yield not greater than
the yield permitted by the Code and regulations relating to acquired
obligations in connection with refunding bond issues.
U.S. Bank National Association, Seattle, Washington, is hereby
appointed as Escrow Agent. The proceeds of the Bonds remaining after
acquisition of the Acquired Obligations and provision for the necessary
cash balance shall be utilized to pay expenses of the acquisition and
safekeeping of the Acquired Obligations and expenses of the issuance of
the Bonds.
In order to carry out the purposes of this section, the Finance
Director is hereby authorized and directed to execute and deliver to the
Escrow Agent an Escrow Agreement.
The City hereby calls the Refunded Bonds for redemption on the
Crossover Date in accordance with the provisions of the 2009 Bond
Ordinance authorizing the redemption and retirement of the Refunded
Bonds prior to their fixed maturities. Said call for redemption of the
Refunded Bonds shall be irrevocable after the issuance of the Bonds and
delivery of the Acquired Obligations to the Escrow Agent. The Finance
Director and the Escrow Agent are hereby authorized and directed to
provide for the giving of notices of the redemption in accordance with the
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provisions of the 2009 Bond Ordinance. The costs of publication of such
notices shall be an expense of the City.
SECTION 17. – Ongoing Disclosure; Additional Covenants. The
City covenants to execute and deliver at the time of issuance and delivery
of the Bonds a Continuing Disclosure Certificate. The Designated
Representative is hereby authorized to execute and deliver such
Continuing Disclosure Certificate upon the issuance, delivery and sale of
the Bonds with such terms and provisions as such officer shall deem
appropriate and in the best interests of the City.
SECTION 18. - Lost, Stolen or Destroyed Bonds. In case any Bonds
are lost, stolen or destroyed, the Bond Registrar may authenticate and
deliver a new Bond or Bonds of like amount, date and tenor to the
Registered Owner thereof if the owner pays the expenses and charges of
the Bond Registrar and the City in connection therewith and files with the
Bond Registrar and the City evidence satisfactory to both that such Bond
or Bonds were actually lost, stolen or destroyed and of his or her
ownership thereof, and furnishes the City and the Bond Registrar with
indemnity satisfactory to both.
SECTION 19. - Contract; Savings Clause. The covenants contained
in this ordinance and in the Bonds shall constitute a contract between the
City and the Registered Owners of the Bonds. If any one or more of the
covenants or agreements provided in this ordinance to be performed on
the part of the City shall be declared by any court of competent
jurisdiction and after final appeal (if any appeal be taken) to be contrary
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to law, then such covenant or covenants, agreement or agreements, shall
be null and void and shall be deemed separable from the remaining
covenants and agreements in this ordinance and shall in no way affect the
validity of the other provisions of this ordinance or of the Bonds.
SECTION 20. – General Authorization; Ratification. The Designated
Representative, the Finance Director, the Chief Administrative Officer, the
City Clerk, and other appropriate officers of the City are authorized to take
any actions and to execute documents as in their judgment may be
necessary or desirable in order to carry out the terms of, and complete the
transactions contemplated by, this ordinance. All acts taken pursuant to
the authority of this ordinance but prior to its effective date are hereby
ratified.
SECTION 21. – Certain Amendments. Without further action of the
City Council, the Designated Representative may approve provisions in the
Bond Purchase Contract that are deemed necessary, upon the advice of
Bond Counsel, in order to effect the crossover advance refunding of the
Refunded Bonds notwithstanding any inconsistency with the provisions set
forth in this ordinance.
SECTION 22. – Corrections by City Clerk or Code Reviser. Upon
approval of the city attorney, the city clerk and the code reviser are
authorized to make necessary corrections to this ordinance, including the
correction of clerical errors; ordinance, section, or subsection numbering;
or references to other local, state, or federal laws, codes, rules, or
regulations.
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Revenue Refunding Bonds
SECTION 23. - Effective Date of Ordinance. This ordinance shall
take effect thirty (30) days after its passage as provided by law.
SUZETTE COOKE, MAYOR Date Approved
ATTEST:
KIMBERLY A. KOMOTO, CITY CLERK Date Adopted
Date Published
APPROVED AS TO FORM:
PACIFICA LAW GROUP LLP
Bond Counsel to the City
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Exhibit A
Form of Bond
[DTC LANGUAGE]
UNITED STATES OF AMERICA
NO. $
STATE OF WASHINGTON
CITY OF KENT
COMBINED UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 20____
INTEREST RATE: % MATURITY DATE: CUSIP NO.:
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The City of Kent, Washington, a municipal corporation organized
and existing under and by virtue of the laws of the State of Washington
(herein called the “City”) hereby acknowledges itself to owe and for value
received promises to pay to the Registered Owner identified above, or
registered assigns, on the Maturity Date identified above, the Principal
Amount indicated above and to pay interest thereon from ___________,
20___, or the most recent date to which interest has been paid or duly
provided for until payment of this bond at the Interest Rate set forth
above, payable on ______________, and semiannually thereafter on the
first days of each succeeding _______ and ____. Both principal of and
interest on this bond are payable in lawful money of the United States of
America. The fiscal agent of the State of Washington has been appointed
by the City as the authenticating agent, paying agent and registrar for the
bonds of this issue (the “Bond Registrar”). For so long as the bonds of
this issue are held in fully immobilized form, payments of principal and
interest thereon shall be made as provided in accordance with the
operational arrangements of The Depository Trust Company (“DTC”)
referred to in the Blanket Issuer Letter of Representations (the “Letter of
Representations”) from the City to DTC.
The bonds of this issue are issued under and in accordance with the
provisions of the Constitution and applicable statutes of the State of
Washington and Ordinance No. _______ duly passed by the City Council
on November 21, 2017 (the “Bond Ordinance”). Capitalized terms used in
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this bond have the meanings given such terms in the Bond Ordinance.
Reference is made to the Bond Ordinance and any and all modifications
and amendments thereto for a description of the nature and extent of the
security for this bond, the funds or revenues pledged, and the terms and
conditions upon which such bond is issued.
The bonds of this issue are being issued for the purpose of
refunding, on a crossover basis, a portion of the Combined Utility System
Revenue Bonds, Series 2009B Taxable (Build America Bonds – Direct
Payment) (the “Refunded Bonds”), paying interest on this bond on and
prior to the Crossover Date (as defined below), and paying costs of
issuance of this bond.
The bonds of this issue are subject to redemption as provided in the
Bond Ordinance and the Bond Purchase Contract.
The bonds of this issue have not been designated by the City as
“qualified tax-exempt obligations” within the meaning of Section 265(b) of
the Internal Revenue Code of 1986, as amended (the “Code”).
Pursuant to RCW 39.53.070, until proceeds of the Bonds and other
funds on deposit in the escrow fund (the “Escrow Fund”) are required to
be used to redeem the Refunded Bonds on December 1, 2019 (the
“Crossover Date”), proceeds of the Bonds and other funds, and the income
therefrom shall be used to pay and secure the payment of the principal of,
if any, and interest on the bonds of this issue. The City hereby irrevocably
pledges proceeds of the bonds of this issue and other funds, and the
income therefrom to the payment of the principal of, if any, and interest
on the bonds of this issue on and prior to the Crossover Date. From and
after the Crossover Date, without further action on the part of the City or
any Registered Owner of the Bonds, the Bonds will be payable from and
secured solely by amounts on deposit in the Bond Fund as provided in the
Bond Ordinance, and will no longer be payable from or secured by any
amounts remaining in the Escrow Fund (if any).
The City has irrevocably obligated and bound itself to pay into the
Bond Fund out of the Net Revenue and ULID Assessments, if any, or from
such other moneys as may be provided therefor certain amounts
necessary to pay and secure the payment of the principal and interest on
the bonds of this issue and other Parity Bonds.
The City does hereby pledge and bind itself to set aside from the
Revenue Fund out of the Revenue of the System and ULID Assessments, if
any, and to pay into the Bond Fund the various amounts required by the
Bond Ordinance to be paid into and maintained in such Fund, all within the
times provided by the Bond Ordinance. To the extent more particularly
provided by the Bond Ordinance, the amounts so pledged to be paid from
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the Revenue Fund out of the Revenue of the System into the Bond Fund
shall be a lien and charge thereon equal in rank to the lien and charge
upon said revenue of the amounts required to pay and secure the
payment of the Outstanding Parity Bonds and any revenue bonds of the
City hereafter issued on a parity with the bonds of this issue and superior
to all other liens and charges of any kind or nature except Costs of
Maintenance and Operation of the System.
The bonds of this issue are special fund obligations of the City
payable solely from and secured solely by the sources identified in the
Bond Ordinance. The bonds of this issue do not constitute an
indebtedness or general obligation of the City or the State, either general
or special, within the meaning of the constitutional provisions and
limitations of the State, but are special obligations of the City payable
solely out of the funds and revenues identified in the Bond Ordinance.
Owners of the bonds of this issue shall not have any claim for the payment
thereof against the City except for payment from the funds and revenues
identified therein. Owners of the Bonds do not have any claim against the
State for the payment for the principal of or interest on the bonds of this
issue. Tax revenues of the City shall not be used directly or indirectly to
secure or guarantee the payment of the principal of or interest on the
bonds of this issue.
The bonds of this issue are issued under and in accordance with the
provisions of the Constitution and applicable statutes of the State of
Washington and duly adopted ordinances of the City. The City hereby
covenants and agrees with the owners of this bond that it will keep and
perform all the covenants of this bond and of the Bond Ordinance to be by
it kept and performed, and reference is hereby made to the Bond
Ordinance for a complete statement of such covenants.
This bond shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Bond Ordinance until the
Certificate of Authentication hereon shall have been manually signed by or
on behalf of the Bond Registrar or its duly designated agent.
It is hereby certified that all acts, conditions, and things required by
the Constitution and statutes of the State of Washington to exist, to have
happened, been done, and performed precedent to and in the issuance of
this bond have happened, been done, and performed.
IN WITNESS WHEREOF, the City of Kent, Washington has caused
this bond to be signed with the facsimile or manual signature of the
Mayor, to be attested by the facsimile or manual signature of the City
Clerk, all as of this _____ day of ____________, 2017.
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CITY OF KENT, WASHINGTON
[SEAL]
By /s/ facsimile or manual
Mayor
ATTEST:
/s/ facsimile or manual
City Clerk
The Bond Registrar’s Certificate of Authentication on the Bonds shall
be in substantially the following form:
CERTIFICATE OF AUTHENTICATION
This bond is one of the bonds described in the within-mentioned
Bond Ordinance and is one of the Combined Utility System Revenue
Refunding Bonds, 2017 of the City of Kent, Washington, dated
____________, 2017.
WASHINGTON STATE FISCAL
AGENT, as Bond Registrar
By
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FINANCE DEPARTMENT
Aaron BeMiller, Director
Phone: 253-856-5260
Fax: 253-856-6255
Address: 220 Fourth Avenue S.
Kent, WA. 98032-5895
DATE: November 7, 2017
TO: Operations Committee
FROM: Aaron BeMiller, Director
SUBJECT: Square Footage Tax Increase - Recommend
SUMMARY: Effective January 1, 2013, the City of Kent implemented a local
Business & Occupation Tax, which is comprised of two complementary components:
gross receipts and square footage. It is structured so that the tax due is based on
the larger of these two components. The square footage component was included
largely to address the destination-based sourcing requirements established by the
state in 2008, whereby most of the B&O taxes generated from manufacturing,
wholesaling and warehousing activities are typically sourced outside of Kent.
Because the Kent Valley is home to a heavy base of manufacturing and large
distribution centers that export goods outside the City, the amount of gross receipts
tax that would otherwise be collected is disproportionate to the revenues needed to
provide essential City services. The square footage tax provides the mechanism to
collect tax on this subset of businesses that significantly contribute to the need for
services, including but not limited to, construction and maintenance of roads.
Impact of Doubling Square Footage Tax(A)
Currently, approximately 3,500 taxpayers (≈ 220 chamber members – six percent)
are registered and filing B&O tax:
≈ 2,000 (57%) file returns and owe/pay B&O tax
≈ 1,500 (43%) file returns but do not owe any tax
MOTION: Recommend Council adopt an ordinance amending Chapter
3.28 of the Kent City Code to increase the City’s square footage tax to
six cents for warehouse floor space and two cents for other business
floor space, and to allocate one-half of the revenue received from the
square footage tax to the Capital Resources Fund.
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Consolidating Budget Adjustment Ordinance – continued
The estimated impact of doubling(B) the current square footage tax rates is:
≈ 680 businesses would be affected, generating ≈ $3 million annually
≈ 60 of the affected businesses are chamber members (9%), generating ≈
$550k annually (18%)
(A) This information is based on returns filed for the most recent year available. It is
limited in scope to data originally reported on the returns and does not reflect
amended returns or adjustments made by the department. The actual tax
increase would vary. Chamber member information is based on the Kent
Chamber Member’s list as of April 2017.
(B) Rate for warehouse square footage increases from .03 per square foot per
quarter to .06; other square footage increases from .01 per square foot per
quarter to .02.
BUDGET IMPACT:
Additional revenues generated (half of total square footage revenues) would be
deposited into the Capital Resources Fund and budgeted for Parks capital or any
good governmental purpose as determined by the Mayor and City Council, such as
public safety facilities.
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1 Amend Ch. 3.28 KCC -
Re: Square Footage Tax
ORDINANCE NO.
AN ORDINANCE of the City Council of the
City of Kent, Washington, amending Section
3.28.050 of the Kent City Code, entitled
“Imposition of the tax – Tax or fee levied,” and
Section 3.28.130 of the Kent City Code, entitled
“Limitation of revenue received,” to increase the
square footage tax.
RECITALS
A. In 2012, the city enacted a Business and Occupation Tax and
a Square Footage Tax.
B. The city now has a demonstrated need to increase its capital
resources accounts.
C. The mayor has proposed this increase to address the need for
increased capital resources.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT,
WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS:
ORDINANCE
SECTION 1. - Amendment. Section 3.28.050 of the Kent City
Code, entitled “Imposition of the tax – Tax or fee levied,” is hereby
amended as follows:
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2 Amend Ch. 3.28 KCC -
Re: Square Footage Tax
Sec. 3.28.050. Imposition of the tax – Tax or fee levied.
Except as provided in subsection (C) of this section, there is hereby levied
upon and shall be collected from every person a tax for the act or privilege
of engaging in business activities within the city, whether the person’s
office or place of business be within or without the city. The tax shall be in
amounts to be determined by application of rates against the gross
proceeds of sale, gross income of business, or value of products, including
byproducts, and by application of rates against the square footage of
business office or facility space within the city, as the case may be, as
follows:
A. Gross receipts tax.
1. Upon every person engaging within the city in business as an
extractor; as to such persons the amount of the tax with respect to such
business shall be equal to the value of the products, including byproducts,
extracted within the city for sale or for commercial or industrial use,
multiplied by the rate of 0.152 hundredths of one percent (0.00152). The
measure of the tax is the value of the products, including byproducts, so
extracted, regardless of the place of sale or the fact that deliveries may be
made to points outside the city.
2. Upon every person engaging within the city in business as a
manufacturer, as to such persons the amount of the tax with respect to
such business shall be equal to the value of the products, including
byproducts, manufactured within the city, multiplied by the rate of 0.046
hundredths of one percent (0.00046). The measure of the tax is the value
of the products, including byproducts, so manufactured, regardless of the
place of sale or the fact that deliveries may be made to points outside the
city.
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3 Amend Ch. 3.28 KCC -
Re: Square Footage Tax
3. Upon every person engaging within the city in the business of
making sales at wholesale, as to such persons, the amount of tax with
respect to such business shall be equal to the gross proceeds of such sales
of the business without regard to the place of delivery of articles,
commodities or merchandise sold, multiplied by the rate of 0.152
hundredths of one percent (0.00152).
4. Upon every person engaging within the city in the business of
making sales at retail, as to such persons, the amount of tax with respect
to such business shall be equal to the gross proceeds of such sales of the
business, without regard to the place of delivery of articles, commodities
or merchandise sold, multiplied by the rate of 0.046 hundredths of one
percent (0.00046).
5. Upon every person engaging within the city in the business of
(a) printing, (b) both printing and publishing newspapers, magazines,
periodicals, books, music, and other printed items, (c) publishing
newspapers, magazines and periodicals, (d) extracting for hire, and (e)
processing for hire; as to such persons, the amount of tax on such
business shall be equal to the gross income of the business multiplied by
the rate of 0.046 hundredths of one percent (0.00046).
6. Upon every person engaging within the city in the business of
making sales of retail services; as to such persons, the amount of tax with
respect to such business shall be equal to the gross proceeds of sales
multiplied by the rate of 0.152 hundredths of one percent (0.00152).
7. Upon every other person engaging within the city in any
business activity other than or in addition to those enumerated in the
above subsections; as to such persons, the amount of tax on account of
such activities shall be equal to the gross income of the business multiplied
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4 Amend Ch. 3.28 KCC -
Re: Square Footage Tax
by the rate of 0.152 hundredths of one percent (0.00152). This subsection
includes, among others, and without limiting the scope hereof (whether or
not title to material used in the performance of such business passes to
another by accession, merger, or other than by outright sale), persons
engaged in the business of developing or producing custom software or of
customizing canned software, producing royalties or commissions, and
persons engaged in the business of rendering any type of service which
does not constitute a sale at retail, a sale at wholesale, or a retail service.
B. Square footage tax. Upon every person who leases, owns, occupies,
or otherwise maintains an office, warehouse, or other place of business
within the city for purposes of engaging in business activities in the city,
the tax shall be measured by the number of square feet of warehouse
business floor space or other business floor space for each office,
warehouse, or other place of business leased, owned, occupied, or
otherwise maintained within the city during the reporting period, calculated
to the nearest square foot.
1. Subject to the reductions established in subsection (B)(6) of
this section, the amount of the tax due shall be equal to the sum of the
number of square feet of business warehouse floor space for each business
warehouse leased, owned, occupied, or otherwise maintained within the
city multiplied by the rate of three cents ($0.036) quarterly for each
calendar year, and the number of square feet of other business floor space
for each office or other place of business leased, owned, occupied, or
otherwise maintained within the city multiplied by the rate of one cent
($0.012) quarterly for each calendar year.
2. For purposes of this section, business warehouse means a
building or structure, or any part thereof, in which goods, wares,
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5 Amend Ch. 3.28 KCC -
Re: Square Footage Tax
merchandise, or commodities are received or stored, whether or not for
compensation, in furtherance of engaging in business.
3. For purposes of this section, other business floor space means
the floor space of an office or place of business, other than a business
warehouse.
4. For purposes of this section, the square footage shall be
computed by measuring to the inside finish of permanent outer building
walls and shall include space used by columns and projections necessary to
the building. Square footage shall not include stairs, elevator shafts, flues,
pipe shafts, vertical ducts, heating or ventilation shafts, janitor closets,
and electrical or utility closets.
5. Persons with more than one (1) office, warehouse, or other
place of business within the city must include all business warehouse floor
space and other business floor space for all locations within the city. When
a person rents space to another person, the person occupying the rental
space is responsible for the square footage business tax on that rental
space only if the renter has exclusive right of possession in the space as
against the landlord. Space rented for the storage of goods in a warehouse
where no walls separate the goods, and where the exclusive right of
possession in the space is not held by the person to whom the space is
rented, shall be included in the warehouse business floor space of the
person that operates the warehouse business, and not by the person
renting the warehouse space.
6. If the square footage tax imposed in this subsection (B) is
less than or equal to the gross receipts tax imposed in subsection (A) of
this section, no square footage tax will be due; if the square footage tax
imposed in this subsection (B) exceeds the gross receipts tax imposed in
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subsection (A) of this section, the taxpayer shall also remit the excess over
the gross receipts tax payable under subsection (A) of this section.
C. Gross receipts exemption/square footage threshold.
1. Any person whose gross proceeds of sales, gross income of
the business, and value of products, including byproducts, as the case may
be, from all activities conducted within the city during any quarter are
equal to or less than sixty-two thousand five hundred dollars ($62,500)
during that quarter shall be exempt from the gross receipts tax imposed in
this chapter. The applicable tax rates shall only apply to amounts in excess
of sixty-two thousand five hundred dollars ($62,500) during any quarter.
2. The square footage tax imposed in subsection (B) of this
section shall not apply to any person unless that person’s total floor area
of business space within the city exceeds the following threshold:
a. Four thousand (4,000) taxable square feet of business
warehouse space; or
b. Twelve thousand (12,000) taxable square feet of other
business floor space.
This is a threshold and not an exemption. If the square footage tax
applies, it applies to all business space leased, owned, occupied, or
otherwise maintained by the taxpayer during the applicable reporting
period.
D. Rules. The director may promulgate rules and regulations regarding
the manner, means, and method of calculating any tax imposed under this
section.
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SECTION 2. - Amendment. Section 3.28.130 of the Kent City
Code, entitled “Limitation of revenue received,” is hereby amended as
follows:
Sec. 3.28.130. Limitation of revenue received. One-half of the
revenue received from the square footage tax shall be allocated to the
city’s Capital Resources Fund. Remaining rRevenue received from the
taxes imposed by this chapter shall first then be applied to the actual cost
to staff and operate the business and occupation tax division, including one
(1) information technology position dedicated to support that division, but
not to exceed the amount budgeted for that division by the city council.
After the above allocations, oOne hundred (100) percent of the any
remainingresidual revenue shall be allocated to the design, construction,
maintenance, improvement, operation, and repair of the city’s
transportation infrastructure and appurtenant improvements including,
without limitation, streets, curbs, gutters, sidewalks, bicycle and
pedestrian lanes and paths, street trees, drainage, lighting, and
signalization. up to a total annual allocation of four million seven hundred
thousand dollars ($4,700,000). Until January 1, 2017, any remaining
revenues received shall be applied to the capital improvement fund and
allocated according to the direction of the city council; beginning January
1, 2017, one hundred (100) percent of the remaining revenue after
payment of the actual cost to staff and operate the business and
occupation tax division, including one (1) information technology position
dedicated to support that division, shall be allocated to the design,
construction, maintenance, improvement, operation, and repair of the
city’s transportation infrastructure and appurtenant improvements
including, without limitation, streets, curbs, gutters, sidewalks, bicycle and
pedestrian lanes and paths, street trees, drainage, lighting, and
signalization.
Comment [AL1]: Is this the technical title of that
fund? Just want to make sure
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Re: Square Footage Tax
SECTION 3. – Amendment Effective Date. The amendments made
by this ordinance, including the square footage tax increase and the
reallocation of revenues, shall take effect on January 1, 2019.
SECTION 4. – Severability. If any one or more section, subsection,
or sentence of this ordinance is held to be unconstitutional or invalid, such
decision shall not affect the validity of the remaining portion of this
ordinance and the same shall remain in full force and effect.
SECTION 5. – Corrections by City Clerk or Code Reviser. Upon
approval of the city attorney, the city clerk and the code reviser are
authorized to make necessary corrections to this ordinance, including the
correction of clerical errors; ordinance, section, or subsection numbering;
or references to other local, state, or federal laws, codes, rules, or
regulations.
SECTION 6. – Effective Date. This ordinance shall take effect and
be in force thirty days from and after its passage, as provided by law.
SUZETTE COOKE, MAYOR Date Approved
ATTEST:
KIMBERLY A. KOMOTO, CITY CLERK Date Adopted
Date Published
APPROVED AS TO FORM:
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TOM BRUBAKER, CITY ATTORNEY
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