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07-26-10 Council Workshop
SPECIAL ACCOMMODATIONS: The City of Arlington strives to provide accessible meetings for people with disabilities. Please contact the ADA coordinator at (360) 403-3441 or 1-800-833-8388 (TDD only) prior to the meeting date if special accommodations are required. CALL TO ORDER / PLEDGE OF ALLEGIANCE/ROLL CALL APPROVAL OF THE AGENDA WORKSHOP ITEMS ~ NO ACTION WILL BE TAKEN 1. (10 min) Review of Annual Six Year Transportation Improvement Plan ATTACHMENT A 2. (10 min) Waste Management Contract Amendment/Extension ATTACHMENT B 3. (10 min) Neighborhood Groups & Volunteer Projects ATTACHMENT C 4. (15 min) Quarterly Finance report Power Point 5. (10 min) 2010 Bond Financing ATTACHMENT D 6. (5min) Snohomish County ILA for equipment space in the Snohomish ATTACHMENT E County Data Center 7. (5 min) SERS/ Blackrock Cable Agreement for Snohomish County ATTACHMENT F Fiber Ring 8. (15 min) Purchase of Ambulance Unit ATTACHMENT G 9. (10 min) FAA DVD 10. Miscellaneous Council items ADJOURNMENT To download all attachments, click here Arlington City Council Workshop July 26, 2010 – 7 PM City Council Chambers ~ 110 E. Third City of Arlington Council Agenda Bill AGENDA ITEM: ATTACHMENT A COUNCIL WORKSHOP DATE: July 26, 2010 SUBJECT: Six Year Transportation Improvement Plan 2011-2016 DEPARTMENT OF ORIGIN: Public Works - James Kelly ATTACHMENTS: • TIP spreadsheet • Resolution (DRAFT) EXPENDITURES REQUESTED: N/A BUDGET CATEGORY N/A LEGAL REVIEW: N/A DESCRIPTION: Council will be provided a revised spreadsheet for the update to the Six Year Transportation Improvement Plan for review and discussion. HISTORY: The State of Washington requires the cities, pursuant to one or more public hearings, to prepare and adopt a six-year comprehensive transportation program (RCW 35.77.010). Then, on an annual basis, every city is required to review the work accomplished under the program during the previous year, determine the transportation needs for the coming year, and update the six- year transportation program. After public hearing on the updated six-year plan, cities must adopt the updated six-year plan. Once adopted the plan is sent to the Washington State Department of Transportation and the Puget Sound Regional Council and compiled with other agency’s information as a tool for statewide planning. ALTERNATIVES: • N/A – no action at this time. RECOMMENDED ACTION: No action at this time – Discussion only. This project will be brought t the August 2, 2010 for adoption by resolution. Project No.Transportation Capital Project Total Project Cost Est 6-Year Program Cost Est 2011 2012 2013 2014 2015 2016 2017-2025 Comments 1 Annual Striping $300,000 $300,000 $45,000 $47,000 $49,000 $51,000 $53,000 $55,000 $0 Annual Maintenance of Striping and Pavement Markings 2 Annual Traffic Control Sign Replacement $69,000 $69,000 $15,000 $15,000 $15,000 $8,000 $8,000 $8,000 $0 Inventory and replacement of traffic control signage as required by the adopted MUTCD 3 Annual Road Rehab/Pavement Mgmt $1,500,000 $1,500,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $0 Repairs and Maintenance of existing city streets 4 Annual Sidewalk Program $30,000 $30,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $0 Repair, Maintenance and Upgrades to sidewalks 5 Arlington Trail Construction Program $700,000 $700,000 $150,000 $150,000 $200,000 $200,000 $0 Design and construct pedestrian trails per the City's Trail Plan (non-motorized transportation facilities) 6 Transportation Comprehensive Plan $40,000 $40,000 $40,000 $0 Development of a stand-alone comprehensive plan for Transportation that will be referenced in the City's general comprehensive plan; similar to Water, Sewer and Storm. 7 WSDOT - SR531; 43rd Ave to 67th Ave $57,000,000 $3,000,000 $3,000,000 $54,000,000 Preliminary planning complete, working on design pending additional funding. 8 WSDOT - SR531; 67th Ave to SR-9 $50,000,000 $15,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $49,985,000 Work with WSDOT on preliminary planning activities - widen to 5 lanes, 6' sidewalk on the south and an 8' non-motorized path on the north connecting to the Centennial Trail at the intersection of 67th and SR531 9 WSDOT - SR531/SR9 Intersection improvements WSDOT funded with nickel gas tax $15,600,000 $12,000,000 $12,000,000 $3,600,000 Project fully funded by Nickel Gas Tax 10 WSDOT - SR9/Burke Signalization $924,000 $924,000 $924,000 $0 Installation of Signal at Burke and SR9 - recommended by the SR9 Coalition 11 SNOCO - 172nd Corridor - SR9 to McElroy Road $7,231,000 $7,231,000 $7,231,000 $0 Potential Alternative Route to TDR Receiving Area. Snohomish County Project. 12 Community Transit Bus Transfer Station - Smokey Point $0 Design and construct a bus transfer station on Smokey Point Drive near 174 St. 13 211th Pl NE - 67th Ave NE to SR530 - $3,900,000 $25,000 $25,000 $3,875,000 Planning phase - to examine proposed alignment to reroute 211th to SR530 via 59th City of Arlington 2011 - 2016 Six Year Transportation Improvement Program (TIP) 14 Airport Blvd. - Extend 51st Ave to 188th Street $3,400,000 $3,400,000 $400,000 $3,000,000 $0 Design is complete - seeking funding. New Arterial extending from SR531 North to 188th Street. 15 67th Ave, Ph 3 - 204th St to Lebanon St $8,600,000 $8,600,000 $2,600,000 $2,000,000 $2,000,000 $2,000,000 $0 Widening and Rehabilitation of existing roadway with addition of pedestrian trail and sidewalks. 30% design in progress - complete fall of 2010. Final design complete spring 2011. 16 186th St NE - SR9 to City Limits $2,000,000 $2,000,000 $500,000 $1,000,000 $500,000 $0 New 2 lane connection with sidewalks both sides. The total project estimate is $5M and was prepared by Snoh. County. The City's portion (SR9 to CL) is $2M. 17 Arlington Valley Road - 67th Ave NE to 204th St NE $3,600,000 $3,600,000 $100,000 $50,000 $5,000 $3,000,000 $445,000 $0 New 3 lane industrial standard road connecting 67th Ave NE to 204th St NE. Low impact design 18 SR9/Eaglefield Pedestrian Improvements $752,000 $752,000 $752,000 $0 Pedestrian Safety Improvements in two phases Grant approved - waiting re-allocation 19 173rd St ROW Procurement and Street Construction. $1,930,000 $1,930,000 $440,000 $50,000 $500,000 $440,000 $500,000 $0 Procure ROW for construction of 173rd Street connection to Smokey Point Blvd 20 Smokey Point Blvd 175th PL to 200th St NE PLANNING $16,060,000 $25,000 $12,500 $12,500 $16,035,000 Planning and Coordination with West Arlington Plan to determine improvements. 21 Smokey Point Blvd 200th St NE to SR530 PLANNING $3,400,000 $25,000 $12,500 $12,500 $3,375,000 Planning and Coordination with West Arlington Plan to determine improvements. TOTAL $177,036,000 $46,166,000 $15,897,500 $10,245,500 $3,001,500 $6,481,500 $9,719,500 $820,500 $130,870,000 Total WSDOT Funded $123,509,000 $15,924,000 $12,000,000 $3,924,000 $0 $0 $0 $0 $107,585,000 Total Grant Funded $2,652,000 $2,652,000 $1,900,000 $752,000 Total Other Funding (SnoCo)$7,231,000 $7,231,000 $0 $0 $0 $0 $7,231,000 $0 $0 Total City Funds $43,644,000 $20,359,000 $1,997,500 $5,569,500 $3,001,500 $6,481,500 $2,488,500 $820,500 $23,285,000 NOTES 1. Project completion dependant on funding availability. 2. City funding includes City Transportation funds and grants. 3. Completed Projects Moved from List: 188th Street Paving WSDOT SR531 Interchange Improvements Smokey Point Blvd Overlay Gifford Sidewalks RESOLUTION NO. ___ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARLINGTON, WASHINGTON ADOPTING THE OFFICIAL SIX YEAR TRANSPORTATION IMPROVEMENT PLAN FOR THE CITY OF ARLINGTON. THE CITY COUNCIL OF THE CITY OF ARLINGTON, WASHINGTON, DO RESOLVE: SECTION 1. July 19, 2010 is hereby adopted as the Official Six Year Transportation Improvement Plan for the City of Arlington. That certain comprehensive Transportation Improvement Plan for the six years commencing July 1, 2011 as detailed in the exhibit presented to the City Council for review at a Public Hearing on PASSED at a regular meeting of the City of Arlington, Washington held on the 2nd day of August, 2010 _____________________________________ Mayor ATTEST: ________________________________ City Clerk City of Arlington Council Agenda Bill AGENDA ITEM: ATTACHMENT B COUNCIL WORKSHOP DATE: July 26, 2010 SUBJECT: Waste Management Northwest Agreement for Solid Waste, Recycling, Collection and Disposal (Contract Renewal). DEPARTMENT OF ORIGIN: Public Works – James Kelly ATTACHMENTS: Draft Contract Agreement (2010) Attachment B – Rates (2010) Original Contract (2002) Contract Extension (2004) EXPENDITURES REQUESTED: N/A BUDGET CATEGORY: N/A LEGAL REVIEW: Pending final review by City Attorney DESCRIPTION: Contract Renewal with Waste Management for continued garbage and recycle collection and disposal service. HISTORY: City of Arlington entered into contract with Waste Management Northwest in 2002 for collection and disposal of garbage within the City. The contract was extended and modified in 2004 for continued collection of both solid waste and recyclables through August 31, 2010. The City has been negotiating a new contract with Waste Management since February 2010; the latest draft is attached. The new contract will include the following: - Rates will be increased over a two year period to make up for not keeping up with inflation for the past 10 years (4.95% effective Sep 2010 and 5.25% effective Sep 2011). During the previous contract period rates were raised at 80% of the Seattle-Tacoma-Bremerton CPI. - Following to 2010 and 2011 planned rate increase, rates will rise at 90% of the Seattle-Tacoma- Bremerton CPI. - Residential food composting is added to the collection services. - A City of Arlington administrative fee based on 5.5% of the collection rate is also proposed. This will bring in approximately $125,000 to the refuse department – a service that is currently funded by Water and Sewer as well as grants from the Department of Ecology. The revenue received from this fee will pay for waste management services (education & outreach, City public waste collection, contract administration, etc.). ALTERNATIVES: - Reject contract and renegotiate - Reject contract and enter into negotiations with other waste hauler (Rubintino, Allied Waste, Sound Disposal, other) RECOMMENDED ACTION: - Discussion only – no action is being requested. CONTRACT FOR SOLID WASTE, RECYCLING, AND COMPOSTABLE ORGANICS COLLECTION, AND DISPOSAL BETWEEN THE CITY OF ARLINGTON, WASHINGTON AND WASTE MANAGEMENT OF WASHINGTON, INC. ii RECITALS ........................................................................................................................................................... 1 DEFINITIONS ...................................................................................................................................................... 2 ARTICLE I ........................................................................................................................................................... 7 AGREMENT, TERM ........................................................................................................................................... 7 1.1 AGREEMENT ........................................................................................................................................... 7 1.2 TERM ........................................................................................................................................................ 7 1.3 MANDATORY SERVICE …………………………………………………………………………….7 ARTICLE II .......................................................................................................................................................... 7 GENERAL OPERATIONS .................................................................................................................................. 7 2.2 COLLECTION ........................................................................................................................................... 7 2.2.1 GENERAL ............................................................................................................................................. 8 2.2.2 COLLECTION SCHEDULE ................................................................................................................. 8 2.2.3 COLLECTION LOCATIONS ............................................................................................................... 8 2.2.4 COLLECTION FROM RESIDENCES OF DISABLED OR IMPAIRED RESIDENTS ...................... 8 2.2.5 DANGEROUS ANIMALS .................................................................................................................... 9 2.2.6 EMPLOYEES TO USE WALKS IF CARRY-OUT SERVICE DIRECTED ........................................ 9 2.2.7 EMPLOYEES NOT TO TRESPASS ..................................................................................................... 9 2.3 CONTRACTOR TO MAKE EXAMINATION ........................................................................................ 9 2.4 EMPLOYEES ............................................................................................................................................ 9 iii 2.4.1 NON-DISCRIMINATION ..................................................................................................................... 9 2.4.2 OSHA/WISHA ..................................................................................................................................... 10 2.4.3 COMPLIANCE WITH LAWS ……………………………………………………………………….10 2.4.4 EMPLOYEES TO BE COURTEOUS, ETC. ....................................................................................... 10 2.5 COMPANY NAME ................................................................................................................................. 10 2.6 CONTRACTOR’S OFFICES .................................................................................................................. 10 2.7 PERMITS ................................................................................................................................................. 10 2.8 PUBLIC UTILITIES ................................................................................................................................ 11 2.9 LOADING ................................................................................................................................................ 11 2.10 CLEANUP OF SPILLS ........................................................................................................................ 11 2.11 DISRUPTION OF COLLECTION ...................................................................................................... 11 2.11.1 DISRUPTION OF COLLECTION DUE TO WEATHER .................................................................. 11 2.11.2 HOLIDAY SCHEDULES …………………………………………………………………………….11 2.11.3 MISSED AND MAKEUP COLLECTIONS ........................................................................................ 12 2.12 COLLECTION EQUIPMENT ............................................................................................................. 12 2.12.1 VEHICLE AND CONTAINERS ...................................... ERROR! BOOKMARK NOT DEFINED. 2.12.2 RESERVE EQUIPMENT .................................................................................................................... 12 2.12.3 PAINTING AND CLEANING OF VEHICLES .................................................................................. 13 2.13 SUBCONTRACTORS ......................................................................................................................... 13 2.14 METHOD OF DISPOSAL ................................................................................................................... 13 2.15 SERVICE TO CITY FACILITIES ....................................................................................................... 13 iv 2.16 COMPLIANCE WITH LAWS ............................................................................................................ 13 ARTICLE III ....................................................................................................................................................... 14 REPORTING REQUIREMENTS ...................................................................................................................... 14 3.1 REPORTING REQUIREMENTS ............................................................................................................ 14 3.1.1 QUARTERLY PROGRAM REPORTS ............................................................................................... 14 3.2 CONTRACTOR'S RECORDS; ACCESS INSPECTION ....................................................................... 15 ARTICLE IV ...................................................................................................................................................... 16 INSURANCE AND SAFEGUARDS ................................................................................................................. 16 4.1 INSURANCE ........................................................................................................................................... 16 4.1.1 GENERAL REQUIREMENTS ............................................................................................................ 16 4.1.2 ADDITIONAL INSURANCE .............................................................................................................. 16 4.1.3 CONTINUANCE ................................................................................................................................. 16 4.1.4 COVERAGES ...................................................................................................................................... 16 4.1.4.1 ENDORSEMENTS ................................................................................................................................. 16 4.1.4.2 MINIMUM LIMITS ............................................................................................................................ 17 4.1.5 OTHER INSURANCE PROVISIONS ……………………………………………………………….15 4.1.5.1 MINIMUM SCOPE OF INSURANCE ………………………………………………………………15 4.1.5.2 ACCEPTABILITY OF INSURERS ………………………………………………………………….15 4.1.5.3 CONTRACTOR'S INSURANCE PRIMARY ………………………………………………………..15 4.2 PERFORMANCE BOND ........................................................................................................................ 17 4.3 INDEMNIFICATION AND HOLD HARMLESS AGREEMENT ........................................................ 18 4.3.1 INDEMNIFICATION .......................................................................................................................... 18 v 4.3.2 WAIVER OF RCW TITLE 51 ............................................................................................................. 18 4.4 COMPLIANCE REQUIRED ................................................................................................................... 18 ARTICLE V ........................................................................................................................................................ 18 GARBAGE COLLECTION ............................................................................................................................... 18 5.1 GARBAGE COLLECTION………………………………….……………………………………….17 5.1.1 CARTS ................................................................................................................................................. 18 5.1.2 BULKY ITEMS AND WHITE GOODS ............................................................................................. 19 ARTICLE VI ...................................................................................................................................................... 19 CITY CLEANUP DAYS .................................................................................................................................... 19 6.1 GENERAL ............................................................................................................................................... 19 ARTICLE VII ..................................................................................................................................................... 19 RECYCLE COLLECTION ................................................................................................................................ 19 7.1 GENERAL RECYCLING PROVISIONS ............................................................................................... 19 7.1.1 APPLICATION OF WUTC TARIFF AND SNOHOMISH COUNTY ORDINANCE .......... ERROR! BOOKMARK NOT DEFINED. 7.2 IMPLEMENTATION OF RESIDENTIAL RECYCLING (NEW PROGRAM) ……………………17 ARTICLE VIII ………………………………………………………………………………………………...18 YARD/FOOD DEBRIS ...................................................................................................................................... 20 8.1 YARD/FOOD DEBRIS COLLECTION …………………………………………………………….18 ARTICLE IX ...................................................................................................................................................... 20 CONTRACTOR COMPENSATION ................................................................................................................. 20 9.1 GENERAL ............................................................................................................................................... 20 vi 9.2 COMPENSATION ............................................................... ERROR! BOOKMARK NOT DEFINED. 9.3 RATE INCREASES .............................................................. ERROR! BOOKMARK NOT DEFINED. 9.4 LIEN FOR NON-PAYMENT ………………………………………………………………………...19 ARTICLE X ........................................................................................................................................................ 21 11.1 TERMINATION .................................................................................................................................. 23 11.2 LIQUIDATED DAMAGES ................................................................................................................. 24 ARTICLE XII ..................................................................................................................................................... 24 ANNEXATION .................................................................................................................................................. 24 12.1 FRANCHISE RIGHTS ......................................................................................................................... 24 ARTICLE XIII .................................................................................................................................................... 25 MISCELLANEOUS ........................................................................................................................................... 25 13.1 NON-WAIVER .................................................................................................................................... 25 13.2 NOTICES ............................................................................................................................................. 25 13.3 SEVERABILITY ................................................................................................................................. 25 13.4 ENTIRE AGREEMENT ...................................................................................................................... 26 13.5 ATTORNEYS’ FEES ........................................................................................................................... 26 13.6 CHANGE IN RATE OR SERVICE ..................................................................................................... 26 13.7 ASSIGNMENT .................................................................................................................................... 26 13.8 FORCE MAJEURE …………………………………………………………………………………...22 13.9 APPLICABLE LAW/VENUE ………………………………………………………………………..22 13.10 INDEPENDENT CONTRACTOR …………………………………………………………………..22 13.11 SUBCONTRACTING ……………………………………………………………………………….23 vii 13.12 TAXES AND FEES …………………………………………………………………………………23 13.13 INSOLVENCY; RIGHT TO TERMINATE CONTRACT …………………………………………23 13.14 RESERVATION OF MUNICIPAL AUTHORITY …………………………………………………23 13.15 SUCCESSORS AND ASSIGNS …………………………………………………………………….23 13.16 CORPORATE AUTHORITY ……………………………………………………………………….23 13.17 DISPUTE RESOLUTION …………………………………………………………………………..24 1 CONTRACT FOR SOLID WASTE, RECYCLING, AND COMPOSTABLE ORGANICS COLLECTION, AND DISPOSAL BETWEEN THE CITY OF ARLINGTON, WASHINGTON AND WASTE MANAGEMENT OF WASHINGTON, INC. RECITALS WHEREAS, the City of Arlington, a Washington municipal corporation (the “City”), has negotiated with Waste Management of Washington, Inc., a Washington corporation (the “Contractor”), for solid waste collection and recycling pick-up services; and WHEREAS, solid waste collection service is a fundamental municipal function with uniform, managed collection necessary for the preservation of public health; and WHEREAS, Contractor represents that it has the experience, resources, and expertise necessary to perform solid waste collection services; and WHEREAS, pursuant to RCW 35.21.120 the City has enacted ordinances codified in the City’s Municipal Code which created a system for the orderly collection and disposal of Garbage within the City of Arlington; and WHEREAS, the City agrees to adopt such modifications to its solid waste ordinances as are necessary to reflect this agreement; and WHEREAS, this contract is subject to the adoption of such ordinance modifications and to the rights of any third parties regarding franchises provided for pursuant to RCW 35.13.280; and WHEREAS, the City Council finds that by entering into this contract for the collection of Recyclables and Garbage, the citizens of the City will receive a greater variety of Garbage services at more stable rates; and WHEREAS, the City and Contractor have negotiated a mutually advantageous proposal for providing solid waste collection services and the City Council has determined that the City should enter into a contract with Contractor for the collection and disposal of Garbage, recycling and yard debris within the City; 2 NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL BENEFITS AND COVENANTS STATED HEREIN THE PARTIES AGREE AS FOLLOWS: DEFINITIONS For the purposes of this Contract the following terms shall have the following meanings: Adjustment Date: means the date that occurs annually on SeptemberJuly 1st . [to coincide with effective date] Administrative Fee: means a monthly fee remitted to the City from the Contractor. [built into rate pro forma?] Bagster Defintion: means a “dumpster in a bag” product which can hold up to three cubic yards of debris and other solid waste materials and is serviced by a special roll-off collection vehicle operated by Contractor. Bagster products may be purchased by customers in local home improvement retail stores. Add Definition of “Blow By” from section:2.9 Cleanup of Spills [VK: don’t really have a definition for this term . . . I think section 2.9 contains an adequate description as is.] Bulky Waste/Items: Couches, chairs, mattresses, appliances and other large items that do not fit into the standard Residential or Commercial Garbage truck. Cart: means Contractor owned wheeled cart that is a plastic container with 20, 35, 64 or 96 gallons of capacity; designed for and used with a hydraulic lifting mechanism; fitted with a sturdy handle and a cover; be rodent and insect resistant; and be capable of holding collected liquids without spilling when in an upright position. Can be used for garbage, organics and recyclable collection. Carry Out/Pack Out Service: means the servicing of carts by Contractor which are not placed Curbside by the customer for collection, but rather require the Contractor to enter onto Customer’s property and roll-out or carry-out carts to Contractor’s collection vehicle. Customers may request a carry out service for an additional fee as set forth in Exhibit A, and such fees are charged based upon the distance from Contractor’s collection vehicle. Carry out service for Senior Citizens and Physically Disabled Persons is set forth in Section 2.1.4. Add definition of an actual carryout. Move Senior Discount language and Physically Challenged Benefits to definitions. Seniors or physically challenged persons can request a carry out/pack out service up to 50 feet from the contractor’s truck. The request must be in writing with the explanation as to the reason for this service. The household cannot have an able bodied person living in the home. 3 City: The City of Arlington, Washington Commercial/Industrial Customers: Non-Residential customers including businesses, institutions, governmental agencies, Multi-Family customers with Commercial accounts and all other users of commercial type Garbage collection services. Commercial Recycling Customers: Commercial/Industrial customers who voluntarily sign up for this service. Compostable Organics: • Means any organic waste materials that are source separated for collection, such as Yard Debris and Food Waste. Food Waste: A • ll compostable pre- and post-consumer food scraps, such as whole or partial pieces of produce, meats, bones, cheese, bread, cereals, coffee grounds and egg shells, and food-soiled paper such as paper napkins, paper towels, paper plates, coffee filters, paper take-out boxes, pizza boxes, paper milk cartons or other paper products accepted by the Contractor’s selected composting site. Food scraps shall not include large dead animals, plastics, diapers, cat litter, liquid wastes, pet wastes or other materials prohibited by the selected composting facility. Yard Debris: Leaves, grass and clippings of woody, as well as fleshy plants. Unflocked whole holiday trees are acceptable. Materials larger than four (4) inches in diameter or four (4) feet in length are excluded. Bundles of Yard Debris up to two (2) feet by two (2) feet by four (4) feet in dimension shall be allowed and shall be secured by degradable string or twine, not nylon or other synthetic materials. Kraft paper bags and untied reusable bags may be used to contain Yard Debris. Contractor: Waste Management of Washington Inc., which has contracted with the City of Arlington to collect, process, market and transport Garbage/Solid Waste, Recyclable Materials, and Compostable Organics within the City limits. County: Snohomish County, Washington. Rates for solid waste collection in the unincorporated areas of County are regulated by the Washington Utilities and Transportation Commission (WUTC). Contract Administrator : The Public Works & Utilities Director or a person designated by that individual. Curb or Curbside: The area within five (5) feet of the public street or alley where regular collection occurs. If safe access is difficult or extraordinary circumstances preclude such a location, curbside shall be considered a placement suitable to the resident, convenient to the Contractor’s equipment, and mutually agreed to by the Administrator and Contractor. 4 Customer: means any residential, multifamily, commercial, or industrial customer who generates Garbage/Solid Waste, Recyclables, or Compostable Organics within the City. – Define per Article 7.1 Food Waste: A ll compostable pre- and post-consumer food scraps, such as whole or partial pieces of produce, meats, bones, cheese, bread, cereals, coffee grounds and egg shells, and food- soiled paper such as paper napkins, paper towels, paper plates, coffee filters, paper take-out boxes, pizza boxes, paper milk cartons or other paper products accepted by the Contractor’s selected composting site. Food scraps shall not include large dead animals, plastics, diapers, cat litter, liquid wastes, pet wastes or other materials prohibited by the selected composting facility. Garbage/Solid Waste: All putrescible and nonputrescible solid and semi-solid wastes, including, but not limited to, rubbish, ashes, industrial wastes, swill, demolition and construction wastes, and discarded commodities that are placed by customers of the Contractor in appropriate bins, bags, cans or other receptacles for collection and disposal by the Contractor. The term Garbage shall not include Hazardous Wastes, Special Wastes, source-separated Recyclables or Compostable Organics. Disposal Fee: The fee charged by to the Contractor for the disposal of any Garbage or Solid Waste. Hazardous Waste: (a) is required to be dealt with as a hazardous waste under regulations promulgated by the United States Environmental Protection Agency at 40 CFR part 261; or The waste, material or substance that is not excluded from regulation as “hazardous waste,” “hazardous substance,” or “dangerous waste” by application of regulations adopted by the United States Environmental Protection Agency or the Washington State Department of Ecology and that now or hereafter: (b) contains a radioactive material the storage or disposal of which is regulated by state or federal law or regulation; or (c) is designated a “dangerous waste” or “extremely hazardous waste” by regulations adopted pursuant to Chapter 70.105 RCW; or (d) is required to be dealt with as a hazardous substance under chapter 70.105D RCW and regulations promulgated by the Washington Department of Ecology at chapter 173-340 WAC. Inaccessible Area: Any road that does not allow safe access, turn-around, clearance or does not meet the weight requirements for the trucks. Mixed Paper: Magazines, junk mail, phone books, bond or ledger grade paper, cardboard and paper board packaging. Tissue paper, paper towels, and frozen food containers are excluded. Multi-Family Residence: All Multi-Family complexes including apartments, condominiums, town houses, and mobile home parks with two (2) or more dwelling units (or any 5 complex that is billed as a group), where single family collection service is not conveniently provided. Public Street: A public right a way used for public travel and owned by the City. Recyclable Material: Aluminum cans; Clean glass containers, clear, amber and green (no ceramic or window glass); Mixed paper, mail, magazines, catalogs, phone books, computer paper, white and colored ledger and corrugated cardboard (no larger than 2 feet by 3 feet); Newspaper and inserts; or Clean plastic bottles, milk jugs and dairy tubs. The City and the Contractor can negotiate any deletion or additions to the Recyclable Materials list. Non- Regular Scheduled/Temporary Service: means, any non-permanent, temporary service requested by a customer and available by the Contractor to bill for. These requested services will be provided by the Contractor and billed directly to the customer by Contractor. City will refer these types of service requests to Contractor for set up, service scheduling and billing. Physically Challenged Persons: means disabled persons or any other residential customer who is not physically able to move carts out to the Curbside, as determined based upon criteria reasonably established by the Contractor, with input from the City. Requests must be made to the Contractor in writing for such designation, and the customer household cannot have another able bodied person living in the home who is capable of rolling carts out to the Curbside. Recycling Carts: A Contractor-owned and provided labeled cart suitable for on-site collection and/or storage of source-separated Recyclables and Compostable Orgranics at Residential and Multi-Family locations. Residence: A living space individually rented, leased, or owned. Senior Citizen: means any residential customer where all residents in the household are at least sixty-two years of age. Service Area: The municipal boundaries of the City both now and as they may be expanded by annexation during the life of the contract, subject to the provisions of RCW 35.13.280. Service Machine Definition: [Emily – we’ve never defined this in a contract before. Let’s discuss …] Single Family Residence: All single unit houses, duplexes, and mobile homes where service is billed to the individual customer. 6 Single Stream Recycling: also known as “fully co-mingled” recycling refers to a system in which all Recyclable Materials are placed together in the same Recycling Cart, instead of being sorted into separate commodities by the resident. Special Waste: The term “Special Waste” means polychlorinated biphenyl (“PCB”) wastes, industrial process wastes, asbestos containing materials, petroleum contaminated soils, treated/de- characterized wastes, incinerator ash, medical wastes, demolition debris and other materials requiring special handling in accordance with applicable federal, state, county or local laws or regulations. Yard Debris: Leaves, grass and clippings of woody, as well as fleshy plants. Unflocked whole holiday trees are acceptable. Materials larger than four (4) inches in diameter or four (4) feet in length are excluded. Bundles of Yard Debris up to two (2) feet by two (2) feet by four (4) feet in dimension shall be allowed and shall be secured by degradable string or twine, not nylon or other synthetic materials. Kraft paper bags and untied reusable bags may be used to contain Yard Debris. White Goods Definition: means large household appliances such as washers, dryers, stoves, refrigerators (not containing CFCs), dishwashers, and other similar appliances. WUTC: means the – State Agency that defines rates for solid waste collection in the unincorporated areas of County are regulated by the Washington Utilities and Transportation Commission (WUTC), which regulates solid waste collection in the unincorporated areas of the County. 7 ARTICLE I AGREEMENT, TERM 1.1 The City of Arlington (hereinafter referred to as “City”), hereby agrees that Waste Management of Washington Inc. (hereinafter referred to as “Contractor”), shall have the exclusive right to collect Garbage/Solid Waste, Recyclable Material and Compostable Organics within the city limits, to the extent allowed by law, including all work incidental thereto, upon the terms and conditions set forth below. Agreement 1.2 The term of this Contract is eight ten years, starting September 1, 2010, and expiring August 31, 2020. The parties may, by mutual agreement, extend the agreement for two (2) successive periods of two (2) years each. Any such extension shall be under the original terms and conditions of this Contract. To exercise the option to extend this Contract, the parties shall agree in writing not less than 180 days prior to the then expiring Contract term. Term 1.3 Collection of Garbage within the City is mandatory for all Residential, Multi-Family and Commercial customers. The City and the Contractor must mutually agree on any exemptions from service. Mandatory Service 1.4 Exclusive Right; Franchise Enforcement. The City does hereby grant to Contractor the exclusive duty, right and privilege to collect and dispose, process and market or otherwise handle all residential, commercial, and industrial Solid Waste generated, deposited, accumulated or otherwise coming to exist in the City, and all residential/multi-family Recyclable Materials and Compostable Organics generated, deposited, accumulated or otherwise coming to exist in the City. All residential premises, multifamily complexes, and commercial and industrial businesses within the City shall be required by City to utilize the Residential/Multi-family recycling collection services and the Solid Waste collection services of Contractor. When asked by the Contractor, the City shall use its best efforts to protect this right of the Contractor; however, the City shall not be obligated to join or instigate litigation to protect the right of the Contractor. The Contractor may independently enforce the exclusive rights under this Contract against third party violators, including but not limited to seeking injunctive relief, and the City shall use good faith efforts to cooperate with Contractor in Contractor's actions to enforce such rights (without obligating the City to join any litigation initiated by Contractor). ARTICLE II GENERAL OPERATIONS 2.1 Collection 8 2.1.1 The services to be performed consist of the collection of all Garbage, Recyclable Material, and Compostable Organics herein referred to which occur within the City of Arlington and disposal or recycling thereof. The collection of Hazardous Waste is not included within the scope of this Agreement, and Contractor shall be under no obligation to collect any Hazardous Waste. Nothing herein is intended to prevent Contractor from collecting, transporting and/or disposing of any non- hazardous or hazardous toxic waste in accordance with applicable federal and state requirements and regulations, so long as such actions are performed separate and apart from any action taken in the performance of this Agreement. General 2.1.2 The collection of Garbage, Recyclable Materials and Compostable OrganicsYard Debris from Single Family and Multi-Family customers within the City shall be between the hours of 7:00 AM and 6:00 PM Monday through Friday. The collection of Commercial customers will be between the hours of 5:00 AM and 6:00 PM Monday through Friday. Recycling and organic composting will be collected bi-weekly on opposite weeks. Collection Schedule and Hours of Operations 2.1.3 Collection Locations Contractor shall collect Garbage, Recyclable Materials and Compostable OrganicsYard/Organics Debris at Curbside from all Single Family Residences and Multi-Family. Contractor may refuse to pick up materials at locations identified by Contractor and approved by the City, acting reasonably, where, because of the conditions of the streets, alleys or roads, it is impractical to operate vehicles, and may refuse to drive into private property where driveways or roads are without adequate turnarounds or have other unsafe conditions. 2.1.4 The Contractor shall offer carry-out service for Garbage, Recyclables and Compostable Organics of up to fifty (50) feet from Contractor’s vehicle to qualifying Senior Citizens and Physically Challenged Persons households lacking the ability to place containers at the Curb, at no additional charge. The Contractor shall use qualification criteria that are fair and meet the needs of the City’s senior or disabled residents. However, exemptions may be granted in writing by the Contractor to accommodate the special needs of customers. These criteria shall comply with all local, state and federal regulations, and shall be subject to City review and approval prior to program implementation. Collection from Senior Citizens and Physically Challenged Personss or Physically Challenged 2.1.4.1 Senior Citizen Discount Senior Citizens s must be 62 years of age and will be required to send proof of age (driver’s license or identification card) to Waste Management Customer Service Center. Once proof of age is received a 10% discount will be applied to the account. 2.1.4.2 Collection from Physically Challenged The Contractor shall offer carry-out service for Garbage, Recyclables and Compostable Organics to households lacking the ability to place containers at the Curb, at no additional charge. The Contractor shall use qualification criteria that are fair and meet the needs of the City’s disabled 9 residents. However, exemptions may be granted in writing by the Contractor to accommodate the special needs of customers. These criteria shall comply with all local, state and federal regulations, and shall be subject to City review and approval prior to program implementation. 2.1.5 Contractor will not be required to enter into private property to pick up materials while an animal considered or feared to be vicious is loose. Dangerous Animals 2.1.6 Employees, in collecting Garbage and Recyclable Materials, shall follow the regular walks for pedestrians while on private property returning to the street or alley after replacing empty cans. They shall also replace all Garbage cans and covers and close all gates opened by them. All employees shall wear clean clothing or uniforms. Employees to Use walks if Carry-out Service Directed 2.1.7 Employees shall not trespass or loiter, cross property to an adjoining premise, or meddle with property which does not concern them. Employees Not to Trespass 2.2 Contractor shall make its own examination and investigation regarding the proper method of doing the work and all conditions affecting the work to be done, and the labor, equipment and materials needed therefore and the quantity of work to be performed. Contractor agrees that it is satisfied with its own investigation and research, and will make no claim against City because of any of the estimates, statements, or interpretations made by any officer or agent of the City. This Agreement is for the benefit of the parties thereto and is not intended to inure to the benefit of any third party. Contractor to Make Examination 2.3 All workers employed by Contractor shall be competent and skilled in the performance of the work to which they may be assigned. All drivers must have a C.D.L. “B” or “A” license and a current medical card. Failure or delay in the performance of this Contract due to Contractor’s inability to obtain workers of the number and scope required, shall constitute a default of this contract. Employees 2.3.1 The Contractor will not discriminate against any employee or applicant for employment because of age, race, religion, creed, color, sex, marital status, sexual orientation, political ideology, ancestry, national origin, or the presence of any sensory, mental or physical handicap, unless based on a bona fide occupational qualification. The Contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their creed, religion, race, color, sex, marital status, sexual orientation, political ideology, ancestry, national origin, or the presence of any sensory, mental or physical handicap. Such action shall include, but not be limited to the following: Employment upgrading; demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of Non-Discrimination 10 compensation; and, selection for training, including apprenticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment any required notices setting forth the provisions of this nondiscrimination clause. Contractor understands and agrees that if it violates this nondiscrimination provision, this contract may be terminated by the City and further that the Contractor shall be barred from performing any services for the City now or in the future, unless a showing is made satisfactorily to the City that discriminatory practices have terminated and that recurrence of such action is unlikely. 2.3.2 Conditions of the Federal Occupational Safety and Health Act of 1970 (OSHA), the Washington Industrial Safety and Health Act of 1973 (WISHA), and standards and regulations issued under these Acts from time-to-time must be complied with. The Contractor shall indemnify and hold harmless the City from all damages assessed for the Contractor’s failure to comply with the acts and standards issued thereunderthere under. The Contractor is also responsible for meeting all pertinent local, state and federal health and environmental regulations and standards applying to the operation of the collection processing system. OSHA/WISHA 2.3.3 Contractor agrees to comply, at its own expense, with all applicable State, Federal and Local Compliance with Laws laws, rules and regulations, including, but not limited to, all applicable laws regarding wages. 2.3.4 Employees of Contractor shall be courteous at all times and not use loud or profane language and shall do their work as quietly as possible. Employees to be Courteous, Etc. 2.4 Contractor shall not use a firm name containing any words implying municipal ownership or including the name of the City. Company Name 2.5 Contractor shall be required to maintain a local access telephone number or a 800 number which meets the approval of the City, and such attendants as may be necessary to take care of complaints, as well as orders for special service or to receive instruction. The attendant shall be on duty between the hours of 8:00 a.m. and 5:00 p.m., Monday through Friday, except holidays. At such times as the office is closed, a recorder shall be in operation. The contractor shall maintain a website for customer use 24 hours per day 7 days per week. The website must provide a separate address for the City of Arlington that can accept electronic communication. Contractor’s Offices 2.6 Contractor shall take out and pay for any business license or other fee required by the City or any other governmental authority which may be required to provide the services under this Contract. Permits 11 2.7 Contractor shall be obligated to protect all public and private utilities whether occupying street, public or private property. If such utilities are damaged by reason of Contractor’s operations under this Contract, he shall repair or replace same. Public Utilities 2.8 Extra care shall be taken in the loading and transporting of Garbage, Recyclables, Compostable Organics and other wastes so that the material to be collected is not left either on private property or on the streets or alleys. Any Garbage, Recyclables, Compostable Organics or other wastes left on private property or on streets or alleys spilled by Contractor shall be cleaned up within a reasonable timeframe24 hours of received complaint. Loading 2.9 All loads collected by the Contractor shall be completely contained in collection vehicles at all times, except when material is actually being loaded. Hoppers on all collection vehicles shall be operated so as to prevent blowing or spillage of materials. Any blowing or spillage of materials either caused by Contractor or that occurs during collection shall be immediately cleaned up by the Contractor at its expense. Prior to any collection vehicle leaving a collection route and/or operating on any roads with a speed limit higher than 25 miles per hour, Contractor shall completely close any collection vehicle openings where materials may blow out, and thoroughly inspect for and remove any collected materials inadvertently spilled on top of the collection vehicle to prevent release or littering this material. Spillage not immediately cleaned up mayshall be cause for performance fees, as described in Section 11.24.1. Cleanup of Spills All vehicles used in the performance of this Contract shall be required to carry and regularly maintain spill kits. At a minimum, spill kits shall include absorbent pads or granules, containment booms, storm drain covers, sweepers and other similar materials sufficient to contain, control and, for minor events, appropriately clean-up, blowing materials, litter, leaks and spillage of Contractor vehicle fluids and leachate. Spill kits shall also include employee spill containment instructions and procedures as well as a regularly updated list of emergency contacts. The Contractor shall develop spill response procedures for review and approval by the City before initiating any work under this Contract. All Contractor vehicle drivers shall be provided with annual hands-on training on the location, maintenance, and use of spill kits and associated containment and notification procedures. All Drop Box Container loads (both open and compactor) shall be properly and thoroughly covered or tarped to prevent any spillage of material prior to Contractor vehicle entering any Private Road or Public Street. Contractor shall be responsible for the cleaning up of all debris spilled or tracked on any street, alley or public place by any of his employees or equipment. Insert description of measures and policies specific to WMNW district 2.10 Disruption of Collection 2.10.1 When weather conditions are such that continued operation would result in danger to the Contractor’s staff, area residents, or property, the Contractor shall collect only in areas that do not Disruption of Collection Due to Weather Comment [e1]: Suggest changing or defining “blowing by” language. 12 pose a danger. The Contractor shall notify the City, on the same business day, of the areas not served. The Contractor shall collect Garbage, Recyclables and Yard Debris from customers with interrupted service on their next scheduled service day. Extra Garbage will not be charged for as long as it does not exceed double their normal service. 2.10.2 Holiday Schedules The Contractor shall designate which holidays will be observed and indicate the schedule that will be worked if the holiday falls on a regular collection day. The holiday schedule for the next year shall be provided in writing by the Contractor to the City. When the day of regular collection is a legal holiday, the Contractor may reschedule the service to the next day, example: Monday to Tuesdays, Tuesday to Wednesday, Wednesday to Thursday, Thursday to Friday and Friday to Saturday. The Contractor may not collect Residential Garbage, Recyclables or Yard Debris earlier than the regular collection day due to a holiday. Commercial collections may be made one day early only with the consent of the Commercial Customer. 2.10.3 If the Contractor fails to collect a customer's Garbage, Recyclable Material or Compostable Organics which have been properly and timely set out for collection during a regularly scheduled collection, other than as provided in Section 2.10.1 or 2.10.2, the Contractor shall make a special make up collection within 24 hours (or one business day) of notification by the City or customer. This section applies to omitted collections of a single residence, a row of residences, or an entire route. If Contractor fails to provide a special pickup for a missed collection within twenty-four (24) hours (or one business day) after notification by the Contract Administrator or customer, the Contract Administrator may cause the work to be done and the Contractor shall fully reimburse the City for its collection expenses. Missed and Makeup Collections 2.11 Collection Equipment Contractor shall possess or demonstrate to the City’s reasonable satisfaction that it has available to it adequate equipment and vehicles, including reserve or replacement vehicles and equipment, sufficient to perform the services required of Contractor herein. Contractor shall maintain all trucks and equipment used within the City in good mechanical condition and the same shall be clean, numbered and uniformly painted. All truck bodies used by Contractor shall be constructed of metal and shall be watertight and leak proof. Each vehicle used by Contractor shall carry at all times a broom and shovel or other item appropriate for use in the prompt removal of any spilled material. All vehicles used by Contractor shall have adequate coverage at all times to prevent the spillage of Solid Waste. 2.12 The number and type of collection vehicles, including back up or reserve equipment in event of equipment failure, furnished by Contractor, shall be sufficient for the collection of all Garbage, Recyclable Materials and Yard Debris. Contractor shall make available for rental detachable containers which meet all applicable safety requirements. Reserve Equipment 13 2.12.1 Collection vehicles shall be painted and numbered and shall have the Contractor's name and number of the vehicles painted in letters of a contrasting color, at least four (4) inches high on each side of each vehicle. No advertising shall be permitted other than the name of the Contractor. All vehicles shall be kept in a clean and sanitary condition. Painting and Cleaning of Vehicles 2.13 Contractor may not subcontract any portion of the services required by this Contract without the specific written consent of the Contract Administrator, which shall not be unreasonably withheld. Such consent shall not relieve Contractor from its responsibilities under this Contract for the services performed by a subcontractor. Subcontractors 2.14 Contractor shall deliver all Garbage, Recyclable Materials and Commercial Organics collected under the Contract to permitted facilities of its choosing, as approved by the SNOHOMISH Snohomish County Solid Waste Division and SNOHOMISH Snohomish County Health Department, for the processing or disposal of such materials. Method of Processing and Disposal 2.15 As partial consideration for this Contract, Contractor shall provide free collection of Garbage and Recyclables from all City facilities. Contractor shall provide free collection of Garbage and Recyclables from all Airport Administrative and Maintenance Buildings, and the Municipal Airport shall provide storage space for Contractor’s detachable garbage containers. Quantity of containers to be stored shall be reasonably approved by the Airport Manager. Service to City Facilities A list of current City facilities is attached as Exhibit 1__As partial consideration for this Contract, Contractor shall provide free collection service of Garbage and Recyclables from all Municipal Buildings, Parks and other City facilities as described below where city employees are the primary occupants that requires can, cart or frontload steel containers (1-yd to 8- yd.) (Dirt, concrete, asphalt, grit, road work and construction materials are excluded). All locations must be accessible to contractor’s trucks. Insert List of chosen facilities for City of Arlington If there is a material increase in the number of Municipal BuildingsCity facilitiesCity facilities during the term of this Contract, then the Parties shall meet and confer in good faith to negotiate an appropriate adjustment to Contractor’s rates set forth herein. 2.16 Contractor shall comply with all applicable local, state and federal regulations and laws regarding the collection, transfer and disposal of Garbage, Recyclable Materials, and Compostable Organics pursuant to this contract. Compliance with Laws 2.17 Service Area Comment [e2]: The City will provide a list of City facilities. 14 The Contractor shall provide all services pursuant to this Contract within the City Service Area. 2.18 Carts and Containers . Contractor shall retain ownership of any Carts or other containers provided by Contractor in performing the services under this Contract. Cart deliveries (for new or replacement Carts) shall be subject to the service rate schedule in Exhibit A. Contractor shall deliver Carts necessary to meet the service requirements set forth under this Contract upon a delivery schedule to be mutually agreed upon by the contractor and the City. ARTICLE III REPORTING REQUIREMENTS 3.1 The Contractor will be required to keep records and submit them to the City as specified below. The minimum reporting requirements set forth below are subject to modification, and shall include: Reporting Requirements 3.1.1 The Contractor shall submit Annual program reports for the length of the Contract period commencing upon the initial day of the Contract. These reports shall be completed by February 15 for the previous calendar year. The City may request program reports at any time during the calendar year but allowing the Contractor 30 days to prepare the reports. These reports shall clearly indicate individual totals for single family, multi family and Commercial collection. At a minimum, the reports shall include: Annual Program Reports a. Monthly summary of Recyclable Materials and Compostable Organics by tonnage, collected and recovered (not disposed of at landfill), by customer category. b. Residential Recycle participation (Count customers twice a year, April & October) c. Monthly summary of solid waste tonnage, by customer category. d. Customer complaint report, missed pick ups, missed deliveries, etc. e. Report the overall Service Machine Score of the company based on 1 error per 1,000 services for the reporting period. 3.1.2 The Contractor shall submit monthly program reports for the length of the Contract period commencing upon the initial day of the Contract. These reports shall be completed at the end of the month for the month prior. These reports shall clearly indicate individual totals for single family, multi family and commercial collection. At a minimum, the reports shall include: Monthly Program Reports a. Monthly summary of recyclable materials and yard debris by tonnage, collected and recovered (not disposed of at landfill), by customer category. b. Approximate resident participation rates in terms of weekly and monthly set- out counts. 15 c. Total number of recycling bins that have been distributed to residents. d. Monthly summary of solid waste tonnage, collected and disposed of at a landfill, by customer category. 3.2 The City shall have the right to inspect and copy all books, records and documents, and to Contractor's Records; Access Inspection interview any person, and to review any evidence in Contractor's possession and control that may assist the City in determining whether the Contractor is in compliance with the Contract. 16 ARTICLE IV INSURANCE AND SAFEGUARDS 4.1 Insurance 4.1.1 Subsequent to the award but prior to the execution of this Contract, the Contractor at its General Requirements own expense shall obtain and file with the City a Certificate of Insurance evidencing general comprehensive liability insurance coverage (including all of the coverages set forth below). This Certificate of Insurance shall be subject to approval by the City as to company, terms and coverages. All insurance shall be written on an occurrence basis. 4.1.2 Contractor's liability insurance must specifically name the City as an additional insured Additional Insurance thereunder and must fully protect the City from any and all claims, risks and losses in connection with any activities or omissions by the Contractor by virtue of this Contract. 4.1.3 Contractor's liability insurance must be maintained in full force and effect at the Continuance Contractor's sole expense for liability for property damage or personal injury that may occur in connection with activities or omissions by the Contractor arising under or related to this Contract. The City shall be given forty-five (45) calendar days prior written notice, by certified mail, of any cancellation, lapse, reduction or modification of such insurance. 4.1.4 Coverages 4.1.4.1 Said insurance policy and/or an endorsement thereto, as evidenced by the Certificate of Insurance, must provide the following minimum coverages and limits and contain the following provisions: Endorsements a. Bodily Injury b. Employees as Additional Insured c. Premises/Operations Liability (M&C) d. Products and Completed Operations Liability e. Blanket Contractual Liability f. Broad Form Property Damage Liability (including completed operations) g. Personal Injury with no employee exclusion h. Stop Gap or Employers Contingent Liability i. Automobile Liability, including coverage for owned, non-owned, leased or hired vehicles 17 4.1.4.2 All Coverages: $1,000,000 per occurrence and $2,000,000 aggregate. Minimum Limits The providing of coverage in this stated amount shall not be construed to relieve the Contractor from liability in excess of such limits. The City shall not be deemed or construed to have assessed the risks that may be applicable to the Contractor under this Contract. Contractor will assess its own risks and, if it deems appropriate and prudent, maintain greater limits. 4.1.5 Other Insurance Provisions 4.1.5.1 Automobile liability insurance covering all owned, non-owned, hired and leased vehicles. Coverage shall be written on Insurance Services Office (ISO) form CA 00 01 or a substitute form proving equivalent liability coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage. Minimum Scope of Insurance Commercial general liability insurance shall be written on ISO occurrence for CG 00 01 and shall cover liability arising from premises, operations, independent contractors and personal injury and advertising injury. 4.1.5.2 Insurance is to be placed with insurers with a current A.M. Best rating of not less than A:VII. Acceptability of Insurers 4.1.5.3 The Contractor’s insurance coverage shall be primary insurance as respects the City. Any insurance, self-insurance, or insurance pool coverage maintained by the City shall be excess of the Contractor’s insurance and shall not contribute with it. Contractor’s Insurance Primary 4.2 Contractor shall furnish to the City a proper performance bond to be approved by the City Performance Bond Attorney, conditioned that Contractor shall faithfully perform all the provisions and terms of the contract and related documents and pay all laborers, mechanics and subcontractors and material persons, and all persons who shall provide such Contractor with provisions and supplies for the carrying on of such work; which bond shall be signed by Contractor and two more good and sufficient sureties or with Surety Company as Surety, and shall be in the amount of One Hundred Thousand Dollars ($100,000.00). Said bond shall at all times be kept in full force and effect during the term of this Agreement. Contractor agrees to pay all costs, including attorney's fees, associated with the enforcement of said bond. 18 4.3 Indemnification and Hold Harmless Agreement 4.3.1 The Contractor shall indemnify and hold the City and its agents, employees, and/or officers, harmless from and shall process and defend at its own expense any and all claims, demands, suits, at law or equity, actions, penalties, loss, damages, or costs, of whatsoever kind or nature, brought against the City arising out of, or in connection with, or incident to, the execution of this Contract and/or the Contractor’s performance or failure to perform any aspect of this Contract; provided, however, that if such claims are caused by or result from the concurrent negligence of the City its agents, employees, and/or officers, this indemnity provisions shall be valid and enforceable only to the extent of the negligence of the Contractor and provided further, that nothing herein shall require the Contractor to hold harmless or defend the City, its agents, employees, and/or officers for damages or loss caused by the City's sole negligence. The provisions of this section shall survive the expiration or termination of this Agreement. Indemnification 4.3.2 With respect to the obligations to hold harmless, indemnify and defend provided for herein, as they relate to claims against the City, their officers, agents and employees, the Contractor agrees to waive the Contractor's immunity under industrial insurance, Title 51 RCW, for any injury, sickness or death suffered by the Contractor's employees which is caused by or arises out of the Contractor's exercise of rights of privileges granted by this agreement. This waiver is mutually agreed to by the parties. Waiver of RCW Title 51 4.4 Failure of the Contractor to fully comply with any and all of the terms of the foregoing Compliance Required insurance or bond provisions shall be considered a material breach of this contract and unless cured by Contractor within 7 days after written notification from the City, shall be cause for its immediate termination at the option of the City. ARTICLE V GARBAGE COLLECTION 5.1 Garbage Collection : Residential Garbage shall be collected by the Contractor, based on the frequency, service levels and rates set forth in Exhibit A. Commercial and Multi-family Garbage shall be collected by Contractor in accordance with the frequency, service levels and rates set forth in Exhibit A. 5.1.1 Residential Garbage will be collected in Contractor provided Carts and each customer shall be required to use a Contractor owned Cart as a primary collection container. Extra materials which do not fit neatly within the customer’s primary Cart shall be collected for a fee as set forth in rate schedule and may be placed adjacent to the primary Cart in customer provided cans, bags, or other receptacles which can be safely collected by Contractor’s personnel and equipment. All Multi- Family Garbage and Commercial Garbage will be collected in Contractor provided Carts or Carts Comment [e3]: City is deciding whether or not to mandate carts for service. 19 containers, and extra materials which do not fit neatly within the customer’s primary Cart or container shall be collected for a fee as set forth in rate schedule and may be placed adjacent to the primary Cart or container in customer provided cans, bags, or other receptacles which can be safely collected by Contractor’s personnel and equipment. Commercial customers may provide their own compactors or containers, provided such can be safely and effectively handled by Contractor’s personnel and collection vehicles. 5.1.2 Upon request from the City, the Contractor shall provide separate collection of bulky items and white goods on a call-in basis. Residents will be charged fees according Service Rate Fees in effect at the time of the request. Bulky Items and White Goods ARTICLE VI CITY CLEANUPS 6.1 Open for discussionStill in discussion. Mountlake Terrace Information will be provided with next draft of contract. Emily ??? General – ARTICLE VII RECYCLABLE MATERIALS COLLECTION 7.1 General Recycling Provisions: Residential Recyclable Materials shall be collected every other week, on the same days as Garbage collection. The cost of Residential Recyclables collection shall be included the rates for Residential Garbage collection set forth in Exhibit A. Up to 64 gallons of extra Recyclables which do not fit within the Contractor provided Cart will be collected free of charge from Residential customers, but any additional materials shall be subject to the fees set forth in Exhibit A. Multi-Family Recyclable Materials shall be collected every other week. The cost of Multi-Family Recyclables collection shall be included the rates for Multi-family Garbage collection set forth in Exhibit A. Multi-family customers may set out an equal volume of Recyclable material to the volume of Garbage service (e.g., 1 cubic yard of garbage, 1 cubic yard of Recyclables) as part of the embedded service. Any additional Recyclable materials set out by Multi- family customers shall be subject to the fees set fort in Exhibit A. Commercial and industrial customers may receive Recyclable Materials collection in roll-off containers or other commercial containers at a frequency and at rates as set forth under separate contract between the Contractor and the Customer. [Emily: will we include roll-off recyclables and other commercial recyclables rates in the rate sheet, or will this be through separate contract with the customers?]Should we include a caveat for roll off? 7.2 Contractor will provide a 35-gallon cart or a 64-gallon cart to all Residential customers for Single Stream Recycling. The default Cart size shall be 64 gallons, unless a customer requests a different size. 96 gallon recycling carts may also be provided to Residential customers, upon Recycling Carts Comment [e4]: Still in discussion. Comment [e5]: City would like to add availability of 96g cart for recycling. 20 request. Commercial and Multifamily Recycling shall be collected either in Carts or containers provided by Contractor, based upon the volume of service. ARTICLE VIII COMPOSTABLE ORGANICS COLLECTION 8.1 Compostable Organics Collection: Compostable Organics shall be collected from Residential customers who choose to subscribe for such service, on an every other week basis (on opposite weeks as Recyclables collection) on the same days as Garbage collection, at the rates set forth in Exhibit A. All Residential customers who sign up for Compostable Organics collection will be provided a 96-gallon cart. Yard Waste and Food Waste may be commingled by Residential customers in the Compostable Organics collection Cart. Small Commercial and Multifamily customers may also participate in the Compostable Organics collection program, for the fees set forth in Exhibit A. Such Commercial and Multifamily customers shall be provided a 96 gallon Cart. ARTICLE IX COMPENSATION 9.1 City Administrative Fee The Contractor shall pay to the City one-twelfth of the annual Administrative Fee by the 5 th of each month beginning September 2010. The initial (1st year) amount of the Administrative Fee will be One Hundred and Twenty Five thousand dollars ($125,000.00). The annual amount of the Administrative Fee will be adjusted each year in accordance with section 9.3. [Make sure this is factored into pro forma rates] 9.2 Contractor Rates The Contractor shall charge the rates set forth in Exhibit A, as adjusted over time under this Contract, for all services performed. The Contractor shall be responsible for billing and collecting funds from Residential, Multi-family, Commercial and Industrial customers in accordance with the charges listed in Exhibit “A” Service Rate Schedule. 9.3 Commencing on September 1, 2011 and on the same date annually thereafter (the “Adjustment Date”), the City Administrative Fee and the Contractor’s collection service charges (excluding disposal fees) as set forth in Exhibit A- Service Rate Schedule, as adjusted hereunder, shall be adjusted by 10090% of the annual percent change in the Consumer Price Index (“CPI”) - for Seattle, Tacoma, Bremerton (1982-84 = 100) for All Urban Consumers (CPI-U) as published by the Bureau of Labor Statistics for the most recent twelve month period ending at least ninety days prior to the Adjustment Dateprevious calendar year. CPI Adjustment 9.4 Other Solid Waste Collection Services. The Contractor may occasionally provide other services related to solid waste collection in the City not specifically provided for under Exhibit A of 21 this Agreement. The Contractor shall notify the City and propose a customer rate for the service. Upon approval of the City, the Contractor may proceed to offer that service. 9.5 Pass Through of Disposal and Processing Fee Increases Periodic adjustments shall be made to Contractor’s collection rates to pass through any increase in fees for disposal of Solid Waste or any increase in fees for the processing of Recyclable Materials or Compostable Organics if such Recyclables or Compostable Organics are being processed at a third party facility not owned or operated by Contractor. . 9.6 Costs of an Uncertain Nature The Contractor’s service rates set by this Agreement are calculated to pay certain expenses and costs that are of a contingent and uncertain nature. Therefore, in addition to the annual CPI adjustment provided by Section 9.3, the Contractor’s rates under this Agreement may, upon written request of Contractor or City, which shall not be unreasonably withheld, be further adjusted on an interim basis for increased or decreased expenses associated with performance of the services hereunder due to any one or more of the following causes: (a) material changes in Contractor’s costs resulting from a Force Majeure event; (b) changes in the scope or method of services provided by Contractor, changes in the Franchise Fee, or other changes or fees required, initiated, or approved by the City; (c) any change in law, statute, rule, regulation, ordinance, order or requirement of any federal, state, regional or local government that is effective after the Effective Date of this Agreement; (d) a material increase in the volume of Solid Waste or Recyclable Materials or other materials collected by Contractor hereunder, whether caused by customer growth and/or annexation, or a material increase in the cost of diesel fuel; (f) any other extraordinary circumstances or causes or reasons that are not within the reasonable control of Contractor. If Contractor or City requests an adjustment due to the extraordinary circumstances set forth above, Contractor or City shall prepare a rate adjustment request setting forth its calculation of the increased or decreased costs and accompanying rate adjustment necessary to offset such increased or decreased costs. The City or Contractor may request any and all documentation and data reasonably necessary to evaluate such request by Contractor or City, and shall act within ninety (90) days of receipt of the request from Contractor or City to either approve or disapprove the request, provided that approval shall not be unreasonably withheld. ARTICLE X BILLING SERVICES AND CUSTOMER EDUCATION 22 10.1 Contractor shall be responsible for billing and collection of all charges, fees and taxes for the collection of Solid Waste, Recyclable Materials and Compostable Organics pursuant to this contract. Contractor shall also perform all customer service functions related to billing and responding to any customer inquiries. If City ever levies a utility tax or other gross receipts tax, Contractor agrees to collect and remit such taxes to the City without any additional charge for the administrative expense incurred in collection and remitting such taxes. Contractor Billing The City retains the right to take over responsibility for the billing of customers and the customer service functions under the Contract, at any time during the term, upon ninety (90) days written notice to Contractor. If the City exercises this option, then the Parties shall meet and confer in good faith to discuss any changes or adjustments to this Contract which may be necessary for the City to take over these billing and customer service functions, including the City’s assumption of the risk of bad debt collection. 10.2 Collection for Lien for Non-Payment – New language in draft . The Contractor may bill to customers a late payment fee, interest, NSF check charges, as well as all costs associated with bad debt collection. Contractor may suspend or terminate service to accounts that become more than sixty days past due, following fifteen days’ written notice to the customer, and/or may place a lien upon the customer’s property, in accordance with applicable law. If such service is reactivated, Contractor may charge a reactivation fee and/or may require a deposit from the customer. 10.3 Suspending Collection from Problem Customers The City and Contractor acknowledge that, from time to time, some Customers may cause disruptions or conflicts that make continued service to that Customer unreasonable. Those disruptions or conflicts may include, but not be limited to, repeated damage to Contractor-owned containers, repeated refusal to position Garbage, Recycling and Compostables Carts properly for automated collection, repeated suspect claims of timely set-out followed by demands for return collection at no charge, repeated claims of Contractor damage to a Customer’s property, or other such problems. The Contractor shall make every reasonable effort to provide service to those problem Customers. However, the Contractor may deny or discontinue service to a problem Customer if reasonable efforts to accommodate the Customer and to provide services fail. If the Customer submits a written letter to the City appealing the Contractor decision, the City may, at its discretion, intervene in the dispute. In this event, the decision of the City shall be final. The City may also require the denial or discontinuance of service to any Customer who is abusing the service or is determined to be ineligible. 10.4 Promotion and Education The City shall have primary responsibility for developing, designing and executing general waste reduction/recycling public education and outreach programs, with the assistance and cooperation of the Contractor. The Contractor shall have primary responsibility for providing service-oriented 23 information and outreach to Customers and implementing on-going recycling promotion, at the direction of the City. The Contractor shall maintain a complete list of all Multifamily Complex and Commercial Customer sites within the City Service Area, and the status of each site’s participation in Contractor- provided services. The Contractor shall annually contact , by mail or site visit,by mail the manager or owner of each site to encourage participation and inform the manager or owner of all available services and ways to decrease Garbage generation. Printed informational materials discussing waste prevention and recycling service options shall be prepared and distributed to support contact with Multifamily complex and Commercial Customer sites. This contact shall be coordinated with City and County promotional efforts. The Contractor shall include with its annual report the list of Multifamily complex and Commercial Customer sites; Garbage, Recycling and Compostables status; container sizes, service frequency, and types; Customer contact dates and outcome of such contacts; and suggestions for increasing participation or other program improvements. The Contractor shall keep the public informed of programs and encourage participation through an Annual Service Update. Each fall, the Contractor shall provide an Annual Service Update for each service sector, the format, content and timeframe of which shall be subject to prior review and approval by the City. The Annual Service Update shall be mailed to all Customers and, at a minimum, shall include an informational brochure indicating rates, all services available, preparation and other service requirements, contact information, inclement weather and other policies, a collection calendar and other useful Customer information. The Contractor shall develop, print, periodically update and maintain sufficient quantities of new Customer information materials, the format and content of which shall be subject to prior review and approval by the City. Upon approval, materials shall be mailed to every new Customer prior to the Customer’s first billing and shall, at a minimum, include a statement of applicable rules and service policies, rates, services and preparation requirements, collection days in calendar format, Contractor customer service information and City contact information. Materials shall be TTY accessible and alternative language formats upon request. The Contractor shall permit the City to insert, at no charge, single-sheet information bulletins into Customer bills twice per year. When the insert is beyond one page and increases Contractor cost, the City shall pay the incremental difference. The City shall work cooperatively with the Contractor for timely inclusion of such materials. ARTICLE XI DEFAULTS 11.1 The failure of Contractor to comply with the material terms of this Contract within ten (10) days after having received written notice by certified mail, return receipt requested, at his mailing Termination 24 address from City, and a thirty (30) day opportunity to cure such defects, shall constitute grounds for termination of the Contract at the option of the City. 11.2 As a breach of the service provided by this Contract would cause serious and substantial damage to City and its residents, and the nature of this Contract would render it impracticable or extremely difficult to fix the actual damage sustained by City by such breach, it is agreed that in case of breach of service, City may elect to collect liquidated damages for each such breach and Contractor shall pay City as liquidated damages and not as penalty, the amount set forth below, such sums being the amount which City will be damaged by the breach of such services. An election to seek such remedy shall not be construed as a waiver of any remedies City may have as to any subsequent breach of services under this Contract. Liquidated Damages A truck making Residential collection prior to 7:00 a. m, or after 6:00 p.m. without city approval per day................................................................................. $50.00 Repetition of Complaints on a route after notification to replace can or detachable container in designated locations, spilling, not closing gate, crossing planted areas, or similar violations............................................................ $25.00 Landfilling or burning uncontaminated Recyclable Material without the express written consent of the Contract Administrator per vehicle no maximum........................................................................................................... $25.00 Liquidated Damages will be reasonably applied and may be levied only if documented in an incident report presented by the City to the Contractor. The Contractor shall be notified and provided a copy of an incident report and shall be given 24 hours to cure the problem (if applicable) before Liquidated Damages are invoiced to the Contractor, except in the case of incidents for which, due to the nature of the event, a “cure” is not possible. Such liquidated damages as City shall elect to collect shall be billed to Contractor and be paid within twenty (20) days. Application of these damages may be appealed within ten (10) days by Contractor to the Contract Administrator, whose decision shall be final. Liquidated damages will not be assessed by the City for the first 60 days from the start up date but the Contractor must make every effort to minimize all complaints during the start up period. ARTICLE XII ANNEXATION 12.1 If, during the term of this Contract, additional territory is added to the City through annexation or other means and the Contractor has an existing WUTC certificate or other franchise Franchise Rights/Annexations 25 for collection at the time of annexation, the Contractor agrees by accepting this Contract from the City, that the certificate or franchise applicable to the annexed areas shall be deemed canceled on the effective date of the annexation. The Contractor shall continue to service the newly annexed areas under the terms and conditions set forth in this Contract. This Contract is in lieu of a franchise as provided in RCW 35A.14.900. The Contractor agrees that their certificate applicable to those annexation areas shall be cancelled effective the date of annexation by the City. The Contractor expressly waives and releases its right to claim any damages or compensation from the City, its officers, agents, or assigns arising out of the cancellation of any pre-existing permit or franchise held by the Contractor prior to annexation, and further specifically waives the right to receive any additional compensation or any rights of collection in the newly annexed territory. The term during which the Contractor will service any future annexation areas shall be ten (10) years, notwithstanding the term set forth in Section 1 of this Agreement. ARTICLE XIII MISCELLANEOUS 13.1 The failure of any party to enforce any contract provision is not and shall not Non-Waiver be construed as a waiver of that provision. The payment or acceptance of compensation subsequent to any breach is not and shall not be construed as an acceptance of that breach. All waivers must be in writing. 13.2 Any notices to be sent to the City shall be sent to the Contract Administrator at the following address: Notices Public Works & Utilities Director City of Arlington Public Works Building 238 N Olympic Arlington, WA Any notices sent to Waste Management of Washington, Inc shall be sent to: District Manager PO Box 12070 Mill Creek, WA 98082 13.3 If any provision of this Contract is held to be void, invalid or unenforceable under any applicable law, the remaining provisions of the Contract shall remain in effect and bind the parties. Severability 26 13.4 This Contract constitutes the entire agreement between City and Contractor, and there are no promises, conditions, terms, obligations, statements, or guarantees other than those contained herein. No modifications or amendments shall be valid unless in writing and fully executed by both parties. Entire Agreement 13.5 In the event of any action or proceeding to enforce, interpret, construe, or otherwise resolve a dispute between the parties arising from any term, condition or provision of this Contract, the prevailing party in such action or proceeding shall be entitled to recover, in addition to all other relief, from the other party, reasonable attorneys' fees incurred by the prevailing party in connection with such action or proceeding, including but not limited to any appeal thereof. Attorneys’ Fees 13.6 Contractor shall give (60) days written notice to the Contract Administrator of any change which affects the date of collection providing that no change in the terms of this Agreement may be made unless agreed to in writing by the Contract Administrator. Change in Service 13.7 This contract may not be assigned or transferred by Contractor, nor shall Contractor subcontract any part of this Contract, without the prior written consent of the City Council, as evidenced by a City Resolution and the signature of the Mayor. The City may withhold its consent to assignment or transfer of this Contract at its sole, subjective discretion. In the event of an unauthorized assignment or transfer, the City reserves the right to cancel the Contract. Notwithstanding the foregoing, Contractor may assign this Agreement to another subsidiary or corporate affiliate of Contractor. Assignment 13.8 Contractor shall not be deemed to be in default and shall not be liable for failure to perform under this Agreement if Contractor’s performance is prevented or delayed by Force Majeure. For purposes of this Agreement, the term Force Majeure shall mean any acts of God including landslides, lightning, forest fires, storms, floods, freezing and earthquakes, civil disturbances, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars, blockades, public riots, explosions, or disposal site, governmental restraint or other causes, whether of the kind enumerated or otherwise, which are not reasonably within the control of the party affected by the Force Majeure event. Force Majeure 13.9 This Contract shall be governed by the laws of the State of Washington. Venue for any action hereunder shall be in SNOHOMISH County Superior Court. Applicable Law / Venue 13.10 The parties agree and acknowledge that Contractor is an independent Contractor and not an agent or employee of the City, and that no liability shall attach to the City as a result of the acts or omissions of Contractor, its employees, agents, or assigns. Contractor shall have no authority to Independent Contractor 27 execute agreements or to make commitments on behalf of the City, and nothing contained in this Contract shall be deemed to create the relationship of employer and employee or principal and agent between the City and Contractor. 13.11 The parties intend that Contractor shall perform pursuant to the terms of this Contract with its own employees. However, in the event any incidental subcontractor services are necessary, Contractor agrees to be responsible for the standards of performance of any subcontractor. Contractor agrees that no subcontractor shall relieve Contractor of any obligations under this Contract. Subcontracting 13.12 Contractor acknowledges that it is responsible for the payment of any local, state, or federal taxes or fees with respect to Contractor’s agents and employees, and any taxes or licenses applicable to Contractor’s business activity. Taxes and Fees 13.13 In addition to other terms of this Contract, any or all of the following shall be considered events of default of this Contract, allowing the City to terminate the Contract if such events are not cured within 10 days of written notice: a) if Contractor petitions any court to be adjudged a bankrupt; b) if a petition in bankruptcy is filed in any court against Contractor; c) if Contractor is adjudged to be insolvent; d) if Contractor is adjudged to be bankrupt; e) if a receiver or other officer is appointed to take charge of the whole or any part of Contractor’s property or to wind up or liquidate its affairs; f) if Contractor seeks reorganization under the Federal Bankruptcy Code, as amended; or g) if Contractor admits in writing its inability to pay its debts as they become due. Insolvency; Right to Terminate Contract 13.14 The City specifically reserves the right to enact general municipal ordinances and resolutions affecting all businesses and persons in the City. Reservation of Municipal Authority 13.15 This Contract shall be binding upon the parties and their successors and assigns. Successors and Assigns 13.16 Each individual executing this Contract on behalf of a corporation represents and warrants that he/she is duly authorized to execute and deliver this Contract on behalf of the corporation. Corporate Authority 13.17 In order to have a administrative mechanism for promptly mediating customer complaints regarding billing for or the collection of garbage, recyclable materials, or yard debris, the City and the Contractor agree as follows: 1) the Contractor shall first make a good faith effort to resolve a customer’s complaint; 2) in the event the customer is not satisfied with the Contractor’s resolution, the complaint shall be forwarded to the Public Works & Utilities Director who shall resolve the complaint after discussing the matter with the customer and the Contractor. ; 3) in the event the customer or the Contractor is not satisfied with the decision of the Public Works & Utilities Dispute Resolution 28 Director, either party may appeal the decision to the Mayor of Arlington, whose decision shall be final. This administrative process shall not foreclose either the City or the Contractor from pursuing their legal or equitable remedies in Superior Court to enforce, construe or otherwise resolve a dispute between the City and the Contractor arising from any term or condition of this Contract. Agreed to as of Dated this ________ day of________________________, 2010:. City of Arlington Waste Management of Washington Inc. By: ________________________________ By: _____________________________ 29 Mayor Manager Attest: By: _____________________________________ City Clerk Approved as to form: _________________________________________ City Attorney 2009 2010 2011 2012-2020 SERVICE TOTAL TOTAL TOTAL TOTAL CLASS SERVICE FEE SERVICE FEE SERVICE FEE SERVICE FEE Percentage Increase 4.95%5.25%90% of CPI RESIDENTIAL SERVICES A. Weekly Residential Single Family 1 Can once per month 6.38$ 6.70$ 7.46$ 1 Can service (20 gal. Mini-can))8.44$ 8.86$ 9.87$ 1 Can (32 gal.)11.42$ 11.99$ 13.35$ 2 Cans 17.62$ 18.49$ 20.60$ 3 Cans 24.86$ 26.09$ 29.06$ 4 Cans 32.05$ 33.64$ 37.46$ 5 Cans 38.83$ 40.75$ 45.39$ 20 gal insert -$ 35 gal Cart 12.82$ 13.45$ 14.98$ 64 gal Cart 19.00$ 19.94$ 22.21$ 96 gal Cart 20.42$ 21.43$ 23.87$ Each additional can (32 gal)7.21$ 7.57$ 8.43$ Extra can, bag, or box (32 gal)4.68$ 4.91$ 5.47$ B. Once per month Residential Single Family 1 Can service (32 gal)6.38$ 6.70$ 7.46$ C. Single Family Recyclable Collection Rate Residential Single Family Curbside Recycling: 3.88$ 4.07$ 4.54$ D. Single Family Yard Debris Collection Rate Residential Single Family Curbside Yard Debris where service is optional: Per month for one container 9.39$ 9.85$ 10.98$ Additional 96gal Yard Debris Cart Rent per month 1.83$ 1.92$ 2.14$ E. SPECIAL COLLECTIONS Mini Can each 1.89$ 1.98$ 2.21$ Garbage Cans, bundles, or wheeled containers each 4.50$ 4.72$ 5.26$ Carry Out over 5' but under 25'0.58$ 0.61$ 0.68$ Carry Out each additional 25' or fraction thereof 0.58$ 0.61$ 0.68$ Stairs & Steps each up or down 0.05$ 0.05$ 0.06$ Overhead Obstruction each less than 8' from ground 0.58$ 0.61$ 0.68$ Sunken or elevated can or unit above or below 4'0.58$ 0.61$ 0.68$ Drive-Ins on private roads or driveways of over 125'2.33$ 2.45$ 2.72$ NOTE1 - Rates include 5.5% City Administrative Fee NOTE 2 - Rates onclude 0.30% B&O Tax increase CITY OF ARLINGTON Attachment B City of Arlington Council Agenda Bill AGENDA ITEM: ATTACHMENT C COUNCIL MEETING DATE: July 26th 2010 Workshop SUBJECT: Volunteer Program Update DEPARTMENT OF ORIGIN: Executive, Paul Ellis #4603 ATTACHMENTS: None EXPENDITURES REQUESTED: None BUDGET CATEGORY: None LEGAL REVIEW: None DESCRIPTION: We are working to expand the volunteer program and provide new opportunities for people interested in donating their time and skills in our community. We are currently working on three additional to the volunteer program. They are; Neighborhood Groups, is a program that will combine crime prevention efforts of Block Watch with outreach from Emergency Management. Adopt-a-Park program is based on the premise that citizens make a difference in ensuring that every City park, playground, or natural area is clean, safe and well maintained. By adopting a park, citizens and civic organizations can make a difference in the way a park looks and operates. Groups will commit to providing labor and basic hand tools necessary to maintain a park four times per year. The City will provide the needed supplies. Park Host would be an opportunity for an individual or couple to be a greeter in the park while acting as evening security and providing small maintenance to the park. This program may not be available in all parks and requires some infrastructure development that could be scheduled into future park projects. HISTORY: We have been utilizing volunteers for many projects over the past years. In 2009 the city expanded the program with the goal of creating a sustainable program providing more volunteer opportunities with greater diversity. Currently the city has 4 volunteer Interns throughout the city departments, 18 volunteers working in the Police Department and about 25 people or groups that volunteer on various park and community projects through the year. COMMITTEE REVIEW AND ACTION: City of Arlington Council Agenda Bill ALTERNATIVES: RECOMMENDED ACTION: No Action City of Arlington Council Agenda Bill AGENDA ITEM: ATTACHMENT D COUNCIL MEETING DATE: July 26, 2010 workshop meeting SUBJECT: 2010 Bond Financing DEPARTMENT OF ORIGIN: Executive/Finance CONTACT: Allen Johnson, 403-3443 Jim Chase, 403-3422 ATTACHMENTS: 1. Preliminary Official Statement 2. Draft Bond Ordinance EXPENDITURES REQUESTED: Refinance 2001 LTGO Sell additional Bonds to Remodel Fire Stat. 46 and purchase land at the airport. BUDGET CATEGORY: Debt LEGAL REVIEW: Foster Pepper (Bond Council) prepared the draft ordinance DESCRIPTION: It is advantageous to refinance the 2001 Limited Tax General Obligation Bonds to take advantage of current low interest rates. Additional funds are needed to fund the remodel of Fire Station 46 and to purchase land at the airport in the Runway Protection Zone. This item was previously discussed at the June 14, 2010 workshop meeting. HISTORY: Jane Towery, Managing Director with Piper Jaffray & Co., has determined the City could save approximately $125,000 in interest payments over the next 11 years by refinancing the 2001 LTGO Bonds. The 2001 Bonds pay interest at 4.25% to 4.90%. It is estimated by refinancing the rates would be between 2.00% to 4.00%. New money, to finance the fire station remodel, would pay interest up to 4.50% in the later years (20 year financing) but would be structured to allow early for redemption. The FAA will be providing assistance with the airport land in the form of a grant. That grant, however, will not be available until 2013. Included in the language is the ability also to pay this portion off early. Jane Towery originally directed the 2001 LTGO bond sales. She was with Bank of America Securities LLC at that time. City of Arlington Council Agenda Bill ALTERNATIVES: 1. Table for additional review 2. Do not refinance 2001 LTGO Issue 3. Only finance the fire station remodel and airport land through bonds or loans with the possibility of higher interest payments. RECOMMENDED ACTION: No action at this time. This will be submitted at the August 2, 2010 meeting for approval. PRELIMINARY OFFICIAL STATEMENT DATED JULY __, 2010 NEW ISSUE RATING: Requested (Moody’s) BANK QUALIFIED BOOK-ENTRY ONLY In the opinion of Bond Counsel, under existing federal law and assuming compliance with applicable requirements of the Internal Revenue Code of 1986, as amended (the “Code”) that must be satisfied subsequent to the issue date of the Bonds, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals. However, while interest on the Bonds also is not an item of tax preference for purposes of the alternative minimum tax applicable to corporations, interest on the Bonds received by corporations is taken into account in the computation of adjusted current earnings for purposes of the alternative minimum tax applicable to corporations, interest on the Bonds received by certain S corporations may be subject to tax, and interest on the Bonds received by foreign corporations with United States branches may be subject to a foreign branch profits tax. Receipt of interest on the Bonds may have other federal tax consequences for certain taxpayers. See the caption “TAX EXEMPTION” herein. CITY OF ARLINGTON, WASHINGTON $5,555,000* Limited Tax General Obligation and Refunding Bonds, Series 2010 DATED: Date of Delivery DUE: December 1, as shown on inside cover The City of Arlington, Washington (the “City”) Limited Tax General Obligation and Refunding Bonds, Series 2010 (the “Bonds”) will be issued in fully registered form and when issued, will be registered in the name of Cede & Co., as bond owner and nominee for The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Bonds. The Bonds will be initially issued in book-entry form only in the denomination of $5,000 or any integral multiple thereof within a single maturity. Purchasers will not receive certificates representing their interest in the Bonds purchased. The Bonds will bear interest payable on December 1, 2010 and semiannually thereafter on June 1 and December 1 of each year, to the maturity or prior redemption of the Bonds. The principal of and interest on the Bonds are payable by the fiscal agency of the State of Washington, currently, The Bank of New York Mellon, New York, New York (the “Fiscal Agent” or “Bond Registrar”). For so long as the Bonds remain in a “book-entry only” transfer system, the Bond Registrar will make such payments only to DTC, which will in turn remit such principal and interest to the DTC participants for subsequent disbursement to Beneficial Owners of the Bonds. See Appendix C - “DTC & BOOK-ENTRY SYSTEM” hereto. The Bonds are subject to redemption prior to maturity. See ‘DESCRIPTION OF THE BONDS – Redemption Provisions” herein. MATURITY SCHEDULE - SEE INSIDE COVER The Bonds are limited tax general obligations of the City. The full faith, credit and resources of the City are pledged irrevocably for the annual levy and collection of property taxes within the constitutional and statutory limitations provided by law without a vote of the electors, in an amount sufficient, together with other money legally available to be used therefor, to pay when due the principal of and interest on the Bonds. The Bonds do not constitute a debt or indebtedness of the State of Washington or any political subdivision thereof other than the City. The City has designated the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See “TAX EXEMPTION” herein. The Bonds are offered by the Underwriter when, as and if issued, with the approving legal opinion of Foster Pepper PLLC, Bond Counsel, Seattle, Washington. It is expected that the Bonds in book-entry form will be ready for delivery through the facilities of DTC in New York, New York, by Fast Automated Securities Transfer, on or around August 18, 2010. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. *Preliminary, subject to change. TThhiiss iiss aa PPrreelliimmiinnaarryy OOffiicciiaall SSttaatteemmeenntt aanndd tthhee iinnfoorrmmaattiioonn ccoonnttaaiinneedd hheerreeiinn iiss ssuubbjjeecctt ttoo ccoommpplleettiioonn oorr aammeennddmmeenntt wwiitthhoouutt nnoottiiccee.. TThheessee sseeccuurriittiieess mmaayy nnoott bbee ssoolldd nnoorr mmaayy ooffeerrss ttoo bbuuyy bbee aacccceepptteedd pprriioorr ttoo tthhee ttiimmee tthhee OOffffiicciiaall SSttaatteemmeenntt iiss ddeelliivveerreedd iinn ffiinnaall ffoorrmm.. UUnnddeerr nnoo cciirrccuummssttaanncceess sshhaallll tthhiiss PPrreelliimmiinnaarryy OOffffiicciiaall SSttaatteemmeenntt ccoonnssttiittuuttee aann ooffffeerr ttoo sseellll oorr tthhee ssoolliicciittaattiioonn ooff aann ooffffeerr ttoo bbuuyy,, nnoorr sshhaallll tthheerree bbee aannyy ssaallee ooff tthheessee sseeccuurriittiieess,, iinn aann uurriissddiiccttiioonn iinn wwhhiicchh ssuucchh oo eerr,, ssoolliicciittaattiioonn oorr ssaallee wwoouulldd bbee uunnllaaww uull rriioorr ttoo rree iissttrraattiioonn oorr uuaallii iiccaattiioonn uunnddeerr tthhee sseeccuurriittiieess llaawwss oo ssuucchh uurriissddiiccttiioonn.. CITY OF ARLINGTON, WASHINGTON $5,555,000* LIMITED TAX GENERAL OBLIGATION AND REFUNDING BONDS, SERIES 2010 MATURITY SCHEDULE SERIAL BONDS Due Interest Price or Dec. 1 Amount* Rate Yield CUSIP No. (2) 2010 $30,000 042038 ___ 2011 55,000 042038 ___ 2012 325,000 042038 ___ 2013 335,000 042038 ___ 2014 345,000 042038 ___ 2015 355,000 042038 ___ 2016 370,000 042038 ___ 2017 385,000 042038 ___ 2018 405,000 042038 ___ 2019 425,000 042038 ___ 2020 435,000 042038 ___ 2021 455,000 042038 ___ 2022 55,000 042038 ___ 2023 60,000 042038 ___ 2024 65,000 042038 ___ 2025 65,000 042038 ___ TERM BONDS Due Interest Price or Dec. 1 Amount* Rate Yield CUSIP No. (2) 2020 (1) $395,000 042038 ___ 2030 (1) 610,000 042038 ___ 2030 385,000 042038 ___ (1) Subject to extraordinary call on December 1, 2013 at par plus accrued interest to the date fixed for redemption as provided in ‘DESCRIPTION OF THE BONDS – Redemption Provisions” herein. (2) Copyright © 2010 CUSIP Global Services. The CUSIP numbers are included for convenience of the holders and potential holders of the Bonds. CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by Standard and Poor’s. No assurance can be given that the CUSIP numbers for the Bonds will remain the same after the date of issuance and delivery of the Bonds. * Preliminary, subject to change. i No dealer, broker, sales representative or other person has been authorized by the City or Piper Jaffray & Co. (the “Underwriter”) to give any information or to make any representations with respect to the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. - - - - - - The information set forth or included in this Official Statement has been provided by the City and from other sources believed by the City to be reliable but is not guaranteed as to accuracy or completeness and it is not to be construed as a representation by the Underwriter. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder shall create any implication that there has been no change in the financial condition or operations of the City described herein since the date hereof. This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinions or that they will be realized. - - - - - - The Bonds have not been registered with the Securities and Exchange Commission under the Securities Act of 1933, in reliance upon a specific exemption contained in such act. The Bonds may, however, be subject to registration or qualification under the securities laws of various states, and may not be transferred in violation of such state laws. The registration or qualification of the Bonds in accordance with applicable provisions of the securities laws of the states in which the Bonds have been registered or qualified, if any, and exemption from registration or qualification in other states, shall not be regarded as a recommendation thereof. No state nor any state or federal agency has passed upon the merits of these Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. - - - - - - This Preliminary Official Statement has been “deemed final” as of its date by the City pursuant to Rule 15c2-12 of the Securities and Exchange Commission except for the omission of offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, and other terms of the Bonds depending on such matters, in accordance with Section 240.15c2-12(b)(1) of Chapter 11 of Title 17 of the Code of Federal Regulations. The City has also undertaken to provide continuing disclosure on certain matters, including annual financial information and specific material events, as more fully described herein under “CONTINUING DISCLOSURE UNDERTAKING.” ii CITY OF ARLINGTON, WASHINGTON 238 N. Olympic Avenue Arlington, WA 98223 (360) 403-3421 www.ci.arlington.wa.us* MAYOR Term Expires Margaret Larson January 1, 2012 CITY COUNCIL Member Term Expires Steve Baker, Mayor Pro Tem January 1, 2014 Richard (Dick) Butner January 1, 2012 Lynda Byrnes Sally Lien January 1, 2012 January 1, 2012 Marilyn Oertle January 1, 2012 Chris Raezer January 1, 2014 Scott Solla January 1, 2014 APPOINTED OFFICIALS Allen Johnson City Administrator James W. Chase Kristin Banfield Steve J. Peiffle David Kuhl Robert Sullenberger Jim Rankin Finance Director City Clerk City Attorney Director of Community Development Police Chief Fire Chief BOND COUNSEL Foster Pepper PLLC Seattle, Washington BOND REGISTRAR he Bank of New York Mellon New York, New Yor * The City’s website is not part of this Official Statement, and investors should not rely on information presented in the City’s website in determining whether to purchase the Bonds. This inactive textual reference to the City’s website is not a hyperlink and does not incorporate the City’s website by reference. TABLE OF CONTENTS INTRODUCTION ....................................................................................................................................................................... 1 DESCRIPTION OF THE BONDS ........................................................................................................................................... 1 Principal Amounts, Dates, Interest Rates, and Maturities .................................................................................................... 1 Form, Denomination and Registration ................................................................................................................................... 1 Authorization of Bonds............................................................................................................................................................. 1 Fiscal Agent ................................................................................................................................................................................ 1 Redemption Provisions ............................................................................................................................................................. 1 Notice of Redemption ............................................................................................................................................................... 3 Open Market Purchase .............................................................................................................................................................. 3 Failure to Redeem the Bonds ................................................................................................................................................... 3 Defeasance of the Bonds .......................................................................................................................................................... 3 Book-Entry Bonds ..................................................................................................................................................................... 3 Transfer and Exchange ............................................................................................................................................................ 3 SECURITY FOR THE BONDS ................................................................................................................................................ 4 PURPOSES AND USES OF FUNDS ....................................................................................................................................... 4 SOURCES AND USES OF FUNDS ......................................................................................................................................... 4 TAXING AUTHORITY .............................................................................................................................................................. 5 Regular Property Tax Limitations ............................................................................................................................................ 5 Assessed Value............................................................................................................................................................................ 6 Overlapping Taxing Districts ................................................................................................................................................... 6 Property Tax Rates and Tax Levies ......................................................................................................................................... 7 TAX COLLECTION .................................................................................................................................................................... 7 Tax Collection Procedures ........................................................................................................................................................ 7 Tax Collection Record .............................................................................................................................................................. 7 Collection of Other Taxes ....................................................................................................................................................... 8 Major Taxpayers ........................................................................................................................................................................ 8 AUTHORIZATION OF INDEBTEDNESS .......................................................................................................................... 9 General Obligation Indebtedness ............................................................................................................................................ 9 Limits on Amount of General Obligation Indebtedness ..................................................................................................... 9 Authorization of Short-Term Debt ......................................................................................................................................... 9 DEBT INFORMATION .......................................................................................................................................................... 10 DEBT PAYMENT RECORD .................................................................................................................................................. 12 FUTURE FINANCING ............................................................................................................................................................ 12 STATEMENT OF GENERAL FUND REVENUES AND EXPENDITURES ...................................................... 13 GENERAL FUND BUDGET OF THE CITY ................................................................................................................ 14 CITY PROFILE ..................................................................................................................................................................... 15 Government Organization .................................................................................................................................................... 15 Labor Relations ........................................................................................................................................................................ 15 Retirement Plans ...................................................................................................................................................................... 15 Other Post-Employment Benefits ........................................................................................................................................ 16 Insurance .................................................................................................................................................................................. 16 Accounting and Budgeting Policies ....................................................................................................................................... 17 Auditing of City Finances ....................................................................................................................................................... 17 Authorized Investments .......................................................................................................................................................... 17 GENERAL AND ECONOMIC INFORMATION ............................................................................................................. 18 Population ................................................................................................................................................................................ 18 Largest Employers .................................................................................................................................................................. 19 Economic Data ....................................................................................................................................................................... 19 INITIATIVE AND REFERENDUM ..................................................................................................................................... 22 TAX EXEMPTION .................................................................................................................................................................... 22 LITIGATION .............................................................................................................................................................................. 23 CONTINUING DISCLOSURE UNDERTAKING ............................................................................................................ 23 Compliance with Continuing Disclosure Undertakings ..................................................................................................... 24 BOND RATING ......................................................................................................................................................................... 24 APPROVAL OF BOND COUNSEL ...................................................................................................................................... 24 LIMITATIONS ON REMEDIES ............................................................................................................................................ 24 CONFLICTS OF INTEREST .................................................................................................................................................. 24 UNDERWRITING ..................................................................................................................................................................... 25 CONCLUDING STATEMENT .............................................................................................................................................. 25 FORM OF LEGAL OPINION................................................................................................... ............................ Appendix A 2008 AUDITED FINANCIALS.................................................................................................. ............................ Appendix B DTC & BOOK-ENTRY SYSTEM............................................................................................. ............................ Appendix C 1 PRELIMINARY OFFICIAL STATEMENT CITY OF ARLINGTON, WASHINGTON $5,555,000* Limited Tax General Obligation and Refunding Bonds, Series 2010 INTRODUCTION The City of Arlington, Washington (the “City”), a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington (the “State”), furnishes this Official Statement in connection with the offering of $5,555,000* principal amount of Limited Tax General Obligation and Refunding Bonds, Series 2010 (the “Bonds”). This Official Statement provides information concerning the City and the Bonds. DESCRIPTION OF THE BONDS Principal Amounts, Dates, Interest Rates, and Maturities The Bonds are being issued in the principal amount of $5,555,000*. The Bonds will be dated and bear interest from their date of initial delivery to the Underwriter. The Bonds will mature on the dates and in the principal amounts as set forth on the inside cover of this Official Statement. The Bonds will bear interest payable semiannually, on each June 1 and December 1, commencing December 1, 2010, at the rates set forth on the inside cover of this Official Statement. Interest on the Bonds will be computed on the basis of a 360-day year of twelve 30-day months. Form, Denomination and Registration The Bonds will be issued in fully registered form as to both principal and interest in the denomination of $5,000 each or any integral multiple thereof within a single maturity and series. The Bonds, when issued, will be registered in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Bonds. Individual purchases may be made in book-entry form only. Purchasers will not receive certificates representing their interest in the Bonds purchased. So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the registered owners or bond owners will mean Cede & Co. and will not mean the “Beneficial Owners” of the Bonds. In this Official Statement, the term “Beneficial Owner” will mean the person for which a DTC participant acquires an interest in the Bonds. See Appendix C - “DTC & BOOK-ENTRY SYSTEM” hereto. Authorization of Bonds The Bonds are issued in accordance with the provisions of the Constitution and ch. 39.36, 39.46 and 39.53 of the RCW and other applicable statutes of the State, pursuant to Ordinance No. ____ (the “Bond Ordinance”) of the City Council passed on August 2, 2010. Fiscal Agent The principal of and interest on the Bonds are payable by the fiscal agency of the State of Washington, currently The Bank of New York Mellon, in New York, New York (the “Bond Registrar”) as paying agent and registrar, to DTC, which in turn is obligated to remit such principal and interest to DTC participants for subsequent disbursement to the Beneficial Owners of the Bonds as described under “Book-Entry Bonds” and Appendix C – ‘DTC & BOOK-ENTRY SYSTEM” herein. Redemption Provisions Optional Redemption – The Bonds maturing on or after December 1, 2020 are subject to redemption prior to their stated maturity dates, at the option of the City, at any time on or after June 1, 2020, as a whole or in part (within one or more maturities selected by the City and randomly within a maturity in such manner as the Bond Registrar shall determine), at par plus accrued interest to the date fixed for redemption. ____________________ *Preliminary; subject to change. 2 Extraordinary Call – The Term Bond maturing on December 1, 2020 in the amount of $395,000(1) and the Term Bond maturing on December 1, 2030 in the amount of $610,000(1) are subject to extraordinary call prior to their stated maturity dates, at the option of the City, at any time on or after December 1, 2013, as a whole or in part, at par plus accrued interest to the date fixed for redemption solely from federal grants received for the purchase of land for the airport. Mandatory Redemption – The Term Bond maturing on December 1, 2020 in the amount of $395,000(1) is subject to mandatory redemption prior to maturity at the redemption price of 100% of the principal amount thereof (without premium) plus accrued interest to the date fixed for redemption, on December 1, in the years and in the amounts set forth below: 2020 Term Bond Due December 1 Mandatory Redemption (1) Due December 1 Mandatory Redemption (1) 2011 $35,000 2016 $40,000 2012 35,000 2017 40,000 2013 35,000 2018 45,000 2014 35,000 2019 45,000 2015 40,000 2020 * 45,000 _____________________ * Maturity (1) Preliminary, subject to change. The Term Bond maturing on December 1, 2030 in the principal amount of $610,000(1) is subject to mandatory redemption prior to maturity at the redemption price of 100% of the principal amount thereof (without premium) plus accrued interest to the date fixed for redemption, on December 1, in the years and in the amounts set forth below: 2030 Term Bond Due December 1 Mandatory Redemption (1) Due December 1 Mandatory Redemption (1) 2021 $50,000 2026 $60,000 2022 50,000 2027 65,000 2023 55,000 2028 70,000 2024 55,000 2029 70,000 2025 60,000 2030 * 75,000 _____________________ * Maturity (1) Preliminary, subject to change. The Term Bond maturing on December 1, 2030 in the principal amount of $385,000(1) is subject to mandatory redemption prior to maturity at the redemption price of 100% of the principal amount thereof (without premium) plus accrued interest to the date fixed for redemption, on December 1, in the years and in the amounts set forth below: 2030 Term Bond Due December 1 Mandatory Redemption (1) 2026 $70,000 2027 2028 2029 75,000 75,000 80,000 2030*85,000 _____________________ * Maturity (1) Preliminary, subject to change. If the City redeems under the optional redemption provisions, purchases in the open market or defeases Term Bonds, the principal amount of the Term Bonds so redeemed, purchased or defeased (irrespective of their actual redemption or purchase prices) will be credited against one or more scheduled mandatory redemption amounts for those Term Bonds. For so long as the Bonds are in book-entry form, the selection of Bonds within a maturity to be redeemed and the manner of providing notice of redemption to beneficial owners shall be governed by the Letter of Representation between the City and DTC. If less than all of the principal amount of any Bond is redeemed, upon surrender of that Bond at either of the principal offices of the Bond Registrar, there will be issued to the registered owner, without charge, a new Bond or Bonds, at the option of the registered owner, of the same maturity and interest rate in any of the denominations authorized by the Bond Ordinances. 3 Notice of Redemption So long as the Bonds are in book-entry only form, the Fiscal Agent will notify DTC of an early redemption not less than 30 days prior to the date fixed for redemption, and will provide such information as required by the Letter of Representations between the City and DTC. During any period in which the Bonds are not in book-entry form, unless waived by an owner of the Bonds to be redeemed, notice of any intended redemption of Bonds will be given by the Fiscal Agent on behalf of the City not less than 30 nor more than 60 days prior to the date fixed for redemption by first-class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice, as described in the Bond Ordinances. Interest on Bonds called for redemption will cease to accrue on the date fixed for redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the call. Open Market Purchase The City has reserved the right and option to purchase any or all of the Bonds in the open market at any time at any price acceptable to the City plus accrued interest to the date of purchase. Failure to Redeem the Bonds If any Bond is not redeemed when properly presented at its maturity or call date, the City will pay interest on that Bond at the same rate provided on the Bond from and after its maturity or call date until that Bond is paid in full or until sufficient money for its payment in full is on deposit in a special account created by the City for such purpose. Defeasance of the Bonds If money and/or direct obligations (as defined in chapter 39.53 RCW) are irrevocably set aside in a special account of the City to effect redemption and retirement of all or a portion of the Bonds, and such amounts (including interest earning thereon) are pledged for such purpose, then no further payments need be made into the bond redemption fund of the City for the payment of the principal of and interest on the Bonds, and such Bonds shall cease to be entitled to any lien, benefit or security of the Bond Ordinance except the right to receive the moneys so set aside and pledged, and such Bonds shall be deemed not to be outstanding. Book-Entry Bonds DTC will act as securities depository for the Bonds. The ownership of one fully registered Bond for each maturity of the Bonds, as set forth on the inside cover of this Official Statement, each in the aggregate principal amount of such maturity, will be registered in the name of Cede & Co., as nominee for DTC. See Appendix C – “BOOK-ENTRY TRANSFER SYSTEM.” Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the persons for whom they act as nominees with respect to the Bonds in respect of the accuracy of any records maintained by DTC (or any successor depository) or any DTC participant, the payment by DTC (or any successor depository) or any DTC participant of any amount in respect of the principal of or interest on Bonds, any notice which is permitted or required to be given to registered owners under the Bond Ordinances (except such notices as are required to be given by the City to the Bond Registrar or to DTC (or any successor depository)), or any consent given or other action taken by DTC (or any successor depository) as the registered owner. For so long as any Bonds are held in fully immobilized form under the Bond Ordinance, DTC or its successor depository will be deemed to be the registered owner for all purposes thereunder, and all references therein to the registered owners will mean DTC (or any successor depository) or its nominee and will not mean the owners of any beneficial interest in such Bonds. In the event that the Bonds are no longer in fully immobilized form, interest on the Bonds shall be paid by check or draft mailed to the registered owners at the addresses for such registered owners appearing on the Bond Register on the 15th day of the month preceding the interest payment date, and principal of the Bonds will be payable upon presentation and surrender of such Bonds by the registered owners at the principal office of the Bond Registrar. Transfer and Exchange Neither the City nor the Bond Registrar shall be required to transfer or exchange Bonds from the record date next preceding an interest payment date of the Bonds through and including such interest payment date or from the record date next preceding any selection of Bonds to be redeemed or thereafter until the first mailing of any notice of redemption, or to transfer or exchange any Bonds called for redemption. For purposes hereof, record date shall mean in the case of each interest payment date, the Bond Registrar’s close of business on the 15th day of the month immediately preceding such interest payment date, and, in the case of each redemption, such record date shall be specified by the Bond Registrar in the notice of redemption, provided that such record date shall not be less than 15 calendar days before the mailing of such notice of redemption. 4 For every transfer and exchange of the Bonds, the Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto, and any reasonable fees and expenses of the Bond Registrar and costs incurred in preparing bond certificates. SECURITY FOR THE BONDS The Bonds are limited tax general obligation bonds of the City and are secured by the full faith, credit and resources of the City. The City, as authorized by state law and the Bond Ordinance, has pledged irrevocably for the annual levy and collection of property taxes within the constitutional and statutory limitations provided by law without a vote of the electors, in an amount sufficient, together with other money legally available therefor, to pay principal of and interest on the Bonds. There are limits on the amount of taxes the City can levy. See “TAXING AUTHORITY.” The City anticipates receiving a $1,000,000 federal grant from the Federal Aviation Administration (FAA) within three years to repay a portion of the Bonds. The rights and remedies of anyone seeking enforcement of the Bonds are subject to applicable bankruptcy or insolvency laws or other similar laws generally affecting creditors’ rights and principles of equity if equitable remedies are sought. The Bonds are not a debt or indebtedness of Snohomish County, the State or any political subdivision thereof other than the City. PURPOSE AND USE OF PROCEEDS The Bonds are being issued for the purpose of providing a portion of the funds to pay the cost of purchasing airport land, remodeling Fire Station #46, to advance refund the City’s outstanding Limited Tax General Obligation Bonds, Series 2001 (the “Refunded Bonds”), and to pay costs of issuance. See “Refunding Plan” below. Refunding Plan Depending on market conditions, upon issuance of the Bonds, certain proceeds of the Bonds, together with other money of the City, will be deposited with U.S. Bank National Association, the Refunding Trustee, and held in cash or used to acquire Acquired Obligations in an amount sufficient to pay the principal of and interest on the 2001 Bonds when due on October 1, 2011. The following table provides a listing of the Refunded Bonds. Maturity Years Principal Interest Call Call CUSIP No. (October 1) Amounts Rates Date Price (%) (042038) 2012 - 2021 $3,375,000 4.25 - 4.90% 10/01/11 100% AW9, AX7, AY5, AZ2, BA6 BB4, BC2, BD0, BE8, BF5 Verification of Mathematical Calculations Grant Thornton LLP, independent certified public accountants, will verify the accuracy of the mathematical computations concerning the adequacy of the maturing principal amounts of and interest earned on the Acquired Obligations, to be placed together with other escrowed money in the escrow account to pay when due pursuant to the call for redemption, the principal of and interest on the Refunded Bonds. The verification will also confirm the mathematical computations supporting the conclusion of Bond Counsel that the Bonds are not “arbitrage bonds” as defined by Section 148 of the Code. SOURCES AND USES OF FUNDS Sources of Funds Par Amount of Bonds $5,555,000* Original Issue Premium ________ Total Sources of Funds $_______ Uses of Funds Project Fund $ Refund 2001 Bonds Issuance Expenses and Underwriter's Discount ________ Total Uses of Funds $_______ ______________________ * Preliminary; subject to change 5 TAXING AUTHORITY The following and the next section ‘TAX COLLECTION” provide a general description of the City’s taxing authority and limitations, the method of determining the assessed value of real and personal property, tax collection procedures, and tax collection information. The City is authorized to levy both “regular” property taxes and “excess” property taxes. Regular property taxes, such as the taxes pledged to the payment of the Bonds, are subject to constitutional and statutory limitations as to rates and amounts and commonly are imposed by taxing districts for general municipal purposes, including the payment of debt service on limited tax general obligation indebtedness, such as the Bonds. Regular property taxes do not require voter approval except as described below. Excess property taxes, such as the taxes levied for the payment of voted bonds, are not subject to limitation as to rates or amounts but must be authorized by a 60 percent approving popular vote, as provided in Article VII, Section 2, of the State Constitution and RCW 84.52.052. To be valid, such popular vote must have a minimum voter turnout of 40 percent of the number who voted at the last City general election, except that one-year excess tax levies also are valid if the turnout is less than 40 percent and the measure receives a number of affirmative votes equal to or greater than 24 percent of the number who voted at the last City general election. Excess levies may be imposed without a popular vote when ordered by a court to prevent impairment of the obligations of contracts. Regular Property Tax Limitations The authority of a city to levy taxes without a vote of the people for general city purposes, including the payment of debt service on limited tax general obligation indebtedness, such as the Bonds, is subject to the limitations described below. Information relating to regular property tax limitations is based on existing statutes and constitutional provisions. Changes in such laws could alter the impact of other interrelated tax limitations on the City. Maximum Rate Limitation. Title 84 RCW authorizes the imposition of regular tax levies with various statutory maximum levy rates (see “Overlapping Taxing Districts” herein). RCW 84.52.043 allows a city to levy taxes of up to $3.375 per $1,000 of taxable property in the city and RCW 41.16.060 allows an additional $0.225 per $1,000, for any municipal purpose, if not required to fund pension programs. These taxes may be levied without a vote of the people. This limitation is exclusive of a levy for the maintenance of a local improvement guaranty fund. The One Percent Aggregate Regular Levy Limitation. Article VII, Section 2 of the Washington Constitution, as amended in 1973, limits aggregate regular property tax levies by the State and all overlapping taxing districts, except port districts and public utility districts, to one percent of the true and fair value of property. RCW 84.52.050 provides the same limitation by statute. $5.90/$1,000 Aggregate Regular Levy Limitation. Within the one percent limitation described above, RCW 84.52.043(2) imposes an aggregate limitation on regular tax levies by all taxing districts, other than the State, of $5.90/$1,000 of assessed value, except levies for any port or public utility district; excess levies authorized in Article VII, Section 2 of the State Constitution; and certain levies for acquiring conservation futures, for emergency medical services or care, to finance affordable housing, for criminal justice purposes, and portions of certain levies imposed by metropolitan park districts, ferry districts and fire protection districts, and for certain county purposes. Uniformity Requirement. Article VII, Section 1 of the Washington Constitution requires that property taxes be levied at a uniform rate upon the same class of property within the territorial limits of a taxing district levying such taxes. It is possible because of different overlapping taxing districts in different areas of the City that the maximum permissible levy under the aggregate levy limit (described above) might vary within the City. In that event, to comply with the constitutional requirement for uniformity of taxation, the lowest permissible rate for any part of the City would be applied to the entire City. Prioritization of Levies. RCW 84.52.010 provides that if aggregate levies certified by all taxing districts exceed the aggregate levy limitations described above, levies certified by junior taxing districts are reduced or eliminated in order to bring the aggregate levy into compliance with the statutory maximum prescribed by RCW 84.52.050 and 84.52.043. RCW 84.52.043 defines “junior taxing districts” as all taxing districts other than the state, counties, road districts, cities, towns, port districts, and public utility districts. The tax levy for unlimited general obligation bonds is a special excess levy approved by the voters and, as such, is not subject to the limitations on regular levies described above. The Levy Increase Limitation. The regular property tax increase limitation, chapter 84.55 RCW, limits the total dollar amount of regular property taxes levied by an individual local taxing district such as the City to the amount of such taxes levied in the highest of the three most recent years multiplied by a limit factor, plus an adjustment to account for taxes on new construction, annexations, improvements and certain other property at the previous year's rate. The limit factor is the lesser of 101 percent of the highest levy in the three previous years (excluding new construction, improvements, and certain other property) or 100 percent plus inflation, unless a greater increase amount is approved by a simple majority of the voters. 6 In addition, RCW 84.55.092 allows the property tax levy to be set at the amount that would be allowed if the tax levy for taxes due in each year since 1986 had been set at the full amount allowed under Chapter 84.55 RCW. This is sometimes referred to as “banked” levy capacity. Since the regular property tax increase limitation applies to the total dollar amount levied rather than to levy rates, increases in the assessed value of all property in the taxing district (excluding new construction, improvements and State-assessed property) which exceed the rate of growth in taxes allowed by the limit factor result in decreased regular tax levy rates, unless voters authorize a higher levy or the taxing district uses banked levy capacity. Decreases in the assessed value of all property in the taxing district (including new construction, improvements and State-assessed property) or increases in such assessed value that are less than the rate of growth in taxes imposed, among other events, may result in increased regular tax levy rates. The tax levy for unlimited tax general obligation bonds are special excess levies approved by a 60 percent majority of the voters, and as such, are not subject to the rate or amount limitations on regular levies described above. Assessed Value The Snohomish County Assessor, or equivalent thereof (the “Assessor”), determines the value of all real and personal property throughout Snohomish County (the “County”) that is subject to ad valorem taxation, except certain utility properties which are valued by the State Department of Revenue. The Assessor is an elected official whose duties and methods of determining value are prescribed and controlled by statute and by detailed regulations promulgated by the State Department of Revenue. For tax purposes, the assessed value of property is 100 percent of its market value. Three approaches may be used to determine real property value: market data, replacement cost and income generating capacity. In the County, all property is subject to revaluation every year based on market value. In addition, at least one-sixth of the real property parcels are visited for an on-site appraisal on an annual basis. The property characteristics and assessed values are listed by the Assessor on the property which is maintained in the Assessor’s office. The Assessor’s determinations are subject to revisions by the County Board of Equalization and, for certain property, subject to further revisions by the State Board of Tax Appeals. After all administrative procedures are complete, the values are certified and passed on to the Snohomish County Treasurer and the County Board of Equalization. Overlapping Taxing Districts The overlapping taxing districts within the City have the statutory power to levy regular property taxes at the following rates subject to the limitations provided by chapter 84.55 RCW and levy excess voter approved property taxes. Representative levy rates for levy code 00110 located entirely within the City, as well as the statutory levy authority of each type of potential overlapping district, are listed below. Levy code 00110 does not include all the property within the City. Representative Levy Rates Statutory Levy Authority (Per $1,000 of Assessed Value) (Per $1,000 of Assessed Value) City of Arlington $1.4448 $3.600 (1) Snohomish County 0.7823 1.800 (2) State Levy for Support Schools 1.9925 3.600 (3) Sno Isle Library 0.4000 0.500 Cascade Valley Hospital (Regular) 0.2936 0.750 Cascade Valley Hospital (Excess) 0.7297 n/a (4) Arlington School District No. 16 3.8953 n/a (5) Total rate for Snohomish County levy code 00110 $9.5382 ___________________ (1) Pursuant to RCW 84.52.043, cities and towns may levy up to $3.375 per $1,000 assessed value. In addition, a city that is annexed into a library district (such as the City) or a fire district may levy up to $3.60 per $1,000 assessed value, reduced by the levies of the library and/or fire district, RCW 84.52.769 and 84.52.712. In addition, RCW 41.16.060 authorized an additional firefighters’ pension fund levy of up to $0.225 per $1,000 assessed value to be used for pension funding purposes, if required. If not required, based on an actuarial study, this tax may be levied and used for any other municipal purpose. (2) Pursuant to RCW 84.52.043(1), a county may increase its levy from $1.80 per $1,000 to a rate not to exceed $2.475 per $1,000 for general county purposes if (i) the total levies for both the county and any road district within the county do not exceed $4.05 per $1,000 and (ii) no other taxing district has its levy reduced as a result of the increased county tax levy (3) RCW 84.52.043(1). The levy by the State shall not exceed $3.60 per $1,000 assessed value adjusted to the State equalized value in accordance with the indicated ratio fixed by the State Department of Revenue to be used exclusively for the support of the common schools. (4) Pursuant to RCW 84.52.052, a public hospital district may levy excess property taxes, which are not subject to limitation, when authorized by a 60% majority popular vote. (5) Washington school districts do not have non-voted regular levy authority. Source: Snohomish County Assessor’s Office. 7 Property Tax Rates and Tax Levies The following tables show the City’s ad valorem levy rates and dollar amounts levied since 2006. Levy Rates Collection (Dollars per $1,000 of Assessed Value) Year Regular EMS Total 2010 $1.03410 $0.41072 $1.44482 2009 0.97111 0.38532 1.35643 2008 0.97369 0.38682 1.36051 2007 1.11587 0.44374 1.55961 2006 1.25500 0.49719 1.75219 Levy Amounts Collection (Dollars per $1,000 of Assessed Value) Year Regular EMS Total 2010 $2,315,625 $919,701 $3,235,326 2009 2,239,628 888,657 3,128,285 2008 2,180,378 866,197 3,046,575 2007 2,100,395 835,250 2,935,645 2006 1,956,043 774,930 2,730,973 _____________________ Source: Snohomish County Assessor’s Office. TAX COLLECTION Tax Collection Procedures Property taxes are levied in specific amounts, and the rate for all taxes levied for all taxing districts in Snohomish County (the “County”) (including the City) are determined, calculated and fixed by the Assessor based upon the assessed valuation of the property within the various taxing districts. The Assessor extends the taxes to be levied within each taxing district upon a tax roll which contains the total amount of taxes to be so levied and collected and assigns a tax account number to each tax lot. The tax roll is delivered to the County Treasurer by January 15, who bills and collects the taxes as certified. All such taxes are due and payable on April 30 of each year, but if the amount due from a taxpayer exceeds fifty dollars, one-half may be paid then and the balance no later than October 31 of that year. Delinquent taxes are subject to interest at the rate of on percent per month until paid. In addition, a penalty of three percent will be assessed on June 1 of the year in which the tax was due; and eight percent on December 1 of the year the tax are due. The method of giving notice of payment of taxes due, accounting for the money collected, the division of the taxes among the various taxing districts, giving notice of delinquency, and collection procedures are all covered by detailed statutes. The lien for ad valorem property taxes which have been levied prior to the filing of federal tax liens is prior to such federal tax liens. In other respects, and subject to the possible “Homestead Exemption,” the lien for delinquent property taxes is prior to all other liens or encumbrances of any kind on real or personal property subject to taxation. By law, the taxing district may commence foreclosure of a tax lien on real property after three years have passed since the first delinquency. Washington State’s courts have not decided whether the Homestead Law (chapter 6.12 RCW) may give the occupying home owner a right in the forced sale of the family residence for delinquent general property taxes to retain the first $125,000 of proceeds of the sale. The State Court of Appeals has held that the homestead exemption applies to the lien for improvement district assessments. The United States Bankruptcy Court for the Western District of Washington has held that the homestead exemption applies to the lien for property taxes, while the State Attorney General has taken the position that it does not. Tax Collection Record The following is a five-year history of ad valorem tax collections for the City. Percent Collected Collection Regular Ad Valorem Year As of Year Assessed Value (1) Tax Levy of Levy 05/01/10 2010 $2,239,257,103 $3,325,326 41.97% 41.97% 2009 2,306,249,447 3,128,285 95.10 97.05 2008 2,239,293,774 3,046,575 96.22 98.21 2007 1,882,294,666 2,935,645 96.95 99.62 2006 1,558,604,815 2,730,973 97.14 99.91 _____________________ (1) Assessed valuation is based upon 100 percent of actual value. Source: Snohomish County Treasurer’s Office 8 Collection of Other Taxes In addition to its regular property tax levy, the City also collects various other taxes, including a retail sales tax (also known as a “local sales and use tax”), utility taxes and gambling taxes. A table showing historical revenue from these sources is as follows: Budget Actual Actual Actual Actual 2010 2009 2008 2007 2006 Property Tax (1) $1,900,452 $1,787,955 $1,745,916 $1,694,821 $1,564,152 Sales Tax (2) 3,304,381 3,225,973 3,748,468 4,184,622 3,987,141 Utilities Tax: Private & County (3) 1,744,751 1,689,815 1,650,254 1,347,529 1,399,415 City owned 398,000 354,996 301,385 300,812 264,051 Gambling Taxes 100,000 181,078 50,794 55,854 96,926 $7,447,584 $7,239,817 $7,496,817 $7,583,638 $7,311,685 _____________________ (1) In the 2010 budget, a total of $413,634 in property taxes were budgeted to go directly to the Capital Facilities Building Fund ($292,231) and to the Street Maintenance Fund ($121,403). Those dollars will be deposited into the General Fund and operating transfers will be provided to those funds if needed. (2) In the 2010 budget, a total of $225,298 in property taxes were budgeted to go directly to the Capital Building Facilities Fund ($195,298) and to the Equipment Replacement Fund ($30,000). Those dollars will be deposited into the General Fund and operating transfers will be provided to those funds if needed. (3) In the 2010 budget, a total of $304,237 in property taxes were budgeted to go directly to the Capital Facilities Building Fund ($69,450) and to the Street Maintenance Fund ($234,787). Those dollars will be deposited into the General Fund and operating transfers will be provided to those funds if needed. Source: City of Arlington. Local Sales and Use Tax. In addition to the State, the City imposes a sales and use tax as a percent of the selling price on any retail sale or use of tangible personal property within the City, upon which the State also imposes a sales and use tax. A portion of the total sales and use tax collected is a local tax and is returned to the city or county or certain other local jurisdictions where the sales transaction took place. The City’s sales and use tax is collected by the State Department of Revenue (the “Department”) under a contract with the City that provides for a deduction by the Department of 1% (not exceeding 2% of the tax collected) for the Department’s administration costs. Of the remaining 99%, the Department distributes 15% to the County and distributes the remaining 85% to the City for retail sales and use tax on a monthly basis. In 2009, the amount of the City’s distribution was $3,005,752. In addition to the 1% sales tax, the City receives a portion of a 1/10 of 1% sales tax for criminal justice purposes. This tax is distributed with 10% going to the County and the remaining 90% distributed to cities and the County based on population. The City received $220,861 in 2009 for this tax. Major Taxpayers The following table lists the ten largest taxpayers within the City on the basis of their 2010 assessed valuation. 2010 Percent of Collection Year Total City Taxpayer Type of Business ssessed Valuatio Assessed Valuation Brunswick Family Boat Co. Inc. Boat manufacturer $31,658,954 1.41% Senior Operations LLC Specialized military tank components 23,742,488 1.06 Lowe's Companies of 61 Retail home improvement 21,141,500 0.94 M & M Arlington LLC Retail shopping center 15,867,000 0.71 Safeway Inc. Retail grocer 15,786,324 0.70 Briar Development Co. Property management and developmen 13,015,000 0.58 Ramo Realty & Construction Property management and developmen 12,754,200 0.57 Washington Federal Savings Savings and loan association 12,735,100 0.57 Smokey Point Properties Property management 12,258,000 0.55 Cook Investments NW Indust Park LLC Financial planning and investments 11,011,300 0.49 $169,969,866 7.59%_____________________ Source: Snohomish County Assessor’s Office. 9 AUTHORIZATION OF INDEBTEDNESS The power of the City to contract debt of any kind is controlled and limited by State law. All debt must be set forth in accordance with detailed budget procedures and paid for out of identifiable receipts and revenues. The budget must be balanced for each fiscal year. It is unlawful for an officer or employee of the City to incur liabilities in excess of budgetary appropriations. General Obligation Indebtedness Under the Constitution and statutes of the State, the City may incur two types of general obligation indebtedness (including bonds). The two types are primarily differentiated by the limits on the real and personal property taxes which may be collected for the repayment of the indebtedness. Limited tax general obligation indebtedness (such as the Bonds) is payable from taxes upon all the taxable property in the City which may be imposed by the City within the limitations prescribed by State statute without a vote of the people (sometimes referred to as “non-voted debt” or “non-voted bonds” or “councilmanic bonds”). Unlimited tax general obligation indebtedness is payable from taxes without limitation as to rate or amount, imposed upon all taxable property in the City. Unlimited tax indebtedness may be incurred only after approval by 60% of the City voters at an election in which the total vote cast exceeds 40% of the votes cast at the last preceding general election of the City or State. Such unlimited tax indebtedness is sometimes referred to as “voted debt,” “voted bonds” or “unlimited tax bonds.” Bonds issued to refund outstanding general obligation indebtedness of either type may be issued without voter approval. Limits on Amount of General Obligation Indebtedness State statutes limit the total principal amount of all City general obligation indebtedness incurred for “general” purposes, both limited tax and unlimited tax, to 2.5% of the assessed value of taxable property within the City. Within this 2.5% limitation, non- voted indebtedness is further limited to 1.5% of the value of such taxable property. The City is additionally authorized to incur general obligation indebtedness for the following “special” purposes, with voter approval, in the total principal amount of up to the following percentages of the actual value of taxable property within the City: water, artificial light and sewers, 2.5%; open space and park facilities and facilities associated with economic development, 2.5%. The combination of unlimited tax and limited tax general obligation debt for all purposes cannot exceed 7.5% of the City's assessed valuation. The State statutory limits on City general obligation indebtedness described in this section are more restrictive than those contained in the State Constitution. Both the constitutional and statutory debt limits may be exceeded if necessary to meet obligations made mandatory by State law or, if necessary, to maintain the corporate existence of the City. In computing total general obligation indebtedness, the following “assets” may be deducted against the principal amount of indebtedness outstanding: (a) money and investments on deposit in general obligation bond retirement funds; (b) taxes (both current and delinquent) levied for the payment of general obligation indebtedness; and (c) delinquent (but not current) taxes due the general fund. In addition to limits on the total principal amount of general obligation indebtedness described in this section, the Constitution and statutes of the State impose other limitations on the City's levy of taxes upon real and personal property. See “TAXING POWERS AND LIMITATIONS” herein. Authorization of Short-Term Debt Any Washington municipal corporation may borrow money and issue short-term obligations, the proceeds of which may be used for any lawful purpose. Short-term obligations may be issued in anticipation of the receipt of revenues, taxes, or grants or the sale of (1) general obligation bonds if the bonds may be issued without the consent of the voters or if previously ratified by the voters; (2) revenue bonds if the bonds have been authorized by ordinance or resolution; or (3) local improvement district bonds if the bonds have been authorized by ordinance or resolution. These short-term obligations shall be repaid out of money derived from the source or sources in anticipation of which they were issued or from any money legally available for this purpose. Additionally, the City may incur short-term indebtedness in the following ways: first, in an emergency, the Council members may put a plan into effect and authorize indebtedness outside the current budget. All expenditures for emergency purpose shall be paid by warrants from any available money in the fund properly chargeable with such expenditures. If there is insufficient money on hand in the fund, the warrants become registered interest-bearing warrants. In adopting the budget for any fiscal year, the Council members shall appropriate funds to retire any outstanding registered warrants issued since the adoption of the last preceding budget. Second, the City may, without a vote of the electors, purchase property on a conditional sales contract if the total contract amount, together with the other non-voted general obligation indebtedness of the City, does not exceed 1.5% of the value of taxable property in the City; any item so purchased must be budgeted for payment in accordance with the terms of the contract. 10 DEBT INFORMATION COMPUTATION OF DEBT CAPACITY (As of August 18, 2010) Assessed Valuation for 2010 Tax Collections $2,239,257,103 General Purposes Non Voted Debt Capacity (1½ % of Assessed Value) $33,588,857 Less: Limited Tax General Obligation Bonds Outstanding (1) (12,232,487) Less: Other Outstanding Limited General Obligation Debt (2) (625,372) Less: he Bonds (3) (5,555,000) Remaining Non-Voted General Purpose Debt Capacit $15,175,998 Voted and Non Voted Debt Capacity: (2½% of Assessed Value) $55,981,428 Less: Voted Bonds Outstanding 0 Less: Limited Tax General Obligation Bonds Outstanding (1) (12,232,487) Less: Other Outstanding Limited General Obligation Debt (2) (625,372) Less: he Bonds (3) (5,555,000) Remaining Voted and Non-Voted General Purpose Debt Capacity $37,568,569 Utility Purposes Voted Debt Capacity: (2½% of Assessed Value) $55,981,428 Less: Voted Bonds Outstanding 0 Remaining Voted General Obligation Debt Capacit $55,981,428 Parks & Open Space and Economic Development Purposes Voted Debt Capacity: (2½% of Assessed Value) $55,981,428 Less: Voted Bonds Outstanding 0 Remaining Voted General Obligation Debt Capacit $55,981,428 _____________________ (1) Includes all outstanding non-voted bonds; excludes the Refunded Bonds. (2) Includes bank notes and interlocal financing agreements. (3) Preliminary; subject to change. Source: City of Arlington 11 BONDED DEBT AND OTHER OUTSTANDING OBLIGATIONS Amount Outstanding Dated Maturity Amount as of Date Date Issued 08/18/10 SECURED BY THE FULL FAITH AND CREDIT OF THE CIT Non-Voted LTGO Bonds LTGO Bonds, 2001 (1) 10/01/01 10/01/11 $4,400,000 $400,000 LTGO Bond, 2001 04/01/01 04/01/11 464,646 42,932 LTGO Bonds, 2004 05/04/04 12/01/34 7,700,000 7,700,000 LTGO Bond, 2005 01/13/05 12/30/11 346,000 81,353 LTGO Bonds, 2007 06/12/07 12/01/27 3,630,000 3,320,000 LTGO Bond, 2009 05/13/09 06/01/24 720,488 688,202 LTGO Bonds, 2010 (2) 08/18/10 12/01/30 5,555,000 5,555,000 Total LTGO Bonds (2) $22,816,134 $17,787,487 Other Obligations Secured by the General Fund Interlocal Financing Agreement, 2003 07/01/03 06/30/21 $514,238 $414,586 Bank Note, 2006 05/06/06 05/15/11 250,000 177,589 Bank Note, 2007 01/15/07 12/01/10 124,764 33,197 Total Other Obligations Secured by the General Fund (2) $889,002 $625,372 TOTAL NET DIRECT DEBT (2) $23,705,136 $18,412,859 _____________________ (1) Excludes the Refunded Bonds. (2) Preliminary; subject to change. Source: City of Arlington DIRECT AND ESTIMATED OVERLAPPING DEBT Direct Debt (as of August 18, 2010) Limited Tax General Obligation Bonds Outstanding (1) $17,787,487 Other Obligations Secured by the General Fund 625,372 Voted General Obligation Bonds Outstanding (1) 0 Net Direct Debt (1) $18,412,859 Overlapping Debt (As of May 1, 2010) Net G.O. Net 2010 Percent of Debt Overlapping Assessed Value Overlap Outstanding Debt Snohomish County $94,125,212,678 2.3790194% $350,743,342 $8,344,252 Fire District No. 19 451,967,750 7.4090839% 2,666,526 197,565 Fire District No. 21 988,883,271 0.0520587% 52,389 27 Arlington School District No. 16 3,750,321,413 46.0929298% 48,595,000 22,398,859 Lakewood School District No. 306 2,025,055,289 25.0270969% 7,930,000 1,984,649 Marysville School District No. 25 6,938,865,774 0.0549303% 111,590,000 61,297 Valley General Hospital 3,963,052,480 43.2746019% 46,165,000 19,977,720 Total Overlapping Debt $52,964,369 Total Direct and Overlapping Debt $71,377,228 _____________________ (1) Includes all outstanding non-voted and voted bonds (excluding the Refunded Bonds) and the Bonds. Preliminary, subject to change. Source: City of Arlington and King County Department of Assessments and Division of Financial Management. 12 BONDED DEBT RATIOS (Including the Bonds) 2009 Assessed Valuation for 2010 Collection $2,239,257,103 2009 City Population 17,150 Direct Debt as a Percentage of Assessed Valuation 0.82% Direct & Overlapping Debt as a Percentage of Assessed Valuation 3.19% Per Capita Assessed Valuation $130,569 Per Capita Direct Debt $1,074 Per Capita Direct & Estimated Overlapping Debt $4,162 ________________________ Source: City of Arlington and King County Treasurer Offices. SCHEDULE OF LIMITED TAX GENERAL OBLIGATION BOND DEBT SERVICE Total Princi al Interest Princi al Interest Debt Service 2010 430,732$ 286,223$ 30,000$ 75,168$ 822,123$ 2011 566,786 571,212 90,000 226,800 1,454,798 2012 223,177 552,306 360,000 224,300 1,359,783 2013 231,663 542,620 370,000 213,150 1,357,433 2014 245,327 532,557 380,000 201,700 1,359,584 2015 254,179 521,905 395,000 189,950 1,361,034 2016 263,228 509,105 410,000 174,150 1,356,483 2017 282,486 495,847 425,000 157,750 1,361,083 2018 291,963 481,620 450,000 140,750 1,364,333 2019 306,670 468,913 470,000 122,750 1,368,333 2020 316,619 455,564 480,000 103,950 1,356,133 2021 331,823 441,760 505,000 84,750 1,363,333 2022 691,063 427,289 105,000 59,500 1,282,852 2023 718,998 396,324 115,000 54,250 1,284,572 2024 723,145 363,815 120,000 48,500 1,255,460 2025 720,000 331,534 125,000 42,500 1,219,034 2026 750,000 298,678 130,000 36,250 1,214,928 2027 785,000 264,428 140,000 29,750 1,219,178 2028 585,000 228,578 145,000 22,750 981,328 2029 610,000 200,790 150,000 15,500 976,290 2030 640,000 171,205 160,000 8,000 979,205 2031 670,000 140,165 - - 810,165 2032 705,000 107,670 - - 812,670 2033 740,000 73,478 - - 813,478 2034 775,000 37,588 - - 812,588 12,857,859$ 8,901,174$ 5,555,000$ 2,232,168$ 29,546,201$ The Bonds (2) Outstandin Bonds (1) ________________________ (1) Includes all outstanding bonds, excluding the Refunded Bonds and the Bonds. (2) Preliminary; subject to change. DEBT PAYMENT RECORD The City has always promptly met principal and interest payments on outstanding bonds when due. Additionally, no refunding bonds have been issued for the purpose of preventing an impending default. FUTURE FINANCING The City does not anticipate issuing additional debt in 2010 at this time. 13 STATEMENT OF GENERAL FUND REVENUES AND EXPENDITURES (Fiscal Year Ending December 31) Unaudited Audited Audited Audited Audited 2009 2008 2007 2006 2005 Beginning Net Cash & Investments $267,121 $452,007 $547,789 $421,128 $765,662 Revenues Taxes $7,239,817 $7,496,817 $7,583,638 $7,311,685 $6,398,777 Licenses & permits 281,639 368,856 406,428 464,395 537,997 Intergovernmental 594,619 603,707 573,275 488,182 422,394 Charges for services 1,561,908 1,715,365 1,490,315 272,943 336,439 Fines & forfeits 314,546 297,204 240,813 197,752 198,394 Miscellaneous 35,480 28,398 156,717 35,795 26,062 Other Financing Sources 1,636,856 671,698 9,942 1,425,093 1,290,451 Total revenues & other sources 11,664,865 11,182,045 10,461,127 10,195,845 9,210,514 Total resources $11,931,986 $11,634,052 $11,010,916 $10,616,973 $9,976,176 Operating Expenditures General government $3,275,180 $3,359,850 $3,004,316 $2,460,728 $2,097,926 Security – persons/property 6,375,424 5,871,624 5,688,355 5,263,848 5,065,976 Physical environment 22,646 29,009 22,077 24,815 110,006 Economic environment 1,120,273 1,357,858 1,195,255 1,311,714 1,131,516 Culture & recreation 616,884 679,402 712,894 147,450 124,810 Total operating expenditures $11,410,407 $11,297,742 $10,622,898 $9,208,555 $8,530,234 Capital outlay 51,732 63,541 34,576 9,891 109,792 Total expenditures $11,462,139 $11,361,284 $10,657,473 $9,218,446 $8,640,025 Other financing uses 249,149 45,989 3,000 965,767 1,034,221 Total expenditures and other uses $11,711,288 $11,407,272 $10,660,473 $10,184,213 $9,674,246 Excess (deficit) of resources over uses $220,698 $226,780 $350,443 $432,760 $301,930 Non-revenues 255,577 310,426 305,747 298,891 298,337 Non-expenditures 276,479 270,086 204,183 181,862 179,139 Ending Net Cash & Investments $199,796 $267,121 $452,007 $549,789 $421,128 ________________________ Source: City of Arlington. 14 GENERAL FUND BUDGET OF THE CITY PROPOSED BUDGET FOR 2010 AND FINAL BUDGET 2009 (Fiscal Year Ending December 31) Proposed Final 2010 2009 Beginning fund balance (1) $940,000 $267,120 Revenues Taxes $7,447,584 $7,239,817 Licenses & permits 316,225 281,639 Intergovernmental 661,832 594,619 Charges for services 1,601,910 1,561,908 Fines & forfeitures 287,000 314,546 Miscellaneous Revenues 9,400 35,480 Other Financing Sources 114,250 1,636,857 Non-revenues 219,600 255,577 Total resources $11,597,801 $12,187,563 Operating Expenditures General government services $2,880,425 $3,275,180 Security of persons &property 6,407,614 6,375,424 Physical environment 28,500 22,646 Economic environment 947,779 1,120,273 Culture & recreation 184,393 616,884 Capital outlay 134,635 51,732 Debt service 0 0 Ending fund balance 94,974 199,796 Total expenditures $10,677,820 $11,661,935 Non-expenditures 160,000 276,479 Other financing uses 759,481 249,149 Total uses $11,597,801 $12,187,563 ________________________ (1) Estimated prior to year end. Source: City of Arlington. 15 CITY PROFILE Government Organization The City of Arlington is a non-charter, code city incorporated in 1903. The City encompasses an area of 8.2 square miles in northwestern Snohomish County along Interstate 5 and had a 2009 population of approximately 17,150. The City operates under the laws of the State of Washington applicable to a code city with a Mayor-Council form of government. City elected officials consist of the Mayor and seven council members. The six Council members are elected to four-year terms, as is the Mayor. The seventh member is at-large and elected to a two-year term. Council members serve staggered terms. The Council is responsible, among other things, for passing ordinances and resolutions, adopting the budget, appointing committees, and adopting general policies and goals for the City. The Mayor appoints, subject to Council approval, a City Administrator who serves as chief administrator of the City and oversees the entire City government under the direction of the Mayor and the policies of the Council. All City department managers report to the City Administrator. The City is a general-purpose government and provides public safety, fire prevention, street improvement, parks and recreation, health and social services, and general administrative services. In addition, the City operates facilities for water supply/treatment/distribution, sewage collection/treatment, storm water (drainage) collection and a municipal airport. Other local governments provide public education and library services. The Council holds regular meetings the first and third Mondays of each month and workshop meetings on the second and fourth Mondays, and special meetings as needed. All meetings are open to the public as provided by law and agenda items are prepared in advance. Brief resumes of the current Mayor, Council members and selected administrative officials follow. Margaret Larson, Mayor. Ms. Larson was elected Mayor in November 2003 and took office on January 1, 2004. She retired as Business Manager for the Arlington School District in 2003. She is a lifelong resident of Arlington. Her current term expires on January 1, 2012. Allen Johnson, City Administrator. Mr. Johnson was appointed as City Administrator in May, 2005. Mr. Johnson holds a Masters Degree in Administration from the University of Missouri and the University of Colorado. Mr. Johnson has worked in public administration for over 30 years in the states of Colorado, Montana and now Washington. Kristin Banfield, City Clerk. Mrs. Banfield was appointed City Clerk in November 2009. She served as City Administrator from January 2001 through June 2004, and also served as Assistant to the Administrator. She holds a Bachelor of Science, Public Administration from the University of Southern California. Jim Chase, Finance Director. Mr. Chase was appointed Finance Director in November, 2009. He was previously with the City of Pasco, Washington for over 22 years, the past 10 years as Finance Manager. He attended Whitworth College in Spokane, Washington. Labor Relations The City has 152 full-time employees (“FTEs”). Police and fire employees are represented by two bargaining units and are employed under provisions of negotiated contracts. The City enters into written bargaining agreements with each bargaining organization. Agreements contain provisions on such matters as salaries, vacation, sick leave, medical and dental insurance, working conditions, and grievance procedures. The fire union contract is in place until December 31, 2010. The police union contract is currently in negotiations with the City. That contract expired at the end of 2009. The City strives to be fair with all employees, consistent with all applicable State laws, to ensure equity, and promote labor relation policies mutually beneficial to management and employees. The City negotiates labor contracts with support from a consultant. City officials consider all current labor relations to be satisfactory. Bargaining Unit Membership Expiration Date IAFF Local 3728 (Fire) 27 12/31/10 rlington Police Officers 22 12/31/09 * ____________________ * In negotiations. Retirement Plans Substantially all full-time and qualifying part-time employees participate in one of the following statewide local government retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing, multiple- employer public employee retirement systems. Actuarial information is on a system-wide basis. Police officers and firefighters are covered by the Law Enforcement Officers and Fire Fighters Retirement System (“LEOFF”). Other City employees are covered by the Public Employees’ Retirement System (“PERS”). Contributions to the systems by both employee and employer are based upon gross wages covered by plan benefits. 16 PERS and LEOFF participants who joined the system by September 30, 1977 are Plan 1 members. Those PERS participants who joined on or after October 1, 1977 are Plan 2 members, unless they exercise an option to transfer to Plan 3. PERS participants joining on or after September 1, 2002 have the irrevocable option of choosing membership in PERS Plan 2 or PERS Plan 3. LEOFF participants who joined on or after October 1, 1977 are Plan 2 members. The City contributed $335,084 to PERS and $245,794 to LEOFF in 2009 for all of the City’s employees that are covered under PERS and LEOFF. The following tables outline the contribution rates of employees and employers under PERS and LEOFF. PERS Contribution Rates as of July 1, 2009 Plan 1 Plan 2 Plan 3 Employer (1) 5.31% 5.31% 5.31% Employee 6.00% 3.90%ariable (2) _________________ (1) Includes a 0.16% administration fee. (2) Rates vary from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member. LEOFF Contribution Rates as of July 1, 2009 Plan 1 Plan 2 Employer (1) 0.16% 5.24% Employee 0.00 8.46 State N/A 3.38 _________________ (1) Includes a 0.16% administration fee. While the City’s contributions in 2009 represent its full current liability under the Systems, any unfunded pension benefit obligations could be reflected in future years as higher contribution rates. It is expected that the contribution rates for employees and employers in the PERS Plans and PSERS Plan 2 will increase in the coming years. The State Actuary’s website (which is not incorporated into this Official Statement by reference) includes information regarding the values and funding levels of these retirement plans, including the underfunding of PERS Plan 1. Volunteer Firefighters Relief and Pension Fund. The Volunteer Firefighters Relief and Pension Fund System is a cost sharing multiple employer retirement system, which was created by the State Legislature in 1945 under Chapter 41.16 RCW. It provides pension, disability and survivor benefits. Membership in the system requires service with a fire department of an electing municipality of the State (except those employees covered by LEOFF). The system is funded through member contributions of $30 per year, employer contributions of $30 per year, and 40% of the Fire Insurance Premium Tax. Members do not earn interest on their contributions. However, they may elect to withdraw their contribution upon termination. Deferred Compensation. The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan permits employees to defer a portion of their salary until future years. The deferred compensation is not available to employees or their beneficiaries until termination, retirement, or unforeseeable emergency or upon death. Other Post-Employment Benefits The City provides lifetime medical care for six LEOFF 1 retirees, as required by Chapter 41.26 RCW. The City provides medical insurance and reimbursements for all necessary hospital, medical and nursing care expenses not payable by worker’s compensation, social security, insurance provided by another employer, other pension plan or any other similar source are covered. Medical insurance for the retirees is provided by the City’s employee medical insurance program. Direct payment is made for other retiree medical expenses not covered by standard medical plan benefits provisions. The City also pays the Medicare premium for qualifying LEOFF 1 retirees as outlined in Chapter 41 RCW. The cost of this premium of approximately $90 per month in 2009 is offset by a lower insurance premium. The City’s funding policy for these benefits is based upon pay-as- you-go financing requirements. The City’s annual required contribution for fiscal year 2009 was $99,079. Insurance The City is a member of the Washington Cities Insurance Authority (“WCIA”) of Washington and its insurance pool (the “Pool”). WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment and administrative expenses. WCIA retains the right to additionally assess the membership for any finding shortfall. WCIA offers a combination of self-insurance and standard insurance to cover liability and property risks and provides related risk management services. 17 Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police professional, public officials errors and omissions, stop gap and employee benefits liability. Limits are $4 million per occurrence in the self insured layer, $16 million per occurrence in the reinsured excess layer. The excess layer is insured by the purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $20 million per occurrence subject to aggregate and sub-limits in the excess layer. The Board of Directors determines the limits and terms of the coverage annually. Accounting and Budgeting Policies The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, as appropriate. The City's resources are allocated to and accounted for in individual funds depending on their intended purpose. Annual appropriated budgets are adopted at the fund level, except in the general fund, where expenditures are adopted at the department level. The budgets constitute the legal authority for expenditures at that level. Annual appropriations for all funds lapse at the fiscal period end. The Finance Director is authorized to transfer budgeted amounts between departments within any fund/object with departments; however, any revisions that alter the total expenditures of a fund must be approved by the City Council. The City Council approves all expenditures for payroll and claims. Auditing of City Finances Accounting systems and budgetary controls are prescribed by the Office of the State Auditor in accordance with RCW 43.09.200 and RCW 43.09.230. State statutes require audits for cities to be conducted by the Office of the State Auditor. The City complies with the systems and controls prescribed by the Office of the State Auditor and establishes procedures and records which reasonably assure safeguarding of assets and the reliability of financial reporting. The State Auditor is required to examine the affairs of cities. The City is audited annually. The examination must include, among other things, the financial condition and resources of the City, whether the laws and constitution of the State are being complied with, and the methods and accuracy of the accounts and reports of the City. The State Auditor completed the annual audit of the City’s general financial statements for the year ended December 31, 2008 and concluded that the financial statements present fairly, in all material respects, the financial position of the City as of that date. See Appendix A. The City’s year ended December 31, 2009 audit is in process. Authorized Investments Chapter 35.39 RCW limits the investment by cities and towns of its inactive funds or other funds in excess of current needs to the following authorized investments: United States bonds; United States certificates of indebtedness; bonds or warrants of the State and any local government in the State; its own bonds or warrants of a local improvement district which are within the protection of the local improvement guaranty fund law; and any other investment authorized by law for any other taxing district or the State Treasurer. Under chapter 43.84 RCW, the State Treasurer may invest in non-negotiable certificates of deposit in designated qualified public depositories; in obligations of the US government, its agencies and wholly owned corporations; in bankers’ acceptances; in commercial paper; in the obligations of the federal home loan bank, federal national mortgage association and other government corporations subject to statutory provisions and may enter into repurchase agreements. Utility revenue bonds and warrants of any city and bonds or warrants of a local improvement district are also eligible investments (RCW 35.39.030). Money available for investment may be invested on an individual fund basis or may, unless otherwise restricted by law, be commingled within one common investment portfolio. All income derived from such investment may be either apportioned to and used by the various participating funds or for the benefit of the general government in accordance with city ordinances or resolutions. Funds derived from the sale of bonds or other instruments of indebtedness will be invested or used in such manner as the authorizing ordinances, resolutions or bond covenants may lawfully prescribe. State Local Government Investment Pool. The State Treasurer’s Office administers the Washington State Local Government Investment Pool (the “LGIP”), a fund that invests money on behalf of more than 450 cities, counties and special taxing districts. The LGIP has approximately $8.5 billion under investment as of April 2010. In its management of LGIP, the State Treasurer is required to adhere, at all times, to the principles appropriate for the prudent investment of public finds. These are, in priority order, (i) the safety of principal; (ii) the assurance of sufficient liquidity to meet cash flow demands; and (iii) to attain the highest possible yield within the constraints of the first two goals. Historically, the LGIP has had sufficient liquidity to meet all cash flow demands. The LGIP, authorized by chapter 43.250 RCW, is a voluntary pool which provides its participants the opportunity to benefit from the economies of scale inherent in pooling. It is also intended to offer participants increased safety of principal and the ability to achieve a higher investment yield than would otherwise be available to them. The pool is restricted to investments with maturities 18 of one year or less, and the average life typically is less than 90 days. Investments permitted under the pool’s guidelines include U.S. government and agency securities, bankers’ acceptances, high quality commercial paper, repurchase and reverse repurchase agreements, motor vehicle fund warrants, and certificates of deposit issued by qualified Washington State depositories. Authorized Investments for Bond Proceeds. In addition to the eligible investments discussed above, bond proceeds may also be invested in mutual funds with portfolios consisting of U.S. government and guaranteed agency securities with average maturities of less than four years; municipal securities rated in one of the four highest categories; and money market funds consisting of the same, so long as municipal securities held in the fund(s) are in one of the two highest rating categories of a nationally recognized rating agency. Bond proceeds may also be invested in shares of money market funds with portfolios of securities otherwise authorized by law for investment by local governments (RCW 39.59.030). Cash Management and Investment Practices. The City adopted an investment policy in 2005. It is the policy of the City of Arlington to invest all of its surplus funds for all funds of the City to maximize yield while preserving security of principal and meeting the City’s cash flow requirements. It is the objective of the City that all funds of the City be invested in accordance with the Revised Code of Washington (RCW) Chapter 35.39, the policies of the City and written administrative procedures. The City’s investment portfolio shall be managed in a manner to attain a market rate of return throughout budgetary and economic cycles while preserving and protecting capital in the overall portfolio. Funds held for future capital projects (i.e., bond proceeds), whenever possible, are to be invested to produce enough income to offset increases in construction costs due to inflation. Where possible, prepayment funds for long-term debt service are to be invested to ensure a rate of return at least equal to the interest being paid on the bonds. As of December 31, 2009, the market value of the City’s investment portfolio totaled $21,390,136, as follows: Type of Investment Balance LGIP $11,461,060 US Government Securities 4,998,333 Certificates of Deposit 4,930,743 Total $21,390,136 GENERAL AND ECONOMIC INFORMATION Incorporated in 1903, the City is located in northern Snohomish County approximately 10 miles north of Everett and 40 miles north of Seattle. The City limits cover an area of approximately 2.2 square miles, and is roughly bounded by the Stillaguamish River and its flood plain on the north-northwest; I-5 on the west; 164th Street N.E. to 67th Avenue then 172nd Street on the south; and by SR-9 and the South Fork Stillaguamish flood plain on the east. The City of Marysville lies to the south and the Tulalip Indian Reservation to the southwest. Further east up the Stillaguamish Valley is the Town of Darrington. The City and the immediate area is primarily suburban and rural residential with supporting retail and commercial enterprises. Light industrial and manufacturing businesses are located in the central portions of the City around the city- owned Arlington Airport. Unlike many small towns, the City is an employment center with approximately 2.2 jobs per household. The City has experienced continued growth over the last twenty years, increasing in population by over 450% since 1990. Arlington’s 2009 population is 17,150 and is expected to double by 2025. People and businesses are drawn to the area by the availability of suitable property and accessibility to water and sewer services. Population Historical populations of the City and Snohomish County is shown as follows. Year City of Arlington Snohomish County 2009 17,150 704,300 2008 17,050 696,600 2007 16,720 686,300 2006 15,430 671,800 2005 14,980 655,800 ________________________ Source: Washington State Office of Financial Management. 19 Largest Employers The following tables provides a list of the major employers in the City and Snohomish County. CITY OF ARLINGTON – MAJOR EMPLOYERS Employer Service/Product Employees Cascade Valley Hospital Healthcare 430 Angel of the Winds Casino Casino and restaurant 260 Aerospace Manufacturing Aircraft parts and frames 240 Masco Services Group Corp. Dry wall contractors 200 Safeway Retail grocer 190 Weyerheuser Hardwoods Inc. Hardwood dimension – flooring mills 170 ABW Technologies Inc. Steel – structural manufacturing 150 Lowe’s Retail home improvement center 150 UPS Courier services 149 Crown Distributing Co. Inc. Wholesale beer and ale 130 SNOHOMISH COUNTY – MAJOR EMPLOYERS Employer Service/Product Employees The Boeing Co. Aircraft assembly 32,000 Naval Station Everett U.S. Military 6,000 Providence Everett Medical Center Healthcare 3,200 Premera Blue Cross Health insurer 3,200 Tulalip Tribes Enterprises Real estate, retail, gaming 3,020 Snohomish County County government 2,965 State of Washington State government 2,800 Everett School District Education 1,700 Phillips Medical Systems Ultrasound technology 1,600 VERIZON Northwest Inc. Telecommunications 1,500 _______________________ Source: Snohomish County Economic Development Council Economic Data Following are additional economic indicators for the City, Snohomish County and the State of Washington. CITY OF ARLINGTON BUILDING PERMITS Residential Commercial Total Year Value Value Value 2010 (1) $913,632 $17,387,012 $18,300,644 2009 1,246,972 13,343,133 14,590,105 2008 10,093,410 44,166,433 54,259,843 2007 16,826,880 15,495,353 32,322,233 2006 22,512,000 22,819,521 53,350,966 2005 29,205,000 8,074,747 54,035,413 ________________________ (1) Data through April 2010. Source: City of Arlington Building Department. 20 RESIDENT CIVILIAN LABOR FORCE AND EMPLOYMENT WASHINGTON STATE AND SNOHOMISH COUNTY 2010(1) 2009 2008 2007 2006 2005 State of Washington Total Labor Force 3,521,200 3,528,710 3,476,370 3,390,410 3,317,390 3,255,530 Total Employment 3,181,890 3,214,500 3,290,090 3,235,960 3,154,420 3,075,970 otal Unemployment 339,310 314,210 186,280 154,450 162,970 179,560 % of Labor Force 9.6%8.9% 5.4% 4.6% 4.9% 5.5% Snohomish County otal Labor Force 384,060 383,170 373,460 365,840 359,650 347,140 otal Employment 346,560 346,580 353,400 350,350 343,380 329,440 otal Unemployment 37,510 36,590 20,060 15,500 16,270 17,700 % of Labor Force 9.8% 9.5% 5.4% 4.2% 4.5% 5.1% ____________________ (1) Average through May 2010, most recent available. Not seasonally adjusted. Source: State of Washington Employment Security Department. NONAGRICULTURAL WAGE AND SALARY EMPLOYMENT IN SNOHOMISH COUNTY 2010(1) 2009 2008 2007 2006 2005 Mining, Logging, and Construction 16,100 17,900 22,700 25,000 22,000 19,800 Manufacturing 51,500 52,900 55,400 53,900 48,400 44,500 Trade, Transportation and Utilities 42,000 42,700 45,200 44,700 41,300 39,100 Information 4,700 4,900 5,500 5,900 5,200 4,100 Financial Activities 11,100 11,500 12,500 13,200 13,100 12,900 Professional and Business Services 19,900 20,800 22,700 23,200 20,300 19,100 Education and Health Services 26,400 26,100 25,200 24,100 22,500 21,500 Leisure and Hospitality 21,600 22,500 23,700 23,600 22,000 20,600 Other Services 8,800 9,000 9,000 8,800 8,500 9,000 Government 39,800 38,900 38,100 36,700 36,400 36,500 Total Nonfarm(2) 242,000 247,000 259,900 259,100 239,600 227,000 ______________________ (1) Average through May 2010. (2) Detail may not add to indicate totals due to rounding. Excludes proprietors, agriculture, self-employed, unpaid family, domestic workers and military. Includes all full and part-time wage and salary workers receiving pay during the period including the 12th of the month by place of work. Source: Washington State Employment Security Department, labor Market and Economic Analysis Branch TAXABLE RETAIL SALES Year City of Arlington Snohomish County 2009 2008 $334,207,270 375,108,811 $9,244,408,434 10,320,564,762 2007 439,415,449 11,209,498,657 2006 442,000,556 10,438,479,556 2005 418,005,196 9,292,804,838 _______________________ Source: Washington State Department of Revenue. 21 PERSONAL INCOME Snohomish County State of Washington Total Personal Per Capita Total Personal Per Capita ear Income (000's) Personal Income Income (000's) Personal Income 2008(1) $29,200,407 $42,610 $280,677,561 $42,747 2007 28,257,248 41,813 271,007,842 41,919 2006 25,577,967 38,542 252,022,976 39,550 2005 23,200,827 35,736 230,001,881 36,734 2004 21,632,183 33,830 222,378,678 35,959 ________________________ (1) Most recent available. Source: U.S. Department of Commerce, Bureau of Economic Analysis MEDIAN HOUSEHOLD INCOME Year Snohomish County Washington State 2009 (1) $60,353 $52,413 2008 (1) 62,071 54,086 2007 65,359 55,771 2006 66,089 56,808 2005 63,454 54,618 ______________________ (1) Figures for 2008 are estimates, figures for 2009 are projected and all are presented in current dollars. Source: Washington State Office of Financial Management. 22 INITIATIVE AND REFERENDUM Under the State Constitution, the voters of the State have the ability to initiate legislation and modify existing legislation through the powers of initiative and referendum, respectively. The initiative power in Washington may not be used to amend the State Constitution. Initiatives and referenda are submitted to the voters upon receipt of a petition signed by at least 8% (initiatives) and 4% (referenda) of the number of voters registered and voting for the office of Governor at the preceding regular gubernatorial election. Any law approved in this manner by a majority of the voters may not be amended or repealed by the Legislature within a period of two years following enactment, except by a vote of two-thirds of all the members elected to each house of the Legislature. After two years, the law is subject to amendment or repeal by the Legislature in the same manner as other laws. TAX EXEMPTION Exclusion From Gross Income. In the opinion of Bond Counsel, under existing federal law and assuming compliance with applicable requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issue date of the Bonds, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals. Continuing Requirements. The City is required to comply with certain requirements of the Code after the date of issuance of the Bonds in order to maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes, including, without limitation, requirements concerning the qualified use of Bond proceeds and the facilities financed or refinanced with Bond proceeds, limitations on investing gross proceeds of the Bonds in higher yielding investments in certain circumstances, and the requirement to comply with the arbitrage rebate requirement to the extent applicable to the Bonds. The City has covenanted in the Bond Ordinance to comply with those requirements, but if the City fails to comply with those requirements, interest on the Bonds could become taxable retroactive to the date of issuance of the Bonds. Bond Counsel has not undertaken and does not undertake to monitor the City’s compliance with such requirements. Corporate Alternative Minimum Tax. While interest on the Bonds also is not an item of tax preference for purposes of the alternative minimum tax applicable to corporations, under Section 55 of the Code, tax-exempt interest, including interest on the Bonds, received by corporations is taken into account in the computation of adjusted current earnings for purposes of the alternative minimum tax applicable to corporations (as defined for federal income tax purposes). Under the Code, alternative minimum taxable income of a corporation will be increased by 75% of the excess of the corporation's adjusted current earnings (including any tax-exempt interest) over the corporation's alternative minimum taxable income determined without regard to such increase. A corporation's alternative minimum taxable income, so computed, that is in excess of an exemption of $40,000, which exemption will be reduced (but not below zero) by 25% of the amount by which the corporation's alternative minimum taxable income exceeds $150,000, is then subject to a 20% minimum tax. A small business corporation is exempt from the corporate alternative minimum tax for any taxable year beginning after December 31, 1997, if its average annual gross receipts during the three-taxable-year period beginning after December 31, 1993, did not exceed $5,000,000, and its average annual gross receipts during each successive three-taxable-year period thereafter ending before the relevant taxable year did not exceed $7,500,000. Tax on Certain Passive Investment Income of S Corporations. Under Section 1375 of the Code, certain excess net passive investment income, including interest on the Bonds, received by an S corporation (a corporation treated as a partnership for most federal tax purposes) that has Subchapter C earnings and profits at the close of the taxable year may be subject to federal income taxation at the highest rate applicable to corporations if more than 25% of the gross receipts of such S corporation is passive investment income. Foreign Branch Profits Tax. Interest on the Bonds may be subject to the foreign branch profits tax imposed by Section 884 of the Code when the Bonds are owned by, and effectively connected with a trade or business of, a United States branch of a foreign corporation. Possible Consequences of Tax Compliance Audit. The Internal Revenue Service (the “IRS”) has established a general audit program to determine whether issuers of tax-exempt obligations, such as the Bonds, are in compliance with requirements of the Code that must be satisfied in order for the interest on those obligations to be, and continue to be, excluded from gross income for federal income tax purposes. Bond Counsel cannot predict whether the IRS will commence an audit of the Bonds. Depending on all the facts and circumstances and the type of audit involved, it is possible that commencement of an audit of the Bonds could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of its ultimate outcome. The Bonds Are “Qualified Tax-Exempt Obligations” for Financial Institutions. Section 265 of the Code generally provides that 100% of any interest expense incurred by banks and other financial institutions that is allocable to tax-exempt obligations acquired after August 7, 1986, will be disallowed as a tax deduction. However, if the tax-exempt obligations are obligations other than private activity bonds, are issued by a governmental unit that, together with all entities subordinate to it, does not reasonably anticipate issuing more than $30,000,000 of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) in the current calendar year, and are designated by the governmental unit as “qualified tax-exempt obligations,” only 20% of any interest expense deduction allocable to those obligations will be disallowed. 23 The City is a governmental unit that, together with all subordinate entities, reasonably anticipates issuing less than $30,000,000 of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) during the current calendar year, and has designated the Bonds as “qualified tax-exempt obligations” for purposes of the 80% financial institution interest expense deduction. Therefore, only 20% of the interest expense deduction of a financial institution allocable to the Bonds will be disallowed for federal income tax purposes. Reduction of Loss Reserve Deductions for Property and Casualty Insurance Companies. Under Section 832 of the Code, interest on the Bonds received by property and casualty insurance companies will reduce tax deductions for loss reserves otherwise available to such companies by an amount equal to 15% of tax-exempt interest received during the taxable year. Effect on Certain Social Security and Retirement Benefits. Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take receipts or accruals of interest on the Bonds into account in determining gross income. Other Possible Federal Tax Consequences. Receipt of interest on the Bonds may have other federal tax consequences as to which prospective purchasers of the Bonds may wish to consult their own tax advisors. LITIGATION There is no litigation of any kind now pending or, to the knowledge of the City, threatened to restrain or enjoin the issuance or delivery of the Bonds or in any manner questioning the proceedings and authority under which the Bonds are issued or affecting the ability of the City to pay the principal of or the interest on the Bonds. CONTINUING DISCLOSURE UNDERTAKING Basic Undertaking to Provide Annual Financial Information and Notice of Material Events. To assist the Underwriter in meeting the requirements of United States Securities and Exchange Commission (“SEC”) Rule 15c2-12(b)(5) (the “Rule”), as applicable to a participating underwriter for the Bonds, the City will undertake (the “Undertaking”) for the benefit of holders of the Bonds to provide or cause to be provided, either directly or through a designated agent, to the Municipal Securities Rulemaking Board (“MSRB”) in an electronic format as prescribed by the MSRB, accompanied by identifying information as prescribed by the MSRB, annual financial information and operating data of the type included in this Official Statement as generally described below (“annual financial information”); and to the MSRB timely notice of the occurrence of any of the following events with respect to the Bonds (as currently defined as follows or as redefined by MSRB in the future), if material: (i) principal and interest payment delinquencies; (ii) non payment related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or events affecting the tax exempt status of the Bonds; (vii) modifications to rights of holders of the Bonds; (viii) Bond calls (other than scheduled mandatory redemptions of Term Bonds for which notice is given pursuant to Exchange Act Release 34-23856); (ix) defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds; and (xi) rating changes. The City also will provide to the MSRB timely notice of a failure by the City to provide required annual financial information on or before the date specified below. Type of Annual Financial Information Undertaken to be Provided. The annual financial information that the City undertakes to provide will consist of (i) annual financial statements prepared (except as otherwise noted therein) in accordance with generally accepted accounting principles promulgated by the Government Accounting Standards Board, as such principles may be changed from time to time, which statements will not be audited, except however, that if and when audited financial statements are otherwise prepared and available to the City they will be provided; (ii) principal amount of outstanding Parity Bonds and debt service coverage; (iii) rates for the System and the number of customers of the System; and will be provided to the MSRB not later than the last day of the ninth month after the end of each fiscal year of the City (currently, a fiscal year ending December 31 as such fiscal year may be changed as required or permitted by State law, commencing with the City’s fiscal year ending December 31, 2010). The annual financial information may be provided in a single or multiple documents and may be incorporated by specific reference to documents available to the public on the Internet website of the MSRB or filed with the SEC. Amendment of Undertaking. The Undertaking is subject to amendment after the primary offering of the Bonds without the consent of any holder of any Bond, or of any broker, dealer, municipal securities dealer, participating underwriter, rating agency, or the MSRB, under the circumstances and in the manner permitted by the Rule and with an opinion of bond counsel. The City will give notice to the MSRB of the substance (or provide a copy) of any amendment to the Undertaking and a brief statement of the reasons for the amendment. If the amendment changes the type of annual financial information to be provided, the annual financial information containing the amended financial information will include a narrative explanation of the effect of that change on the type of information to be provided. 24 Termination of Undertaking. The City’s obligations under the Undertaking shall terminate upon the legal defeasance, prior redemption, or payment in full of all of the Bonds. In addition, the City’s obligations under the Undertaking shall terminate if those provisions of the Rule that require the City to comply with the Undertaking are invalid, have been repealed retroactively, or otherwise do not apply in respect of the Bonds for any reason, as confirmed by an opinion of nationally recognized bond counsel to the City, and the City provides timely notice of such termination to the MSRB. Remedy for Failure to Comply with Undertaking. No failure by the City or other obligated person to comply with the Undertaking will constitute a default in respect of the Bonds. The sole remedy of any holder or beneficial owner of a Bond will be to seek an order of specific performance from an appropriate court to compel the City or other obligated person to comply with the Undertaking. Compliance with Continuing Disclosure Undertakings The City has complied with all prior undertakings under the Rule. BOND RATING The City received a rating of “A_” from Moody’s Investors Service (“Moody’s”). A municipal bond rating reflects a rating agency’s current assessment of a number of factors relating to the issuer of any debt, including the likelihood of repayment of such debt, the perceived quality of management and administration of the entity, the nature and relative health of the local economy in which the issuer exists and the overall financial condition and operational controls which exist for the issuer. The existence of a bond rating does not imply a recommendation by a rating agency to purchase, sell or hold any such security, inasmuch as it does not take into account a number of subjective variables, including the market price of any such security or suitability of such security for any particular investor. A credit rating is based on current information furnished by the issuer or obtained by a rating agency from sources which it considers to be reliable. Moody’s does not perform an audit in connection with any credit rating it may assign and may, on occasion, rely on un-audited financial information. A bond rating may be changed, suspended or withdrawn as a result of changes in, or unavailability of, such information, or for other circumstances. APPROVAL OF BOND COUNSEL Legal matters incident to the authorization, issuance, and sale of the Bonds by the City are subject to the approving legal opinion of Foster Pepper PLLC, Seattle, Washington, Bond Counsel. The form of the opinion of Bond Counsel with respect to the Bonds is attached as Appendix A. The opinion of Bond Counsel is given based on factual representations made to Bond Counsel, and under existing law, as of the date of initial delivery of the Bonds, and Bond Counsel assumes no obligation to revise or supplement its opinion to reflect any facts or circumstances that may thereafter come to its attention, or any changes in law that may thereafter occur. The opinion of Bond Counsel is an expression of its professional judgment on the matters expressly addressed in its opinion and does not constitute a guarantee of result. Bond Counsel will be compensated only upon the issuance and sale of the Bonds. LIMITATIONS ON REMEDIES Any remedies available to the owners of the Bonds upon the occurrence of an event of default under the Bond Ordinance are in many respects dependent upon judicial actions, which are in turn often subject to discretion and delay and could be both expensive and time consuming to obtain. If the City fails to comply with its covenants under the Bond Ordinance or to pay principal of or interest on the Bonds, there can be no assurance that available remedies will be adequate to fully protect the interests of the owners of the Bonds. In addition to the limitations on remedies contained in the Bond Ordinance, the rights and obligations under the Bonds and the Bond Ordinance may be limited by and are subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, and other laws relating to or affecting creditors’ rights, to the application of equitable principles, and to the exercise of judicial discretion in appropriate cases. The opinion to be delivered by Foster Pepper PLLC, as Bond Counsel, concurrently with the issuance of the Bonds, will be subject to limitations regarding bankruptcy, insolvency, and other laws relating to or affecting creditors’ rights. The various other legal opinions to be delivered concurrently with the issuance of the Bonds will be similarly qualified. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix A. CONFLICTS OF INTEREST Some or all of the fees of the Underwriter and Bond Counsel are contingent upon the issuance and sale of the Bonds. Furthermore, Bond Counsel from time to time serves as counsel to the Underwriter with respect to issuers other than the City and transactions other than the issuance of the Bonds. None of the council members or other officers of the City have interests in the issuance of the Bonds that are prohibited by applicable law. 25 UNDERWRITING The Underwriter has agreed, subject to certain conditions, to purchase all of the Bonds at a price of $_________. The Underwriter has represented that the Bonds will be reoffered at the prices or yields set forth on the inside cover hereof, and such initial offering prices may be changed from time to time by the Underwriter. After the initial public offering, the public offering prices may be varied from time to time. The Underwriter has entered into an agreement (the “Distribution Agreement”) with Advisors Asset Management, Inc. (“AAM”), for the distribution of certain municipal securities offerings allocated to the Underwriter at the original offering prices. Under the Distribution Agreement, if applicable to the Bonds, the Underwriter will share with AAM a portion of the fee or commission, exclusive of management fees, paid to the Underwriter. CONCLUDING STATEMENT All estimates, assumptions, statistical information and other statements contained herein, while taken from sources considered reliable, are not guaranteed by the City or the Underwriter. So far as any statement herein includes matters of opinion, or estimates of future expenses and income, whether or not expressly so stated, they are intended merely as such and not as representations of fact. The information contained herein should not be construed as representing all conditions affecting the City or the Bonds. Additional information may be obtained directly from the City or the Underwriter. The foregoing statements relating to the Bond Ordinances and other documents are in all respects subject to and qualified in their entirety by provisions of such documents. This Official Statement, starting with the cover page and all subsequent pages, including any appendices, comprise the entire Official Statement, which has been approved by the City. The City has represented to the Underwriter that the portions of this Official Statement directly pertaining to the City neither contain any misrepresentation of material fact nor omit any material fact necessary to understand the financial, economic or legal nature of the City or any information presented herein. CITY OF ARLINGTON, WASHINGTON By ____________________________________ Authorized Representative APPENDIX A FORM OF LEGAL OPINION TEL: 206.447.4400 FAX: 206.447.9700 1111 THIRD AVENUE, SUITE 3400 SEATTLE, WASHINGTON 98101‐3299 WWW.FOSTER.COM SEATTLE WASHINGTON SPOKANE WASHINGTON 51076424.1 [FORM OF APPROVING LEGAL OPINION] City of Arlington, Washington Re: City of Arlington, Washington, $____________ Limited Tax General Obligation and Refunding Bonds, 2010 We have served as bond counsel to the City of Arlington, Washington (the “City”), in connection with the issuance of the above referenced bonds (the “Bonds”), and in that capacity have examined such law and such certified proceedings and other documents as we have deemed necessary to render this opinion. As to matters of fact material to this opinion, we have relied upon representations contained in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. The Bonds are issued by the City pursuant to Ordinance No. ______ (the “Bond Ordinance”) to provide the funds to pay a part of the cost of purchasing airport land, remodeling Fire Station #46, to advance refund a portion of the City’s outstanding Limited Tax General Obligation Bonds, 2001 and to pay the costs of issuance and sale of the Bonds, all as set forth in the Bond Ordinance. Reference is made to the Bonds and the Bond Ordinance for the definitions of capitalized terms used and not otherwise defined herein. We have not been engaged to review and thus express no opinion concerning the completeness or accuracy of any official statement, offering circular or other sales or disclosure material relating to the issuance of the Bonds or otherwise used in connection with the Bonds. Under the Internal Revenue Code of 1986, as amended (the “Code”), the City is required to comply with certain requirements after the date of issuance of the Bonds in order to maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes, including, without limitation, requirements concerning the qualified use of Bond proceeds and the facilities financed or refinanced with Bond proceeds, limitations on investing gross proceeds of the Bonds in higher yielding investments in certain circumstances and the arbitrage rebate requirement to the extent applicable to the Bonds. The City has covenanted in the Bond Ordinance to comply with those requirements, but if the City fails to comply with those requirements, interest on the Bonds could become taxable retroactive to the date of issuance of the Bonds. We have not undertaken and do not undertake to monitor the City’s compliance with such requirements. City of Arlington, Washington _____________, 2010 Page 2 51076424.1 Based upon the foregoing, as of the date of initial delivery of the Bonds to the purchaser thereof and full payment therefor, it is our opinion that under existing law: 1. The City is a duly organized and legally existing code city under the laws of the State of Washington; 2. The Bonds have been duly authorized and executed by the City and are issued in full compliance with the provisions of the Constitution and laws of the State of Washington and the ordinances of the City relating thereto; 3. The Bonds constitute valid and binding general obligations of the City payable from annual ad valorem taxes to be levied within the constitutional and statutory tax limitations provided by law without a vote of the electors of the City on all of the taxable property within the City, except only to the extent that enforcement of payment may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights and by the application of equitable principles and the exercise of judicial discretion in appropriate cases; and 4. Assuming compliance by the City after the date of issuance of the Bonds with applicable requirements of the Code, the interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals; however, while interest on the Bonds also is not an item of tax preference for purposes of the alternative minimum tax applicable to corporations, interest on the Bonds received by corporations is to be taken into account in the computation of adjusted current earnings for purposes of the alternative minimum tax applicable to corporations, interest on the Bonds received by certain S corporations may be subject to tax, and interest on the Bonds received by foreign corporations with United States branches may be subject to a foreign branch profits tax. We express no opinion regarding any other federal tax consequences of receipt of interest on the Bonds. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. We bring to your attention the fact that the foregoing opinions are expressions of our professional judgment on the matters expressly addressed and do not constitute guarantees of result. Respectfully submitted, FOSTER PEPPER PLLC APPENDIX B 2008 AUDITED FINANCIALS Washington State Auditor’s Office Financial Statements and Federal Single Audit Report City of Arlington Snohomish County Audit Period January 1, 2008 through December 31, 2008 Report No. 1002197 Issue Date September 28, 2009 Olympia, Washington 98504-0021 (360) 902-0370 TDD Relay (800) 833-6388 FAX (360) 753-0646 http://www.sao.wa.gov September 28, 2009 Mayor and City Council City of Arlington Arlington, Washington Report on Financial Statements and Federal Single Audit Please find attached our report on the City of Arlington’s financial statements and compliance with federal laws and regulations. We are issuing this report in order to provide information on the City’s financial condition. Sincerely, BRIAN SONNTAG, CGFM STATE AUDITOR Table of Contents City of Arlington Snohomish County January 1, 2008 through December 31, 2008 Federal Summary ....................................................................................................................... 1 Schedule of Prior Federal Audit Findings and Questioned Costs ................................................ 3 Schedule of Prior Audit Findings ................................................................................................. 4 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters in Accordance with Government Auditing Standards ........................................................................................................................ 5 Independent Auditor’s Report on Compliance with Requirements Applicable to its Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 .............................................................................................................................. 7 Independent Auditor’s Report on Financial Statements ............................................................... 9 Financial Section ....................................................................................................................... 11 Federal Summary City of Arlington Snohomish County January 1, 2008 through December 31, 2008 The results of our audit of the City of Arlington are summarized below in accordance with U.S. Office of Management and Budget Circular A-133. FINANCIAL STATEMENTS An unqualified opinion was issued on the financial statements. Internal Control Over Financial Reporting: Significant Deficiencies: We reported no deficiencies in the design or operation of internal control over financial reporting that we consider to be significant deficiencies. Material Weaknesses: We identified no significant deficiencies that we consider to be material weaknesses. We noted no instances of noncompliance that were material to the financial statements of the City. FEDERAL AWARDS Internal Control Over Major Programs: Significant Deficiencies: We reported no deficiencies in the design or operation of internal control over major federal programs that we consider to be significant deficiencies. Material Weaknesses: We identified no significant deficiencies that we consider to be material weaknesses. We issued an unqualified opinion on the City’s compliance with requirements applicable to its major federal program. We reported no findings that are required to be disclosed under OMB Circular A-133. ________________________________________________________________________________________________________ Washington State Auditor's Office 1 Identification of Major Programs: The following was a major program during the period under audit: 20.106 Airport Improvement Program The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by OMB Circular A-133, was $300,000. The City did not qualify as a low-risk auditee under OMB Circular A-133. ________________________________________________________________________________________________________ Washington State Auditor's Office 2 Schedule of Prior Federal Audit Findings and Questioned Costs City of Arlington Snohomish County January 1, 2008 through December 31, 2008 This schedule presents the status of federal findings reported in prior audit periods. The status listed below is the representation of the City of Arlington. The State Auditor’s Office has reviewed the status as presented by the City. Audit Period: 2005 Report Reference No:72014 Finding Reference No:1 CFDA Number(s): 20.106 Federal Program Name and Granting Agency: Federal Aviation Administration – Pass-Through Agency Name: NA Finding Caption: The City of Arlington did not comply with federal program requirements regarding suspension and debarment. Background: The Status of Corrective Action: (check one) Partially Corrected No Corrective Action Taken Finding is considered no longer valid Corrective Action Taken: The City implemented a procedure to confirm that all contracts of $25,000 or greater involving federal dollars are not made to vendors (contractors, consultants, engineers) who are suspended or debarred from participation in programs that receive federal funds. Documentation indicating that the vendor is not suspended or debarred is included in the project files and the contracts also reference this requirement. ________________________________________________________________________________________________________ Washington State Auditor's Office 3 Status of Prior Audit Findings City of Arlington Snohomish County January 1, 2008 through December 31, 2008 The status of findings contained in the prior years’ audit reports of the City of Arlington is provided below: 1. The City of Arlington does not have adequate internal controls to ensure accurate financial reporting. Report No. 1000716, dated February 23, 2009 Background We identified the following deficiencies in internal controls over financial reporting that, when taken together, represent a significant deficiency: Personnel responsible for preparing and reviewing financial reports do not have adequate knowledge of cash basis accounting principles or lacked sufficient understanding of the Budgeting, Accounting and Reporting Standards (BARS) manual. City management has not established a process to compare the classification of accounting transactions against the BARS manual in order to improve internal controls over accounting and financial reporting, despite prior audit recommendations. City personnel were not aware of Washington state requirements that allow expenditures paid within 20 days after the close of fiscal year to be recorded to that fiscal year. Status The prior audit finding has been significantly resolved. Finance personnel have received additional training for BARS requirements. Finance personnel have developed and followed a detailed checklist for preparation and review of the annual financial report, to ensure no processes are overlooked. Personnel received guidance for appropriately posting year-end expenditures. Although some minor errors in posting expenditures were noted again during the 2008 audit, they are immaterial and the City remains committed to correcting the issue. ________________________________________________________________________________________________________ Washington State Auditor's Office 4 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters in Accordance with Government Auditing Standards City of Arlington Snohomish County January 1, 2008 through December 31, 2008 Mayor and City Council City of Arlington Arlington, Washington We have audited the financial statements of the City of Arlington, Snohomish County, Washington, as of and for the year ended December 31, 2008, and have issued our report thereon dated August 20, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to the financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit, we considered the City’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City's financial statements that is more than inconsequential will not be prevented or detected by the City's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity’s internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies ________________________________________________________________________________________________________ Washington State Auditor's Office 5 in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of the City’s compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended for the information and use of management, the Mayor and City Council, federal awarding agencies and pass-through entities. However, this report is a matter of public record and its distribution is not limited. It also serves to disseminate information to the public as a reporting tool to help citizens assess government operations. BRIAN SONNTAG, CGFM STATE AUDITOR August 20, 2009 ________________________________________________________________________________________________________ Washington State Auditor's Office 6 Independent Auditor’s Report on Compliance with Requirements Applicable to its Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 City of Arlington Snohomish County January 1, 2008 through December 31, 2008 Mayor and City Council City of Arlington Arlington, Washington COMPLIANCE We have audited the compliance of the City of Arlington, Snohomish County, Washington, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to its major federal program for the year ended December 31, 2008. The City’s major federal program is identified in the Federal Summary. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal program is the responsibility of the City’s management. Our responsibility is to express an opinion on the City’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to the financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City’s compliance with those requirements. In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable to its major federal program for the year ended December 31, 2008. INTERNAL CONTROL OVER COMPLIANCE The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City’s internal ________________________________________________________________________________________________________ Washington State Auditor's Office 7 control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A control deficiency in an entity’s internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to administer a federal program such that there is a more than remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity’s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in a more than remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity’s internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended for the information of management, the Mayor and City Council, federal awarding agencies and pass-through entities. However, this report is a matter of public record and its distribution is not limited. It also serves to disseminate information to the public as a reporting tool to help citizens assess government operations. BRIAN SONNTAG, CGFM STATE AUDITOR August 20, 2009 ________________________________________________________________________________________________________ Washington State Auditor's Office 8 Independent Auditor’s Report on Financial Statements City of Arlington Snohomish County January 1, 2008 through December 31, 2008 Mayor and City Council City of Arlington Arlington, Washington We have audited the accompanying financial statements of the City of Arlington, Snohomish County, Washington, for the year ended December 31, 2008. These financial statements are the responsibility of the City’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 1 to the financial statements, the City prepares its financial statements on the basis of accounting that demonstrates compliance with Washington State statutes and the Budgeting, Accounting and Reporting System (BARS) manual prescribed by the State Auditor, which is a comprehensive basis of accounting other than generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position and results of operations of the City of Arlington, for the year ended December 31, 2008, on the basis of accounting described in Note 1. In accordance with Government Auditing Standards, we have also issued our report on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. ________________________________________________________________________________________________________ Washington State Auditor's Office 9 Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The accompanying Schedule of Long-Term Debt is also presented for purposes of additional analysis as required by the prescribed BARS manual. These schedules are not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole. BRIAN SONNTAG, CGFM STATE AUDITOR August 20, 2009 ________________________________________________________________________________________________________ Washington State Auditor's Office 10 Financial Section City of Arlington Snohomish County January 1, 2008 through December 31, 2008 FINANCIAL STATEMENTS Fund Resources and Uses Arising from Cash Transactions – 2008 Notes to Financial Statements – 2008 SUPPLEMENTAL INFORMATION Schedule of Long-Term Debt – 2008 Schedule of Expenditures of Federal Awards – 2008 Notes to the Schedule of Expenditures of Federal Awards – 2008 ________________________________________________________________________________________________________ Washington State Auditor's Office 11 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources and Uses Arising from Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Fund 001 Current Expense Fund 002 PW Admin/Engineering Beginning Net Cash and Investments 600,000 452,007 10,000 176 Revenues and Other Sources 310 Taxes 7,885,963 7,496,817 320 Licenses and Permits 409,748 368,856 28,000 15,039 330 Intergovernmental 505,322 603,707 340 Charges for Goods and Services 1,731,928 1,715,365 828,399 775,703 350 Fines and Forfeits 230,000 297,204 360 Miscellaneous 16,000 28,398 100 83 390 Other Financing Sources 483,043 671,698 Total Revenues and Other Sources 11,262,004 11,182,045 856,499 790,825 Total Resources 11,862,004 11,634,052 866,499 791,001 Operating Expenditures: 510 General Government 3,096,879 3,359,850 520 Public Safety 6,193,358 5,871,624 530 Physical Environment 15,500 29,009 847,014 790,005 540 Transportation 550 Economic Enviroment 1,480,879 1,357,858 560 Mental and Physical Health 570 Culture and Recreational 688,177 679,402 Total Operating Expenditures 11,474,793 11,297,742 847,014 790,005 591-593 Debt Service 594-595 Capital Outlay 55,938 63,541 23,707 9,742 Total Expenditures 11,530,731 11,361,284 870,721 799,747 597-599 Other Financing Uses 250,928 45,989 Total Expenditures and Other Uses 11,781,659 11,407,272 870,721 799,747 Excess (Deficit) of Resources Over Uses 80,345 226,780 (4,222) (8,746) 380 Nonrevenues (Except 384 & 388.80) 191,400 310,426 5,700 8,757 580 Nonexpenditures (Except 584 & 588.80) 251,745 270,086 500 11 ________________________________________________________________________________________________________ Washington State Auditor's Office 12 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Beginning Net Cash and Investments 50,000 396 3,707 Revenues and Other Sources 310 Taxes 372,547 373,782 320 Licenses and Permits 330 Intergovernmental 264,520 363,062 157,485 20,244 340 Charges for Goods and Services 7,500 1,140 350 Fines and Forfeits 360 Miscellaneous 33,000 37,141 31 390 Other Financing Sources 257,145 200,031 Total Revenues and Other Sources 934,712 975,155 157,485 20,274 Total Resources 984,712 975,551 161,192 20,274 Operating Expenditures: 510 General Government 520 Public Safety 530 Physical Environment 540 Transportation 949,591 895,243 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 949,591 895,243 - - 591-593 Debt Service 594-595 Capital Outlay 1,723 1,473 Total Expenditures 951,314 896,716 - - 597-599 Other Financing Uses 29,000 29,000 161,192 20,274 Total Expenditures and Other Uses 980,314 925,716 161,192 20,274 Excess (Deficit) of Resources Over Uses 4,398 49,835 - (0) 380 Nonrevenues (Except 384 & 388.80) 165 580 Nonexpenditures (Except 584 & 588.80) Fund 102 Arterial Street Fund 101 Street Maintenance ________________________________________________________________________________________________________ Washington State Auditor's Office 13 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Fund 107 Growth Fund Beginning Net Cash and Investments 42,156 4,210,359 4,344,820 Revenues and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 415,555 427,333 375,000 409,684 350 Fines and Forfeits 360 Miscellaneous 2,364 119,724 390 Other Financing Sources Total Revenues and Other Sources 415,555 429,698 375,000 529,408 Total Resources 415,555 471,854 4,585,359 4,874,227 Operating Expenditures: 510 General Government 520 Public Safety 530 Physical Environment 25,000 25,000 540 Transportation 269,973 285,014 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 294,973 310,014 - - 591-593 Debt Service 594-595 Capital Outlay Total Expenditures 294,973 310,014 - - 597-599 Other Financing Uses 120,000 71,517 1,150,248 16,388 Total Expenditures and Other Uses 414,973 381,532 1,150,248 16,388 Excess (Deficit) of Resources Over Uses 582 90,322 3,435,111 4,857,840 380 Nonrevenues (Except 384 & 388.80) 580 Nonexpenditures (Except 584 & 588.80) 3 - 19,207 Ending Net Cash and Investments 582 90,319 3,435,111 4,838,633 Fund 103 Storm Water Management ________________________________________________________________________________________________________ Washington State Auditor's Office 14 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Budget Actual Budget Actual Beginning Net Cash and Investments 83,736 115,754 955,250 1,003,471 Revenues and Other Sources 310 Taxes 1,443,688 1,439,979 320 Licenses and Permits 330 Intergovernmental 1,200 13,644 1,522,178 1,213,019 340 Charges for Goods and Services 766,219 667,839 350 Fines and Forfeits 360 Miscellaneous 500 7,028 5,000 72,280 390 Other Financing Sources 42,239 468,531 468,531 Total Revenues and Other Sources 2,211,607 2,170,729 1,995,709 1,753,831 Total Resources 2,295,343 2,286,483 2,950,959 2,757,302 Operating Expenditures: 510 General Government 520 Public Safety 2,204,981 2,082,629 530 Physical Environment 540 Transportation 64,917 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 2,204,981 2,082,629 - 64,917 591-593 Debt Service 34,787 34,787 594-595 Capital Outlay 16,580 3,212 2,824,359 1,578,451 Total Expenditures 2,256,348 2,120,627 2,824,359 1,643,368 597-599 Other Financing Uses 27,815 27,815 Total Expenditures and Other Uses 2,284,163 2,148,442 2,824,359 1,643,368 Excess (Deficit) of Resources Over Uses 11,180 138,040 126,600 1,113,934 380 Nonrevenues (Except 384 & 388.80) 2,698 580 Nonexpenditures (Except 584 & 588.80) 11,885 Fund 112 Airport Improvement Fund 108 Emergency Medical ________________________________________________________________________________________________________ Washington State Auditor's Office 15 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Budget Actual Budget Actual Beginning Net Cash and Investments 500 Revenues and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 350 Fines and Forfeits 360 Miscellaneous 100 589 390 Other Financing Sources 340,760 340,260 370,272 370,885 Total Revenues and Other Sources 340,860 340,260 370,272 371,474 Total Resources 341,360 340,260 370,272 371,474 Operating Expenditures: 510 General Government 520 Public Safety 530 Physical Environment 540 Transportation 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures - - - - 591-593 Debt Service 340,260 340,260 370,272 369,374 594-595 Capital Outlay Total Expenditures 340,260 340,260 370,272 369,374 597-599 Other Financing Uses Total Expenditures and Other Uses 340,260 340,260 370,272 369,374 Excess (Deficit) of Resources Over Uses 1,100 - - 2,100 380 Nonrevenues (Except 384 & 388.80) 580 Nonexpenditures (Except 584 & 588.80) Fund 208 2004 LTGO Bond Fund 113 ________________________________________________________________________________________________________ Washington State Auditor's Office 16 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Fund 211 2007 LTGO Fund Fund 212 LID #21 Budget Actual Budget Actual Beginning Net Cash and Investments 133,653 134,151 Revenues and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 350 Fines and Forfeits 360 Miscellaneous 137,650 263,948 390 Other Financing Sources 286,821 287,411 Total Revenues and Other Sources 286,821 287,411 137,650 263,948 Total Resources 286,821 287,411 271,303 398,099 Operating Expenditures: 510 General Government 520 Public Safety 530 Physical Environment 540 Transportation 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures - - - - 591-593 Debt Service 286,821 286,125 266,303 128,693 594-595 Capital Outlay Total Expenditures 286,821 286,125 266,303 128,693 597-599 Other Financing Uses Total Expenditures and Other Uses 286,821 286,125 266,303 128,693 Excess (Deficit) of Resources Over Uses - 1,286 5,000 269,407 380 Nonrevenues (Except 384 & 388.80) 580 Nonexpenditures (Except 584 & 588.80) ________________________________________________________________________________________________________ Washington State Auditor's Office 17 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Fund 304 REET 2 Fund 305 Capital Facilities/Bldg Budget Actual Budget Actual Beginning Net Cash and Investments 894,420 1,601,560 140,000 135,251 Revenues and Other Sources 310 Taxes 551,000 219,601 543,591 276,839 320 Licenses and Permits 330 Intergovernmental 154,849 154,849 340 Charges for Goods and Services 350 Fines and Forfeits 360 Miscellaneous 2,500 40,538 5,000 2,677 390 Other Financing Sources 461,866 481,237 Total Revenues and Other Sources 553,500 260,139 1,165,306 915,602 Total Resources 1,447,920 1,861,699 1,305,306 1,050,853 Operating Expenditures: 510 General Government 520 Public Safety 530 Physical Environment 540 Transportation 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational 125,000 125,000 Total Operating Expenditures 125,000 125,000 - - 591-593 Debt Service 594-595 Capital Outlay 258,420 48,604 297,307 206,755 Total Expenditures 383,420 173,604 297,307 206,755 597-599 Other Financing Uses 459,220 557,644 1,003,252 817,365 Total Expenditures and Other Uses 842,640 731,248 1,300,559 1,024,120 Excess (Deficit) of Resources Over Uses 605,280 1,130,451 4,747 26,733 380 Nonrevenues (Except 384 & 388.80) 580 Nonexpenditures (Except 584 & 588.80) 26,733 ________________________________________________________________________________________________________ Washington State Auditor's Office 18 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Fund 310 Transportation Improvement Fund 401 Water/Sewer Fund Budget Actual Budget Actual Beginning Net Cash and Investments 260,000 260,017 700,000 1,400,404 Revenues and Other Sources 310 Taxes 524,712 522,991 320 Licenses and Permits 330 Intergovernmental 678,017 184,650 340 Charges for Goods and Services 6,361,063 6,758,854 350 Fines and Forfeits 360 Miscellaneous 11,400 19,956 12,500 62,197 390 Other Financing Sources 677,439 Total Revenues and Other Sources 1,366,856 204,606 6,898,275 7,344,042 Total Resources 1,626,856 464,623 7,598,275 8,744,446 Operating Expenditures: 510 General Government 520 Public Safety 530 Physical Environment 5,070,715 4,947,852 540 Transportation 22,000 42,222 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 22,000 42,222 5,070,715 4,947,852 591-593 Debt Service 41,989 39,662 594-595 Capital Outlay 1,404,154 84,909 97,104 71,955 Total Expenditures 1,426,154 127,131 5,209,808 5,059,469 597-599 Other Financing Uses 146,017 177,939 1,350,152 1,450,152 Total Expenditures and Other Uses 1,572,171 305,070 6,559,960 6,509,621 Excess (Deficit) of Resources Over Uses 54,685 159,553 1,038,315 2,234,825 380 Nonrevenues (Except 384 & 388.80) 17,225 25,000 19,760 580 Nonexpenditures (Except 584 & 588.80) 23,244 376,109 359,464 ________________________________________________________________________________________________________ Washington State Auditor's Office 19 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Fund 402 Airport Fund 404 Water/Sewer Rev Bond Redemption Budget Actual Budget Actual Beginning Net Cash and Investments 71,543 242,405 6,500 49,008 Revenues and Other Sources 310 Taxes 111,554 109,212 320 Licenses and Permits 330 Intergovernmental 142,500 59,197 340 Charges for Goods and Services 20,000 12,053 350 Fines and Forfeits 360 Miscellaneous 2,551,445 2,515,142 390 Other Financing Sources 586,107 586,107 Total Revenues and Other Sources 2,825,499 2,695,604 586,107 586,107 Total Resources 2,897,042 2,938,009 592,607 635,115 Operating Expenditures: 510 General Government 520 Public Safety 530 Physical Environment 540 Transportation 2,052,367 2,022,830 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 2,052,367 2,022,830 - - 591-593 Debt Service 29,428 29,428 587,107 586,829 594-595 Capital Outlay 144,256 124,159 Total Expenditures 2,226,051 2,176,417 587,107 586,829 597-599 Other Financing Uses 678,490 664,079 Total Expenditures and Other Uses 2,904,541 2,840,496 587,107 586,829 Excess (Deficit) of Resources Over Uses (7,499) 97,513 5,500 48,286 380 Nonrevenues (Except 384 & 388.80)380,847 354,402 580 Nonexpenditures (Except 584 & 588.80) 373,348 341,932 ________________________________________________________________________________________________________ Washington State Auditor's Office 20 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Fund 405 Water Improvement Fund 406 Sewer Improvement Budget Actual Budget Actual Beginning Net Cash and Investments 2,750,000 4,017,457 2,118,215 5,839,160 Revenues and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 420 550 350 Fines and Forfeits 360 Miscellaneous 45,000 118,515 45,000 97,614 370 Capital Contributions 752,500 608,450 577,535 577,535 390 Other Financing Sources 500,000 500,000 200,000 300,000 Total Revenues and Other Sources 1,297,500 1,227,385 822,535 975,699 Total Resources 4,047,500 5,244,842 2,940,750 6,814,859 Operating Expenditures: 510 General Government 520 Public Safety 530 Physical Environment 1,210,050 94,931 144,915 102,201 540 Transportation 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 1,210,050 94,931 144,915 102,201 591-593 Debt Service 594-595 Capital Outlay 2,553,500 244,145 1,930,000 343,578 Total Expenditures 3,763,550 339,077 2,074,915 445,778 597-599 Other Financing Uses 3,872,487 Total Expenditures and Other Uses 3,763,550 339,077 2,074,915 4,318,266 Excess (Deficit) of Resources Over Uses 283,950 4,905,765 865,835 2,496,593 380 Nonrevenues (Except 384 & 388.80) 3,575 68,652 580 Nonexpenditures (Except 584 & 588.80) 3,171 67,640 Ending Net Cash and Investments 283,950 4,906,169 865,835 2,497,606 ________________________________________________________________________________________________________ Washington State Auditor's Office 21 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Fund 407 Utilities Administration Fund 408 WWTP Improvement Budget Actual Budget Actual Beginning Net Cash and Investments 20,000 49,542 951,842 Revenues and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 574,272 574,268 460 350 Fines and Forfeits 360 Miscellaneous 500 2,071 98,158 98,159 390 Other Financing Sources 1,000,000 3,872,487 Total Revenues and Other Sources 574,772 576,339 1,098,158 3,971,106 Total Resources 594,772 625,881 2,050,000 3,971,106 Operating Expenditures: 510 General Government 520 Public Safety 530 Physical Environment 533,397 517,004 4,050,000 1,542,127 540 Transportation 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 533,397 517,004 4,050,000 1,542,127 591-593 Debt Service 594-595 Capital Outlay 42,253 30,463 86,813 Total Expenditures 575,650 547,468 4,050,000 1,628,940 597-599 Other Financing Uses 1,500 1,500 Total Expenditures and Other Uses 577,150 548,968 4,050,000 1,628,940 Excess (Deficit) of Resources Over Uses 17,622 76,913 (2,000,000) 2,342,166 380 Nonrevenues (Except 384 & 388.80) 165 2,000,000 2,750,000 580 Nonexpenditures (Except 584 & 588.80) ________________________________________________________________________________________________________ Washington State Auditor's Office 22 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 Statement C-4 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. BARS CODE Fund 410 Airport Reserve Fund 504 PW Maintenance & Operations Budget Actual Budget Actual Beginning Net Cash and Investments 648,623 271,635 87,085 40,507 Revenues and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 200,000 200,000 340 Charges for Goods and Services 1,620,454 1,554,850 350 Fines and Forfeits 360 Miscellaneous 2,500 6,373 16,600 18,002 390 Other Financing Sources 100,000 100,000 Total Revenues and Other Sources 302,500 306,373 1,637,054 1,572,852 Total Resources 951,123 578,008 1,724,139 1,613,359 Operating Expenditures: 510 General Government 1,527,549 1,411,613 520 Public Safety 530 Physical Environment 540 Transportation 768 37,020 31,706 550 Economic Enviroment 560 Mental and Physical Health 570 Culture and Recreational 166,310 154,525 Total Operating Expenditures - 768 1,730,879 1,597,845 591-593 Debt Service 594-595 Capital Outlay 375,900 375,000 8,447 6,561 Total Expenditures 375,900 375,768 1,739,326 1,604,406 597-599 Other Financing Uses 4,000 4,004 Total Expenditures and Other Uses 375,900 375,768 1,743,326 1,608,410 Excess (Deficit) of Resources Over Uses 575,223 202,240 (19,187) 4,949 380 Nonrevenues (Except 384 & 388.80) 22,000 27,871 580 Nonexpenditures (Except 584 & 588.80) 821 ________________________________________________________________________________________________________ Washington State Auditor's Office 23 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 STATEMENT C-5 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement. Fund 003 Recycling Program Fund 104 Program Development Budget Actual Budget Actual Beginning Net Cash and Investments 10,000 17,641 466,000 198,980 Revenues and Other Financing Sources 17,450 15,633 162,000 55,048 Total Resources 27,450 33,274 628,000 254,029 Expenditures And Other Financing Uses 17,450 11,285 108,500 106,020 Excess (Deficit) of Resources Over Uses 10,000 21,989 519,500 148,008 Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) Stream Corridor Lodging Tax Budget Actual Budget Actual Beginning Net Cash and Investments 1 116,513 143,637 Revenues and Other Financing Sources 22,000 41,155 60,000 81,655 Total Resources 22,000 41,156 176,513 225,292 Expenditures And Other Financing Uses 22,000 17,679 120,000 69,205 Excess (Deficit) of Resources Over Uses - 23,477 56,513 156,087 Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) - - Cemetery Improvement 2001 LTGO Bond Budget Actual Budget Actual Beginning Net Cash and Investments 35,000 45,823 Revenues and Other Financing Sources 222,737 205,657 59,220 59,223 Total Resources 257,737 251,481 59,220 59,223 Expenditures And Other Financing Uses 263,737 257,610 59,220 59,025 Excess (Deficit) of Resources Over Uses (6,000) (6,129) - 198 Nonrevenues (Except 384 and 388.80) 6,000 8,751 Nonexpenditures (Except 584 and 588.80) - 2,622 - - ________________________________________________________________________________________________________ Washington State Auditor's Office 24 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 STATEMENT C-5 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement Fund 207 2003 Airport Rev Bond Fund 209 2005 LTGO Fund Budget Actual Budget Actual Beginning Net Cash and Investments 1,000 112 500 661 Revenues and Other Financing Sources 52,154 52,574 56,815 56,815 Total Resources 53,154 52,687 57,315 57,476 Expenditures And Other Financing Uses 52,654 52,654 56,721 56,679 Excess (Deficit) of Resources Over Uses 500 33 594 797 Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) Fund 210 2007 LTGO Bond Proceeds Fund 303 REET 1 Budget Actual Budget Actual Beginning Net Cash and Investments 500,000 500,092 500,000 421,495 Revenues and Other Financing Sources 10,000 35,522 387,500 225,213 Total Resources 510,000 535,614 887,500 646,707 Expenditures And Other Financing Uses 510,000 71,566 701,065 559,825 Excess (Deficit) of Resources Over Uses - 464,049 186,435 86,883 Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) - - Airport CIP Storm Water - CIP Budget Actual Budget Actual Beginning Net Cash and Investments 542,738 565,952 342 Revenues and Other Financing Sources 219,895 229,144 70,000 78,826 Total Resources 762,633 795,095 70,000 79,168 Expenditures And Other Financing Uses 755,133 97,895 70,000 62,950 Excess (Deficit) of Resources Over Uses 7,500 697,200 - 16,219 Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) - - ________________________________________________________________________________________________________ Washington State Auditor's Office 25 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 STATEMENT C-5 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement Fund 311 Park Improvement Fund 312 Library Capital Budget Actual Budget Actual Beginning Net Cash and Investments 166 42,000 46,400 Revenues and Other Financing Sources 961,809 31,960 49,000 54,649 Total Resources 961,809 32,126 91,000 101,049 Expenditures And Other Financing Uses 961,809 32,126 91,000 88,049 Excess (Deficit) of Resources Over Uses - (0) - 13,000 Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) - - EMS Reserve 2004 Facilities Const Budget Actual Budget Actual Beginning Net Cash and Investments - 196 620,000 504,507 Revenues and Other Financing Sources 21,530 Total Resources - 196 620,000 526,037 Expenditures And Other Financing Uses 526,500 524,483 Excess (Deficit) of Resources Over Uses - 196 93,500 1,554 Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) W/S Revenue Bond Res Equipment Rental Budget Actual Budget Actual Beginning Net Cash and Investments 478,419 478,419 4,000 10,921 Revenues and Other Financing Sources 47,936 53,214 Total Resources 478,419 478,419 51,936 64,135 Expenditures And Other Financing Uses 47,986 43,977 Excess (Deficit) of Resources Over Uses 478,419 478,419 3,950 20,158 Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) - - - - ________________________________________________________________________________________________________ Washington State Auditor's Office 26 MCAG NO. 0654 CITY OF ARLINGTON Fund Resources And Uses Arising From Cash Transactions For The Year Ended December 31, 2008 STATEMENT C-5 1 of 1 The Accompanying Notes Are An Integral Part Of This Statement Fund 502 Self Insurance Fund 503 Equipment Depreciation Budget Actual Budget Actual Beginning Net Cash and Investments 92,679 47,434 307,165 122,600 Revenues and Other Financing Sources 2,000 1,115 183,282 124,723 Total Resources 94,679 48,549 490,447 247,323 Expenditures And Other Financing Uses 88,000 71,464 Excess (Deficit) of Resources Over Uses 94,679 48,549 402,447 175,860 Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) 7,579 7,578 - - Cemetery Endowment LID Guaranty Budget Actual Budget Actual Beginning Net Cash and Investments 219,070 205,684 1,317,458 655,675 Revenues and Other Financing Sources 11,400 11,001 6,000 16,023 Total Resources 230,470 216,685 1,323,458 671,698 Expenditures And Other Financing Uses 60,781 51,081 685,458 671,698 Excess (Deficit) of Resources Over Uses 169,689 165,604 638,000 - Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) Name Name Budget Actual Budget Actual Beginning Net Cash and Investments Revenues and Other Financing Sources Total Resources - - - - Expenditures And Other Financing Uses Excess (Deficit) of Resources Over Uses - - - - Nonrevenues (Except 384 and 388.80) Nonexpenditures (Except 584 and 588.80) ________________________________________________________________________________________________________ Washington State Auditor's Office 27 NOTE 1 - SUMMARY OF ACCOUNTING POLICIES The City reports financial activity using the revenue and expenditure classifications, statements, and schedules contained in the Cash Basis Budgeting, Accounting and Reporting System (BARS) manual. The manual is prescribed by the State Auditor’s Office under the authority of Washington State law, Chapter 43.09 RCW. The City of Arlington was incorporated in 1903 and operates under the laws of the State of Washington applicable to a non-charter code city with a mayor-council form of government. The city is a general purpose government and provides public safety, fire prevention, street improvement, parks and recreation, health and social services, and general administrative services. In addition, the city owns and operates a water/sewer and solid waste collection system and an airport. The City of Arlington uses single-entry, cash basis accounting, which is a departure from generally, accepted accounting principles (GAAP). The following is a summary of the more significant policies, including identification of those policies which result in material departures from generally accepted accounting principles: a. Fund Accounting The accounts of the City of Arlington are organized on the basis of funds and account groups, each of which is considered a separate accounting entity and accounted for with a separate set of single entry accounts. Reported are beginning and ending cash and investment balances, cash receipts, and disbursements. GOVERNMENTAL FUND TYPES: Governmental fund operating statements focus on measuring changes in cash and investment balances rather than net income; they present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Current Expense Fund (Fund No. 001) This fund is the general operating fund of the city. It accounts for all financial resources and transactions except those required to be accounted for in another fund. Special Revenue Funds (Funds in the 100 series). These funds account for revenues derived from specific taxes, grants, or other sources which are designated to finance particular activities of the city. Capital Projects Funds (Funds in the 300 series) These funds account for financial resources which are designated for the acquisition or construction of general government capital projects. _________________________________________________________________________________________________________ Washington State Auditor's Office 28 Debt Service Funds (Fund 203, 212, 404, and 621) These funds account for the accumulation of resources to pay principal, interest and related costs on general long-term debt. PROPRIETARY FUND TYPES: Enterprise Funds (Fund 401, 402, 405, 406, 408 and 410) These funds account for operations that provide goods or services to the general public and are supported primarily through user charges. Internal Service Funds (Funds in the 500 Series) These funds account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost-reimbursement basis. FIDUCIARY FUND TYPES: Fiduciary funds account for assets held by the city on behalf of other governments and other funds. Agency Funds These funds are used to account for cash and other assets received and held by the city acting in the capacity of custodian. General Long-Term Debt The city accounts for its long-term debt in a bond register and other records and the results are reported in the accompanying long-term debt schedule. Proprietary long-term debt is accounted for in the appropriate fund. b. Basis of Accounting Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Revenues are recognized only when cash is received and expenditures are recognized when paid, including those properly chargeable against the report year(s) budget appropriations as required by state law. In accordance with state law the City also recognizes expenditures paid during twenty days after the close of the fiscal year for claims incurred during the previous period. Purchases of capital assets are expensed during the year of acquisition. There is no capitalization of capital assets, nor allocation of depreciation expense. Inventory is expensed when purchased. _________________________________________________________________________________________________________ Washington State Auditor's Office 29 c. Budgets Annual appropriated budgets are adopted for all funds. The financial statements include budgetary comparisons for those funds. Annual appropriated budgets are adopted at the fund level (except the General (Current Expense) Fund, where budgets are adopted at the department level.) The budgets constitute the legal authority for expenditures at that level. Annual appropriations for all funds lapse at the fiscal period end. The Finance Director is authorized to transfer budgeted amounts between (departments within any fund/object classes with departments); however, any revisions that alter the total expenditures of a fund must be approved by the City Council. The City Council approves all expenditures for payroll and claims. The budget amounts shown in the financial statements are the final authorized amounts as revised during the year. d. Cash It is the City of Arlington’s policy to invest all temporary cash surpluses. The amount is included in the net cash and investments shown on the statements of fund resources and uses arising from cash transactions. The interest on these investments is prorated to the various funds. e. Deposits The city's deposits and certificates of deposit are entirely covered by federal depository insurance (FDIC) or by collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC). f. Investments See Note #3 g. Derivatives And Similar Transactions The city does not have any derivatives or riskier investments to disclose. h. Capital Assets Capital Assets are long-lived assets of the City of Arlington and are recorded as expenditures when purchased. _________________________________________________________________________________________________________ Washington State Auditor's Office 30 i. Compensated Absences Vacation leave may be accumulated up to 240 hours and is payable upon separation or retirement. Sick leave may be accumulated up to 1000 hours. Upon termination of employment or retirement, an employee shall be paid one third (1/3) of his/her accrued sick leave up to 240 hours. In no event shall an Employee’s combined sick leave and vacation benefits payable upon termination/retirement exceed 240 hours. j. Long-Term Debt-See Note #6 k. Other Financing Sources or Uses Interfund transactions are classified as follows: Transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the city. Transfers to support the operations of other funds are recorded as "Operating Transfers" and classified with "Other Financing Sources or Uses." Contributions to the capital of enterprise or internal service funds, transfers to establish or reduce working capital in other funds, and transfers of remaining balances when funds are closed are classified as residual equity transfers and reported as direct additions to or deductions from fund equity. Non-Revenues and Non-Expenditures The city's non-revenues and non-expenditures consist of Interfund loan proceeds and repayments, agency collections and disbursements, investment proceeds and purchases, prior period corrections, residual equity transfers - in or out. l. Risk Management The City of Arlington is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self-insuring, and/or jointly contracting for risk management services. WCIA has a total of 129 members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. _________________________________________________________________________________________________________ Washington State Auditor's Office 31 Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, public officials’ errors or omissions, stop gap, and employee benefits liability. Limits are $4 million per occurrence self insured layer, and $16 million per occurrence in the re-insured excess layer. The excess layer is insured by the purchase of reinsurance and insurance and is subject to aggregate limits. Total limits are $20 million per occurrence subject to aggregate sublimits in the excess layers. The Board of Directors determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and machinery are purchased on a group basis. Various deductibles apply by type of coverage. Property insurance and auto physical damage are self-funded from the members’ deductible to $500,000 for all perils other than flood and earthquake, and insured above that amount by the purchase of reinsurance. In-house services include risk management consultation, loss control field services, claims and litigation administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel issues and land use problems, insurance brokerage, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. These revenues directly offset portions of the membership's annual assessment. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. m. Accounts Receivable The city of Arlington has $761,516 billed and unpaid as of 12/31/08 for Water, Sewer and Stormwater. All charges for water when delinquent and unpaid shall be a lien against the premises to which water has been furnished. Charge offs are rare expect for a small penalty owing on the account. Penalty waivers are approved by the Supervisor. The City of Arlington has $1,153,201 billed and unpaid as of 12/31/08 for the Airport Fund. _________________________________________________________________________________________________________ Washington State Auditor's Office 32 NOTE 2 - COMPLIANCE AND ACCOUNTABILITY There have been no material violations of finance-related legal or contractual provisions, and there have been no significant expenditures exceeding legal appropriations in any of the funds of the city. NOTE 3 - INVESTMENTS The city investments are either insured, registered or held by the city or its agent in the city’s name. Type of Investment Balance L.G.I.P. $ 21,311,582 U.S. Government Securities 0_____ Certificates of Deposit 3,809,779 Total $ 25,121,361 NOTE 4 - PROPERTY TAXES The county treasurer acts as an agent to collect property taxes levied in the county for all taxing authorities. Collections are distributed after the end of each month. Property tax revenues are recognized when cash is collected. Delinquent taxes are considered fully collectible because a lien affixes to the property when taxes are levied. The city's regular levy for 2008 was $.97 per $1,000 on an assessed valuation of $ 2,239,293,774 for a total regular levy of $2,180,378. The city also levied $.38 per $1,000 for emergency medical services (EMS). NOTE 5 - INTERFUND LOANS AND ADVANCES In 1999 the City of Arlington purchased 24 acres of land from the City’s municipal airport, to be used for parks and recreation. A 50 year repayment schedule was established. The following table displays interfund loan activity during 2008. Borrowing Lending Balance Balance Fund Fund 01/01/2008 New Loans Repayments 12/31/2008 Current Expense Airport $3,149,417 0 40,507 $3,108,910 TOTALS $3,149,417 0 40,507 $3,108,910 _________________________________________________________________________________________________________ Washington State Auditor's Office 33 NOTE 6 - LONG-TERM DEBT AND CAPITAL LEASES The accompanying Schedule of Long-term Debt provides a listing of the outstanding debt of the city. The annual principal and interest requirements to amortize outstanding debt and capital lease payments are as follows: General Leases & Obligation LTGO Revenue Total Bonded Debt Other Debt Debt Debt 2009 1,008,639 228,917 1,217,656 2,455,212 2010 1,026,314 228,917 1,217,028 2,472,259 2011 902,414 337,997 1,180,255 2,420,666 2012 1,082,809 51,231 1,172,270 2,306,310 2013 1,081,609 51,231 1,173,648 2,306,488 2014-2018 5,435,905 256,155 4,607,851 10,299,911 2019-2023 5,369,586 153,693 1,700,989 7,224,268 2024-2028 5,016,536 0 1,141,814 6,158,350 2029-2033 4,058,308 0 0 4,058,308 2033-2038 812,588 0 0 812,588 TOTALS 25,794,708 1,308,141 13,411,511 40,514,360 NOTE 7 - PENSION PLANS Substantially all city full-time and qualifying part-time employees participate in one of the following statewide local government retirement systems, administered by the Department of Retirement Systems, under cost-sharing multiple-employer public employee retirement systems. Actuarial information is on a system-wide basis and is not considered pertinent to the city's financial statements. Contribution to the systems by both employees and employer are based upon gross wages covered by plan benefits. Historical trend information showing each system's progress in accumulating sufficient assets to pay benefits when due is presented in the State of Washington's comprehensive annual financial report. Please refer to said report for detailed trend information. State of Washington Office of Financial Management 300 Insurance Building AQ-44 Olympia, WA 98504-0201 _________________________________________________________________________________________________________ Washington State Auditor's Office 34 OTHER DISCLOSURES Grants In 2008 the City received the following grants that were for prior year expenses: - $200,000 grant from the Washington State Department of Ecology for 2006 expenses related to gun range clean-up at the Arlington Airport - FEMA funds, $2,105.95 federal and $337.49 state, for a November 2006 flood event. Subsequent Events The City of Arlington has applied for FEMA assistance for a snow event in December 2008 and a flood event in 2009. The City has not yet received a grant award. Refund of Grant Monies The City received a U.S. Department of Homeland Security Grant (EMW-2006-FG 09205) in the amount of $130,368 to purchase a generator and exhaust sysem. Some of the items were procured through the State Bid and City received a better price than anticipated. All the grant funds were not used and $ 26,732.50 was refunded in 2008. The City received a U.S. Department of Homeland Security Grant (EMW-2007-FO- 06402) in the amount of $162,998 to purchase Nightlawk alerting system, generator, and wellness assessment and equipment. Some of the items were procured through the State Bid and City received a better price than anticipated. All the grant monies were not used and $16,719.33 was refunded in 2009. _________________________________________________________________________________________________________ Washington State Auditor's Office 35 MC A G N O . 0 6 5 4 C I T Y O F A R L I N G T O N X G en e r a l D e b t S ch e d u l e 0 9 Re v e n u e D e b t Pa g e 1 o f 3 As s e s s m e n t D e b t Re f u n d e d D e b t Sp e c i a l P u r p o s e D i s t r i c t I. D . N o . D e s c r i p t i o n Da t e o f Or i g i n a l Is s u e Da t e o f Ma t u r i t y Be g i n n i n g Ou t s t a n d i n g De b t 0 1 / 0 1 / 0 8 Am t I s s u e d i n Cu r r e n t Y e a r BA R S C o d e fo r R e c e i p t Re c e i v i n g Fu n d N u m b e r Am o u n t Re d e e m e d i n Cu r r e n t Y r BA R S C o d e f o r Re d e m p t i o n Re d e e m i n g Fu n d N o . En d i n g Ou t s t a n d i n g De b t 1 2 / 3 1 / 0 8 25 1 . 1 1 10 / 0 1 1 0 / 2 1 4 , 1 0 5 , 0 0 0 - 1 5 5 , 0 0 0 5 9 1 . 1 9 . 7 1 1 1 3 3 , 9 5 0 , 0 0 0 25 1 . 1 1 04 / 0 1 0 4 / 1 1 1 9 9 , 0 4 4 - 4 9 , 7 6 4 5 9 1 . 7 2 . 7 1 2 0 6 1 4 9 , 2 8 0 25 1 . 1 1 A i d C a r / S w e e p e r 0 1 / 0 5 1 2 / 1 1 2 0 8 , 1 6 3 2 4 , 1 6 3 5 9 1 . 3 6 . 7 1 2 0 9 1 5 8 , 8 5 2 25 , 1 4 9 5 9 1 . 4 2 . 7 1 2 0 9 26 3 . 8 1 8 0 0 M H Z 7 / 0 3 6 / 1 8 4 9 1 , 2 9 0 - 2 4 , 2 1 0 5 9 1 . 2 2 . 7 8 . 0 0 3 0 3 4 6 7 , 0 8 0 * * 25 1 . 1 1 2 0 0 4 L T G O 0 5 / 0 4 1 2 / 3 4 7 , 7 0 0 , 0 0 0 - 7, 7 0 0 , 0 0 0 26 3 . 5 1 A r n o t P r o p e r t y 0 5 / 0 6 0 5 / 1 1 2 2 3 , 7 7 6 1 7 , 0 3 6 5 9 1 . 7 2 . 7 1 3 1 2 2 0 6 , 7 4 0 26 3 . 5 3 M e d i c 4 8 C h a s i s 0 1 / 0 7 1 2 / 1 0 9 5 , 1 0 7 3 0 , 2 3 1 5 9 1 . 2 6 . 7 1 . 0 1 1 0 8 6 4 , 8 7 6 25 1 . 1 1 06 / 0 7 1 2 / 2 7 3 , 5 9 5 , 0 0 0 1 3 5 , 0 0 0 5 9 1 . 0 0 . 7 1 2 1 1 3 , 4 6 0 , 0 0 0 TO T A L G E N E R A L D E B T 1 6 , 6 1 7 , 3 8 0 - 4 6 0 , 5 5 3 1 6 , 1 5 6 , 8 2 7 ** S n o h o m i s h C o u n t y s u p p l i e d c i t y w i t h a m o r t i z a t i o n s c he d u l e i n 2 0 0 9 t h e r e f o r e 2 0 0 8 p r i n c i p a l d e b t w a s a n e s t i m a t e _________________________________________________________________________________________________________ Washington State Auditor's Office 36 MC A G N O . 0 6 5 4 C I T Y O F A R L I N G T O N Ge n e r a l D e b t X R e v e n u e D e b t SC H E D U L E O F L O N G - T E R M D E B T As s e s s m e n t D e b t Fo r T h e Y e a r E n d e d D e c e m b e r 3 1 , 2 0 0 8 Re f u n d e d D e b t Sp e c i a l P u r p o s e D i s t r i c t s I. D . N o . D e s c r i p t i o n Or i g i n a l Is s u e Da t e o f Ma t u r i t y Ou t s t a n d i n g De b t 0 1 / 0 1 / 0 8 Am t I s s u e d i n Cu r r e n t Y e a r BA R S C o d e fo r R e c e i p t Re c e i v i n g Fu n d N u m b e r Re d e e m e d i n Cu r r e n t Y r fo r Re d e m p t i o n Re d e e m i n g Fu n d N o . Ou t s t a n d i n g De b t 1 2 / 3 1 / 0 8 26 3 . 9 2 07 / 9 3 0 7 / 1 3 3 0 2 , 4 1 2 - 5 0 , 4 0 1 5 8 2 . 3 4 . 7 2 . 0 1 4 0 1 2 5 2 , 0 1 1 26 3 . 7 1 C E R B L o a n 0 1 / 9 1 0 1 / 1 0 5 2 , 8 3 9 - 2 5 , 4 6 5 5 9 1 . 4 6 . 7 9 4 0 2 2 7 , 3 7 4 26 3 . 9 2 05 / 9 6 0 7 / 1 6 8 1 7 , 2 3 1 - 9 0 , 8 0 3 5 8 2 . 3 4 . 7 2 . 0 2 4 0 1 7 2 6 , 4 2 8 25 2 . 1 1 08 / 0 7 1 2 / 1 7 4 , 5 8 5 , 0 0 0 - 3 8 5 , 0 0 0 5 9 1 . 3 5 . 7 2 4 0 4 4 , 2 0 0 , 0 0 0 26 3 . 9 2 8 / 0 3 8 / 1 8 4 1 4 , 7 2 4 - 2 9 , 1 6 7 5 9 1 . 4 6 . 7 2 2 0 7 3 8 5 , 5 5 7 26 3 . 9 2 DW S R F L o a n 01 / 0 1 0 9 / 1 9 3 4 5 , 7 8 6 - 2 8 , 8 1 5 5 8 2 . 3 4 . 7 2 . 0 3 4 0 1 3 1 6 , 9 7 1 26 3 . 9 2 W W T P I m p - 7 m i l 0 7 / 0 7 0 7 / 2 6 3 , 1 5 0 , 0 0 0 - 1 6 5 , 7 8 9 5 8 2 . 3 5 . 7 2 . 0 1 4 0 1 2 , 9 8 4 , 2 1 1 26 3 . 9 2 W W T P - 1 0 m i l 0 7 / 0 8 0 7 / 2 7 2 , 0 0 0 , 0 0 0 3 8 2 . 2 0 . 0 2 4 0 8 2 , 0 0 0 , 0 0 0 26 3 . 9 2 W W T P - P r e c o n 07 / 0 8 0 7 / 2 7 7 5 0 , 0 0 0 3 8 2 . 2 0 . 0 1 4 0 8 7 5 0 , 0 0 0 TO T A L R E V E N U E D E B T 9 , 6 6 7 , 9 9 2 2 , 7 5 0 , 0 0 0 7 7 5 , 4 4 1 1 1 , 6 4 2 , 5 5 1 Sc h e d u l e 0 9 Pa g e 2 o f 3 ________________________________________________________________________________________________________ Washington State Auditor's Office 37 MC A G N O . 0 6 5 4 C I T Y O F A R L I N G T O N Ge n e r a l D e b t Sc h e d u l e 0 9 Re v e n u e D e b t Pa g e 3 o f 3 SC H E D U L E O F L O N G - T E R M D E B T X A s s e s s m e n t D e b t Fo r T h e Y e a r E n d e d D e c e m b e r 3 1 , 2 0 0 8 Re f u n d e d D e b t Sp e c i a l P u r p o s e D i s t r i c t s I. D . N o . Or i g i n a l Is s u e Da t e o f Ma t u r i t y Ou t s t a n d i n g De b t 0 1 / 0 1 / 0 8 in C u r r e n t Ye a r BA R S C o d e fo r R e c e i p t Fu n d Nu m b e r Re d e e m e d i n Cu r r e n t Y r BA R S C o d e f o r Re d e m p t i o n Re d e e m i n g Fu n d N o . Ou t s t a n d i n g De b t 1 2 / 3 1 / 0 8 25 3 . 1 1 0 2 / 9 5 0 2 / 1 7 3 2 0 , 0 0 0 0 1 0 0 , 0 0 0 5 9 1 . 4 5 . 7 9 2 1 2 2 2 0 , 0 0 0 TO T A L A S S E S S M E N T D E B T 3 2 0 , 0 0 0 - 1 0 0 , 0 0 0 2 2 0 , 0 0 0 ________________________________________________________________________________________________________ Washington State Auditor's Office 38 MCAG NO. 0654 CITY OF ARLINGTON Schedule 16 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2008 1 2 3 4 5 6 Federal Agency Name / Pass – Through Agency Name Federal Program Name CFDA Numbe r Other I.D. Number Expenditures Foot Note Ref. From Pass Through Awards From Direct Awards Total U.S. Department of Transportation Federal Aviation Administration Airport Improvement Program 20.106 3-53-0002-16 $19,024 $19,024 U.S. Department of Transportation Federal Aviation Administration Airport Improvement Program 20.106 3-53-0002-017 $1,291,629 $ 1,291,629 ** U.S. Department of Transportation Federal Aviation Administration Airport Improvement Program 20.106 3-53-0002-018 $ 87,011 $ 87,011 U.S. Department of Justice Bullet Proof Vest Partnership Program 16.607 $ 1,657 $ 1,657 U.S. Department of Homeland Security Assistance to Firefighters Grant 97.044 EMW-2006- FG09201 $ 70,975 $ 70,975 U.S. Department of Homeland Security Assistance to Firefighters Grant 97.044 EMW-2007- FO-06402 $ 94,469 $ 94,469 U.S. Fish & Wildlife Service Fish & Wildlife Management Assistance 15.608 2006-0098- 018 $ 4,222 $4,222 U.S. Department of Commerce Pacific Coast Salmon Recovery/Pacific Salmon Treaty Program 11.438 NA06NME 4380091 $ 6,702 $ 6,702 Total Federal Awards Expended $ 6,702 $ 1,568,987 $ 1,575,689 ** A project change order was approved by the City and FAA in 2008. An amended grant amount was formally approved by the FAA in 2009. 2008 expenditures include the amended grant amount.. The accompanying notes to the Schedule of Expenditures of Federal Awards are an integral part of the Schedule. _________________________________________________________________________________________________________ Washington State Auditor's Office 39 CITY OF ARLINGTON, WASHINGTON NOTES TO THE SCHEDULE OF EXPENDITURE S OF FEDERAL AWARDS NOTE 1 – BASIS OF ACCOUNTING This schedule is prepared on the same basis of accounting as the City’s financial statements. The City recognizes revenues only when cash is received and expenditures are recognized when paid, including those properly chargeable against the report year (s) budget appropriations as required by law. NOTE 2 – PROGRAM COSTS The amounts shown as current year expenditures represent only the federal grant portion of the program costs. Entire program costs, including the City’s portion, are more than shown. ________________________________________________________________________________________________________ Washington State Auditor's Office 40 (SAO FACTS.DOC - Rev. 06/09) ABOUT THE STATE AUDITOR'S OFFICE The State Auditor's Office is established in the state's Constitution and is part of the executive branch of state government. The State Auditor is elected by the citizens of Washington and serves four-year terms. Our mission is to work in cooperation with our audit clients and citizens as an advocate for government accountability. As an elected agency, the State Auditor's Office has the independence necessary to objectively perform audits and investigations. Our audits are designed to comply with professional standards as well as to satisfy the requirements of federal, state, and local laws. The State Auditor's Office employees are located around the state to deliver our services effectively and efficiently. Our audits look at financial information and compliance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits of state agencies and local governments and fraud, whistleblower and citizen hotline investigations. The results of our work are widely distributed through a variety of reports, which are available on our Web site and through our free, electronic subscription service. We continue to refine our reporting efforts to ensure the results of our audits are useful and understandable. We take our role as partners in accountability seriously. We provide training and technical assistance to governments and have an extensive quality assurance program. State Auditor Brian Sonntag, CGFM Chief of Staff Ted Rutt Deputy Chief of Staff Doug Cochran Chief Policy Advisor Jerry Pugnetti Director of Audit Chuck Pfeil, CPA Director of Special Investigations Jim Brittain, CPA Director for Legal Affairs Jan Jutte, CPA, CGFM Director of Quality Assurance Ivan Dansereau Local Government Liaison Mike Murphy Communications Director Mindy Chambers Public Records Officer Mary Leider Main number (360) 902-0370 Toll-free Citizen Hotline (866) 902-3900 Web Site www.sao.wa.gov Subscription Service https://www.sao.wa.gov/EN/News/Subscriptions/ APPENDIX C DTC & BOOK-ENTRY SYSTEM The following information has been provided by DTC. The City makes no representation regarding the accuracy or completeness thereof. Beneficial Owners should therefore confirm the following with DTC or the Direct Participants (as hereinafter defined). DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered Bond certificate will be issued for each issue of the Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over two million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly- owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange, LLC., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from the City or Bond Registrar on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Bonds held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC (nor its nominee), the Bond Registrar, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Bond Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as bond depository with respect to the Bonds at any time by giving reasonable notice to the City or the Bond Registrar. Under such circumstances, in the event that a successor bond depository is not obtained, Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor bond depository). In that event, Bond certificates will be printed and delivered to DTC. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City and the Underwriter believe to be reliable, but neither the City nor the Underwriter takes responsibility for the accuracy thereof. 51070284.3 CITY OF ARLINGTON, WASHINGTON ORDINANCE NO. _______ AN ORDINANCE of the City of Arlington, Washington, providing for the issuance of $__________ par value of Limited Tax General Obligation and Refunding Bonds, 2010 to provide funds to pay a part of the cost of purchasing airport land, remodeling Fire Station #46 and to advance refund a portion of the City’s outstanding Limited Tax General Obligation Bonds, 2001, fixing certain terms and covenants of the bonds; and approving the sale of the bonds to Piper Jaffray & Co. of Seattle, Washington. Passed: August 2, 2010 This document prepared by: Foster Pepper PLLC 1111 Third Avenue, Suite 3400 Seattle, Washington 98101 (206) 447-4400 -i- 51070284.3 TABLE OF CONTENTS Page Section 1 . Definitions............................................................................................................... 2 Section 2 . Debt Capacity.......................................................................................................... 4 Section 3 . Authorization of Bonds ........................................................................................... 4 Section 4 . Description of Bonds .............................................................................................. 4 Section 5 . Registration and Transfer of Bonds ........................................................................ 6 Section 6 . Payment of Bonds ................................................................................................... 7 Section 7 . Redemption Provisions and Open Market Purchase of Bonds ............................... 8 Section 8 . Notice of Redemption ........................................................................................... 10 Section 9 . Failure To Redeem Bonds .................................................................................... 11 Section 10 . Pledge of Taxes ..................................................................................................... 11 Section 11 . Form and Execution of Bonds .............................................................................. 11 Section 12 . Duties of Bond Registrar ...................................................................................... 12 Section 13 . Preservation of Tax Exemption for Interest on Bonds.......................................... 13 Section 14 . Designation of Bonds as “Qualified Tax-Exempt Obligations” ........................... 13 Section 15 . Refunding or Defeasance of the Bonds ................................................................ 14 Section 16 . Bond Fund and Deposit of Bond Proceeds ........................................................... 15 Section 17 . Approval of Bond Purchase Contract ................................................................... 15 Section 18 . Refunding of the Refunded Bonds ........................................................................ 16 Section 19 . Call for Redemption of the Refunded Bonds ........................................................ 19 Section 20 . City Findings with Respect to Refunding ............................................................. 19 Section 21 . Preliminary Official Statement Deemed Final ...................................................... 20 Section 22 . Undertaking to Provide Continuing Disclosure .................................................... 20 Section 23 . Effective Date of Ordinance ................................................................................. 23 -1- 51070284.3 CITY OF ARLINGTON, WASHINGTON ORDINANCE NO. _______ AN ORDINANCE of the City of Arlington, Washington, providing for the issuance of $__________ par value of Limited Tax General Obligation and Refunding Bonds, 2010 to provide funds to pay a part of the cost of purchasing airport land, remodeling Fire Station #46 and to advance refund a portion of the City’s outstanding Limited Tax General Obligation Bonds, 2001, fixing certain terms and covenants of the bonds; and approving the sale of the bonds to Piper Jaffray & Co. of Seattle, Washington. WHEREAS, the City of Arlington, Washington (the “City”), is in need of purchasing airport land and remodeling Fire Station #46 (the “Projects”), the estimated cost of which is $_______________, and the City does not have available sufficient funds to pay the cost; and WHEREAS, pursuant to Ordinance No. 1267, the City of Arlington, Washington (the “City”) issued its $4,400,000 par value Limited Tax General Obligation Bonds, 2001 (the “2001 Bonds”), for the purpose of providing a portion of the funds to construct a new city hall/police facility, make certain street improvements, construct a skate board park, and acquire land for a fire station, and by that ordinance reserved the right to redeem the 2001 Bonds maturing on or after October 1, 2012, prior to their maturity at any time on or after October 1, 2011, at a price of par plus accrued interest to the date fixed for redemption; and WHEREAS, there are presently outstanding $3,375,000 par value of 2001 Bonds maturing on October 1 of each of the years 2012 through 2021, inclusive, and bearing various interest rates from 4.25% to 4.90% (the “Refunded Bonds”); and WHEREAS, it appears to the City Council that the Refunded Bonds may be refunded by the issuance and sale of the limited tax general obligation and refunding bonds authorized herein (the “Bonds”) so that a savings will be effected by the difference between the principal and interest cost over the life of the Bonds and the principal and interest cost over the life of the -2- 51070284.3 Refunded Bonds but for such refunding, which refunding will be effected by carrying out the Refunding Plan (as hereinafter defined); and WHEREAS, the City Council deems it to be in the best interests of the City to issue and sell the Bonds to pay (a) part of the costs of the Projects; (b) the cost of refunding the Refunded Bonds; and (c) the administrative costs of such refunding and the costs of issuance and sale of the Bonds; and WHEREAS, the Piper Jaffray & Co. of Seattle, Washington, has offered to purchase the Bonds under the terms hereinafter set forth in the form of a bond purchase contract; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARLINGTON, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: “Acquired Obligations” means those United States Treasury Certificates of Indebtedness, Notes, and Bonds--State and Local Government Series and other direct, noncallable obligations of the United States of America purchased to accomplish the refunding of the Refunded Bonds as authorized by this ordinance. “Bond Fund” means the Limited Tax General Obligation and Refunding Bond Fund, 2010, created by this ordinance for the payment of the Bonds. “Bond Register” means the books or records maintained by the Bond Registrar containing the name and mailing address of the owner of each Bond and the principal amount and number of Bonds held by each owner. “Bond Registrar” means the Fiscal Agent. -3- 51070284.3 “Bonds” means the $__________ par value Limited Tax General Obligation and Refunding Bonds, 2010, of the City issued pursuant to and for the purposes provided in this ordinance. “City” means the City of Arlington, Washington, a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington. “Code” means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. “DTC” means the Depository Trust Company, New York, New York. “Fiscal Agent” means the fiscal agent of the State of Washington, as the same may be designated by the State from time to time. “Letter of Representations” means the Blanket Issuer Letter of Representations dated July 15, 1997, between the City and DTC, as it may be amended from time to time. “MSRB” means the Municipal Securities Rulemaking Board. “Projects” means the purchasing airport land and remodeling Fire Station #46. “Refunded Bonds” means the outstanding Limited Tax General Obligation Bonds, 2001, of the City maturing in the years 2012 through 2021, inclusive, issued pursuant to Resolution No. 1267, the refunding of which has been provided for by this ordinance. “Refunding Plan” means: (a) the placement of sufficient proceeds of the Bonds which, with other money of the City, if necessary, will acquire the Acquired Obligations to be deposited, with cash, if necessary, with the Refunding Trustee; (b) the payment of the principal of and interest on the Refunded Bonds when due up to and including October 1, 2011, and the call, payment, and redemption on October 1, 2011, of all of the then- outstanding Refunded Bonds at a price of par; and -4- 51070284.3 (c) the payment of the costs of issuing the Bonds and the costs of carrying out the foregoing elements of the Refunding Plan. “Refunding Trust Agreement” means a Refunding Trust Agreement between the City and the Refunding Trustee. “Refunding Trustee” means a bank or trust company appointed by the Finance Director to serve as trustee or escrow agent or any successor trustee or escrow agent. “SEC” means the United States Securities and Exchange Commission. Section 2. Debt Capacity. The assessed valuation of the taxable property within the City as ascertained by the last preceding assessment for City purposes for the calendar year 2010 is $2,239,257,103, and the City has outstanding general indebtedness evidenced by limited tax general obligation bonds, notes and interlocal financing agreements, in the principal amount of $[12,857,859] incurred within the limit of up to 1-1/2% of the value of the taxable property within the City permitted for general municipal purposes without a vote of the qualified voters therein, and no unlimited tax general obligation bonds incurred within the limit of up to 2 1/2% of the value of the taxable property within the City. Section 3. Authorization of Bonds. The City shall borrow money on the credit of the City and issue negotiable limited tax general obligation and refunding bonds evidencing that indebtedness in the amount of $__________, to provide the funds to pay a portion of the costs of the Projects, to refund the Refunded Bonds pursuant to the Refunding Plan, and pay the costs of issuance and sale of the bonds (the “costs of issuance”). The general indebtedness to be incurred shall be within the limit of up to 1-1/2% of the value of the taxable property within the City permitted for general municipal purposes without a vote of the qualified voters therein. Section 4. Description of Bonds. The bonds shall be called Limited Tax General Obligation and Refunding Bonds, 2010, of the City (the “Bonds”); shall be in the aggregate -5- 51070284.3 principal amount of $__________; shall be dated as of the date of their initial delivery; shall be in the denomination of $5,000 or any integral multiple thereof within a single maturity; shall be numbered separately in the manner and with any additional designation as the fiscal agent of the State of Washington (as the same may be designated by the State of Washington from time to time) (the “Bond Registrar”) deems necessary for purposes of identification; shall bear interest (computed on the basis of a 360-day year of twelve 30-day months) payable semiannually on each June 1 and December 1, commencing December 1, 2010, to the maturity or earlier redemption of the Bonds; and shall mature on December 1 in years and amounts and bear interest at the rates per annum as follows: Maturity Years Amounts Interest Rates Portions of the above maturity amounts are allocated to paying the respective costs of the Projects and of carrying out the Refunding Plan, including a ratable share of proceeds used to pay the costs of issuance of the Bonds, in accordance with the following schedule: Maturity Years Refunding Allocation New Money Allocation Total -6- 51070284.3 Section 5. Registration and Transfer of Bonds. The Bonds shall be issued only in registered form as to both principal and interest and shall be recorded on books or records maintained by the Bond Registrar (the “Bond Register”). The Bond Register shall contain the name and mailing address of the owner of each Bond and the principal amount and number of each of the Bonds held by each owner. Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized denomination of an equal aggregate principal amount and of the same interest rate and maturity. Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to the Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee. The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days preceding any principal payment or redemption date. The Bonds initially shall be registered in the name of Cede & Co., as the nominee of The Depository Trust Company, New York, New York (“DTC”). The Bonds so registered shall be held in fully immobilized form by DTC as depository in accordance with the provisions of a Blanket Issuer Letter of Representations dated July 15, 1997 between the City and DTC (as it may be amended from time to time, the “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 with respect to the Bonds regarding accuracy of any records maintained by DTC or DTC participants of any amount in respect of principal of or interest on the Bonds, or any notice which is permitted or required to be given to registered owners hereunder (except such notice as is required to be given by the Bond Registrar to DTC). For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its successor depository shall be deemed to be the registered owner for all purposes hereunder and -7- 51070284.3 all references to registered owners, bondowners, bondholders or the like shall mean DTC or its nominee and, except for the purpose of the City’s undertaking herein to provide continuing disclosure, shall not mean the owners of any beneficial interests in the Bonds. Registered ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to any successor of DTC or its nominee, if that successor shall be qualified under any applicable laws to provide the services proposed to be provided by it; (ii) to any substitute depository appointed by the City or such substitute depository’s successor; or (iii) to any person if the Bonds are no longer held in immobilized form. 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 City that it no longer wishes to continue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the City may 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. If (i) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository can be obtained, or (ii) the City determines that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any person as provided herein and the Bonds no longer shall be held in fully immobilized form. Section 6. Payment of Bonds. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be paid by checks or drafts of the Bond Registrar mailed on the interest payment date to the registered owners at the addresses appearing on the Bond Register on the 15th day of the month preceding the interest payment date or, if requested in writing by a registered owner of $1,000,000 or more -8- 51070284.3 in principal amount of Bonds prior to the applicable record date, by wire transfer on the interest payment date. Principal of the Bonds shall be payable upon presentation and surrender of the Bonds by the registered owners to the Bond Registrar. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, payment of principal of and interest on the Bonds shall be made in the manner set forth in the Letter of Representations. Section 7. Redemption Provisions and Open Market Purchase of Bonds. Bonds maturing in the years 2010 through 2019, inclusive, shall be issued without the right or option of the City to redeem those Bonds prior to their stated maturity dates. The City reserves the right and option to redeem the Bonds maturing on or after December 1, 2020, prior to their stated maturity dates at any time on or after June 1, 2020, as a whole or in part (within one or more maturities selected by the City and randomly within a maturity in such manner as the Bond Registrar shall determine), at par plus accrued interest to the date fixed for redemption. Term Bonds maturing on December 1, 20[20] with an interest rate of _____% and on December 1, 20[30] with an interest rate of _____%, are subject to extraordinary call prior to their stated maturity dates at any time on or after December 1, 2013, as a whole or in part, at par plus accrued interest to the date fixed for redemption, solely from federal grants for the purchase of land for the airport. Bonds maturing in 20[20] and 20[30] are Term Bonds and, if not redeemed under the optional redemption provisions set forth above or purchased in the open market under the provisions set forth below, shall be called for redemption randomly (in such manner as the Bond Registrar shall determine) at par plus accrued interest on December 1 in years and amounts as follows: Mandatory Redemption Years Mandatory Redemption Amounts -9- 51070284.3 * * Maturity. If the City redeems under the optional redemption provisions, purchases in the open market or defeases Term Bonds, the par amount of the Term Bonds so redeemed, purchased or defeased (irrespective of their actual redemption or purchase prices) shall be credited against one or more scheduled mandatory redemption amounts for those Term Bonds. The City shall determine the manner in which the credit is to be allocated and shall notify the Bond Registrar in writing of its allocation at least 60 days prior to the earliest mandatory redemption date for that maturity of Term Bonds for which notice of redemption has not already been given. Portions of the principal amount of any Bond, in installments of $5,000 or any integral multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is redeemed, upon surrender of that Bond to the Bond Registrar, there shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds, at the option of the registered owner) of the same maturity and interest rate in any of the denominations authorized by this ordinance in the aggregate principal amount remaining unredeemed. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, selection of Bonds for redemption shall be in accordance with the Letter of Representations. The City further reserves the right and option to purchase any or all of the Bonds in the open market at any time at any price acceptable to the City plus accrued interest to the date of purchase. All Bonds purchased or redeemed under this section shall be canceled. -10- 51070284.3 Section 8. Notice of Redemption. While the Bonds are held by DTC in book-entry only form, any notice of redemption shall be given at the time, to the entity and in the manner required by DTC in accordance with the Letter of Representations, and the Bond Registrar shall not be required to give any other notice of redemption. If the Bonds cease to be in book-entry only form, the City shall cause notice of any intended redemption of Bonds to be given by the Bond Registrar not less than 30 nor more than 60 days prior to the date fixed for redemption by first-class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and the requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided, whether or not it is actually received by the owner of any Bond. In the case of an optional redemption, the notice may state that the City retains the right to rescind the redemption notice and the related optional redemption of Bonds by giving a notice of rescission to the affected registered owners at any time prior to the scheduled optional 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. Interest on Bonds called for redemption shall cease to accrue on the date fixed for redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the call. In addition, the redemption notice shall be mailed within the same period, postage prepaid, to the MSRB, to any nationally recognized rating agency which at the time maintains a rating on the Bonds at the request of the City, and to such other persons and with such additional information as the City shall determine, but these additional mailings shall not be a condition precedent to the redemption of Bonds. -11- 51070284.3 Section 9. Failure To Redeem Bonds. If any Bond is not redeemed when properly presented at its maturity or call date, the City shall be obligated to pay interest on that Bond at the same rate provided in the Bond from and after its maturity or call date until that Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the bond redemption fund hereinafter created and the Bond has been called for payment by giving notice of that call to the registered owner thereof. Section 10. Pledge of Taxes. For as long as any of the Bonds are outstanding, the City irrevocably pledges to include in its budget and levy taxes annually within the constitutional and statutory tax limitations provided by law without a vote of the electors of the City on all of the taxable property within the City in an amount sufficient, together with other money legally available and to be used therefor, to pay when due the principal of and interest on the Bonds, and the full faith, credit and resources of the City are pledged irrevocably for the annual levy and collection of those taxes and the prompt payment of that principal and interest. Section 11. Form and Execution of Bonds. The Bonds shall be prepared in a form consistent with the provisions of this ordinance and state law and shall be signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. Only Bonds bearing a Certificate of Authentication in the following form, manually signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: CERTIFICATE OF AUTHENTICATION This Bond is one of the fully registered City of Arlington, Washington, Limited Tax General Obligation and Refunding Bonds, 2010, described in the Bond Ordinance. -12- 51070284.3 WASHINGTON STATE FISCAL AGENT Bond Registrar By Authorized Signer The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. If any officer whose facsimile signature appears on the Bonds ceases to be an officer of the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on the date of issuance of the Bonds. Section 12. Duties of Bond Registrar. The Bond Registrar shall keep, or cause to be kept, sufficient books for the registration and transfer of the Bonds, which shall be open to inspection by the City at all times. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of the Bonds and this ordinance, to serve as the City’s paying agent for the Bonds and to carry out all of the Bond Registrar’s powers and duties under this ordinance. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar’s Certificate of Authentication on the Bonds. The Bond Registrar may become the owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the -13- 51070284.3 extent permitted by law, may act as depository for and permit any of its officers or directors to act as members of, or in any other capacity with respect to, any committee formed to protect the rights of Bond owners. Section 13. Preservation of Tax Exemption for Interest on Bonds. The City covenants that it will take all actions necessary to prevent interest on the Bonds from being included in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be included in gross income for federal income tax purposes. The City also covenants that it will, to the extent the arbitrage rebate requirement of Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”), is applicable to the Bonds, take all actions necessary to comply (or to be treated as having complied) with that requirement in connection with the Bonds, including the calculation and payment of any penalties that the City has elected to pay as an alternative to calculating rebatable arbitrage, and the payment of any other penalties if required under Section 148 of the Code to prevent interest on the Bonds from being included in gross income for federal income tax purposes. Section 14. Designation of Bonds as “Qualified Tax-Exempt Obligations.” The City has determined and certifies that (a) the Bonds are not “private activity bonds” within the meaning of Section 141 of the Code; (b) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) which the City and any entity subordinate to the City (including any entity that the City controls, that derives its authority to issue tax-exempt obligations from the City, or that issues tax-exempt obligations on behalf of the City) will issue during the calendar year in which -14- 51070284.3 the Bonds are issued will not exceed $30,000,000; and (c) the amount of tax-exempt obligations, including the Bonds, designated by the City as “qualified tax-exempt obligations” for the purposes of Section 265(b)(3) of the Code during the calendar year in which the Bonds are issued does not exceed $30,000,000. The City designates the Bonds as “qualified tax-exempt obligations” for the purposes of Section 265(b)(3) of the Code. Section 15. Refunding or Defeasance of the Bonds. The City may issue refunding bonds pursuant to the laws of the State of Washington or use money available from any other lawful source to pay when due the principal of and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such then-outstanding Bonds (hereinafter collectively called the “defeased Bonds”) and to pay the costs of the refunding or defeasance. If money and/or “government obligations” (as defined in chapter 39.53 RCW, as now or hereafter amended) maturing at a time or times and bearing interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or defease the defeased Bonds in accordance with their terms are set aside in a special trust fund or escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased Bonds (hereinafter called the “trust account”), then all right and interest of the owners of the defeased Bonds in the covenants of this ordinance and in the funds and accounts obligated to the payment of the defeased Bonds shall cease and become void. The owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account. The City shall include in the refunding or defeasance plan such provisions as the City deems necessary for the random selection of any defeased Bonds that constitute less than all of a particular maturity of the Bonds, for notice of the defeasance to be given to the owners of the defeased Bonds and to such other persons as the City shall determine, -15- 51070284.3 and for any required replacement of Bond certificates for defeased Bonds. The defeased Bonds shall be deemed no longer outstanding, and the City may apply any money in any other fund or account established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall determine. If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for notices of redemption of Bonds. Section 16. Bond Fund and Deposit of Bond Proceeds. There is created and established in the office of the Finance Director a special fund designated as the Limited Tax General Obligation and Refunding Bond Fund, 2010 (the “Bond Fund”), for the purpose of paying principal of and interest on the Bonds. All taxes collected for and allocated to the payment of the principal of and interest on the Bonds shall be deposited in the Bond Fund. The principal proceeds and premium, if any, received from the sale and delivery of the Bonds other than the amount necessary to refund the Refunded Bonds, shall be paid into the project account designated by the Finance Director (the “Project Fund”) and used for the purposes specified in Section 2 of this ordinance. Until needed to pay the costs of the Projects and costs of issuance of the Bonds, the City may invest principal proceeds temporarily in any legal investment, and the investment earnings may be retained in the Project Fund and be spent for the purposes of that fund. Section 17. Approval of Bond Purchase Contract. Piper Jaffray & Co. of Seattle, Washington, has presented a purchase contract (the “Bond Purchase Contract”) to the City offering to purchase the Bonds under the terms and conditions provided in the Bond Purchase Contract. The City Council finds that entering into the Bond Purchase Contract is in the City’s -16- 51070284.3 best interest and therefore accepts the offer contained therein and authorizes its execution by City officials. The Bonds will be printed at City expense and will be delivered to the purchaser in accordance with the Bond Purchase Contract, with the approving legal opinion of Foster Pepper PLLC, municipal bond counsel of Seattle, Washington, regarding the Bonds. The proper City officials are authorized and directed to do everything necessary for the prompt delivery of the Bonds to the purchaser and for the proper application and use of the proceeds of the sale thereof. Section 18. Refunding of the Refunded Bonds. (a) Appointment of Refunding Trustee. The Finance Director is authorized to appoint a bank or trust company to act as Refunding Trustee. (b) Use of Bond Proceeds; Acquisition of Acquired Obligations. A sufficient amount of the proceeds of the sale of the Bonds shall be deposited immediately upon the receipt thereof with the Refunding Trustee and used to discharge the obligations of the City relating to the Refunded Bonds under Ordinance No. 1267 by providing for the payment of the amounts required to be paid by the Refunding Plan. To the extent practicable, such obligations shall be discharged fully by the Refunding Trustee’s simultaneous purchase of the Acquired Obligations, bearing such interest and maturing as to principal and interest in such amounts and at such times so as to provide, together with a beginning cash balance, if necessary, for the payment of the amount required to be paid by the Refunding Plan. The Acquired Obligations are listed and more particularly described in the Refunding Trust Agreement between the City and the Refunding Trustee, but are subject to substitution as set forth below. Any Bond proceeds or other money deposited with the Refunding Trustee not needed to purchase the Acquired -17- 51070284.3 Obligations and provide a beginning cash balance, if any, and pay the costs of issuance of the Bonds shall be returned to the City at the time of delivery of the Bonds to the initial purchaser thereof and deposited in the Project Fund to pay costs of the Projects. (c) Substitution of Acquired Obligations. Prior to the purchase of any Acquired Obligations by the Refunding Trustee, the City reserves the right to substitute other direct, noncallable obligations of the United States of America (“Substitute Obligations”) for any of the Acquired Obligations and to use any savings created thereby for any lawful City purpose if, (a) in the opinion of Foster Pepper PLLC, the City’s bond counsel, the interest on the Bonds and the Refunded Bonds will remain excluded from gross income for federal income tax purposes under Sections 103, 148, and 149(d) of the Code, and (b) such substitution shall not impair the timely payment of the amounts required to be paid by the Refunding Plan, as verified by a nationally recognized independent certified public accounting firm. After the purchase of the Acquired Obligations by the Refunding Trustee, the City reserves the right to substitute therefor cash or Substitute Obligations subject to the conditions that such money or securities held by the Refunding Trustee shall be sufficient to carry out the Refunding Plan, that such substitution will not cause the Bonds or the Refunded Bonds to be arbitrage bonds within the meaning of Section 148 of the Code and regulations thereunder in effect on the date of such substitution and applicable to obligations issued on the issue dates of the Bonds and the Refunded Bonds, as applicable, and that the City obtain, at its expense: (1) a verification by a nationally recognized independent certified public accounting firm acceptable to the Refunding Trustee confirming that the payments of principal of and interest on the substitute securities, if paid when due, and any other money held by the Refunding Trustee will be sufficient to carry out the Refunding Plan; and (2) an opinion from Foster Pepper PLLC, bond -18- 51070284.3 counsel to the City, its successor, or other nationally recognized bond counsel to the City, to the effect that the disposition and substitution or purchase of such securities, under the statutes, rules, and regulations then in force and applicable to the Bonds, will not cause the interest on the Bonds or the Refunded Bonds to be included in gross income for federal income tax purposes and that such disposition and substitution or purchase is in compliance with the statutes and regulations applicable to the Bonds. Any surplus money resulting from the sale, transfer, other disposition, or redemption of the Acquired Obligations and the substitutions therefor shall be released from the trust estate and transferred to the City to be used for any lawful City purpose. (d) Administration of Refunding Plan. The Refunding Trustee is authorized and directed to purchase the Acquired Obligations (or substitute obligations) and to make the payments required to be made by the Refunding Plan from the Acquired Obligations (or substitute obligations) and money deposited with the Refunding Trustee pursuant to this ordinance. All Acquired Obligations (or substitute obligations) and the money deposited with the Refunding Trustee and any income therefrom shall be held irrevocably, invested and applied in accordance with the provisions of Ordinance No. 1267, this ordinance, chapter 39.53 RCW and other applicable statutes of the State of Washington and the Refunding Trust Agreement. All necessary and proper fees, compensation, and expenses of the Refunding Trustee for the Bonds and all other costs incidental to the setting up of the escrow to accomplish the refunding of the Refunded Bonds and costs related to the issuance and delivery of the Bonds, including bond printing, verification fees, bond counsel’s fees, and other related expenses, shall be paid out of the proceeds of the Bonds. (e) Authorization for Refunding Trust Agreement. To carry out the Refunding Plan provided for by this ordinance, the Mayor or Finance Director of the City is authorized and -19- 51070284.3 directed to execute and deliver to the Refunding Trustee a Refunding Trust Agreement setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection with the payment, redemption, and retirement of the Refunded Bonds as provided herein and stating that the provisions for payment of the fees, compensation, and expenses of such Refunding Trustee set forth therein are satisfactory to it. Prior to executing the Refunding Trust Agreement, the Mayor or Finance Director of the City is authorized to make such changes therein that do not change the substance and purpose thereof or that assure that the escrow provided therein and the Bonds are in compliance with the requirements of federal law governing the exclusion of interest on the Bonds from gross income for federal income tax purposes. Section 19. Call for Redemption of the Refunded Bonds. The City calls for redemption on October 1, 2011, all of the Refunded Bonds at par plus accrued interest. Such call for redemption shall be irrevocable after the delivery of the Bonds to the initial purchaser thereof. The date on which the Refunded Bonds are herein called for redemption is the first date on which those bonds may be called. The proper City officials are authorized and directed to give or cause to be given such notices as required, at the times and in the manner required, pursuant to Ordinance No. 1267 in order to effect the redemption prior to their maturity of the Refunded Bonds. Section 20. City Findings with Respect to Refunding. The City Council finds and determines that the issuance and sale of the Bonds at this time will effect a savings to the City and is in the best interest of the City and its taxpayers and in the public interest. In making such finding and determination, the City Council has given consideration to the fixed maturities of the Bonds and the Refunded Bonds, the costs of issuance of the Bonds and the known earned income -20- 51070284.3 from the investment of the proceeds of the issuance and sale of the Bonds pending payment and redemption of the Refunded Bonds. The City Council further finds and determines that the money to be deposited with the Refunding Trustee for the Refunded Bonds in accordance with Section 18 of this ordinance will discharge and satisfy the obligations of the City under Ordinance No. 1267 with respect to the Refunded Bonds, and the pledges, charges, trusts, covenants, and agreements of the City therein made or provided for as to the Refunded Bonds, and that the Refunded Bonds shall no longer be deemed to be outstanding under such ordinance immediately upon the deposit of such money with the Refunding Trustee. Section 21. Preliminary Official Statement Deemed Final. The City Council has been provided with copies of a preliminary official statement (the “Preliminary Official Statement”), prepared in connection with the sale of the Bonds. For the sole purpose of the Bond purchaser’s compliance with Securities and Exchange Commission Rule 15c2-12(b)(1), the City “deems final” that Preliminary Official Statement as of its date, except for the omission of information as to offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, maturity dates, options of redemption, delivery dates, ratings and other terms of the Bonds dependent on such matters. Section 22. Undertaking to Provide Continuing Disclosure. To meet the requirements of United States Securities and Exchange Commission (“SEC”) Rule 15c2-12(b)(5) (the “Rule”), as applicable to a participating underwriter for the Bonds, the City makes the following written undertaking (the “Undertaking”) for the benefit of holders of the Bonds: (a) Undertaking to Provide Annual Financial Information and Notice of Material Events. The City undertakes to provide or cause to be provided, either directly or through a designated agent, to the Municipal Securities Rulemaking -21- 51070284.3 Board (the ‘MSRB”), in an electronic format as prescribed by the MSRB, accompanied by identifying information as prescribed by the MSRB: (i) Annual financial information and operating data of the type included in the final official statement for the Bonds and described in subsection (b) of this section (“annual financial information”); (ii) Timely notice of the occurrence of any of the following events with respect to the Bonds, if material: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (7) modifications to rights of holders of the Bonds; (8) Bond calls (other than scheduled mandatory redemptions of Term Bonds); (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds; and (11) rating changes; and (iii) Timely notice of a failure by the City to provide required annual financial information on or before the date specified in subsection (b) of this section. (b) Type of Annual Financial Information Undertaken to be Provided. The annual financial information that the City undertakes to provide in subsection (a) of this section: (i) Shall consist of (1) annual financial statements prepared (except as noted in the financial statements) in accordance with applicable generally accepted accounting principles promulgated by the Government Accounting Standards Board (“GASB”), as such principles may be changed from time to time, which statements shall not be audited, except, however, that if and when audited financial statements are otherwise prepared and available to the City they will be provided; (2) authorized, issued and outstanding balance of general obligation bonds; (3) assessed valuation for the fiscal year; and (4) regular property tax levy rate and regular property tax levy rate limit for the fiscal year; (ii) Shall be provided not later than the last day of the ninth month after the end of each fiscal year of the City (currently, a fiscal year ending December 31), as such fiscal year may be changed as required or permitted by State law, commencing with the City’s fiscal year ending December 31, 2010; and (iii) May be provided in a single or multiple documents, and may be incorporated by specific reference to documents available to the public on the Internet website of the MSRB or filed with the SEC. -22- 51070284.3 (c) Amendment of Undertaking. The Undertaking is subject to amendment after the primary offering of the Bonds without the consent of any holder of any Bond, or of any broker, dealer, municipal securities dealer, participating underwriter, rating agency or the MSRB, under the circumstances and in the manner permitted by the Rule. The City will give notice to the MSRB of the substance (or provide a copy) of any amendment to the Undertaking and a brief statement of the reasons for the amendment. If the amendment changes the type of annual financial information to be provided, the annual financial information containing the amended financial information will include a narrative explanation of the effect of that change on the type of information to be provided. (d) Beneficiaries. The Undertaking evidenced by this section shall inure to the benefit of the City and any holder of Bonds, and shall not inure to the benefit of or create any rights in any other person. (e) Termination of Undertaking. The City’s obligations under this Undertaking shall terminate upon the legal defeasance of all of the Bonds. In addition, the City’s obligations under this Undertaking shall terminate if those provisions of the Rule which require the City to comply with this Undertaking become legally inapplicable in respect of the Bonds for any reason, as confirmed by an opinion of nationally recognized bond counsel or other counsel familiar with federal securities laws delivered to the City, and the City provides timely notice of such termination to the MSRB. (f) Remedy for Failure to Comply with Undertaking. As soon as practicable after the City learns of any failure to comply with the Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected. No failure by the City or other obligated person to comply with the Undertaking shall constitute a default in respect of the Bonds. The sole remedy of any holder of a Bond shall be to take such actions as that holder deems necessary, including seeking an order of specific performance from an appropriate court, to compel the City or other obligated person to comply with the Undertaking. (g) Designation of Official Responsible to Administer Undertaking. The Finance Director of the City (or such other officer of the City who may in the future perform the duties of that office) or his or her designee is authorized and directed in his or her discretion to take such further actions as may be necessary, appropriate or convenient to carry out the Undertaking of the City in respect of the Bonds set forth in this section and in accordance with the Rule, including, without limitation, the following actions: (i) Preparing and filing the annual financial information undertaken to be provided; -23- 51070284.3 (ii) Determining whether any event specified in subsection (a) has occurred, assessing its materiality with respect to the Bonds, and, if material, preparing and disseminating notice of its occurrence; (iii) Determining whether any person other than the City is an “obligated person” within the meaning of the Rule with respect to the Bonds, and obtaining from such person an undertaking to provide any annual financial information and notice of material events for that person in accordance with the Rule; (iv) Selecting, engaging and compensating designated agents and consultants, including but not limited to financial advisors and legal counsel, to assist and advise the City in carrying out the Undertaking; and (v) Effecting any necessary amendment of the Undertaking. Section 23. Effective Date of Ordinance. This ordinance shall take effect and be in force from and after its passage and five days following its publication as required by law. PASSED by the City Council of the City of Arlington, Washington, at an open public meeting thereof, this 2nd day of August, 2010. Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney 51070284.3 CERTIFICATION I, the undersigned, City Clerk of the City of Arlington, Washington (the “City”), hereby certify as follows: 1. The attached copy of Ordinance No. ____ (the “Ordinance”) is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on August 2, 2010, as that ordinance appears on the minute book of the City; and the Ordinance will be in full force and effect five days after publication in the City’s official newspaper; and 2. A quorum of the members of the City Council was present throughout the meeting and a majority of those members present voted in the proper manner for the passage of the Ordinance. IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of August, 2010. CITY OF ARLINGTON, WASHINGTON _____________________________________ City Clerk City of Arlington Council Agenda Bill AGENDA ITEM: ATTACHMENT E COUNCIL MEETING DATE: July 26th, 2010 SUBJECT: Snohomish County ILA for equipment space in the Snohomish County Data Center DEPARTMENT OF ORIGIN: CONTACT: Bryan Terry, IT 403-4610 ATTACHMENTS: Interlocal Agreement and Supplemental Work order from Snohomish County EXPENDITURES REQUESTED: $600/year BUDGET CATEGORY: To be determined LEGAL REVIEW: City Attorney has reviewed document DESCRIPTION: In order to utilize the fiber from SERS/Blackrock, we need to have some equipment housed in the Snohomish County Datacenter. As part of the Department of Homeland Security grant that the Police Chiefs received, it is to include the switching gear that is needed to make the connection. We need to lease rack space at $50/month from the County to help cover their costs of electricity, climate control and Snohomish County DIS staff time for maintenance. HISTORY: ALTERNATIVES: 1. Table for additional review 2. Do nothing RECOMMENDED ACTION:. No action is requested at this time. Supplemental Work Order Fiber Connectivity between COA and SCDIS This Supplemental Work Order (SWO) is executed by the Snohomish County, a political subdivision of the State of Washington, through its Department of Information Services (SCDIS) and the City of Arlington, a municipal corporation of the State of Washington (COA) pursuant to the terms and conditions of the Intergovernmental Services Agreement to Provide Information Technology Services signed and filed under Snohomish County Auditor’s number (ISA) . The parties acknowledge they have read and understand the terms and conditions therein. All rights and obligations of the parties shall be subject to and governed by the terms of the ISA. This SWO sets forth the obligations of the parties with respect to SCDIS’s provision of services to COA. This SWO also serves as the Service Level Agreement between COA and SCDIS. 1. Purpose and Scope of Work Purpose: SCDIS will provide COA 1 RU space within Snohomish County’s data center for the purpose of cross connections to State, County, and other participating agencies. Scope of Work: SCDIS will provide single mode fiber cross connect between SCDIS Blackrock demark and COA switching equipment in Meet Me cabinet. SDIS will mount, provide power, and energize COA’s network equipment. The specific services covered by this SWO includes the “Primary” items listed in Appendix A – Services Listing and any item directly “associated” with the primary item after acceptance by SCDIS per terms of Section 5 (ACCEPTANCE OF WORK). 2. Term and Termination The term of this SWO is effective upon the date of execution by both parties for the period of five (5) years unless extended or terminated upon written notification to the other party. Either party may cancel or terminate this SWO upon ninety (90) day’s written notification to the other party. In the event the ISA is terminated, this SWO shall also terminate on the ISA termination date. 3. Liability Neither party shall be liable to the other for claims, actions or damages, including direct, consequential, special or otherwise, for failure to comply with the terms and conditions of this SWO. 4. Designated Points of Contact and Escalation Points. SCDIS’s designated point of contact for COA to request Support Services, contact Service personnel, request problem status updates, and receive problem resolutions is via the SCDIS Help Desk at (425) 388- 3378, Monday – Friday, 7:30 a.m. – 5:00 p.m. Schedule is subject to change by written notice from SCDIS. SCDIS Contacts and Escalation Points: Service Desk 425-388-3378 Client Services Supervisor 425-388-3938 Networking / Telecom Supervisor (Secondary) 425-388-7171 Systems Manager (Primary) 425-388-3212 Technology Coordinator 425-388-3904 Director: 425-388-3730 FAX: 425-388-3999 COA’s designated point of contact for SCDIS to send invoices, address issues, and otherwise conduct business shall be: Contact Information: City of Arlington Primary Contact: Bryan Terry 360-403-4610 City of Arlington Secondary Contacts: Tony Harrell 360-403-3430 COA Informational Escalation Points: 1st 2 Level Escalation Tony Harrell 360-403-3430 425-754-1226 nd Level Escalation Bryan Terry 360-403-4610 360-913-7001 5. Acceptance of Work SCDIS will invoice COA for this work; and subsequently on a yearly basis for the monthly recurring costs of the Network / Integration services deliverables as specified in Appendix A of this SWO. Payment of invoices will indicate to SCDIS acceptance of work and services performed for COA. 6. Declined Equipment NO equipment is provided by this SWO. All equipment maintenance is the responsibility of COA. 7. Pricing and Service Fees The pricing and fee schedule for services provided by SCDIS are outlined in Appendix A of this SWO. 8. Billing and Invoicing Billing and invoicing will be in accordance with procedures outlined in the ISA. Customer will be billed yearly 9. Modifications / Changes for services rendered. Customer will be billed in full for services rendered up to and including the date DIS receives Customer’s cancellation or change request. This SWO may be modified at any time upon mutual written agreement of the parties. All such modifications will be made as an amendment to this SWO and will take precedence over the original SWO. 10. Order of Precedence If there is a conflict between this SWO and the ISA, the conflict will be resolved by giving precedence first to this SWO and then to the ISA. 11. Assignment This SWO may not be assigned by either party to a third party without the prior written consent of COA or SCDIS. 12. Responsibilities and Service Level Expectations SCDIS Responsibilities: 1. Provide COA’s fiber vendor a termination point for a single pair of single mode fiber. 2. Provide COA 1Us of rack space and UPS power in SCDIS’s Data Center for an Ethernet switch. 3. Provide path for fiber or single mode fiber between termination point and COA’s equipment. 4. Provide COA access to the SCDIS Data Center during normal business hours (M-F, 8:00 AM – 5:00 PM). 5. Provide emergency access to the SCDIS Data Center. 6. Complete the work authorized under each SWO and described in Appendix A and B. COA Responsibilities : 1. Provide fiber connectivity between COA and SCDIS data facilities. 2. Provide Ethernet Switching equipment for 2RU rack space within Snohomish County Data Center. 3. Maintenance of Ethernet Switching equipment. SCDIS takes no ownership when it comes to the repair of COA owned equipment, SCDIS will provide escorted access to the Network Operations Center (NOC) between the hours of 6:00 AM and 7:00PM Monday through Friday and 7 am to 3pm Saturdays. Access to Network Operations center after hours or on Sundays will result in a three (3) hour charge at $100.00 per hour. Contact 425.388.3378 for access to the facility. a) Emergency Response: Network outage, multi-user outage/critical event, City of Arlington is unable to conduct business. Response Time 2 Hours The assigned primary response contact will make contact within 1 hour of receiving notification from either the Help Desk or Management. If contact is not made within ½ hour the call receiver will contact the secondary support contact. If still unable to contact, the appropriate supervisor will be contacted. The assigned response contact will schedule network operations access as necessary. b) Priority Problem Response: Network is impaired, COA is still able to conduct business; no practical workaround exists. Response Time 3 Hours The primary response contact will make contact with the customer. If contact is not made within 2 hours the call receiver will contact the secondary response contact. If still unable to contact, the appropriate supervisor will be contacted. The assigned response contact will schedule network operations access as necessary c) Routine Response: User is inconvenienced, or non-mission-critical application is impaired. Practical workaround exists. Response Time 3 Days (Maximum) The primary response contact will respond to this category of call when all other service requests of higher priority have been answered. Every effort will be made to respond within 3 business days. This category of call includes but is not limited to, training issues, minor operational issues, and minor system inconveniences. SWO Management Unless otherwise indicated, all correspondence regarding this SWO should be directed to: City of ARLINGTON Information Technology Manager Bryan Terry 238 N Olympic Ave, ARLINGTON, WA 98223 360-403-4610 Primary SCDIS Contact JD Braathen, Telecom Network Engineering Supervisor 3000 Rockefeller Ave. Everett, WA 98201 Ph: (425) 388.7171 Jd.braathen@snoco.org By their signatures, SCDIS and COA hereby acknowledge and accept the terms and conditions of this SWO. Approved Approved City of Arlington Snohomish County Department of Information Services. Signature Signature Print or Type Name MAYOR Print or Type Name DIRECTOR Title Date Title Date Appendix A - COA Services List SCDIS will provide the following services at the prepaid support rate identified below. Each after hours request has a 3 hours minimum. An additional $200.00 per incident will be charged for each after hours incident management/access and response in excess to the contracted 12 hours. Note: Access during normal business hours will be covered under the Net Equipment Hosting service. (Access to Data Center/SCDIS Assistance after hours). Network Services: Services Owner Function and Identification Qty Date of Activation LOC Monthly Charge Annual charge Net Equipment Hosting 1 Rack Unit Space, first 4 cross connects Connectivity/Equipment hosting 12 1/1/2009 SCDIS $50.00 $600.00 Recurring Charges: $50.00 $600.00 Optional Support Services: Services Owner Function and Identification Qty Date of Activation LOC Monthly Charge Annual charge Additional Cross Connects Cross Connects 6 1/1/2009 SCDIS $25 $300.00 $300.00 THIS APPENDIX IS NOT REFERENCED IN THE MSA OR THE SWO!! SEEMS TO NEED REFERENCE IN THE SWO SECTION 12 Appendix B - Basic Services Basic Services include: Co-location of City of Arlington equipment within the Snohomish County Data Center. Co-location space has been established for Ethernet switching equipment, and consists of 2 rack units. Hours of Service: Interactive: Monday through Friday 8:00AM through 5:00PM Maintenance: Monday-Friday *8:00AM through 5:00PM *Note: Saturday, Sunday, & Holidays Not Applicable. Resources may not always be available due to emergency and/or other contingencies. Scheduled Outage for Maintenance: Each Saturday between 7:00 AM and Noon is scheduled for regular maintenance. This is essential to network health. Intermittent outages will occur during this period. If for some reason you will be working during those periods then please contact the Help Desk at 425.388.3378 so that they might advise Network and Systems Engineers of your situation. A. Net Services Infrastructure Support Services and Maintenance SCDIS will provide services on SCDIS owned equipment as needed for standard transport services to include all time and materials necessary to return this service and its associated equipment to working condition upon failure. These devices and transport infrastructure will be owned, operated and configured by Snohomish County SCDIS. SCDIS will provide Data Center Net Equipment Hosting of COA owned equipment and transports in order to access SCDIS standard Transport Services: It will be incumbent on COA to return this service and its associated equipment to working condition upon failure. These devices, and transports will be owned, operated and configured by COA. Purchase, Delivery and Installation COA will purchase, own, prepare and deliver mutually agreed upon Ethernet Switching equipment for placement in the Snohomish County Data Center. Warranty Repair Assistance Warranty and Repair of COA electronics is solely the responsibility of COA. Help-Desk Dispatch and Telephone Support SCDIS will provide a single-point service to report suspected SCDIS problems which might involve SCDIS owned equipment and transports and to assist with Data Center access and escort arrangements. Logging calls and dispatching the appropriate resources as necessary for on-site resolution/escort. Provide telephone support to assist COA in the restoration of SCDIS Contracted Services. COA agrees to utilize this service to help insure that requests for assistance are proactively tracked and managed consistent with County practices. Basic Assistance Basic assistance is limited to efforts deemed reasonable by SCDIS to encourage and promote the sharing of knowledge and information consistent with building cooperative services of interest to both COA and SCDIS. In the event that SCDIS deems requests for assistance are beyond the scope of this SWO, SCDIS will work with COA to develop and recommend approaches to meet COA requirements. City of Arlington Council Agenda Bill AGENDA ITEM: ATTACHMENT F COUNCIL MEETING DATE: July 26th, 2010 SUBJECT: SERS/ Blackrock Cable Agreement for Snohomish County Fiber Ring DEPARTMENT OF ORIGIN: CONTACT: Bryan Terry, IT 403-4610 ATTACHMENTS: Interlocal Agreement Implementing Dark Fiber Optic Lease Facilitation Agreement. EXPENDITURES REQUESTED: $0 BUDGET CATEGORY: To be determined LEGAL REVIEW: City Attorney has reviewed document DESCRIPTION: This agreement is for 3 years of use at no cost of the Black Rock fiber ring that connects the following Cities to Snohomish County: Arlington, Edmonds, Lynnwood, Marysville, Mill Creek and Mukilteo. This fiber ring lease is funded using a Department of Homeland Security grant that the Police Chiefs applied for. HISTORY: ALTERNATIVES: 1. Table for additional review 2. Do nothing RECOMMENDED ACTION:. No action is requested at this time. City of Arlington Council Agenda Bill AGENDA ITEM: ATTACHMENT G COUNCIL MEETING DATE: July 26, 2010 SUBJECT: Purchase of Ambulance Unit DEPARTMENT OF ORIGIN: FIRE ATTACHMENTS: Purchase Proposal EXPENDITURES REQUESTED: $150,000 (Not to exceed) BUDGET CATEGORY: EMS LEGAL REVIEW: N/A DESCRIPTION: The City has an opportunity to purchase a 2009 ambulance “demonstration model” from Braun Northwest Inc. for a cost not to exceed $150,000. The base price of the unit including sales tax is $139,734 [$121,050 + 8%]. In addition to the purchase price there will be some costs to add lettering to the unit and install the radios from the old unit. We are trying to finalize these costs but may not have the final figures for the workshop. However, the additional costs will not exceed the $150,000 amount. The 2010 EMS budget has sufficient funds to make this purchase. HISTORY: Over the past several months the Department has begun to experience an increasing occurrence of mechanical break downs on the existing ambulance units (especially Medic 48 assigned to Station 48). These breakdowns have placed Medic 48 out of service sometimes for several days at a time. This unit has over 120,000 road miles and because of its mechanical condition it has become unreliable for immediate response. In an effort to investigate the immediate availability of ambulance units staff contacted 3 manufactures; Braun Northwest, Road Rescue and H&N Inc. Braun was the only manufacturer that responded to the inquiry and they have a unit immediately available. Braun is the company that furnished one of our units and refurbished another unit. City of Arlington Council Agenda Bill ALTERNATIVES: Continue to rely on borrowing equipment from neighboring agencies when breakdowns occur. RECOMMENDED ACTION: There is no action requested at this time.