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8.4 Issue T-Notes City Of Salina Request for Commission Action Date 7/10/2000 Time 4:00 PM 8 ORIGINATING DEPARTMENT: APPROVED FOR AGENDA AGENDA SECTION: FINANCE ITEM NO.: 4 BY: Rodney Franz ~ Item: Resolution # 00-5618 authorizing and directing the issuance, sale and delivery of $800,000 principal amount of General Obligation Temporary Notes, Series 2000-3 of the City of Salina, Kansas, providing funds to pay the cost of making certain street, drainage, subdivision, and other improvements in the City, and prescribing the form and details of said notes. Background: This action authorizes the sale of temporary notes to finance the development of East Bank Estates, Twin Oaks, and Woodland Hills subdivisions, and to re-finance the South 9th Street Water and Sewer Improvements. The total amount of notes to be issued is $800,000, with maturity of August 1,2001, at which time they will be rolled into long term financing. We will be receiving and opening bids on Monday, July 10 and will have a report at the meeting. Recommendation: A. Accept low bid for Temporary Note 2000-3 B. Adopt resolution #00-5618. :.Q Ii! en '0, ~ ,9 5 .~ "s. ~{'l .!!liS 3CIl mm ,.0 :5 "Om "Stn orn :<:-5 m::; me. VlO ....- OVl e::2 0..0 'S]i :Q:g ~~ ....- C ~,g Orn fj~ ::lo VlVl :Q.E ~>, =:(ij .!::o O~ e:u gQ) U"O ~2 c:e: ::l'- ~Vl >,.- ffi~ t;E :f.)~ :Drn ~U5 :J- ;:,rn ~~ ~o ~~ "m _e: :;).- :D's ~~ a.. ~-~ m~ ml- .Dc' mO (un ;5~ _Vl ~:~ Vlr:; ""u O::l CVl :>;E' ..6m ,go ....Vl ~=: 0.!l1 e:Vl m~ to.~ cU .Q~ rom :=::..c: u- ~a; VlU me: r:;::l -e: o.Q ~~ cn~ om -::l (j:;IT :to,- 00 PRELIMINARY OFFICIAL STATEMENT DATED JUl'\r:E 19, 2000 In the opinion of Gilmore & Bell, P.e., Kansas City, Missouri, Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended, the interest on the Notes and Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The interest on the Notes and Bonds is exemptfrom Kansas income taxation. The Notes and Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See TAX MATTERS herein. New Issue Book-Entry Only Bank Qualified Moody's Rating- "Applied For" $800,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2000-3 Dated: July 15,2000 Due: As Shown Herein The Series 2000-3 Notes (the "Notes") will be issued as fully registered notes in the denomination of $5,000 or any integral multiple thereof. The Notes shall be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York, to which payment of principal and interest will be made. Individual purchases of Notes will be made in book-entry form. Purchasers will not receive certificates representing their interest in the Notes purchased. Interest on the Notes will be payable at maturity. Principal and interest on the Notes will be payable by check, draft, or wire transfer from the City Treasurer (the "Note Paying Agent"). The Notes are subject to redemption at the option of the City as further described herein. MATURITY SCHEDULE (See Inside Front Cover) The Notes and interest thereon will constitute general obligations of the City, payable in part from special assessments levied upon the property benefited by the construction of certain improvements, from the proceeds of general obligation notes or bonds, or from both, and ifnot so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The balance of the Notes is payable from the proceeds of general obligation notes or bonds, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. See THE NOTES - "Security" herein. BIDS FOR THE PURCHASE OF THE NOTES WILL BE RECEIVED AT: CITY/COUNTY BUILDING, 300 WEST ASH, ROOM 206, SALINA, KANSAS 67402-0736, ATTENTION: BARBARA WEBER, ACTING CITY CLERK. ON OR BEFORE 1:00 P.M., CENTRAL DAYLIGHT TIME, ON MONDAY, JULY 10,2000. New Issue Book-Entry Only Bank Qualified Moody's Rating- Bidder's Option Insurance "Applied For" "Applied For" $3,885,000 (subject to change) CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2000-A Dated: July 15,2000 Due: As Shown Herein The Series 2000-A Bonds (the "Bonds") will be issued as fully registered bonds in the denomination of $5,000 or any integral multiple thereof. The Bonds shall be initially registered in the name of Cede & Co., as nominee of DTC to which payment of principal and interest will be made. Individual purchases of Bonds will be made in book-entry only form. Purchasers will not receive certificates representing their interest in the Bonds purchased. Principal on the Bonds will be payable on each October 1 in the years shown herein. Interest on the Bonds will be payable semiannually on April I and October I of each year until maturity, commencing on April I, 2001. The principal of and interest on the Bonds will be payable by check, draft, or wire transfer of the Treasurer of the State of Kansas (the "Bond Paying Agent). The Bonds are subject to redemption at the option of the City as further described herein. MATURITY SCHEDULE (See Inside Front Cover) The Bonds constitute general obligations ofthe City, payable as to both principal and interest in part from special assessments levied upon property benefited by the construction of certain improvements and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The balance of the Bonds are payable as to both principal and interest from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. See THE BONDS - "Security" herein. SEALED BIDS FOR THE PURCHASE OF THE BONDS WILL BE RECEIVED AT: CITY/COUNTY BUILDING, 300 WEST ASH, ROOM 206, SALINA, KANSAS 67402-0736, ATTENTION: BARBARA WEBER, ACTING CITY CLERK. ON OR BEFORE 2:00 P.M., CENTRAL DAYLIGHT TIME, ON MONDAY, JULY 10,2000. The Notes and Bonds are offered when, as and if issued by the City and received by the Successful Bidders subject to the approval of Bond Counsel. It is expected that the Notes and Bonds will be available for delivery through the facilities of The Depository Trust Company, New York, New York, on or about July 27, 2000. TIllS COVER PAGE CONTAINS INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THE ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMA nON ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. MATURITY SCHEDULES GENERAL OBLIGATION TEMPORARY NOTES SERIES 2000-3 Maturitv 08-01-01 Amount $800,000 Rate Price The Notes will be subject to redemption prior to maturity at the option of the City on Aprill, 2001, and any time thereafter, in whole or in part, upon thirty days written notice at a price equal to 100% of the principal amount thereof, plus interest accrued to the redemption date. See THE NOTES - "Redemption Provisions" herein. GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2000-A Maturitv Amount Rate Yield Maturity Amount Rate Yield 10-01-01 $335,000 10-01-09 $330,000 10-01-02 335,000 10-01-10* 330,000 10-01-03 330,000 10-01-11 * 115,000 10-01-04 330,000 10-01-12* 115,000 10-01-05 330,000 10-01-13* 115,000 10-01-06 330,000 10-01-14* 115,000 10-01-07 330,000 10-01-15* 115,000 10-01-08 330,000 *The Bonds maturing on or after October 1, 2010, will be subject to redemption prior to maturity at the option of the City on October 1,2009, and thereafter, as a whole on any date, or in part on any interest payment date, in principal amounts of$5,000 or any integral multiple thereof, at a price equal to 100% of the principal amount of Bonds to be redeemed plus accrued interest to the date fixed for redemption. See THE BONDS - "Redemption Provisions" herein. NOTICE OF SALE $800,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2000-3 AND $3,885,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2000-A OF THE CITY OF SALINA, KANSAS SALINA, KANSAS (the "City"), will receive bids addressed to BARBARA WEBER, ACTING CITY CLERK, at ROOM 206 AT THE CITY/COUNTY BUILDING, 300 WEST ASH, SALINA, KANSAS 67402-0736 (785-826-7240), on MONDAY, JULY 10, 2000 for the purchase of $800,000 principal amount of General Obligation Temporary Notes, Series 2000-3 (the "Notes") and $3,885,000 principal amount of General Obligation mtemal hnprovement Bonds, Series 2000-A, of the City (the "Bonds"), at which time and place such bids will be publicly read. Bids for the Notes will be read at 1:00 p.m., local time on that day. Bids for the Bonds will be read at 2:00 p.m., local time, on that day. The bids for the sale of the Notes and Bonds will be considered at a meeting of the City Commission at 4:00 p.m. on said day and the City Commission will thereafter accept the best bids or reject all bids at that meeting. No oral or auction bids will be considered. THE NOTES Not~ n~t::lils. The Notes will be dated July 15, 2000 and will become due on August 1, 2001. The Notes will consist of fully registered notes in the denomination of $5,000 or any integral multiple thereof. The Notes will bear interest from the dated date at the rate determined when the Notes are sold, which interest will be payable at maturity on August 1, 2001. Rook-Entry Only Syst~m. The Notes will initially be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, to which payments of principal of and interest on the Notes will be made. mdividual purchases of Notes will be made in book-entry form only. Purchasers will not receive certificates representing their interest in Notes purchased. Pl::lC~ of P::lym~nt ::lncl Not~ R~eistrntion. The interest on the Notes will be payable in lawful money of the United States of America by check, draft or wire transfer of funds from the Treasurer of the City (the "Note Paying Agent" and "Note Registrar"), to the registered owners whose names are on the registration books of the Note Registrar as of the fifteenth day (whether or not a business day) of the calendar month next preceding the interest payment date. The principal of the Notes will be payable to the registered owners thereof at the offices of the Note Paying Agent upon surrender of the Notes for cancellation and payment. Redemption of Note~ Prior to Matnrity. The Notes shall be subject to redemption prior to maturity at the principal amount thereof plus accrued interest thereon to the date of redemption from the proceeds of general obligation bonds issued to permanently finance certain improvements or from other available funds of the City. At the option of the City, Notes may be called for redemption in whole or in part (selection of Notes to be designated by the Note Registrar in such equitable manner as it may determine) on April I, 2001, or on any date thereafter, at the redemption price of 100% of the principal amount plus accrued interest thereon to the date of redemption. Whenever the Note Registrar is to select Notes for the purpose of redemption, it will, in the case of Notes in denominations greater than $5,000, if less than all of the Notes then outstanding are to be called for redemption, treat each $5,000 of face value of each such fully registered Note as though it were a separate Note in the denomination of $5,000. Unless waived by any owner of the Notes to be redeemed, if the City elects to call any Notes for redemption and payment prior to the maturity thereof, the City will cause the Note Registrar to give written notice of its intention to call and pay said Notes on a specified date, the same being described by maturity, said notice to be mailed by United States first class mail addressed to the owners of the Notes mailed not less than 30 days before the date fixed for redemption. The City shall also give such additional notice as may be required by Kansas law in effect as of the date of such notice. If any Note is called for redemption and payment, all interest on such Note will cease from the date for which such call is made, provided funds are available for its payment at the price specified. Anthority, P1l1po~e and Secnrity, The Notes are being issued pursuant to the laws of the State of Kansas, including without limitation K.S.A. 10-101 et seq. and, K.S.A l2-6aOl et seq., all as amended and supplemented, for the purpose of paying the cost of certain street, drainage, subdivision and other improvements in the City. The Notes and the interest thereon will constitute general obligations of the City. The Notes are payable as to principal and interest in part from special assessments levied upon the property benefited by the construction of said improvements, from general obligation bonds or from both; and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The balance of the principal and interest on the Notes is payable from general obligation bonds and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the Notes as the same become due. THE RONOS Rond~ Oetai1~. The Bonds will be dated July 15,2000, and will mature serially on October 1 in the years and in the amounts set forth below. The Bonds will consist of fully registered certificated bonds, each in the denomination of $5,000 or integral multiples thereof. Interest will be payable semiannually on April 1 and October 1 (the "Interest Payment Dates"), beginning April 1, 2001. The principal of the Bonds will be payable at the principal office of the Treasurer of the State of Kansas (the "Paying Agent" and "Bond Registrar") to the registered owners thereof upon presentation of the Bonds for payment and cancellation. Interest on the Bonds will be payable to the registered owners appearing on the books maintained by the Bond Registrar as of the 15th day of the month preceding each interest payment date (the "Record Dates"). The fees of the Bond Registrar for registration and transfer of the Bonds will be paid by the City. -2- The Bonds will become due on the stated maturity dates as follows: PRINCIPAL AMOTJNT MATURITY OCTORER 1 PRINCIPAL A MOTJNT MATURITY OCTORER 1 $335,000 335,000 330,000 330,000 330,000 330,000 330,000 330,000 2001 2002 2003 2004 2005 2006 2007 2008 $330,000 330,000 115,000 115,000 115,000 115,000 115,000 2009 2010 2011 2012 2013 2014 2015 Optional Rprlemption. Bonds maturing on or after October 1, 2010, will be subject to redemption prior to maturity at the option of the City on October 1,2009, and thereafter, in whole at any time or in part on any interest payment date, in such principal amounts for such maturities as shall be determined by the City (selection of Bonds for partial redemption of Bonds of the same maturity to be made in such manner as the Bond Registrar shall determine), at a redemption price of 100% of the principal amount of Bonds redeemed plus accrued interest to the redemption date, without a premium. Mandatory Reclemption. A bidder may elect to have all or a portion of the Bonds scheduled to mature in 2011 to 2015, inclusive, issued as term bonds scheduled to mature in 2015 and subject to mandatory redemption requirements consistent with the schedule of serial maturities set forth above, subject to the following conditions: (1) Serial Bonds in inverse order of maturity, including not less than all Bonds of the same serial maturity, shall be converted to term bonds with mandatory redemption requirements and (2) a bidder shall make such an election by completing the applicable paragraph on the Official Bid Form. Rook-Entry Only System. The Bonds will initially be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, to which payments of principal of and interest on the Bonds will be made. Individual purchases of Bonds will be made in book-entry form only. Purchasers will not receive certificates representing their interest in Bonds purchased. Anthority, Pnrpose and Secnrity. The Bonds are being issued pursuant to the provisions of the laws of the State of Kansas, including without limitation K.S.A. 10-101 et seq., K.S.A. l2-6aOl et seq. and K.S.A. 12-685 et seq., all as amended, for the purpose of fmancing the cost of constructing certain street, utility, drainage, signalization, subdivision and other improvements in the City. The principal of and interest on the Bonds will be payable in part from special assessments levied upon the property benefited by the construction of said improvements and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all of the taxable tangible property, real and personal, within the territorial limits of the City. The balance of the principal of and interest on the Bonds will be payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all of the taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the Bonds as the same become due. -1- RIDS FOR NOTES AND RONDS Conrlitions of Rirls. Bids may be submitted for the Notes and/or the Bonds. Bids will be received for the Notes and for the Bonds bearing such rate or rates of interest as may be specified by the bidder subject to the following conditions: For the Notes: The same interest rate shall apply to all Notes. The interest rate specified shall be a multiple of 11100 of 1 %. The interest rate may not exceed a rate equal to the index of 30-year treasury bonds published by The Ronrl Ruyer in New York, New York, on the Monday next preceding the day of which the Notes are sold, plus 2%. No bid of less than 99.50% of the principal amount of the Notes and accrued interest thereon to the date of delivery will be considered and no supplemental interest payments will be considered. Bids for less than the entire issue of Notes will not be considered. Each bid must specify the total interest cost to the City during the term of the Notes on the basis of such bid, the discount, if any, the premium, if any, offered by the bidder, and the net interest cost to the City on the basis of such bid, all certified by the bidder to be correct and the City will be entitled to rely on the certificate of correctness of the bidder. Each bid must also specify the average annual net interest rate to the City on the basis of such bid. For the Bonds: The same rate shall apply to all Bonds of the same maturity. Each interest rate specified shall be a multiple of one-eighth (1I8th) or one-twentieth (1I20th) of one percent (1 %). The difference between the highest and lowest rates specified in any bid shall not exceed two percent (2%). No interest rate may exceed the maximum interest rate allowed by Kansas law, said rate being the daily yield for the thirty-year treasury bonds published by The Ronrl Ruyer in New York, New York, on the Monday next preceding the day on which the Bonds are sold, plus 2%. No bid of less than par and accrued interest will be considered and no supplemental interest payments will be considered. Bids for less than the entire issue of Bonds will not be considered. Each bid must specify the total interest cost to the City during the term of the Bonds on the basis of such bid, the premium, if any, offered by the bidder, the net interest cost on the basis of such bid and the TIC (as hereinafter defined) on the basis of such bid, all certified by the bidder to be correct and the City will be entitled to rely on the certificate of correctness of the bidder. Goorl F::lith Dt>,posit. For the Notes: A good faith deposit will not be required for the Notes. For the Bonds: Each bid must be accompanied by a good faith deposit ("Deposit") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of 2% of the principal amount of the Bonds, payable to the order of the Acting City Clerk. If a check is used, it must accompany each bid. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the state of Kansas, and such bond must be submitted to the City or the Financial Advisor hereinafter referred to prior to the opening of the bids. The Financial Surety Bond must identify each bidder whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to a bidder utilizing a Financial Surety Bond, that successful bidder is required to submit its Deposit to the City in form of a cashier's check (or wire transfer such amount as instructed by the City or its Financial Advisor) not later than 2:00 P.M., local time on the next business day following the award. The Deposit of the successful bidder shall constitute a good faith deposit and shall be retained by the City to insure performance of the requirements of the sale by the successful bidder. In the event the successful bidder shall fail to comply with the terms of its bid, the Deposit will be forfeited as full and complete liquidated damages. Upon delivery of the Bonds, the Deposit -4- will be applied to the purchase prices of the Bonds, but no interest shall be allowed thereon. After the award is made to the successful bidder, the Deposit of the unsuccessful bidders will be returned forthwith. Rid Forms. All bids must be made on forms which may be procured from the Acting City Clerk or the City's financial advisor. No additions or alterations in such forms shall be made and any erasures may cause rejection of any bid. Snhmission of Rids. Bids must be submitted and addressed to the Acting City Clerk. Bids for the Notes and the Bonds may be submitted by mail or delivered in person to the Acting City Clerk. No bids will be accepted via fax. Bids for the Notes must be received before 1:00 p.m., local time, on the sale date. Bids for the Bonds must be received before 2:00 p.m., local time, on the sale date. R~sis of Aw~rd. For the Notes: The award of the Notes will be made on the basis of the lowest net interest cost to the City, which will be determined by adding the amount of the discount bid, if any, and subtracting the amount of the premium bid, if any, from the total interest cost to the City. If there is any discrepancy between the net interest cost and the interest rate specified, the specified interest rate shall govern and the net interest cost specified in the bid shall be adjusted accordingly. If two or more proper bids providing for identical amounts for the lowest net interest cost are received, the governing body will detennine by lot which bid, if any, will be accepted, and its determination is [mal. For the Bonds: Following the opening of the bids for the Bonds, the low bidder will be designated by a representative of the City. The low bidder will be the bidder whose bid will result in the lowest "true interest cost" ("TIC"), detennined as follows: the TIC is the discount rate (expressed as a per annum percentage rate) which, when used in computing the present value of all payments of principal and interest to be paid on the Bonds, from the payment dates to July 15, 2000 (the dated date of the Bonds), produces an amount equal to the principal amount of the Bonds, plus premium, if any. Payments of principal and interest on the Bonds will be based on the principal amounts set forth in this Notice and the interest rates specified by each bidder. Present value will be computed on the basis of semiannual compounding and a 360-day year of twelve 30-day months. ill the event there is a discrepency between the TIC specified by a bidder and their indicated interest rates, the interest rates shall govern and the TIC shall be adjusted accordingly. ill the event that two or more bidders offer bids at the same lowest TIC, governing body of the City will detennine by lot which bidder will be designated as the low bidder. The City reserves the right to reject any and/or all bids and to waive any irregularities in a submitted bid. Any bid for the Notes received after 1 :00 p.m., local time, on the date of sale will not be considered. Any bid for the Bonds received after 2:00 p.m., local time, on the date of sale will not be considered. Dp.livp.ry ~nd P~ymp.nt. The City will pay for preparing the Notes and the Bonds. The purchaser(s) of the Notes and the Bonds will be furnished with a complete transcript of proceedings evidencing the authorization and issuance of the Notes and the Bonds and the usual closing proofs, which will include a certificate that there is no litigation pending or threatened at the time of delivery of the Notes and the Bonds affecting their validity. Payment for the Notes and the Bonds will be made in Federal Reserve Funds or other immediately available funds by approximately 10:00 A.M., local time, on the day of delivery. Delivery of the Notes and the Bonds will be made to the successful bidder(s) on or about July 27, 2000, through the facilities of The Depository Trust Company in New York, New York. The purchase price for the Notes and the Bonds, including accrued interest from the date of the Notes and the Bonds to the date of delivery, will be paid at delivery or the good faith deposit will be forfeited. -~- T ,ee::ll Opinion. The Notes and the Bonds will be sold subject to the approving legal opinion of Gilmore & Bell, P.c., Kansas City, Missouri, Bond Counsel, which opinions will be furnished and paid for by the City and will accompany the Notes and the Bonds and will be delivered to the successful bidder(s) when the Notes and the Bonds are delivered. Said opinions will also include the opinion of Bond Counsel relating to the exclusion of the interest on the Notes and the Bonds from gross income for federal and Kansas income tax purposes. Reference is made to the Preliminary Official Statement for further discussion of federal and Kansas income tax matters relating to the interest on the Notes and the Bonds. Certific::Ition ::I~ to Offerine Price~. To provide the City with information necessary for compliance with Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), the successful bidder(s) will be required to complete, execute and deliver to the City prior to the delivery of the Notes and the Bonds, a certificate regarding the "issue price" (as defined in Section 148 of the Code) of the Notes and the Bonds, as applicable, reflecting the initial offering prices (excluding accrued interest and expressed as dollar prices) at which a substantial amount (Le., 10% or more) of the Notes and/or the Bonds of each maturity have been or are expected to be sold to the public. The term "public" excludes bond houses, brokers or similar persons, or organizations acting in the capacity of underwriters or wholesalers. Such certificate shall state that 10% or more of the Notes and/or the Bonds of each maturity have been or are expected to be sold to the public at prices no higher than such initial offering prices. However, such certificate may indicate that the successful bidder(s) will not reoffer the Notes and/or the Bonds for sale. Cn~ip Tnentific::Ition Nnmhers. CUSIP identification numbers will be printed on the Notes and the Bonds. All expenses in relation to printing of CUSIP numbers on the Notes and the Bonds and the expenses charged by the CUSIP Service Bureau for the assignment of said numbers shall be the responsibility of and shall be paid for by the City. Mnnidp::ll Bonn Tn~nrnnce. The City has applied to AMBAC Indemnity Corporation, Financial Guaranty Insurance Company, Financial Security Assurance Inc. and MBIA Insurance Corporation for a policy of bidder's option municipal bond insurance on the Bonds. The City will not pay the premium or associated rating costs required in connection with any municipal bond insurance policy desired by the successful bidder, with the exception of the fee of Moody's Investor Service. If the successful bidder elects to purchase a policy of municipal bond insurance, it will be the responsibility of the successful bidder to provide for the payment of all costs associated with the issuance of the policy. Information concerning the final availability of policies from these companies and the associated cost will be available only from the respective company officials. R::Itine~. The City has applied to Moody's Investors Service for a rating on the Notes and the Bonds. Such application and rating are further described in the City's Preliminary Official Statement relating to the Notes and the Bonds, copies of which may be obtained from the City or the City's financial advisor. If the successful bidder for the Bonds elects to purchase a policy of municipal bond insurance, then the Bonds may be assigned the ratings of "Aaa" by Moody's Investors Service, Inc. and "AAA" by Standard & Poor's Ratings Group. These ratings are contingent upon the purchase of a municipal bond insurance policy and payment of any rating fees and are based on the current ratings of the insurance companies. -0- Any explanation as to the significance of the ratings, when received, may be obtained only from the rating agencies. Ratings are not recommendations to buy, sell, or hold the Notes and the Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of either or both ratings may have an adverse affect on the market price of the Notes and the Bonds. A""e""erl V::IhHltion ::md Bonded Tndehtedne"". The equalized assessed tangible valuation for computation of bonded debt limitations is $314,487,783. The total general obligation indebtedness of the City as of the date of the Notes and Bonds, including the Notes and Bonds being sold but excluding the temporary notes to be retire with the proceeds of the Notes and Bonds being sold, is $35,790,000. Preliminary Offic.ial St::ltement ::Ind Offid::ll St::ltement. The City has prepared a Preliminary Official Statement dated June 19, 2000, copies of which may be obtained from the undersigned or the City's financial advisor. The Preliminary Official Statement is in a form "deemed fmal" by the City for the purpose of Rule l5c2-l2(b)(1) of the Securities and Exchange Commission (the "Rule"). Upon the sale of the Notes and the Bonds, the City will furnish the successful bidder(s) a reasonable number of copies of the final official statement without additional cost. Additional copies in excess of a reasonable number may be ordered by the successful bidder(s) at the expense of the successful bidder(s). C'ontinnine Di"c.lo"llTe. The City will agree in the proceedings authorizing the Notes and the Bonds to provide annually certain financial information and operating data and other information necessary to comply with the Rule, and to transmit the same to certain national repositories and the Municipal Securities Rulemaking Board, as applicable. For further information, reference is made to the caption "Continuing Disclosure" in the Preliminary Official Statement and APPENDIX B to the Preliminary Official Statement. Offic.ial TnformMion. Additional copies of this Notice of Sale, Official Bid Forms or further information may be obtained from the undersigned or George K. Baum & Company, Twelve Wyandotte Plaza, Kansas City, Missouri 64105 (816-474-1100), the City's financial advisor. Dated June 19,2000. SALINA, KANSAS By Barbara Weber Acting City Clerk Room 206 City/County Building 300 West Ash Salina, Kansas 67402-0736 (785-826-7240) -7- (TmS PAGE LEFT BLANK INTENTIONALLY) CITY OF SALINA, KANSAS 300 West Ash City/County Building - Room 206 P. O. Box 736 Salina, Kansas 67402-0736 CITY COMMISSION Alan Jilka, Mayor Kristin M. Seaton, Commissioner Don Heath, Commissioner Monte Shadwick, Commissioner Larry Mathews, Commissioner CITY STAFF Dennis M. Kissinger, City Manager Michael Morgan, Deputy City Manager Rodney Franz, Finance Director Judy D. Long, City Clerk Barbara Weber, Acting City Clerk CITY ATTORNEY Greg Bengtson Clark, Mize & Linville, Chartered Salina, Kansas BOND COUNSEL Gilmore & Bell, P.C. Kansas City, Missouri FINANCIAL ADVISOR George K. Baum & Company Kansas City, Missouri No person has been authorized by the City or the Successful Bidders to give any information or to make any representations with respect to the Notes or Bonds to be issued, other than those contained in this Official Statement, and if given or made, such other information or representations not so authorized must not be relied upon as having been given or authorized by the City or the Successful Bidders. This Official Statement is not to be used in connection with an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. All fmancial and other information presented herein, except for information expressly attributed to other sources, has been provided by the City from its records and is intended to show recent historic information. Such information is not guaranteed as to accuracy or completeness. All descriptions of laws and documents contained herein are only summaries and are qualified in their entirety by reference to such laws and documents. Information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale of the Notes or Bonds shall, under any circumstances, create any implication that the information contained herein has remained unchanged since the respective dates as of which such information is glVen. TABLE OF CONTENTS Pa2e INTRODUCTORY STATEMENT.................... 1 General.............. ........................... ............. ....... 1 Additional Information..................................... 1 THE NOTES ...................................................... 2 Description ...................... .......... ........... ..... ....... 2 Redemption Provisions..................................... 2 Authority ........................... ...... ....... ........ .......... 2 Security............................................................. 3 Registration and Transfer ................................. 3 THE BONDS...................................................... 3 Description ........................ ... .............. .... .......... 3 Redemption Provisions..................................... 3 Authority ........................................... .... ........... 4 Security............................................................. 4 Registration and Transfer ................................. 4 BOOK-ENTRY ONLY SYSTEM ..................... 4 BIDDERS OPTION MUNICIPAL BOND INSURANCE .......... ...... .......... ........... ....... ..... 6 THE FINANCING PLAN.................................. 6 The Projects.... ................ ..................... ............. 6 SOURCES AND USES OF FUNDS.................. 7 FINANCIAL OVERVIEW................................ 8 THE CITY OF SALINA, KANSAS .................. 9 Location and Size ............................................. 9 Government... ............................. .... .... ......... ..... 9 Kansas Public Employees Retirement System (KPERS) ............................................ 9 Kansas Police and Fire Retirement................... 10 Population.. ...... ................ ...... .... ....... ...... .......... 10 Police and Fire Protection ................................ 10 Economic Characteristics ................................. 10 Industry.. ................. ....................... ......... .......... 11 Income ............... ..................... ............. .... ......... 11 Recent Economic Development ....................... 12 The Salina Airport Authority............................ 13 Major Employers .............................................. 13 Unemployment Rate......................................... 14 Education.......................................................... 14 Kansas State University-Salina ........................ 14 Transportation ............... ......... ................. ......... 15 Utilities. ..................... .................. ..................... 15 Pa2e Health Facilities ............................................... 15 Financial Institutions ........................................ 15 Other Information. ...... ................ ...... ................ 15 DEBT SUMMARy............................................ 17 Current Indebtedness........................................ 17 Overlapping Debt............................................. 18 Historical Debt Information ............................. 19 Legal Debt Limits ............................................ 19 Annual Debt Payments..................................... 19 Future Indebtedness ......................................... 20 Debt Payment Record ...................................... 20 FINANCIAL INFORMATION ......................... 21 Financial Statement Summary.......................... 21 Assessed Valuation .......................................... 22 Estimated Actual Valuation ............................. 22 Largest Taxpayers ............................................ 23 Special Assessments......................................... 23 Tax Collections ................................................ 24 Sales Tax ............... .... .......... .... ........ .......... ... .... 24 Tax Levies ........ ............ .......... ...... ...... ........ ...... 25 Building Permits .............................................. 25 Budgeting Procedures ...................................... 26 Appraisal and Assessment Procedures ............. 26 Property Assessment Rates .............................. 26 Equalization Ratios .......................................... 27 LEGAL MATTERS ........................................... 27 TAX EXEMPTION ........................................... 28 Federal Tax Exemption.................................... 28 Original Issue Discount.................................... 28 Kansas Tax Exemption .................................... 29 Other Tax Consequences.................................. 29 RATINGS .. ........................ .......... ...... ........ ........ 29 UNDERWRITING............................................. 29 ABSENCE OF MATERIAL LITIGATION ...... 29 CONTINUING DISCLOSURE ......................... 30 CERTIFICATION OF THIS OFFICIAL STATEMENT .................................................. 30 APPENDIX A - Financial Statements APPENDIX B - Continuing Disclosure Instructions CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES $800,000 SERIES 2000-3 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS $3,885,000 (stc) SERIES 2000-A INTRODUCTORY STATEMENT General The purpose of this Official Statement is to present certain information concerning the City of Salina, Kansas (the "City"), and the issuance of its $800,000 General Obligation Temporary Notes, Series 2000-3 (the "Notes"), and $3,885,000 (subject to change) General Obligation Internal Improvement Bonds, Series 2000-A (the "Bonds"), both dated July 15, 2000. The Notes and Bonds are being issued to provide funds to fmance certain capital improvements within the City. See THE FINANCING PLAN herein. The Notes and interest thereon will constitute general obligations of the City, payable in part from special assessments levied upon the property benefited by the construction of certain improvements, from the proceeds of general obligation notes or bonds, or from both, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The balance of the Notes is payable from the proceeds of general obligation notes or bonds, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. See THE NOTES - "Security" herein. The Bonds constitute general obligations of the City, payable as to both principal and interest in part from special assessments levied upon property benefited by the construction of certain improvements and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The balance of the Bonds are payable as to both principal and interest from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. See THE BONDS - "Security" herein. APPENDIX A, containing selected fmancial data relating to the City, is an integral part of this Official Statement and should be read in its entirety. All fmancial and other information presented herein has been compiled by the City's fmancial advisor, George K. Baum & Company, Kansas City, Missouri (the "Financial Advisor"). Such information has been provided by the City and other sources deemed to be reliable. The presentation of information herein is intended to show recent historic information and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel, has not assisted in the preparation of this Official Statement, except for the sections titled INTRODUCTORY STATEMENT, THE NOTES, THE BONDS, LEGAL MATTERS, TAX EXEMPTION, CONTINUING DISCLOSURE, and APPENDIX B and, accordingly, expresses no opinion as to the accuracy or sufficiency of any other information contained herein. Additional Information Additional information regarding the City or the Notes and Bonds may be obtained from George K. Baum & Company, Twelve Wyandotte Plaza, 120 West 12th Street, Kansas City, Missouri 64105, telephone 816/474-1100. George K. Baum & Company has received permission from the City to submit a bid for the purchase of the Bonds. THE NOTES Description The Notes will be issued in the principal amounts and mature on the dates shown on the inside cover page hereof, will be dated July 15, 2000, and will consist of fully registered notes without coupons. When issued, the Notes will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchases of the Notes will be made in book-entry only form as described below (without certificates), in the denomination of $5,000 or any integral multiple thereof. Interest on the Notes will be payable at maturity. Interest will be paid on the basis of a 360-day year consisting of twelve 30-day months, without compounding. Interest will be paid to the registered owners of such notes as shown on the registration books maintained by the City Treasurer (the "Note Paying Agent") as of the fifteenth day of the month next preceding the date on which interest is payable (the "Record Date"), by check or draft mailed by the Note Paying Agent to the address of such registered owner shown on the registration books; provided that payment of principal of and interest on the Notes registered in the name of Cede & Co. shall be payable in same-day funds on the payment date. Principal on the Notes will be payable upon presentation and surrender of the Notes by the registered owners thereof at the office of the City Treasurer. So long as the Notes are registered in the name of Cede & Co., principal and interest payments on the Notes shall be made to DTC for disposition as hereinafter described. See BOOK-ENTRY ONLY SYSTEM herein. Redemption Provisions Optional Redemption. At the option of the City, the Notes will be subject to redemption and payment prior to maturity on April 1, 2001 and thereafter, in whole or in part upon thirty days written notice at a redemption price of 100% of the principal amount thereof, without premium, plus accrued interest to the date fixed for redemption. Selection of Notes to be Redeemed. Specific amounts of Notes called for redemption in advance of their stated maturities may be selected by the City as it determines. In the event of a partial redemption of Notes, the Notes to be redeemed will be selected in such manner as the City may determine. Notes will be redeemed in integral multiples of $5,000. If less than all Notes are called for redemption, the Note Paying Agent shall, in the case of Notes in denominations greater than $5,000, treat each $5,000 of face value as though it were a separate Note. Notice and Effect of Redemotion. If the City elects to call any Notes for redemption and payment prior to the maturity thereof, the City will cause the Note Paying Agent to give written notice of its intention to redeem said Notes on a specified date. The Note Paying Agent will notify holders of the Notes of such call by mailing, or causing to be mailed, the notice of call to the noteholders by fIrst class mail at least thirty days prior to the redemption date. Interest on any Note so called for redemption and payment will cease from and after the date for which such call is made, provided funds are available for payment thereof. So long as DTC is effecting book-entry transfers of the Bonds, the Bond Paying Agent shall provide the notices specified above to DTC. It is expected that DTC will, in turn, notify the DTC Participants and that the DTC Participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of DTC or a DTC Participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice from the Bond Paying Agent, a DTC Participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. Authoritv The Notes are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including particularly K.S.A. 12-6aOI et seq., as amended, and the resolution adopted by the City on_, 2000, authorizing the issuance of the Notes (the "Note Resolution"). 2 Security The Notes and interest thereon will constitute general obligations of the City, payable in part from special assessments levied upon the property benefited by the construction of certain improvements, from the proceeds of general obligation notes or bonds, or from both, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The balance of the Notes is payable from the proceeds of general obligation notes or bonds, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. Re2:istration And Transfer As long as any Note remains outstanding, the Note Paying Agent will maintain a note register in which all transfers and exchanges of the Notes will be registered. All Notes presented for transfer or exchange must be accompanied by a written instrument of transfer or authorization for exchange in a form and with guarantee of a signature satisfactory to the Note Paying Agent. Notes may be exchanged for Notes in the same aggregate principal amount and maturity upon presentation to the Note Paying Agent, and upon payment of any tax, fee or other governmental charge required to be paid with respect to any such registration, exchange, or transfer. The foregoing provisions for the registration, transfer and exchange of the Notes will not be applicable to Beneficial Owners of the Notes so long as the Notes are subject to the DTC or other book-entry only system. THE BONDS Description The Bonds will be issued in the principal amounts and mature on the dates shown on the inside cover page hereof, will be dated July 15, 2000, and will consist of fully registered bonds without coupons. When issued, the Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchases of the Bonds will be made in book-entry only form as described below (without certificates) in the denomination of $5,000 or any integral multiple thereof. Interest on the Bonds will be payable semiannually on April 1 and October 1 in each year, beginning on April 1, 2001. Interest will be paid on the basis ofa 360-day year consisting of twelve 30-day months. Principal will be payable upon presentation and surrender of the Bonds by the registered owners thereof at the office of the State Treasurer of the State of Kansas in Topeka, Kansas (the "Bond Paying Agent"). Interest will be paid to the registered owners of such Bonds as shown on the registration books maintained by the Bond Paying Agent as of the fifteenth day of the month next preceding the date on which the interest is payable (the "Record Date") by check or draft mailed by the Bond Paying Agent to the address of such registered owner shown on the registration books; provided that payment of principal of and interest on the Bonds registered in the name of Cede & Co. shall be payable in same-day funds on each payment date (or the equivalent under existing arrangements with the City and Bond Paying Agent). So long as the Bonds are registered in the name of Cede & Co., principal and interest payments on the Bonds shall be made to DTC for disposition as hereinafter described. See BOOK-ENTRY ONLY SYSTEM herein. Redemption Provisions Optional Redemption. The Bonds maturing on or before October 1, 2009 shall become due without option of prior payment. At the option of the City, Bonds maturing on or after October 1, 2010, may be called for redemption and payment prior to maturity on October 1, 2009, and thereafter, in whole at any time, or in part on any interest payment date, at a redemption price of 100% of the principal amount thereof, without premiwn, plus accrued interest to the date fixed for redemption. Selection of Bonds to be Redeemed. The Bonds and the specific annual maturities of Bonds called for redemption in advance of their stated maturities may be selected by the City as it determines in its sole discretion. In the event of a partial redemption of Bonds of a given maturity, the Bonds to be redeemed will be selected in such manner as the Paying Agent acting on behalf of the City may deem equitable. Bonds will be redeemed in integral multiples of $5,000. If fewer than all Bonds of a given maturity are called for redemption, the City and the Bond 3 Paying Agent shall, in the case of Bonds in denominations greater than $5,000, treat each $5,000 of face value as though it were a separate Bond. Notice and Effect of Redemotion. If the City elects to call any Bonds for redemption and payment prior to the maturity thereof, the City will give the Bond Paying Agent written notice of its intention to redeem said Bonds on a specified date, the same being described by maturity. The Bond Paying Agent will notify holders of the Bonds of such call by mailing, or causing to be mailed, the notice of call to the bondholders by first class mail at least thirty days prior to the redemption date. Interest on any Bond so called for redemption and payment will cease from and after the date for which such call is made, provided funds are available for payment thereof. So long as DTC is effecting book-entry transfers of the Bonds, the Bond Paying Agent shall provide the notices specified above to DTC. It is expected that DTC will, in turn, notify the DTC Participants and that the DTC Participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of DTC or a DTC Participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice from the Bond Paying Agent, a DTC Participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. Authoritv The Bonds are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including particularly K.S.A. 12-6aOl et seq., and K.S.A. 12-685 et seq., as amended; and an ordinance and resolution adopted by the City on _' 2000, authorizing the issuance of the Bonds (jointly referred to herein as the "the Bond Ordinance"). Security The Bonds constitute general obligations of the City, payable as to both principal and interest in part from special assessments levied upon property benefited by the construction of certain improvements and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The balance of the Bonds are payable as to both principal and interest from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. Relrlstration and Transfer As long as any Bond remains outstanding, the Bond Paying Agent will maintain a bond register in which all transfers and exchanges of the Bonds will be registered. All Bonds presented for transfer or exchange must be accompanied by a written instrument of transfer or authorization for exchange in a form and with guarantee of a signature satisfactory to the Bond Paying Agent. Bonds may be exchanged for Bonds in the same aggregate principal amount and maturity upon presentation to the Bond Paying Agent and upon payment of any tax, fee or other governmental charge required to be paid with respect to any such registration, exchange, or transfer. The foregoing provisions for the registration, transfer and exchange of the Bonds will not be applicable to Beneficial Owners of the Bonds so long as the Bonds are subject to the DTC or other book-entry only system. BOOK-ENTRY ONLY SYSTEM The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The Notes and Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully registered Note and Bond certificate will be issued for each maturity of such series of the Notes and Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. 4 DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book- entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants'). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of the Notes and 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 Note and 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 purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Direct or Indirect Participants through which the Beneficial Owners entered into the transactions. Transfers of ownership interests in the Notes and Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Notes and Bonds, except in the event that use of the book-entry system for the Notes and Bonds is discontinued. To facilitate subsequent transfers, all Notes and Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Notes and Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes and Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Notes and Bonds are credited, which mayor may not be the Beneficial Owners. The 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 Cede & Co. If fewer than all of the Notes and Bonds within an issue are being redeemed, DTC's practice is to detennine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to the Notes and Bonds. 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 & Coo's consenting or voting rights to those Direct Participants to whose accounts the Notes and Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Notes and Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on payable due. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name" and will be the responsibility of such Participants and not of DTC, the Note Paying Agent, Bond Paying Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Note Paying Agent and Bond Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. 5 DTC may discontinue providing its services as securities depository with respect to the Notes and Bonds at any time by giving reasonable notice to the City or the Note Paying Agent and Bond Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Note and Bond certificates are required to be printed and delivered as provided in the Ordinance and Note Resolutions. The Beneficial Owner, upon registration of the Notes and Bonds held in the Beneficial Owners name, shall become the Note and Bond Owner thereof under the terms of the Ordinance and Note Resolutions. The City may detennine to discontinue the system of book-entry transfers through DTC (or a successor securities depository). In such event, the Notes and Bonds are to be delivered as provided in the Resolution or Ordinance and the Note Paying Agent and Bond Paying Agent is entitled to rely on information provided by DTC and the Participants as to the names and principal amounts in which the Notes and Bonds are to be registered. The City, the Note Paying Agent, and the Bond Paying Agent, so long as a book-entry system is used for the Notes and Bonds, are to send any notice of redemption or other notices required to be sent to Owners, only to DTC. Any failure by DTC to advise any Participant, or by any Participant to notify the Beneficial Owner, of any such notice and its content or effect shall not affect the validity of the redemption of the Notes and Bonds called for redemption or of any other action premised on such notice. The City, the Note Paying Agent, and the Bond Paying Agent cannot and do not give any assurances that DTC, the Participants or others will distribute payments on the Notes and Bonds made to DTC or its nominee, as the registered Owner, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis or that DTC and the Participants, or any successor depository, will serve and act in a manner described in this Official Statement. NEITHER THE CITY, THE NOTE PAYING AGENT, NOR THE BOND PAYING AGENT WILL HA VB ANY RESPONSffiILITY OR OBLIGATIONS TO SUCH PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE FOR THE PARTICIPANTS, THE INDIRECT PARTICIPANTS, OR THE BENEFICIAL OWNERS. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City, the Financial Advisor and Bond Counsel believe to be reliable, but the City, the Financial Advisor and Bond Counsel take no responsibility for the accuracy thereof, and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should instead confirm the same with DTC or the DTC Participants, as the case may be. BIDDERS OPTION MUNICIPAL BOND INSURANCE The City has applied to AMBAC Indemnity Corporation, Financial Guaranty Insurance Company, Financial Security Assurance, and Municipal Bond Investors Assurance Corporation for a bidders option municipal bond insurance policy on the Bonds. Information concerning the availability of such a policy from each company and the associated cost thereof will be available only from representatives of the companies approximately one business day prior to the sale of the Bonds. If the Successful Bidder elects to purchase a municipal bond insurance policy on the Bonds, it will be the bidder's responsibility to pay the cost of the insurance policy and all related costs thereof, excluding Moody's bond rating fee. THE FINANCING PLAN The Proiects Proceeds from the sale of the Notes will be used to provide initial fmancing for certain capital improvements and redeem outstanding temporary notes (the "Note Projects"). Proceeds from the sale of the Bonds will be used to redeem outstanding temporary notes to provide long-term financing for certain capital improvements within the boundaries of the City (the "Bond Projects"). The Note Projects and the Bond Projects are collectively referred to herein as the "Projects". The Projects primarily involve various street, water, and sewer improvements in the City. 6 The cost of constructing a portion of the Projects was initially provided with proceeds from the sale of general obligation temporary notes of the City. Proceeds from the sale of the Notes and Bonds will be used to redeem the outstanding temporary notes, pay additional Project costs, and pay the costs associated with the issuance of the Notes and the Bonds. SOURCES AND USES OF FUNDS Funds to be used in the financing of the Project, exclusive of accrued interest, will be provided and applied approximately as follows. Sources of Funds: Note and Bond Proceeds Prepaid Assessments Other Available Funds Total Sources of Funds Notes $800,000.00 0.00 0.00 $800,000.00 Bonds $3,885,000.00 109,572.99 957.454.34 $4,952,027.33 Uses of Funds: Issuance Costs Additional Project Cost Temporary Note Redemption Total Application of Funds $ 0.00 800,000.00 0.00 $800,000.00 $ 41,704.00 0.00 4,910.323.33 $4,952,027.33 (THIS SPACE LEFT BLANK INTENTIONALLY) 7 FINANCIAL OVERVIEW CITY OF SALINA, KANSAS Net of Gross Self-Supporting Debt Debt (1) 1999 Estimated Actual Valuation (2) $ 1,953,641,508.76 $ 1999 Assessed Valuation (3) $ 314,487,783.00 $ General Obligation Bonds (4) $ 28,990,000.00 $ 19,925,000.00 Population - 1998 U.S. Census Estimate 44,020 General Obligation Debt Per Capita $ 658.56 $ 452.64 Ratio of General Obligation Debt to Estimated Actual Valuation 1.48% 1.02% Ratio of General Obligation Debt to Assessed Valuation 9.22% 6.34% Outstanding Temporary Notes (5) $ 6,800,000.00 $ Outstanding Lease Obligations $ 187,857.00 $ Outstanding Revenue Bonds $ 14,555,000.00 $ Overlapping General Obligation Debt (6) $ 62,973,898.00 $ Direct and Overlapping General Obligation Debt (7) $ 98,763,898.00 $ 89,698,898.00 Direct and Overlapping Debt Per Capita $ 2,243.61 $ 2,037.69 Ratio of Direct and Overlapping Debt to Estimated Actual Valuation 5.06% 4.59% Ratio of Direct and Overlapping Debt to Assessed Valuation 31.40% 28.52% (1) The City intends to provide for payment on its Series 1998-A Bonds and its Kansas Revolving Loan with net revenues derived from the operation of its water and sewage system. The column titled "Net of Self- Supporting Debt" therefore excludes the Series 1998-A Bonds and the Kansas Revolving Loan. The Series 1998-A Bonds and the Kansas Revolving Loan are ultimately secured, however, by the City's ability to levy unlimited ad valorem taxes. (2) For a further description of how Estimated Actual Valuation is calculated and additional historical figures see the section titled FINANCIAL INFORMATION - "Estimated Actual Valuation". (3) Real property, personal property, and state assessed utility valuations were released in 1999 and used in computing tax levies for the City's 2000 Budget. Motor vehicle valuations were released January 2000. (4) Does not include bonds previously escrowed to stated maturity dates or escrowed to stated call dates. Includes the Bonds. (5) Includes the Notes. Does not include notes to be redeemed with Note or Bond proceeds. (6) For a more detailed explanation of the overlapping debt of the other jurisdictions, see DEBT SUMMARY _ "Overlapping Debt". (7) Includes outstanding general obligation bonds and temporary notes of the City and overlapping jurisdictions. 8 THE CITY OF SALINA, KANSAS Location and Size The City of Salina is located in north central Kansas, near the geographic center of the contiguous United States. It is the seventh largest city in Kansas, with a 1998 U. S. Census Bureau estimated population of 44,020. The City is the county seat for Saline County, which had a population of 51,617 in 1998. Situated at the intersection of Interstate Highways 70 and 135, the City of Salina is centered in one of the largest wheat producing areas in the world. Kansas City, Kansas, and Wichita, Kansas, are 175 and 95 miles away, respectively, via the direct access of these two major highways. The City encompasses a total area of approximately 20.31 square miles. Government The Town of Salina was organized in 1858 under the Town and Village Act in the State of Kansas. The City has had a Commission-City Manager form of government since 1921. The Commission comprises five members elected at-large. Each year the Commission chooses one member to act as Mayor. The City Manager is appointed by the Governing Body and acts as its primary agent in accordance with state statute. Other city officers and employees are appointed by the City Manager. The Governing Body is responsible for the policy determination, and the City Manager is responsible for the administration of the municipal government. Salina became a City of the First Class on July 9, 1920. The City currently has 474 full-time employees, including police and fITe employees, and 11 part-time employees. There are no organized city employee unions. The present elected officials of the City, along with the expiration of their current terms of office, are as follows: Name Alan Jilka Kristin M. Seaton Don Heath Monte Shadwick Larry Mathews Title Mayor Commissioner Commissioner Commissioner Commissioner Term Expires 2001 2003 2001 2001 2003 Kansas Public Emplovees Retirement Svstem (KPERS) The City participates in the Kansas Public Employees Retirement System (KPERS) which was established by the 1961 Kansas Legislature. There are approximately 182,800 current and former public employees in Kansas who are members of the Kansas Public Retirement System. These members represent over 1,200 state and local agencies and include the state, all counties, all unified school districts, community junior colleges, area vocational technical schools, various cities, and other instrumentalities. The KPERS program covers all of the City's full-time employees. The purpose of the KPERS program is to provide an orderly means of financing the pension benefits of retiring public employees and to extend life insurance coverage; long-term disability and service connected death and disability benefits to members and their beneficiaries. A nine-member Board of Trustees governs KPERS. The Governor appoints four members to the Board, the Speaker of the House of Representatives and the President of the Senate appoint one member each, two members are elected by the Board members themselves, and the State Treasurer is a member. City employees annually contribute 4% of their gross salary to the System. The City's contribution varies from year to year based upon the annual actuarial valuation and appraisal made by the actuary of the KPERS program. For 2000, the City's contribution will be 3.22% of each employee's gross salary. 9 Kansas Police and Fire Retirement The City has established membership in the Kansas Police and Fire Retirement System for its police and ftre personnel. Beneftts are determined by total years of service and fmal average salary. The State of Kansas administers the plan. An actuarial study is made annually and the City's annual contribution is adjusted to meet current fund requirements. Payment of employee retirement beneftts is the sole responsibility ofKP&F. Currently the City contributes 11.4% of employees' gross compensation, and the majority of employees contribute 7.0% of their gross salary. Population The City of Salina has a population that is approaching metropolitan area status. This is defined by the U.S. Census Bureau as cities with 50,000 inhabitants or more. According to the Salina Chamber of Commerce, the City's citizens had a median age of 35.6 years in 1998. The following table shows the population for the City for selected years from 1950 to 1998, as provided by the U.S. Census Bureau. Year 1950 1960 1970 1980 1990 1991 1992 1993 1994 1995 1996 1997 1998 U.S. Census Bureau Population 26,176 43,202 37,714 * 41,843 42,918 43,244 43,724 44,000 43,942 44,233 44,176 44,600 44,020 *The decline in population between 1960 and 1970 reflects the closing of Schilling Air Force Base in 1965. Police and Fire Protection The City of Salina provides police and fITe protection services to residents of the City and surrounding areas. Fire ftghting services are provided from four stations located throughout the City with 89 full-time employees. The fire department operates 22 vehicles and provides emergency medical services. The police department employs approximately 74 full-time employees and operates 31 police vehicles, including patrol vehicles, motorcycles, and cushmans. Economic Characteristics The City of Salina benefits from its location at the junction of Interstate Highways 70 and 135. This convenient location has drawn numerous national and regional companies to open manufacturing or distribution centers in the City. Such companies include Raytheon Aircraft (formerly Beech Aircraft), Pepsi-Cola, and Tony's Pizza, all located within the City, and Exide Battery, Parts America, and Philips Lighting which are located immediately outside city limits. Currently, manufacturing, retail trade, and service industries rank as the three primary employers in the City. No single industry is clearly the leader. The government sector and wholesale trade industries make up the second tier of Salina employers. There is approximately 2,200 retail, commercial, and other business establishments located in the City. 10 The City serves as a regional trade center for north central Kansas. Many individuals and businesses within a 70-mile radius travel to the City to purchase consumer goods and services. This designation as a regional trade center is supported by the fact that Saline County had the third highest "trade pull factor" of all Kansas counties in 1998 according to Kansas State University. Trade pull factor is measured by dividing the county sales tax collections per capita by the average statewide sales tax per capita. In December 1999, the Kansas Department of Human Resources estimated the civilian labor force in the City of Salina to be 26,470 persons. The U.S. Census Bureau determined that the median household income for the City was $25,084 in 1990. Homeowner occupancy rates in the City were 98.6% in 1990. The City of Salina has made a conunitment to plan for its future through capital and economic development planning. In 1992, the City Conunission approved a comprehensive and transportation plan designed to encourage and manage growth in the City during the next 15 to 20 years. A firm based out of Chicago specializing in such studies developed the plan. Among its numerous recommendations, the plan calls for several street and intersection improvements, revisions to certain zoning and construction standards and policies, landscaping projects, historic preservation, and business/government cooperation. Significant public improvement projects have been completed in the fust seven years. The study will provide guidelines for encouraging growth within the City and expansion of certain city limits. Industrv Although Saline County is located in the center of one of the most productive agricultural areas in the United States, Salina is a city centered more around industry than agriculture. Currently, there are approximately 100 manufacturing and processing companies located in the City. The City, Saline County, the Chamber of Commerce, and the Salina Airport Authority have developed several economic incentives which they can offer companies as an inducement to opening a new industrial facility in Salina. These include property tax abatement for basic industry, the waiving of building permit and inspection fees, refunding of sales tax paid on machinery and equipment, and providing training for employees through the Salina Area Technical School and the Kansas State University-Salina, College of Technology. Additionally, a "build-to- suit-tenant" agreement is available on sites in the Airport Industrial Center that can provide 1 00% financing for land and building costs. Income The following table shows the per capita personal income for residents of Saline County and the State during the years indicated: Year 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Saline County $16,948 18,194 19,929 20,107 21,086 21,451 22,715 23,528 25,049 26,422 State of Kansas $16,062 16,818 17,968 18,559 19,541 20,213 20,784 21,481 22,707 23,972 Sources: U. S. Bureau of Economic Analysis 11 Recent Economic Development Several industrial and commercial establishments in Salina have been making major expansions to their facilities. E1dorado National, the largest North American manufacturer of small commercial buses of the type used in airport or car rental shuttles, has announced a consolidation of their operations in a new facility to be located at the Airport Industrial Center. Upon completion, Eldorado will have a total of 240,000 square feet of modernized manufacturing space. The project is scheduled for completion in the spring of 2001 and should result in about 75 new jobs. E1dorado currently employs about 265. KASA Industrial Controls is also consolidating its manufacturing operations in the South Industrial Area by acquiring a 97,000 square foot facility currently owned by Eldorado National. The consolidation increases manufacturing floor space by about 30,000 square feet, and will allow for further expansion potential. The company anticipates 40 to 50 new jobs over the course of the next three years as a result of the consolidation. Raytheon Aircraft has made a 100-job expansion to its manufacturing base in Salina. More than $10,000,000 worth of tooling was moved to Salina to support the expansion. Raytheon currently employs 650 at the Salina Division, which encompasses 595,000 square feet of manufacturing, warehouse, and office space. An addition to the existing Wal-Mart store has been completed, converting the facility into a "supercenter", with a full line grocery, bank facilities, portrait studio, hair salon, and McDona1ds. The expansion increased the total square footage from 114,557 to more than 208,000. About 100 new jobs were created as a result of the expansion. K-Mart has recently completed a substantial renovation to their facility, adding more grocery items. They have added 28 new jobs as a result of the improvements. Ovation Cabinetry, a manufacturer of nationally marketed upscale kitchen cabinets, has announced plans to expand their business into a new 36,000 square foot plant at the Airport Industrial Center. Ovation currently employs 33 people, and is expecting to create 87 new jobs over the next five years. New manufacturing and commercial facilities locating in Salina include: A-Plus Galvanizing has selected Salina as the location for the world's largest hot-dip galvanizing plant. The 156,000 square foot, $9 million facility will initially employ 70 people, with the potential to grow to 150-160 people. Aerospace Systems and Technologies have announced plans to build a 35,000 square foot manufacturing plant at the Airport Industrial Center. AS&T builds ice protection systems for smaller aircraft. The new plant will be completed by the end of2001 and will employ about 80 new employees with a total payroll of$2.1 million. The company will begin operations in Salina in April 2000 utilizing temporary facilities. Office Depot has located a retail outlet in Salina, occupying the former Alco Discount Store. Office Depot will employ about 35 people. Walgreens has constructed a 15,000 square foot retail drug store, employing 25-30 people. The Rolling Hills Wildlife Refuge opened to the public in October 1999. The refuge is a privately funded and operated wildlife sanctuary located in rural Saline County, easily accessible from both Interstate 70 and Interstate 135. The refuge incorporates an education center, restaurant, and gift shop. Fifty-five acres of the park are presently open, and includes state-of-the-art displays of 45 examples of rare and endangered species. Future displays are under construction, as is a Museum of Natural History, featuring an extensive taxidermy collection. The facility is accredited by the American Zoo and Aquarium Association and employs about 40 people. 12 The Salina Airport Authoritv The Salina Airport Authority was created in 1965 as a result of the closing of Schilling Air Force Base. The City of Salina, acting in accordance with Kansas Statutes, authorized and empowered the Authority as a means to acquire and utilize surplus United States government property for purposes of creating a public airport and industrial center. In 1966 the Authority received a quitclaim deed for 3,500 acres ofland which contained housing, hangar, runway, sanitary sewer, and other property formerly maintained by Schilling Air Force Base. The property available to the Authority was developed into two facilities: the Salina Municipal Airport and the Salina Airport Industrial Center. The Airport utilizes the former Air Force runway of over 13,000 feet to serve general aviation, corporate aviation, commuter airlines, and military activities. The size of the runway and its central location has made the Salina Municipal Airport a useful refueling, training, aircraft testing, aircraft manufacturing and maintenance, and military maneuvers facility. Additionally, the Airport has attracted several aviation-related industries and services to the Salina Industrial Center. These aviation-related operations include Raytheon Aircraft (a division of Raytheon Flower Aviation); Moore's Midway Aviation, and the Kansas State University of Salina, College of Technology, Department of Aeronautical Technology. The Authority has also been successful in attracting a wide range of other industries to the Salina Airport Industrial Center. Currently, 64 businesses are located within the Industrial Center with estimated employment of 4,800 and total payroll exceeding $117.8 million. These include companies involved in food processing, light and heavy metal fabrication, distribution, high technology equipment production, and transit vehicle production. The Authority continues to seek new industry through active self-promotion and work with the City of Salina, the Salina Area Chamber of Commerce, Saline County, and various state agencies and utility companies. The Authority owns 779 acres of Airport Industrial Center property. The undeveloped industrial sites total 436 acres. Maior Emplovers Industrial development during the past ten years has established a broad, industrial base within the City. The economic and industrial bases are well diversified and, as a result, Salina is not dependent on anyone type of industrial or commercial activity. A list of the major employers is as follows. All figures represent total full-time employment excluding seasonal and part-time employees. Name Tony's Pizza Service Salina Regional Health Center U.S.D. #305 Exide Batteries * Raytheon Aircraft Corporation Great Plains Mfg. * Philips Lighting Co. * City of Salina EI Dorado National OCCK, Inc. ProductlBusiness Frozen Pizza Health Care School System Battery Manufacturer Aircraft Subassemblies Agricultural & Landscaping Equipment Fluorescent Lamps City Government BusesIRecreationa1 Vehicles Plastic Assembly 1999 Estimated Emplovment 2,300 1,082 935 825 653 650 605 471 264 263 * These employers have facilities that are situated immediately outside city limits but employ primarily residents of the City. Source: Salina Chamber of Commerce 13 Unemplovment Rate According to the Kansas Department of Human Resources, the following graph shows the annual unemployment rate trend for the City of Salina and the State of Kansas since 1990. 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 9<::' ",Q> - State of Kansas City of Salina 9'"v 9'> 9CO 9'0 ",Q> ",Q> "Q> "Q> ~<::,<::' Education The City of Salina has a very complete and diverse educational system from the primary level up to its higher educational institutions. Unified School District #305 provides public education through its 13 elementary, two middle, and two senior high schools. The District also operates alternative education, vocational-technical, and special education schools. Total enrollment as of September 1999 was approximately 7,782 including special education, pre-school, and kindergarten students. The Salina community initiated a major improvement to the educational system in November 1998 when the voters approved a $98,000,000 bond issue to be used for school expansion and construction. Also approved in the same election was an additional Y4-cent city sales tax to be used for instructional technology and career educational equipment. Bond issue proceeds will be used to construct a new middle school, replacing the aging Roosevelt-Lincoln facility. In addition, expansions and improvements will be constructed at both high schools, at South Middle School, and at all of the elementary schools. The technology sales tax is expected to raise about $12,000,000 over the next six years to be used for K-12 improvements as well as improvements to the Salina Area Vo-Tech. Additionally, there are a number of parochial institutions that operate four grade schools, one junior high school, and one senior high school. A military school is located in the City and operates both a grade school and high school. The City is home to five regional or private upper-level specialty schools. The Kansas Highway Patrol has a training academy located in Salina. One public library with over 180,000 volumes, two college libraries, a medical library, and a law library are located within the City. According to the 1990 U.S. Census Bureau, 9,957 people in the city of Salina were enrolled in school. Kansas State Universitv-Salina Action by the Kansas State Legislature in 1991 provided for the creation of a satellite campus of Kansas State University to be established in the City of Salina. The satellite campus represents a merger between Kansas State University and the Kansas College of Technology. The combined facilities are known as Kansas State University-Salina, College of Technology. The University offers a variety of engineering technology degree programs, including an aeronautical studies program, as well as two-year associate degrees in engineering technology and a four-year Bachelor of Science degree in engineering technology. Areas of emphasis include civil, electrical and mechanical engineering technologies, aeronautical studies, and avionics. The campus is located entirely within the boundaries of the Salina Airport Industrial Center. Approximately 775 students were enrolled in the school for the spring 1999 semester. The University has extensive plans for developing and improving the campus. These plans were assisted by the City of Salina's pledge of a one-half cent sales tax for years 1991 and 1992. Proceeds from this additional tax, a total of approximately $5.3 million, were used in funding certain capital improvements to the campus. Funds from the tax have already been used to fmance the construction of a $700,000 addition to the Technology Center and various infrastructure improvements to accommodate the additional traffic and buildings. In addition to the 14 improvements to be funded by the sales tax, in 1992 the University completed construction of a laboratory addition financed with state revenue Notes. A $1.8 million dormitory facility for approximately 100 students was opened in 1994. A second dormitory was constructed and opened in the fall of 1997. Transportation In addition to Interstate Highways 70 and 135, U.S. Highways 81 and 40 also intersect Salina. Approximately 20 freight companies provide motor freight service in Salina with direct and connecting schedules to all cities in the United States. Bus service is available at regular intervals during each day in all directions. Four railways including Union Pacific, Missouri Pacific, St. Louis Southwestern, and Santa Fe provide daily package-car service in and out of Salina. There are approximately 14 daily freights stopping in the City. Lines radiate from the City in six directions. Existing terminals have adequate capacity to handle present and greatly increased future capacity. Approximately 30 miles of storage tracks are available. Air Midwest, operating as U. S. Airways Express with three daily turboprop flights to Kansas City International Airport, serves Salina Municipal Airport. In addition, Salina is served by Great Lakes Aviation operating as United Express with three daily turboprop flights to Denver International Airport. During 1999, the Salina Municipal Airport enplaned 13,638 passengers. Salina Municipal Airport is classified by the Federal Aviation Administration as a Primary Airport. Utilities Western Resources supply electricity and natural gas to the City. Southwestern Bell Telephone provides telephone service. Two cellular phone companies provide service to the City. The City of Salina Water and Sewage Department provide water and wastewater services. Health Facilities The City is served by Salina Regional Health Center; a 385-bed regional facility divided between two Salina campuses. The Health Center is the result of a 1995 merger of the two major Salina hospitals, St. John's and Asbury. SRHC is an acute care facility for the diagnosis and treatment of all types of diseases and conditions. The medical facilities have recently undergone substantial expansion. These expansions increased the range of treatment capabilities and patient capacity, with the merger expected to provide improved cost-effectiveness and medical service to the region. There are approximately 120 physicians and 28 dentists practicing in the City. Every physician employed by or on staff at the hospitals is either board certified or board eligible. Several other facilities providing mental health services, counseling, and alcohol and drug dependency treatment programs are located in the City. Financial Institutions Eight banks operating a total of 16 different facilities are located in the City. Four banks are headquartered in the City and reported combined deposits in excess of $1.4 billion as of June 30, 1999. One savings and loan institution with total deposits of $222.9 million is headquartered in the City, and two additional savings and loan institutions have branch offices in the City. Other Information )> Public recreation facilities available to city residents include 17 public parks, a golf course, 18 baseball/softball fields, two swimming pools, an art center, a community theater, a public museum, eight tennis courts, and ice and roller skating facilities. Two private clubs provide additional recreational opportunities for residents of the City. 15 ~ According to a 1998 study by the American Chamber of Commerce Research Association, the City of Salina has a cost ofliving index 8.6% below the national average. ~ Numerous concerts, exhibitions, conventions, and other events are held in the 7,500-seat Bicentennial Center. The Center has approximately 40,000 square feet of exhibit space. ~ In 1999 Salina became home to the Kansas Cagerz, a professional basketball team playing in the United States Basketball League. The Cagerz play about thirteen home games, all at the city-owned and operated Bicentennial Center. ~ According to a report published by K-State Research and Extension in September 1999, Saline County ranks second out of 105 counties in the State in "Strength Index". The Strength Index is a measure of economic prosperity and consists of three components: wealth, employment, and personal income. In 1998, Saline County ranked fourth in the Strength Index. ~ Fifty-two churches serve the City's population, representing approximately 20 denominations. ~ The Salina Journal has a daily circulation of approximately 32,367 in 30 counties. ~ The City was recently ranked 30th out of 193 "micropolitan" area cities in the Rating Guide to Life in America's Small Cities. ~ There are nine radio stations in the City including three AM, five FM, and one public FM station. Five standard television stations from Wichita serve the Salina area. Additionally, Multimedia Cablevision provides access to up to 60 television stations to subscribing customers. ~ There are approximately 26 lodging facilities with a total of an estimated 1,731 rooms m the City. Approximately 110 eating establishments are located in the City. 16 Current Indebtedness DEBT SUMMARY The following is an overview of the City's outstanding indebtedness by classification as of July 15, 2000. Figures do not include bonds for which payment has been provided through the creation of designated escrow accounts. General Obligation Bonds: The City has applied to Moody's Investors Service for a rating on the Bonds. Some of the City's outstanding bonds have received a rating of "Aaa" from Moody's Investors Service as the result of a municipal bond insurance policy. The City's other currently outstanding general obligation bonds also have an underlying rating of "AI" by Moody's. The outstanding general obligation bonded indebtedness of the City is as follows: Date Issued 12-01-90 04-01-91 07-01-91 12-01-91 05-01-92 05-01-93 12-01-93 06-01-94 05-01-95 06-01-96 04-01-97 01-05-98* 02-01-98 08-01-98* 07-15-99 07-15-00 Purpose Broadway Overpass Internal Improvements Internal Improvements West Crawford Improvements Internal Improvements Internal Improvements Solid Waste & Other Improvements Internal Improvements Solid Waste & Other Improvements Internal Improvements Internal Improvements Kansas Public Water Loan Internal Improvements Water and Sewage System Refunding Internal Improvements Internal Improvements Amount of Issue $ 455,000 1,300,000 1,417,000 1,785,000 1,240,000 685,000 1,800,000 1,175,000 2,434,000 1,847,000 1,650,000 3,600,000 3,900,000 6,010,000 5,465,000 3,885,000 Final Maturitv 12-01-00 10-01-01 10-01-01 10-01-01 10-01-02 10-01-03 10-01-03 10-01-04 08-01-05 08-01-06 08-01-07 08-01-20 08-01-13 10-01-08 10-01-14 10-01-15 Outstandine: $ 45,000 260,000 280,000 350,000 375,000 280,000 750,000 575,000 1,455,000 1,295,000 1,320,000 3,600,000 3,590,000 5,465,000 5,465,000 3.885.000 $28,990,000 * The City intends to provide for payment of this debt with net revenues derived from the operation of its water and sewage system However, these bonds are ultimately secured by the City's ability to levy unlimited ad valorem taxes. A portion of the City's outstanding general obligation bonds are payable from special assessments levied upon properties benefited by certain internal improvement projects and transfers from enterprise funds of the City. If such payments are not provided in a timely manner, the principal of and interest on the bonds must then be paid from the City's ability to levy unlimited ad valorem taxes. See FINANCIAL INFORMATION - "Special Assessments" for a further description of special assessment financing. The City has a practice of issuing its general obligation debt with level annual principal payments over a period of ten or fifteen years, depending on the nature and size of the projects being financed. Exceptions to this practice have been made for special projects. Revenue Bonds: Certain revenue bonds have a rating of "Aaa" by Moody's Investors Service as the result of a municipal bond insurance policy. The City's currently outstanding utility revenue bonds are rated "Al" by Moody's. Revenue bonds are payable solely from the net revenues derived by the City from the operation of its combined Water and Sewage System Revenue bonds do not represent a general obligation indebtedness of the City for which the City's taxing ability has been pledged. 17 Date Issued 07-01-92 07-01-93 01-01-94 Purpose Improvement Improvement Refunding Amount of Issue $15,000,000 3,200,000 11,390,000 Final Maturitv 10-01-00 10-01-13 09-01-12 Outstandine: $ 605,000 2,560,000 11.390.000 $14,555,000 Temporary Notes: The City has applied to Moody's Investors Service for a rating on the Notes. Some of the City's other outstanding note issues have received short-term MIG 1 ratings from Moody's Investor's Service. Temporary notes represent a general obligation indebtedness payable ultimately from the City's ability to levy unlimited taxes upon all taxable tangible property within its territorial limits. The City customarily redeems temporary notes with proceeds from the sale oflong-term general obligation notes or other available funds. Final Original Date Maturity Note Amount Proiect Series Issued Date Amount Outs tan dine: Solid Waste 08-06-98 09-01-01 $1,500,000 $ 1,500,000 Street, Drainage and Sub- division Improvements 1999-1 02-01-99 08-01-00 5,275,000 650,000 (1) Street 1999-2 06-01-99 08-01-00 2,000,000 2,000,000 (1) Animal Shelter, Utility, and Subdivision Improvements 1999-3 11-01-99 08-01-00 1,900,000 1,900,000 (1) Street, Drainage and Sub- division Improvements 2000-1 02-01-00 08-01-00/01 780,000 780,000 (2) Internal Improvements 2000-2 04-15-00 08-01-01 3,900,000 3,900,000 Internal Improvements 2000-3 07-15-00 08-01-01 800,000 800.000 $11,530,000 (1) To be paid with bond proceeds and other available funds. (2) $180,000 matures 08-01-00 and will be paid with bond proceeds and other available funds. $600,000 matures 08-01-01. Lease Purchase Obligations: Issued Computer Equipment Year Issued 1999 Original Amount $291,587 Final Year 2002 Amount Outstandine: $187,857 Overlappine: Debt The following table shows the overlapping general obligation indebtedness of the City. The percent of an overlapping jurisdiction's debt that is applicable to the City is calculated by dividing the assessed valuation of that portion of the jurisdiction's boundaries which overlap those of the City by the total assessed valuation of such jurisdiction. Jurisdiction U.S.D. #305 Saline County Salina Airport Authority Amount Outstandine: $60,800,000 1,415,000 6,170,000 Estimated Share of the City Amount Percentae:e $55,755,690 91.70% 1,048,208 74.08 6,170,000 100.00 Source: Saline County Clerk's Office 18 Historical Debt Information The following table shows historical balances of outstanding general obligation bonds for the City during the most recent five-year period. Bonds Debt to Debt to Debt Outstanding Assessed Estimated Actual Per Year December 31 Valuation Valuation Population Capita 1995 $11,519,000 4.67 0.78 44,233 $260.42 1996 10,982,000 4.26 0.71 44,176 286.01 1997 10,490,000 3.74 0.61 44,176 235.20 1998 12,590,000 (1) 4.21 0.68 44,020 286.01 1999 15,610,000 (1) 4.97 0.80 44,020 (2) 354.61 (1) The City intends to provide for payment on its Series 1998-A Bonds with net revenues derived from the operation of its water and sewer system. Therefore, this figure excludes the outstanding principal amount, although the Bonds are ultimately secured by the City's ability to levy unlimited ad valorem taxes. (2) Based upon 1998 U. S. Census Bureau estimate. Lee:al Debt Limits Cities within Kansas are permitted to issue bonds in an aggregate amount not to exceed 30% of the total assessed valuation of the city. Bonds issued for the purpose of improving, acquiring, enlarging, or extending municipal utilities, including storm and sanitary sewer systems; bonds issued to pay the cost of improvements to intersections and streets in front of city or school district property; bonds for bridges as authorized by a vote of the electors of a city; bonds issued to refund outstanding bonds; and bonds payable from revenue sources other than the general taxing authority of the city are not included in total aggregate debt for purposes of computing a city's debt limitation. Annual Debt Payments The following is a list of annual debt service requirements for the City's currently outstanding general obligation bonded indebtedness. All amounts are rounded to the nearest whole dollar. All Outstanding: Bonds Series 2000-A Bonds SRF Loan Year Principal Interest Principal Interest Principal Interest Total 2000 $ 2,985,000 $1,061,208 $ $ 57,750 2001 2,955,000 856,984 335,000 $ 119,243 150,697 2002 2,530,000 710,779 335,000 124,414 145,527 2003 2,335,000 591,413 330,000 129,808 140,132 2004 2,100,000 484,365 330,000 135,437 134,504 2005 2,015,000 390,220 330,000 141,309 128,631 2006 1,805,000 299,613 330,000 147,436 122,504 2007 1,655,000 218,865 330,000 153,829 116,111 2008 1,270,000 144,805 330,000 160,499 109,441 2009 615,000 87,545 330,000 167,459 102,482 2010 280,000 58,960 330,000 174,720 95,221 2011 280,000 46,000 115,000 182,295 87,645 2012 280,000 32,720 115,000 190,200 79,741 2013 280,000 19,360 115,000 198,447 71,494 2014 120,000 6,000 115,000 207,051 62,889 2015 115,000 216,029 53,911 2016 225,396 44,544 2017 235,170 34,771 2018 245,366 24,574 2019 256,006 13,935 2020 132.136 2.834 $21,505,000 $5,008,837 $3,885,000 $3,600,000 $1,798,808 *Includes debt service payments made in April 2000. 19 Future Indebtedness The City regularly fmances, on a temporary basis, the costs of improvement projects under construction through the issuance of temporary notes. When the projects are completed the notes are called and redeemed with the proceeds from the sale of long-term general obligation bonds. The City has also made a practice of issuing general obligation temporary notes for sanitary land fill improvements for a period of three years. Such notes have periodic principal maturities that are funded with revenues generated from the landfill operation and no associated long-term bonds are issued. The City annually prepares and adopts a five-year capital improvements plan. This plan identifies and prioritizes potential capital improvement projects within the City and includes the respective funding sources. Based on the City's 1999 capital improvements plan, the following table lists the total cost of projects the City anticipates undertaking each year for the next four years and the estimated general obligation bonding requirements: Year 2000 2001 2002 2003 Total Cost of Proiects in CIP $10,685,000 13,320,000 7,385,000 4,410,000 Funding Provided bv GO Bonds $4,500,000 4,500,000* 2,500,000 o *$2,000,000 to be repaid by landfill fees Borrowing requirements described above do not include future subdivision improvement projects fmanced with general obligation special assessment temporary notes and bonds. The City typically undertakes such projects after receiving and reviewing a valid petition from property owners. See FINANCIAL INFORMA nON - "Special Assessments" . Debt Payment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. 20 FINANCIAL INFORMATION Financial Statement Summarv The following is a summary of the combined revenues, expenditures, and fund balances for the City's General, Special Revenue, and Debt Service Funds for the most recent available years as shown in the City's Comprehensive Annual Financial Reports. This summary has not been prepared or reviewed by the City's auditor. Audited Audited Audited Audited 1996 1997 1998 1999 Revenues: Property Taxes $ 6,690,485 $ 6,945,943 $ 6,995,943 $ Sales Tax 8,446,809 8,948,067 9,687,988 Franchise Tax 1,836,694 1,929,622 1,950,520 Transient Guest Tax 583,506 592,715 730,488 Combined Taxes 21,314,633 Intergovernmental 3,342,888 3,197,436 3,208,793 4,383,281 Charges for Services 3,160,771 3,197,039 4,851,556 2,068,329 Fines 970,233 977,288 895,393 Special Assessments 1,191,772 1,127,400 1,050,242 1,086,557 Use of Money Interest 908,416 589,921 414,669 Reimbursements 123,269 111,603 127,147 Miscellaneous 557.306 474.648 514.497 Total Revenues $28,112,147 $28,091,682 $30,427,236 $33,110,363 Expenditures: General Government $ 5,400,525 $ 5,721,204 $ 7,319,381 $ 2,178,432 Public Safety 7,492,967 8,123,762 7,825,422 10,447,619 Public Works 2,631,025 2,557,584 2,211,719 3,467,893 Recreation 1,872,887 1,947,685 1,941,834 4,413,084 Cultural 469,901 522,763 496,483 Conununity Development 473,245 246,047 260,548 4,100,217 Health and Welfare 474,604 491,299 512,818 673,433 Debt Service 2,667,038 4,042,308 2,858,079 2,491,953 Capital Outlay 4,261,039 4,525,977 3,181,300 3,644,789 Bicentennial Center 1,768,489 1,681,770 2,184,746 Other 29.561 176.364 374.840 Total Expenditures $27,541,281 $30,036,763 $29,167,170 $ 25,280,678 Revenues Over (Under) Expenditures $ 570,866 $(1,945,081) $1,260,066 $ 1,692,943 Other Sources (Uses) 56.384 29.433 46.096 (615.443) Revenues and Other Sources Over (Under) Expenditures and Other Uses $ 627,250 $(1,915,648) $1,306,162 $ 1,077,500 Fund Balance January 1 $11,147,468 $11,780,481 $10,016,759 $11,234,905 Residual Equity Transfer 5.763 151.926 (88.016) Fund Balance December 31 $11.708.481 $10.016.759 $11.234.905 $12.133.440 21 Assessed Valuation According to the Saline County Clerk's Office, the following table gives the assessed valuation of the City in the years indicated. Year 1990-1991 (1) 1991-1992 1992-1993 1993-1994 (2) 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 Real Estate $125,389,311 134,834,179 135,267,866 129,632,717 145,239,331 166,462,923 175,997,879 196,360,843 213,488,582 226,207,727 Personal Property $13,454,685 14,314,162 16,751,713 22,447,713 22,678,728 24,890,665 25,550,448 26,279,996 27,534,811 28,786,094 State Assessed $11,094,235 11,208,262 11,545,541 12,849,722 14,272,658 12,528,204 12,708,970 13,954,569 12,909,972 14,122,529 Motor Vehicle $35,096,634 34,515,855 35,803,591 37,569,816 41,805,765 42,981,776 43,786,794 43,994,555 44,924,849 45,371,433 Total Assessed Valuation $185,034,865 194,872,458 199,368,711 202,499,968 223,996,482 246,863,568 258,044,091 280,589,963 298,858,214 314,487,783 (1) In 1990 a number of taxpayers protested their property valuations that were assigned during statewide reappraisal in 1989. Many taxpayers were successful in having their property valuations lowered. The impact of these valuation decreases is reflected in the 1990-1991 assessed valuation figures. (2) 1993-1994 assessed valuation figures were impacted by a constitutional amendment approved by Kansas voters in November 1992. See FINANCIAL INFORMATION - "Property Assessment Rates". Estimated Actual Valuation Based on assessment percentages provided by Kansas Statutes, real estate equalization ratios provided by the Kansas Department of Revenue (see FINANCIAL INFORMATION - "Property Assessment Rates"), and estimated actual valuation figures provided by the Saline County Appraiser's Office, the following table provides estimated actual valuations for the City in the years indicated. Year 1990-1991 1991-1992 1992-1993 1993-1994* 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 Residential Real Estate Equalization Ratio 11.88 11.83 11.45 10.22 10.74 11.25 10.64 11.29 11.50 n.a. Estimated Actual Value $1,026,844,668 1,075,575,019 1,105,026,368 1,175,493,628 1,314,830,748 1,482,502,706 1,551,794,365 1,716,987,425 1,850,244,169 1,953,641,509 * In November 1992 an amendment to the Kansas Constitution was implemented which modified certain property classification ratios. Equalization ratios shown for 1993-1994 were impacted by this legislative change. See FINANCIAL INFORMATION - "Property Assessment Rates". 22 Lar2:est Taxpayers The following table lists the largest taxpayers in the City, their 1999 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. Company Schwan's Sales Warmack, Salina Partnership Western Resources Southwestern Bell Wal-Mart Stores, Inc. Kansas Gas Service Salina Regional Health and Medical Center Sunset Properties Dillon Stores Great Plains Manufacturing Bradley Operating Delloitte & Touche Type of Business Manufacturing Retail Shopping Center Utility Telephone Utility Discount Retail Utility Assessed Valuation $ 6,766,642 * 5,862,083 5,476,810 5,117,625 2,813,976 2,518,810 % of Total Valuation 2.15% 1.86 1.74 1.63 .89 .80 .74 .67 .56 .54 .43 ~ 12.45% * Schwan's Sales has experienced a significant increase in assessed valuation in recent years, attributable primarily to land acquisition, renovations, and extensive acquisition of miscellaneous personal property. Source: Saline County Clerk's Office Special Assessments Hospital and Medical Offices Retail, Office and Medical Building Retail Manufacturing Community Shopping Center Hotel 2,322,069 2,102,808 1,764,292 1,712,038 1,359,010 1.344.4 77 $39,160,640 The City has pursued a policy of utilizing special benefit districts to assign the cost of certain internal improvement projects to the property that directly benefits from the construction. Kansas statutes allow for the creation of special benefit districts to pay for the cost of a variety of improvements including street construction, storm water drains, sanitary sewer system improvements, street lighting, water system improvements, recreational facilities, flood control projects, bridges, and parking facilities. The City has typically utilized special benefit districts to pay for the costs associated with constructing streets, sidewalks, curbs, gutters, and lighting in new residential developments within the City. When a developer requests the use of Special Assessments to finance public improvements, the City requires that they pay 20% of the estimated cost of the project in cash, or file a letter of credit equivalent to 35% of the estimated cost of the project. The letter of credit is released when Certificates of Occupancy have been issued for 35% of the lots in the development. Special benefit districts have also been created to pay for the cost of improvements to streets and sidewalks in the City's downtown area. The creation of special benefit districts, the determination of property benefited, and the method of allocating the cost of the improvement is at the discretion of the City. Property owners have the ability to suggest improvements through a petition process and to comment on the final amount of their assessment. The City mayor may not be included as part of the special benefit district. All property owners have the option to pay their portion of the improvement cost with a one-time payment during a 30-day assessment prepayment period or pay in annual installments with interest over a certain number of years. Upon completion of the special benefit district improvement projects and a 30-day prepayment period, the City issues general obligation bonds to provide for permanent project financing. The payment of the principal of and interest on such bonds is paid from the special assessments levied annually on the benefited property. Special assessments are paid at the same time and in the same manner as ad valorem property taxes. If at any time the special assessments received from the property owners are insufficient to provide for the payment of the principal of and interest on the bonds, the City is obligated to provide for the balance of such payments through its ability to levy unlimited ad valorem property taxes. 23 Tax Collections Real estate property tax statements are mailed November 1 each year and may be paid in full or one-half on or before December 20 with the remaining one-half due on or before June 20 of the following year. Taxes that are unpaid on the due dates are penalized at the rate of 12% per annum (1 % pro-rated monthly) until paid or until the property is sold for taxes. Real estate bearing unpaid taxes is advertised for sale in July of each year and is sold to the County for taxes and all legal charges on the first Tuesday in September. Properties that are sold to the County and not redeemed by the delinquent taxpayer within two years after the tax sale are subject to foreclosure sale, except properties defmed as "homesteads" under the Kansas Constitution, which are subject to sale after three years. Personal property taxes are assessed, due and may be paid in the same manner as real estate taxes. Motor vehicle property taxes are based on valuations provided by the Kansas Department of Revenue and the county average tax rate for the county in which the vehicle is registered. Motor vehicle taxes are payable to the county treasurer at the time of the vehicle's annual registration. Vehicle registration dates are assigned by the State in a manner such as to equal registration over a twelve-month period. Motor vehicle taxes are distributed by the county to the state, city and other taxing jurisdictions based on their proportionate tax levies. Delinquent personal and motor vehicle taxes are penalized at the same rate as delinquent real property taxes. The following is a summary of tax collections for the years shown. Taxes levied according to the 1999 tax rolls were collected in December 1999 and June 2000 and were used to fInance the City's 2000 budget. Current Current and Delinquent Budget Tax Taxes Tax Collections Tax Collections Year Rate Levied Amount % Amount % 1990 30.015 $4,693,317 $4,394,623 93.6* $4,499,127 95.9 1991 30.028 4,502,345 4,317,229 95.9* 4,322,973 96.0 1992 29.828 4,783,118 4,500,863 94.1* 4,663,073 97.5 1993 29.849 4,881,773 4,696,471 96.2 4,837,579 99.0 1994 29.461 4,858,543 4,673,374 96.2 4,776,852 98.3 1995 28.709 5,241,229 5,177,552 98.8 5,284,148 100.8 1996 27.145 5,540,896 5,411,474 97.7 5,529,657 99.8 1997 26.942 5,777,867 5,689,316 98.5 5,783,780 100.1 1998 25.705 6,087,331 5,982,433 98.3 6,097,800 100.2 1999 25.270 6,425,767 6,255,833 97.4 6,396,584 99.6 2000 (to date) 24.876 6,702,087 3,811,489 56.9 n.a. 56.9 * In 1990 through 1992 the City experienced a decrease in annual tax collections as a result of numerous protests by property owners of their reappraised property valuations. The City adjusted its budgeting procedures accordingly to reflect a lower tax collection rate. The City has budgeted for a 4% delinquency rate in recent years. Sales Tax In 1982 the voters of Saline County, in accordance with Kansas statutes, approved a 1 % countywide local option sales tax. In 1992 voters of the City approved a local option .50% citywide sales tax for purposes of helping fund general operations expenditures of the City. In November 1998, voters within the City approved an additional .25% restricted local option sales tax to be collected through June 1,2004 and distributed to UnifIed School District No. 305 to fund educational technology. The total sales tax for goods and services in the City is now 6.65%, which consists of 4.9% imposed by the State, 1 % countywide local option sales tax, and .75% citywide local option sales tax. Sales tax collections are the responsibility of the Kansas Department of Revenue. The Department of Revenue distributes the local option countywide and citywide sales taxes on a monthly basis. Countywide sales taxes are distributed between the levying county and the cities located within the county based on population and relative tax levies. Citywide local option sales taxes are distributed solely to the levying city. Statewide sales taxes are retained entirely by the state. 24 The City of Salina deposits sales tax receipts from its 1992 tax into its General Fund. In 1999, the City collected a total of$l1,162,221 from all city and countywide local option sales taxes representing 33.71% of total revenues in the General, Special Revenue, and Debt Service Funds. Sales tax receipts are used for funding general operating expenditures of the City and capital improvement projects. The following table lists the local-option sales tax receipts of the City of Salina in the years indicated. Figures represent actual collections and may vary slightly from final audited amounts. Year 1994 1995 1996 1997 1998 1999 .25 Citywide Local Option Sales Tax Receipts (Distributed to V.S.D. 305) .50~ Citywide Local Option Sales Tax Receipts $3,169,765 3,456,554 3,440,067 3,611,403 3,925,229 3,992,065 $1,529,768 Tax Levies City's Portion of 1 ~ Countywide Local Option Sales Tax Receipts $4,591,521 4,869,601 4,810,469 5,047,000 5,634,338 5,640,388 The City may levy taxes in accordance with the requirements of its adopted budget. The County Clerk determines property tax levies based upon the assessed valuations provided by the Appraiser and spreads the levies on the tax rolls. The following table gives the total tax levies for all taxing jurisdictions per $1,000.00 assessed valuation of the City for the last five years. 1995 1996 1997 1998 1999 Levy Levy Levy Levy Levy for for for for for 1996 1997 1998 1999 2000 Jurisdiction Bude:et Bude:et Bude:et Bude:et Bude:et City of Salina 27.145 26.942 25.705 25.270 24.876 Salina Library 5.393 5.565 5.804 5.419 5.291 State Education & Other 1.500 1.500 1.500 1.500 1.500 Unified School District #305 42.287 42.312 39.529 36.840 56.321 Airport Authority 1.372 1.275 1.129 2.950 2.653 Saline County 23.370 22.925 18.141 20.488 23.187 Total 101.067 100.519 91.808 92.467 113.828 BuUdine: Permits Building permits issued in the City have experienced new highs in recent years. Strong commercial and industrial growth has led to a significant increase in demand for residential housing. In addition to the historical permit information provided below, the City has recently approved the development of several new subdivisions. The following table shows the total volume and estimated valuation of building permits authorized by the City during the years indicated. Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Permits Issued 497 562 598 628 680 759 890 725 757 772 Estimated Valuation $36,469,096 * 22,665,785 25,283,947 36,411,632 38,667,261 34,156,955 55,369,816 38,149,921 42,870,543 35,795,980 *Includes one permit in the amount of $16,000,000 issued to Asbury Hospital for a large expansion project. 25 Budl!etinl! Procedures Applicable Kansas statutes require that budgets be legally adopted for all funds (including debt service and enterprise funds) unless exempted by a specific statute. All budgets are prepared utilizing the modified accrual basis further modified by the encumbrance method of accounting. For example, commitments such as purchase orders and contracts, in addition to disbursements and accounts payable, are recorded as expenditures. The statutes provide that the budget for the succeeding calendar year must be prepared on or before August 1 and published on or before August 5 of each year. A public hearing is required to be held on or before August 15, with the final budget being adopted on or before August 25 of each year. Original appropriations may be modified by supplemental appropriations and transfers among budget categories. The City Commission must approve all significant changes. Kansas law prohibits cities and other governmental units from creating indebtedness unless there is money on hand in the proper fund and unencumbered by previous commitments with which to pay the indebtedness. The execution of a contract, or the issuing of a purchase order, automatically encumbers the money in the fund for the payment of the amount represented by the commitment. It makes no difference that the amount may not have to be paid until more moneys are in the fund or until the following year. An exception to this cash basis law is the issuance of debt, in the form of bonds, notes, or warrants, pursuant to statutory authority, referendum or by the State Board of Tax Appeals. In the event debt is issued, funds need not be on hand for future payments. Appraisal and Assessment Procedures The determination of appraised and assessed valuation and the collection of property taxes for all political subdivisions in the State of Kansas are the responsibility of the various counties. The Saline County appraiser annually determines the appraised valuation of property located in the City. The appraiser's determination is based on a number of criteria established by Kansas's statute. All property, with the exception of agricultural land, is appraised based on estimated fair market value. Agricultural property is appraised based on productivity value. Kansas statutes require that each parcel of real property be reviewed and inspected by the county appraiser once every four years for taxation purposes. Once appraised valuations have been determined, they are multiplied by the applicable statutory assessment rates to arrive at the assessed valuations. The total assessed valuation is then used to establish property tax rates. Property Assessment Rates In order to determine the assessed valuation of a parcel of property for taxation purposes, the county appraiser multiplies the appraised value of the parcel by the applicable assessment rate. Current property assessment rates were established in 1986, effective in 1989, and slightly modified in 1992. The most significant 1992 modifications involved lowering the assessment rate on commercial and industrial real property from 30% to 25% and on residential property from 12% to 11.5%. 26 The following table shows the current assessment rates for the different classes of taxable tangible property within the State of Kansas. Real Property: Residential Commercial and Industrial- Real Property Agricultural Land (I) Agricultural Improvements Vacant Lots Not-for-Profit (2) All Other Personal Property: Mobile Homes Mineral Leaseholds (large) Mineral Leaseholds (small) Commercial & Industrial Machinery & Equipment All Other Utilities: Railroads All Other Public Utilities Motor Vehicles: Property Exempt: Property used for the following purposes, or portions thereof, are exempt from taxation provided certain statutory requirements are met: religious, educational, literary, scientific, benevolent, alumni associations, veterans' organizations, or charitable purposes, including parsonages and community service organizations providing humanitarian services. 11.5% 25.0 30.0 25.0 12.0 12.0 30.0 11.5% 30.0 25.0 25.0 30.0 federally mandated rate 33.0% 20.0% (3) (1) Agricultural land is valued based on the productivity value of the property and not estimated market valuation. (2) A bill passed by the Kansas Legislature in 1994 clarified this class of property to include all property owned and operated by not-for-profit organizations not subject to federal income taxation pursuant to paragraphs (2), (3), (4), (7), (8), or (10) of Subsection C of Section 501 of the federal internal revenue code. This bill specifically established that private, not-for-profit country clubs would be assessed at 12% for all land that does not accommodate buildings or improvements. (3) Effective January 1, 1996, the applicable assessment rates on motor vehicles was reduced from 30% of market value to 20% of market value over a five-year period in the following increments: 1996-28.5%; 1997- 26.5%; 1998-24.5%; 1999-22.5%; and 2000-20.0%. Eaualization Ratios Annually, the Property Valuation Division of the Kansas Department of Revenue conducts a study to compare the assessed valuation of real property to estimated market value based on property sale prices. The study derives an equalization ratio which, when divided into assessed valuation, provides a means to approximate actual market value. According to the 1998 Real Estate Assessment/Sales Ratio Study, the equalization ratio for residential real property in Saline County was 11.50%, and commercial and industrial property was 25.60%. LEGAL MATTERS Legal matters incident to the authorization, issuance, and sale of the Notes and Bonds by the City and the tax-exempt status thereof are subject to the approval of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel, whose approving opinion accompanies the Notes and Bonds. The opinions are dated and given on and speak only as of the date of original delivery of the Notes and Bonds. Bond Counsel has not participated in the preparation of this Official Statement except for the sections titled INTRODUCTORY STATEMENT, THE NOTES, THE BONDS, LEGAL MATTERS, TAX EXEMPTION, CONTINUING DISCLOSURE, and APPENDIX B. 27 TAX EXEMPTION Federal Tax Exemption In the opinion of Gilmore & Bell, P.C., Bond Counsel, under existing law, the interest on the Notes and Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. It should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defmed for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinions set forth in this paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance of the Notes and Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Notes and Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Notes and Bonds. The Notes and Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest on the Notes and Bonds. Orillinal Issue Discount In the opinion of Bond Counsel, subject to the conditions set forth above, the original issue discount in the selling price of each Note and Bond purchased in the original offering at a price less than the par amount thereof (the "OlD Securities"), to the extent properly allocable to each owner of such Note or Bond, is excluded from gross income for federal income tax purposes with respect to such owner. Original issue discount is the excess of the stated redemption price at maturity of an OlD Security over the initial offering price to the public, excluding underwriters and intermediaries, at which price a substantial amount of the OlD Securities of such maturity were sold. Under Section 1288 of the Code, original issue discount on tax-exempt bonds accrues on a compound basis. The amount of original issue discount that accrues to an owner of an OlD Security during any accrual period generally equals (i) the issue price of such OlD Security plus the amount of original issue discount accrued in all prior accrual periods, multiplied by (ii) the yield to maturity of such OlD Security (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), less (iii) any interest payable on such OlD Security during such accrual period. The amount of original issue discount accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excluded from gross income for federal income tax purposes, and will increase the owner's tax basis in such OlD Security. Any gain realized by an owner from a sale, exchange, payment or redemption of an OlD Security will be treated as gain from the sale or exchange of such OlD Security. As noted above, original issue discount is the excess of the "stated redemption price at maturity" of a bond or note over the initial offering price to the public. Under Code section 1273, "stated redemption price at maturity" of a bond or note is the sum of all payments on such bond or note, other than qualified stated interest payments. Qualified stated interest is stated interest that is unconditionally payable at least annually at a single fixed rate. For most bonds and notes, all of the interest is "qualified stated interest," and the stated redemption price at maturity is simply the par amount of the obligation. But interest on the Notes is payable more than one year after the delivery of such notes. Therefore, the interest payable on Notes is not qualified stated interest and is included in the stated redemption price at maturity. Original issue discount on the Notes is the par amount, plus all interest to be paid on the Notes, minus the initial offering price to the public. Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Notes and Bonds. 28 Kansas Tax Exemption The interest on the Bonds and the Notes is exempt from Kansas income taxation. Other Tax Conseauences Prospective purchasers of the Notes and Bonds should be aware that (i) Section 265 of the Internal Revenue Code of 1986 (the "Code"), denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Notes and Bonds, except with respect to certain ftnancial institutions (within the meaning of Section 265(b)(5) of the Code), (ii) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items, including interest on the Notes and Bonds, (iii) interest on the Notes and Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch proftts tax imposed by Section 884 of the Code, (iv) passive investment income, including interest on the Notes and Bonds, may be subject to federal income taxation under Section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and proftts at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income, and (v) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement beneftts to take into account in determining gross income, receipts, or accruals of interest on the Notes and Bonds. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of the Notes and Bonds should consult their own tax advisors as to the applicability of these tax consequences. RATINGS The City has applied to Moody's Investors Service for a rating on the Notes and the Bonds. Any explanation of the signiftcance of such ratings, when received, may be obtained only from said rating agency. There is no assurance that the ratings will remain for any given period of time or that they may not be lowered or withdrawn entirely by the rating services if, in their judgment, circumstances so warrant. Any such downward change in or withdrawal of the ratings may have an adverse effect on the market price of the Notes. The City's other outstanding notes and bonds have been rated "MIG 1" and "A 1 ", respectively, by Moody's. UNDERWRITING The Notes were purchased at public sale on , 2000, by Bidder") at a price equal to , plus accrued interest to the date of closing. (the "Successful The Bonds were purchased at public sale on , 2000, by Bidder") a price equal to , plus accrued interest to the date of closing. (the "Successful are collectively referred to herein as the "Underwriters". ABSENCE OF MATERIAL LITIGATION The Transcript of Proceedings will contain a certiftcate of non-litigation dated as of the closing date and executed by the City to the effect that there is no controversy, suit, or proceeding of any kind .pending or, to the knowledge of the City, threatened wherein or whereby any question is raised, or may be raised, questioning, disputing, or affecting in any way the legal organization of the City or its boundaries or the legality of any official act shown to have been done regarding the issuance of the Notes and Bonds or the constitutionality or validity of the obligation represented by the Notes and Bonds or the means provided for the payment of the Notes and Bonds. 29 CONTINillNG DISCLOSURE The Securities and Exchange Commission (the "SEC") has promulgated amendments to Rule 15c2-12 (the "Rule"), requiring continuous secondary market disclosure for issues sold on or after July 3, 1995. In the Bond Ordinance and the Note Resolution, the City has covenanted to provide annually certain financial infonnation and operating data and other infonnation necessary to comply with the Rule, and to transmit the same or cause the same to be transmitted to certain national repositories, any state repository, and the Municipal Securities Rulemaking Board, as applicable. This covenant is for the benefit of and is enforceable by the owners of the Bonds. See APPENDIX B for further details concerning continuing disclosure requirements. The City is in compliance with any prior continuing disclosure undertaking. CERTIFICATION OF THIS OFFICIAL STATEMENT The preparation and distribution of this Preliminary Official Statement has been authorized by the City. This Preliminary Official Statement is hereby duly approved by the governing body of the City and "deemed fmal", except for the omission of certain infonnation as provided in Securities and Exchange Commission Rule 15c2-12 as of the date on the cover page hereof. Dated: June 19,2000 CITY OF SALINA, KANSAS By /s/ Alan E. Jilka Mayor ATTEST: /s/ Rodnev Franz Finance Director 30 APPENDIX A Financial Statements Since 1992, the City's comprehensive annual fmancial reports have received the Certificate of Achievement for Excellence in Financial Reporting award by the Government Finance Officers Association. The Certificate of Achievement was developed to encourage governmental units to prepare and publish an easily readable and understandable fmancial report covering all funds and financial transactions of the government during the fiscal year. The following is a portion of the report on examination of the City of Salina, Kansas for the fiscal year ended December 31, 1999, prepared by the firm of Agler & Gaeddert, Chartered, Certified Public Accountants, Ottawa, Kansas. (THIS PAGE LEFT BLANK INTENTIONALLY) 234 South Main P.O. Box 1020 Ottawa. Kansas 66067 (785) 242.3170 (785) 242-9250 FAX JtJ Agl~f,,~g~~2~~r~n~HARTERED w. Keith Gaeddert Lucille L Hinderliter Raymond E. t./ieyer, Jr. REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Honorable Mayor and the Board of the City Commissioners City of Salina, Kansas We have audited the accompanying general purpose fmancial statements of the City of Salina, Kansas as of and for the year ended December 31, 1999 as listed in the table of contents to the fmancial section. These general purpose fmancial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these general purpose fmancial statements based on our audit. We did not audit the fInancial statements of the Salina Airport Authority and the Housing Authority of the City of Salina, which are discretely presented component units in the accompanying fmancial statements. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Salina Airport Authority .and the Housing Authority of the City of Salina, is based solely on the reports of the other auditors. . . We conducted our audit in acCordance with generally accepted auditing standards; the Kansas Municipal Audit Guide and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan andperfonn,the audit to obtain reasonable assurance about whether the general purpose fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the. amounts and disclosures in the general purpose fmancial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as. e'faluating the overall general purpose fInancial statement presentation. We believe that our audit and.the report of oiherauditors provide a reasonable basis for our opinion. In our opinion, based on our audit and the reports of other auditors, the general purpose fmancial statements referred to above present fairly, in all material respects, the fmancial position of the City of Salina, Kansas as of December 31, 1999, and the results of its operations and cash flows of its proprietary fund types and nonexpendable trust funds for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated May 12, 2000 on our consideration of the City of Salina, Kansas' internal control structure and a report dated May 12,2000 on its compliance with laws and regulations. A-I ~ INPACT l~;" ~"II..r'~'",,,,, ". .\,'(~ i')l "~ ....;h...:-....; ,,::.-.:"."j...~t\ Our audit was conducted for the purpose of fonning an opinion on the general purpose financial statements taken as a whole. The combining, individual fund and account group financial statements, schedules and additional infonnation listed in the table of contents to the financial section are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City of Salina, Kansas. Such additional infonnation has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose fmancial statements taken as a whole. The other data included in this report, designated as the "Statistical Section" in the table of contents, has not been audited by us and, accordingly, we express no opinion on that data. ~. oJ x!;;dJA d;;t;;;j May 12, 2000 , , A-2 GENERAL PURPOSE FINANCIAL STATEMENTS A-3 City of Salina, Kansas COMBINED BALANCE SHEET ALL FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS December 31, 1999 Governmental Fund Types Special Debt Capital General Revenue Service Projects ASSETS AND OTHER DEBITS ASSETS Cash and investments $ 6,845,472 $ 3,177,391 $ 779,992 $ 851,756 Cash and investments - non-expendable trusts 0 0 0 0 Cash with fiscal agent 0 0 6,895 0 Receivables (net of allowance for uncollectibles) Accounts 213,108 33,200 0 0 Taxes 2,861,334 3,621,011 1,478,426 0 Interest 83,782 0 0 0 Notes 0 12,615 0 0 Inventory and prepaid supplies 121,750 0 0 0 Due from funds 276,917 0 0 0 Restricted assets Cash and investments' 0 0 0 0 Fixed assets (net of accumulated depreciation, where applicable) 0 0 0 0 Financing leases o. 0 0 0 Deferred charges 6 0 0 0 OTHER DEBITS Amount available in debt service funds 0 0 0 0 Amount to be provided for retirement of general long-term debt 0 0 0 0 Total assets and other debits $ 10,402,363 $ 6,844,217 $ 2,265,313 $ 851,756 LIABILITIES, EQUITY AND OTHER CREDITS LIABILITIES Accounts payable $ 327,379 $ 57,387 $ 0 $ 0 Retainage payable 9,963 3,642 0 13,436 Due to funds 0 276,917 0 0 Meter deposits payable 0 0 0 0 Health claims payable 0 0 0 0 Matured principal and interest payable 0 0 6,895 0 A-4 The accompanying notes are an integral part of this statement. Statement 1 Proprietary Fund Types Fiduciary Fund Types Total Primary Government (Memoran- dum Only) Enterprise Internal Service Trust and Agency Account Groups General General Fixed Long- Assets Term Debt $ 12,690,266 $ 2,444,939 $ 239,151 $ 0 $ 0 $ 27,028,967 0 0 253,332 0 0 253,332 0 0 0 0 0 6,895 962,633 0 0 0 0 1,208,941 0 0 0 0 0 7,960,771 0 0 0 0 0 83,782 0 0 0 0 0 12,615 480,971 39,939 0 0 0 642,660 0 0 0 0 0 276,917 11,804,132 , , 0 0 0 0 11,804,132 55,355,534 717,034 0 27,454,454 0 83,527,022 0 0 0 .. 0 0 0 ,. 517,819 0 0 0 0 517,819 o o o o 779,992 779,992 o o o o 15,901,663 15,901,663 $ 81,811,355 $ 3,201,912 $ 492,483 $ 27,454,454 $ 16,681,655 $ 150,005,508 $ 404,220 $ 103,500 $ 199,242 $ 0 $ 0 $ 1,091,728 280,686 0 0 0 0 307,727 0 0 0 0 0 276,917 90,888 0 0 0 0 90,888 0 597,676 0 0 0 597,676 0 0 0 0 0 6,895 A-S cont. City of Salina, Kansas COMBINED BALANCE SHEET ALL FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS December 31, 1999 Governmental Fund Types Special Debt Capital General Revenue Service Projects LIABILITIES - continued Payable from restricted assets Accrued interest payable $ 0 $ 0 $ 0 $ 0 Revenue bonds payable - current 0 0 0 0 Deferred interest-fmancing leases 0 0 0 0 Accrued compensated absences 0 0 0 0 Loans payable. - current 0 0 0 0 General obligation bonds - current 0 0 0 0 Capital leases payable - current 0 0 0 0 Temporary notes payable 0 0 0 4,650,000 Loans payable 0 0 0 0 General obligation bonds payable 0 o. 0 0 Revenue bon,ds payable 0 0 0 0 Capital leases payable 0 0 0 0 Mortgages payable 0 0 0 0 Landfill closure and postclosure 0 0 0 0 Deferred revenue 2,174,208 3,043,636 1,478,426 0 TotaIliabilities 2,511,550 ",. 3,381,582 1,485,321 4,663,436 EQUITY AND OTHER CREDITS Investment in general fixed assets 0 0 0 0 Contributed capital 0 0 0 0 Retained Earnings Reserved for bond retirement 0 0 0 0 Reserved for postclosure care 0 0 0 0 Unreserved 0 0 0 0 Fund balances Reserved for encumbrances 837,108 207,614 0 2,166,752 Reserved for notes receivable 0 12,615 0 0 Unreserved Designated for debt service 0 0 779,992 0 Undesignated (deficit) 7,053,705 3,242,406 0 (5,978,432) Total equity and other credits 7,890,813 3,462,635 779,992 (3,811,680) Total liabilities, equity and other credits $ 10,402,363 $ 6,844,217 $ 2,265,313 $ 851,756 A-6 The accompanying notes are an integral palt of this statement. Proprietary Proprietary Fiduciary Total Fund Types Fund Types Fund Types Account Groups Primary General General Government Internal Trust and Fixed Long- (Memoran- Enterprise Service Agency Assets Term Debt dum Only) $ 309,134 $ 0 $ 0 $ 0 $ 0 $ 309,134 735,000 0 0 0 0 735,000 0 0 0 0 0 0 421,017 49,997 0 0 1,889,982 2,360,996 49,740 0 0 0 0 49,740 763,754 0 0 0 2,181,481 2,945,235 0 98,848 0 0 0 . 98,848 1,000,000 0 0 0 0 5,650,000 3,050,955 0 0 0 0 3,050,955 5,548,103 0 0 0 12,610,192 18,158,295 24,865,000 0 0 0 0 24,865,000 0 192,739 0 0 0 192,739 0 0 0 0 0 0 1,007,235 0 0 0 0 1,007,235 0 0 0 0 0 6,696,270 38,525,732 1,042,760 199,242. 0 16,681,655 68,491,278 0 0 0 27,454,454 0 27,454,454 8,736,894 621,543 0 0 0 9,358,437 2,810,428 0 0 0 0 2,810,428 97,533 0 0 0 0 97,533 31,640,768 1,537,~09 0 0 0 33,178,377 0 0 0 0 0 3,211,474 0 0 0 0 0 12,615 0 0 0 0 0 779,992 0 0 293,241 0 0 4,610,920 43,285,623 2,159,152 293,241 27,454,454 0 81,514,230 $ 81,811,355 $ 3,201,912 $ 492,483 $ 27,454,454 $ 16,681,655 $ 150,005,508 A-7 cont. City of Salina, Kansas COMBINED BALANCE SHEET ALL FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS December 31, 1999 Total Total Primary. Component Units Reporting Government Salina Salina Entity (Memoran- Airport Housing (Memoran- dum Only) Authority Authority dum Only) ASSETS AND OTHER DEBITS ASSETS Cash and investments $ 27,028,967 $ 73,661 $ 559,855 $ 27,662.483 Cash and investments - non-expendable trusts 253,332 0 0 253,332 Cash with fiscal agent 6,895 0 0 6,895 Receivables (net of alIowance for uncollectibles) Accounts 1,208,941 121,512 75,784 1,406,237 Taxes 7,960,771 714,772 0 8,675,543 Interest 83,782 0 0 83,782 Notes 12,615 0 0 12,615 Inventory and prepaid'supplies 642,660 2,524 11,203 656,387 Due from funds 276,917 0 0 276,917 Restricted. assets Cash and investments.' 11,804,132 85,000 67,888 11,957.020 Fixed assets (net of accumulated depreciation, where applicable) 83,527.022 24.584,752. 6,945.876 115.057.650 'Financing leases 0 1.260.228 0 1.260.228 Deferred charges 517,819' 102,094 0 619,913 OTHER DEBITS Amount available in debt service funds 779,992 0 0 779,992 Amount to be provided for retirement of generallong-tenn debt 15,901,663 0 .0 15,901,663 Total assets and other debits $ 150.005,508 $ 26,944,543 $ 7,660,606 $ 184.610,657 LIABILITIES, EQUITY AND OTHER CREDITS LIABILITIES Accounts payable $ 1,091,728 $ 141,252 $ 80,490 $ 1,313.470 Retainage payable 307.727 0 0 307,727 Due to funds 276,917 0 0 276.917 Meter deposits payable 90,888 0 0 90,888 Health claims payable 597,676 0 0 597,676 Matured principal and interest payable 6,895 0 0 6,895 A-8 The accompanying notes are an integral part of this statement. cont. City of Salina, Kansas Statement I Pae:e 4 COMBINED BALANCE SHEET ALL FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS December 3 I, 1999 Total Total Primary Component Units Reporting Government Salina Salina Entity (Memoran- Airport Housing (Memoran- dum Only) Authority Authority dum Only) LIABILITIES - continued Payable from restricted assets Accrued interest payable $ 309,134 $ 108,410 $ 0 $ 417,544 Revenue bonds payable - current 735,000 60,000 0 795,000 Deferred interest-financing leases 0 65,092 0 65,092 Accrued compensated absences 2,360,996 0 0 2,360,996 Loans payable - current 49,740 48,978 0 98,718 General obligation bonds - current 2,945,235 630,000 0 3,575,235 Capital leases payable - current 98,848 0 0 98,848 Temporary notes payable 5,650,000 0 0 5,650,000 Loans payable 3,050,955 371,551 0 3,422,506 General obligation bonds payable 18,158,295 4,940,000 0 23,098,295 Revenue bonds payable 24,865,000 440,000 0 25,305,000 Capital leases payable 192,739 o. 0 192,739 Mortgages payable 0 0 634,051 634,051 Landfill closure and postclosure 1,007,235 0 0 1,007,235 Deferred revenue ' 6,696,270 748,808 6,906 7,451,984 Total liabilities 68,491,278 7,554,091 721,447 76,766,816 EQUITY AND OTHER CREDITS Investment in general fixed assets 27,454,454 0 6,945,706 34,400,160 Contributed capital 9,358,437 10,093,641 0 19,452,078 Retained Earnings Reserved for bond retirement 2,810,428 0 0 2,810,428 Reserved for postc1osure care 97,533 0 0 97,533 Unreserved 33,178,377 9,296,811 0 42,475,188 Fund balances Reserved for encumbrances 3,211,474 0 0 3,211,474 Reserved for notes receivable 12,615 0 0 12,615 Unreserved Designated for debt service 779,992 0 0 779,992 U ndesignated (deficit) 4,610,920 0 (6,547) 4,604,373 Total equity and other credits 81,514,230 19,390,452 6,939,159 107,843,841 Total liabilities, equity and other credits $ 150,005,508 $ 26,944,543 $ 7,660,606 $ 184,610,657 The accompanying notes are thti~tegral part of this statement. City of Salina, Kansas COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES _ ALL GOVERNMENTAL FUND TYPES, EXPENDABLE TRUST FUNDS AND DISCRETELY PRESENTED COMPONENT UNITS For the fiscal year ended December 31, 1999 Governmental Fund Types Special Debt Capital General Revenue Service Projects Revenues Taxes $ 15,484,334 $ 4,579,346 $ 1,250,953 $ 0 Intergovernmental 1,750,941 2,632,340 0 0 Fees and charges 1,437,526 630,803 0 0 Special assessments 0 0 1,086,557 0 Other revenues 2,616,771 1,447,667 193,125 831,465 Total revenues 21,289,572 9,290,156 2,530,635 831,465 Expenditures Current General government 2,012,477 165,955 0 0 Public safety 8,442,693 2,004,926 0 0 Public works 2,706,176 761,717 0 0 Culture and recreation 1,707,818 2,705,266 0 0 Public health and sanitation 539,931 133,502 0 0 Community development 2,678,390 1,421,827 0 0 Other 0 0 0 0 Capital outlay 1,778,158 1,866,631 0 5,524,833 Debt service Principal 0 0 1,851,481 9,440,000 Interest and other charges 0 0 640,472 346,182 Total expenditures 19,865,643 9,059,824 2,491,953 15,311,015 Excess (deficiency) of revenues over (under) expenditures 1,423,929 230,332 38,682 (14,479,550) A-IO The accompanying notes are an integral part of this statement. con!. Statement 2 Fiduciary Total Component Total Fund Type Primary Unit Reporting Government Salina Entity Expendable (Memo ran- Housing (Memo ran- Trust dum Only) Authority dum Only) $ 0 $ 21,314,633 $ 0 $ 21,314,633 0 4,383,281 828,405 5,211,686 0 2,068,329 274,023 2,342,352 0 1,086,557 0 1,086,557 1,959 5,090,987 39,882 5,130,869 1,959 33,943,787 1,142,310 35,086,097 0 2,178,432 0 2,178,432 0 10,447,619 0 10,447,619 0 3,467,893 0 3,467,893 0 4,413,084 0 4,413,084 2,401 675,834 0 675,834 0 '4,100,217 907,805 5,008,022 0 0 150,351 150,351 0 9,169,622 122,305 9,291,927 0 11,291,481 0 11,291,481 0 986,654 43,460 1,030,114 2,401 46,730,836 1,223,921 47,954,757 (442) (12,787,049) (81,611) ( 12,868,660) A-ll cont. City of Salina, Kansas COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES, EXPENDABLE TRUST FUNDS AND DISCRETELY PRESENTED COMPONENT UNITS For the fiscal year ended December 31, 1999 Governmental Fund Types Special Debt Capital General Revenue Service Projects Other financing sources (uses) Operating transfers in $ 17,000 $ 632,073 $ 0 $ 675,000 Operating transfers out (1,004,179) (319,894) 0 0 Bond and temporary note proceeds 0 0 0 9,883,368 Sale of assets 59,557 0 0 0 Total other fmancing sources (uses) (927,622) 312,179 0 10,558,368 Excess (deficiency) of revenues and other sources over (under) expenditures and other uses 496,307 542,511 38,682 (3,921,182) Fund balances (deficit), January 1 7,015,511 3,478,084 741,310 (30,998) Residual equity transfer in 394,239 0 0 366,103 Residual equity transfer ~ut (15,244) (557,960) 0 (225,603) Fund balances (deficit), December 31 $ 7,890,813 $ 3,462,635 $ 779,992 $ (3,811,680) Th . A-:l? I fh. e accompanymg notes are an mregra part 0 t is statement. cont. Statement 2 ~ Fiduciary Total Component Total Fund Type Primary Unit Reporting Government Salina Entity Expendable (Memoran- Housing (Memo ran- Trust dum Only) Authority dum Only) $ 0 $ 1,324,073 $ 0 $ 1,324,073 0 (1,324,073) 0 (1,324,073) 0 9,883,368 0 9,883,368 0 59,557 0 59,557 0 9,942,925 0 9,942,925 (442) (2,844,124) 11,244,258 760,342 , (798,807) (81,611) 40,351 o o 75,064 (2,925,735) 11,319,322 760,342 (798,807) o o $ 39,909 $ 8,361,669 $ (6,547) $ 8,355,122 A-13 City of Salina, Kansas COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES _ ACTUAL AND BUDGET - GENERAL, SPECIAL REVENUE AND DEBT SERVICE FUNDS For the fiscal year ended December 31, 1999 Total revenues General Fund Variance Favorable Actual Budget (Unfavorable) $ 15,654,583 $ 15,805,291 $ (150,708) 1,756,732 1,684,942 7 I ,790 1,420,786 1,376,472 44,314 2,812,895 2,707,311 105,584 21,644,996 21,574,016 70,980 Revenues Taxes Intergovernmental Fees and charges Other revenues Expenditures Current General government Public safety Public works Public health and sanitation Culture and recreation Community development Other Capital outlay Debt service Principal Interest and other charges Cash reserve 1,797,584 1,943,113 145,529 8,336,635 8,692,245 355,610 3,253,338 3,562,582 309,244 539,161 539,445 284 1,698,834 1,721,558 22,724 2,327,073 2,314,568 (12,505) 0 .0 0 2,469,192 3,700,240 . 1,231,048 0 0 0 0 0 0 0 4,292,080 4,292,080 ,20,42 1,8 I 7 26,765,83 I 6,344,014 1,223,179 (5,191,815) 6,414,994 17,000 17,000 0 (1,004, I 79) (510,000) (494, I 79) 59,557 30,000 29,557 (927,622) (463,000) (464,622) Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses) Operating transfers in Operating transfers out Sale of assets Total other financing sources (uses) A-14 The accompanying notes are an integral part of this statement. Statement 3 Special Revenue Funds Debt Service Funds Variance Variance Favorable Favorable Actual Budget (Unfavorable) Actual Budget (Unfavorable) $ 4,588,040 $ 4,577,131 $ 10,909 $ 1,251,027 $ 1,252,740 $ (1,713) 1,664,835 1,635,140 29,695 0 0 0 877,475 831,537 45,938 0 0 0 192,733 511,700 (318,967) 1,279,682 1,307,438 (27,756) 7,323,083 7,555,508 (232,425) 2,530,709 2,560,178 (29,469) 133,667 144,385 10,718 0 0 0 1,854,943 2,137,681 282,738 0 0 0 747,793 835,922 88,129 0 0 0 133,502 136,769 3,267 0 0 0 1,525,704 1,614,568 88,864 0 0 0 655,814 684,519 28,705 0 0 0 32,925 34,073 1,148 0 0 0 1,721,833 1,995,741 273,908 0 0 0 0 0 0 1,851,481 1,851,631 150 0 0 0 640,546 641,377 831 0 1,859,524 1,859,524 0 808,480 808,480 6,806,181 9,443,182 2,637,001 2,492,027 3,301,488 809,461 516,902 (1,887,674) 2,404,576 38,682 (741,310) 779,992 627,894 286,000 341,894 0 0 0 (319,894) (672,346) 352,452 0 0 0 8,000 0 8,000 0 0 0 316,000 (386,346) 702,346 0 0 0 A-I5 rnnt City of Salina, Kansas COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES _ ACTUAL AND BUDGET - GENERAL, SPECIAL REVENUE AND DEBT SERVICE FUNDS For the fiscal year ended December 31, 1999 General Fund Variance Favorable Actual Budget (Unfavorable) Excess (deficiency) of revenues and other sources over (under) expenditures and other uses $ 295,557 $ (5,654,815) $ 5,950,372 Unreserved fund balances, January 1 5,484,672 5,484,672 0 Prior year cancelled encumbrances 5,000 0 5,000 Residual equity transfer in 207,101 170,143 36,958 Residual equity transfer out (34,428) 0 (34,428) Unreserved fund balances, December 31 5,957,902 $ 0 $ 5,957,902 Receivables reconciliation 984,016 Inventory reconciliation 121,750 Retainage reconciliation (9,963) Encumbrance reconciliation 837,108 Non-budgeted funds 0 Fund balances, December 31 $ 7,890,813 , , A-16 The accompanying notes are an integral part of this statement. Statement 3 Pal!:e2 Special Revenue Funds Debt Service Funds Variance Variance Favorable Favorable Actual Budget (Unfavorable) Actual Budget (Unfavorable) $ 832,902 $ (2,274,020) $ 3, I 06,922 $ 38,682 $ (741,310) $ 779,992 2,444,164 2,444,163 741,310 741,310 0 13,242 0 13,242 0 0 0 0 0 0 0 0 0 (557,960) (170,143) (387,817) 0 0 0 2,732,348 $ 0 $ 2,732,348 779,992 $ 0 $ 779,992 610,075 0 0 0 (3,642) 0 207,614 0 (83,760) 0 $ 3,462,635 $ 779,992 A-17 City of Salina, Kansas COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS/FUND BALANCES ALL PROPRIETARY FUND TYPES, SIMILAR TRUST FUNDS AND DlSCRETEL Y PRESENTED COMPONENT UNITS For the fiscal year ended December 31, 1999 Fiduciary Proprietary Fund Types Fund Type Non- Internal expendable Enterprise Service Trust Operating revenues Charges for services $ 15,138,741 $ 4,779,188 $ 6,976 Reimbursements 18,158 56,836 0 Miscellaneous 256,189 940 0 Total operating revenues 15,413,088 4,836,964 6,976 Operating expenses General government 0 4,980,345 0 Public works 10,077,057 0 0 Recreation 713,371 0 0 Other 0 0 35 Depreciation 2,832,353 165,110 0 Total operating expeqses 13,622,781 5,145,455 35 , Operating income (loss) 1,790,307 (308,491) 6,941 Nonoperating revenues (expenses) Use of money and property 1,321,945 126,616 II,963 Operating grants 452,0 II 0 0 Bond issuance costs (57,268) 0 0 Debt service (1,848,674) 0 0 Mill levy 0 0 0 Gain (loss) on disposition offixed.assets (4,191) 0 0 Total nonoperating revenues (expenses) (136,177) 126,616 II ,963 Net income (loss) 1,654,130 (181,875) 18,904 Add depreciation on assets acquired through Federal contributions 0 0 0 Increase (decrease) in retained earnings/fund balances 1,654,130 (181,875) 18,904 Retained earnings/fund balances, January 1 32,894,599 1,719,484 234,428 Retained earnings/fund balances, December 3 I $ 34,548,729 $ 1,537,609 $ 253,332 A-I8 The accompanying notes are an integral part of this statement. Statement 4 Total Component Total Primary Unit Reporting Government Salina Entity (Memorandum Airport (Memorandum Only) Authority Only) $ 19,924,905 $ .1,447,147 $ 21,372,052 74,994 0 74,994 257,129 26,965 284,094 20,257,028 1,474,112 21,731,140 4,980,345 0 4,980,345 10,077,057 0 10,077,057 713,371 0 713,371 35 1,104,108 1,104,143 2,997,463 925,397 3,922,860 18,768,271 ,2,029,505 20,797,776 , 1,488,757 (555,393) 933,364 1,460,524 158,858 1,619,382 452,011 0 452,011 (57,268) 0 (57,268) (1,848,674) 069,561) (2,218,235) 0 783,363 783,363 (4,191) o. (4,191) 2,402 572,660 . 575,062 1,491,159 17,267 1,508,426 0 595,779 595,779 1,491,159 613,046 2,104,205 34,848,511 8,683,765 43,532,276 $ 36,339,670 $ 9,296,811 $ 45,636,481 A-19 City of Salina, Kansas COMBINED STATEMENT OF CASH FLOWS ALL PROPRIETARY FUND TYPES, SIMILAR TRUST FUNDS AND DISCRETELY PRESENTED COMPONENT UNITS For the fiscal year ended December 31, 1999 Fiduciary Proprietary Fund Types Fund Type Non- Internal expendable Enterprise Service Trust Cash flows from operating activities Cash received from customers and users $ 14,969,117 $ 4,352,061 $ 6,976 Cash received from quasi-external transactions 0 483,963 0 Cash paid to suppliers (6,358,175) (4,215,047) (35) Cash paid to employees (4, I 07,627) (584,233) 0 Cash paid for quasi-external transactions (633,195) (31,133) 0 Other operating receipts 274,347 940 0 Net cash provided by operating activities 4,144,467 6,551 6,941 Cash flows from capital and related financing activities Purchase and construction of fixed assets (4,247,387) (154,381) 0 Contributed capital 38,464 0 0 Proceeds from issuance of debt 2,164;841 0 0 Principal payments - temporary notes (500,000) 0 0 Principal payments - loans 0 0 0 Principal payments - gen. obligation bonds (808,522) 0 0 Principal payments - revenue bonds (700,000) 0 0 Interest paid (1,843,292) 0 0 Bond issuance costs 0 0 0 Proceeds from property tax 0 0 0 Principal received on financing leases 0 0 0 Interest received on financing leases 0 0 0 Principal received on long-term note 0 0 0 Proceeds from capital grants 0 0 0 Return of capital grant proceeds 0 0 0 Net cash used in capital and related financing activities (5,895,896) (I 54,381) 0 Cash flows from investing activities Interest received 1,321,945 126,616 11 ,963 Cash flows from noncapital financing activities Operating grant receipts 452,0 II 0 0 Net increase (decrease) in cash and cash equivalents 22,527 (21,214) 18,904 Cash and cash equivalents, January I 24,471,871 2,466,153 234,428 Cash and cash equivalents, December 31 A-20 $ 24,494,398 $ 2,444,939 $ 253,332 The accompanying notes are an integral part of this statement. Statement 5 Total Component Total Primary Unit Reporting Government Salina Entity (Memorandum Airport (Memorandum Only) Authority Only) $ 19,328,154 $ 1,386,088 $ 20,714,242 483,963 0 483,963 (10,573,257) (635,344) (11,208,601) (4,691,860) (420,315) (5,112,175) (664,328) 0 (664,328) 275,287 0 275,287 4,157,959 330,429 4,488,388 (4,401,768) (1,460,223) (5,861,991) 38,464 0 38,464 . 2,164,841 , 0 2,164,841 (500,000) 0 (500,000) 0 (48,013) (48,013) (808,522) (I,880,000) (2,688,522) (700,000) (55,000) (755,000) (1,843,292) (400,040) (2,243,332) 0 (14,219) (14,219) 0 783,363 783,363 0 59,263 59,263 0 130,184. 130,184 0 1,374,760 . 1,374,760 0 97,971 97,971 0 (11,131) (11,131) (6,050,277) (1,423,085) (7,473,362) 1,460,524 32,628 1,493,152 452,011 0 452,011 20,217 (1,060,028) (1,039,811) 27,172,452 1,218,689 28,391,141 $ 27,192,669 $ 158,661 $ 27,351,330 A-21 i"'nnt City of Salina, Kansas COMBINED STATEMENT OF CASH FLOWS ALL PROPRIETARY FUND TYPES, SIMILAR TRUST FUNDS AND DISCRETELY PRESENTED COMPONENT UNITS For the fiscal year ended December 31, 1999 Total cash and cash equivalents Fiduciary Proprietary Fund Types Fund Type Non- Internal expendable Enterprise Service Trust $ 12,690,266 $ 2,444,939 $ 253,332 11,804,132 0 0 $ 24,494,398 $ 2,444,939 $ 253,332 Cash and investments Restricted cash and investments Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ 1,790,307 $ (308,491) $ 6,941 Adjustments to reconcile operating income (loss) to net cash provided by operating activities ' Depreciation expense (Increase) decrease in accounts receivable (Increase) decrease in deposits receivable (Increase) decrease in inventory Increase (decrease) in accounts payable Increase (decrease) in retain age payable Increase (decrease) in accrued compensated absences Increase (decrease) in meter deposits payable Increase (decrease) in claims payable Increase (decrease) in deferred income Increase (decrease) in landfill closure and postclosure Net cash provided by operating activities 2,832,353 165,110 0 (175,260) 0 0 0 0 0 (50,697) 6,575 0 (272,054) 41,735 0 13,155 0 0 (19,617) 7,359 0 5,636 0 0 0 94,263 0 0 0 0 20,644 0 0 $ 4,144,467 $ 6,551 $ 6,941 NON-CASH TRANSACTIONS: Fixed assets in the amount of$14,352 were transferred from the Water/Sewer Fund to the Solid Waste Fund. Fixed assets in the amount of $10,732 were transferred from the General Fixed Assets Account Group to to Sanitation Fund. Fully depreciated fixed assets having an original cost of $60,619 were retired from the Enterprise Funds. Fully depreciated fixed assets having an original cost of$63,621 were retired from the Airport Authority. The City acquired computer equipment at a cost of$291,587 through a lease-purchase arrangement in the same amount. A-22 The accompanying notes are an integral part of this statement. Statement 5 Pal!e 2 Total Component Total Primary Unit Reporting Government Salina Entity (Memorandum Airport (Memorandum Only) Authority Only) $ 15,388,537 $ 73,661 $ 15,462,198 11,804,132 85,000 11,889,132 $ 27,192,669 $ 158,661 $ 27,351,330 $ 1,488,757 $ (555,393) $ 933,364 2,997,463 925,397 3,922,860 (175,260) (74,784) (250,044) 0 0 0 (44,122) (2,524) (46,646) (230,319) 50,973 (179,346) 13,155 0 13,155 (12,258) 0 (12,258) 5,636 0 5,636 94,263 o. 94,263 0 (13,240) . (13,240) 20,644 0 20,644 $ 4,157,959 $ 330,429 $ 4,488,388 A-23 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1999 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Salina is a municipal corporation governed by five elected commissioners. As required by generally accepted accounting principles, these fmancial statements present the City and its component units, entities for which the government is considered to be fmancially accountable. Blended component units, although legally separate entities, are, in substance, part of the City's operations and so data from these units is combined with data of the primary government. The city has no blended component units to present for the year ended December 31, 1999. Each discretely presented component unit is reported in a separate column in the combined fmancial statements to emphasize it is legally separated from the government. Discretelv Presented Component Units City of Salina Airport Authority - The Salina Airport Authority (Airport Authority) was created for the purpose of accepting as surplus property portions of the former Schilling A.F.B that was closed by the United States Department of Defense in June, 1965. One of the primary functions of the Airport Authority is to facilitate the continued growth of jobs and payroll at the Airport Industrial Center. The Airport Authority is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. Any director may be removed by a majority vote of the Salina City Commission. The Airport Authority's basic mill levy (up to 3 mills) requires the approval of the City Commission. The Commission must also approve the issuance of general obligation debt by the Airport Authority. The Airport Authority is reported as an enterprise fund. The Airport Authority has a December 31 fiscal year end. Housing Authority of the City of Salina - The purpose of the Housing Authority of the City of Salina (Housing Authority) is to administer Public Housing Programs authorized by the United States Housing Act of 1937. The governing board is appointed by the Mayor of the City of Salina. Commissioners of the Housing Authority may be removed by the City Commission. Revenue bonds for the Housing Authority must be issued by the City. The financial liability of the Housing Authority is essentially supported by the operating and debt service subsidies received under contract from the Federal government. The Housing Authority is reported as a governmental fund type. The Housing Authority has a June 30 fiscal year end. Information in the accompanying financial statements covers the fiscal year ended June 30, 1999. Complete fmancial statements for each of the individual component units may be obtained at the entity's administrative offices. Salina Airport Authority 3237 Arnold Ave. Salina, KS Housing Authority of the City of Salina 469 S 5th Salina, KS Joint Ventures The City of Salina also participates with Saline County in two joint ventures. The Salina-Saline County Board of Health was organized by the City and County to promote public health. The Salina County-City Building Authority Was organized by the City and County to acquire, operate and maintain facilities for the administrative offices of both governments. The primary governments each have an ongoing financial responsibility for the joint ventures. Separate fmancial statements are available from the governing boards of each joint venture. Board of Building Health Authority 245,552 $ 355,472 2,616,643 679,768 440,671 244,069 Total fund balance, December 31, 1999 Total revenues, year ended December 3 I, 1999 Total revenues from City of Salina $ A-24 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1999 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES _ continued B. Measurement Focus, Basis of Accounting and Basis of Presentation The accounts of the City are organized and operated on the basis of funds and account groups. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with fmance- related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. Account groups are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. The city has the following fund types and account groups. Governmental Funds are used to account for the City's general government activities. Governmental fund types use the flow of current fmancial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting revenues are recognized when susceptible to accrual (Le., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers property taxes as available if they are collected within 60 days after year end. A one-year availability period is used for revenue recognition for all other governmental fund revenues. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available fmancial resources. Property taxes, frahchise taxes, licenses, interest revenue, special assessments and charges . for services are susceptible to accrual. Sales taxes collected and held by the State at year-end on behalf of the City are also recognized as revenue. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-dr:iven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. The City reports deferred revenue on its combined balance sheet. Deferred revenues arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise. when resources are received by the City before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized. . Governmental funds include the following fund types: The general fund is the City's primary operating fund. It accounts for all fmancial resources of the general government, except those required to be accounted for in another fund. The special revenue funds account for revenue sources that are legally restricted to expenditure for specific purposes (not including expendable trusts or major capital projects). The debt service funds account for the servicing of the general long-term debt not being financed by proprietary or nonexpendable trust funds of the City. The capital projects funds account for the acquisition of fixed assets or the construction of major capital projects not being fmanced by the proprietary or nonexpendable trust funds of the City. A-25 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1999 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-continued B. Measurement Focus, Basis of Accounting and Basis of Presentation - continued Proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. The government applies all applicable F ASS pronouncements in accounting and reporting for its proprietary operations. Proprietary funds include the following fund types: The enterprise funds are used to account for those operations that are financed and operated in a manner similar to private business or where the board has decided that the determination of revenues earned, costs incurred and/or net income is necessary for management accountability. The internal service funds account for operations that provide services to other departments or agencies of the government, or to other governments, on a cost-reimbursement basis. Fiduciary funds account for assets held by the City in a trustee capacity or as an agent on behalf of others. Trust funds account for assets held by the City under the tenns of a formal trust agreement. The expendable trust funds are accounted for in essentially the same manner as the governmental fund types, using the same measurement focus and basis of accounting. Expendable trust funds account for assets where both the principal and interest may be spent. The nonexpendable trust funds are accounted for in essentially the same manner as the proprietary funds, using the same measurement focus and basis of accounting. Nonexpendable trust funds account forassets of which the principle may not be spent. The agency funds are custodial in nature and do not present results of operations or have a measurement focus. Agency funds are accounted for using the modified accrual basis of accounting. These funds are used to account for assets that the City hoids for others in an agency capacity. Account Groups. The general fixed assets account group is used to account for fixed assets of the City. The general long-term debt account group is used to account for generallong-tenn debt and certain other liabilities of the City. C. Assets, Liabilities and Equity 1. Pooled Cash and. Investments The City maintains a cash and investment pool that is available for use by all funds managed by the city. Each fund type's portion of this pool is displayed on the combined balance sheet as "Cash and Investments". The city's cash and cash equivalents are considered to be cash on hand, demand deposits and short-tenn investments with original maturities of three months or less from the date of acquisition. Investments in the Kansas Municipal Pool are carried at fair value. Cash balances from all funds are invested to the extent available in certificates of deposit and other authorized investments. Investments with maturity dates greater than three months are stated separately. Earnings from these investments, unless specifically designated, are allocated monthly to the investing fund based on the percentage of funds invested to total investments. All investments are carried at fair value. A-26 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued C. Assets, Liabilities and Equity - continued 2. Receivables and Payables Transactions between funds that are representative of lendinglborrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund receivables/payables" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds". Accounts Receivable. The City records revenues when services are provided. All receivables are shown net of an allowance for uncollectible amounts. Property taxes receivable. The determination of assessed valuations and the collections of property taxes for all political subdivisions in the State of Kansas is the responsibility of the various counties. The office of the County Appraiser annually determines assessed valuations and the County Clerk spreads the annual assessment on the tax rolls. The County Treasurer is the tax collection agent for all taxing entities within the county. In accordance with state statutes, property taxes levied during the current year are a revenue source to be used to fmance the budget of the ensuing year. One-half of the property taxes are due December 20, prior to the fiscal year for which they are budgeted, and the second half is due the following June 20. This procedure eliminates the need to issue tax anticipation notes since funds will be on hand prior to the begirming.of each fiscal year. The City Treasurer draws down all available funds from the County Treasurer's office in two-month intervals; Collection of current year property tax by the County Treasurer is not completed, apportioned nor distributed to the various subdivisions until the succeeding year, such procedure being in conformity with governing state statutes. Consequently, current year property taxes receivable are not available as a resource that can be used to finance the current year operations of the City. Accruals of uncoll~~ted current year property taxes are offset by deferred revenue and are identical to the adopted budget for 2006. It is not practicable to apportion delinquent taxes held by the County Treasurer and, further, the amounts thereof are not material in relationship to the fmancial statements taken as a whole. 3. Inventories Inventories are valued at cost using the first-inlfirst-out (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed. 4. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 5. Restricted Assets Certain proceeds of enterprise fund revenue bonds and general obligation bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. The "Water and Sewer Principal and Interest" account is used to segregate resources accumulated for debt service payments over the next twelve months. The "Debt Service Reserve" account is used to report resources set aside to make up potential future deficiencies in the "Water and Sewer Principal and Interest Account" . A-27 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1999 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued C. Assets, Liabilities and Equity -continued 5. Restricted Assets - continued The "Bond Escrow" account is used to report resources set aside in a "crossover refunding" transaction. Under the crossover arrangement certain bonds of the City were refunded, with the proceeds placed in the bond escrow account. The bond escrow account and the refunded bonds will remain on the City's books until a specified future date when the bonds will be considered defeased and the City will assume the repayment of the refunding bonds. 6. Fixed Assets Fixed assets used in governmental fund types of the City are recorded in the general fixed assets account group at cost or estimated historical cost if purchased or constructed. Donated fixed assets are recorded at their estimated 'fair value at the date of donation. Assets in the general fixed assets account group are not depreciated. Interest incurred during construction is not capitalized on general fixed assets. Public domain (infrastructure) general fixed assets (e.g., roads, bridges, sidewalks and other assets that are immovable and of value only t6 the government) are not capitalized. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets' lives are not included in the general fixed assets account group. Property, plant and equipment in the proprietary funds of the government are recorded at cost. Property, plantand equipment donated tQ the proprietary fund type operations are recorded at their estimated fair value at the date of donation. Major outlays for capital assets and improvements are capitalized in proprietary funds as projects are constructed. Interest incurred during the construction phase of proprietary fund fixed assets is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Property, plant and equipment are depreciated in the proprietary and similar trust funds of the government using the straight line method over the following estimated useful lives: Assets Buildings Other Equipment Vehicles Utility Plant & Equipment Years 20-50 5-10 7-10 10-70 A-28 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES _ continued C. Assets, Liabilities and Equity - continued 7. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All employees of the City, except temporary and part time employees, may accumulate sick leave at a rate of 8 or II hours per month depending on their work duty schedule. There is no limit on the amount of sick leave that can be accumulated. Employees with more than five years of service with the City are paid for one-third of their accumulated sick leave at their current wage scale upon termination of employment in good standing. All regular employees are entitled to paid vacation time. Such leave is granted each year of employment and unused leave may accumulate without limit. Employees are paid for all accumulated vacation leave at their current wage scale upon termination of employment. Vested or accumulated vacation leave that is expected to be liquidated with expendable available fmancial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it. Amounts of vested or accumulated vacation leave that are not expected to be liquidated with expendable available fmancial resources are reported in the general long-term debt account group. No expenditure is reported for these amounts. Vested or accumulated vacation leave of proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees. In accordance with the provisions of Statement No. 16 of the Governmental Accounting Standards Board, Accounting for Compensated Absences, a Iiabiljty is recorded for accumulated rights to receive sick pay benefits that are payable upon termination of employment. 8. Temporary N~ Upon authorization for the issuance of general obligation bonds for certain improvements, Kansas law permits the temporary fmancing of such improvements by the issuanc;e of temporary notes. Temporary notes issued may not exceed the aggregate amount of bonds authorized, are interest bearing and have a maturity date not later than four years from the date of issuance of such temporary notes. Temporary notes outstanding are retired from the proceeds of the sale of general obligation bonds. 9. Long -Term Obligations The government reports long-term debt of governmental funds at face value in the general long-term debt account group. Certain other governmental fund obligations not expected to be financed with current available fmancial resources are also reported in the general long-term debt account group. Long-term debt and other obligations fmanced by proprietary funds are reported as liabilities in the appropriate funds. For governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bond proceeds are reported as an other fmancing source net of the applicable premium or discount. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. For proprietary fund types, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs are reported as deferred charges. A-29 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1999 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued C. Assets, Liabilities and Equity - continued 10. Fund Equity Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. Reservations of retained earnings are limited to outside third-party restrictions. Designations of fund balance represent tentative management plans that are subject to change. The proprietary fund's contributed capital represents equity acquired through capital grants and capital contributions from developers, customers or other funds. 11. Interfund Transactions Quasi-external transactions (Le., transactions that would be treated as revenues or expenses if they involved organizations external to the governmental unit, such as internal service fund billings to departments) are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund are expenditures/expenses in the reimbursing fund and reductions of expenditures/expenses. in the fund that is reimbursed. . All other. interfund transactions, except quasi-external transactions and reimbursements, are reported as transfers. Nonrecurring or nonroutine pennanenttransfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. 12. Memorandum pnly - Total Columns Total columns on the general purpose [mancial statements are captioned as "memorandum only" because they do not represent consolidated [mancial infonnation and are presented only to facilitate financial analysis. The columns do not present infonnation that reflects financial positIon, results of operations or cash flows in accordance with generally accepted accounting principles. Interfund eliminations have not been made in the aggregation of this data. 13. Comparative Data/Reclassifications Comparative total data for the prior year have been presented in selected sections of the. accompanying financial statements in order to provide an understanding of the changes in the government's [mancial position and operations. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Kansas statutes require that an annual operating budget be legally adopted for the general fund, special revenue funds (unless specifically exempted by statute), debt service funds and enterprise funds. The statutes provide for the following sequence and timetable in the adoption of the legal annual operating budget. A-30 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 II. STEW ARDSHIP, COMPLIANCE AND ACCOUNTABILITY - continued A. Budgetary Information - continued a) Preparation of the budget for the succeeding calendar year on or before August I st of each year. b) Publication in a local newspaper of the proposed budget and the notice of public hearing on the budget on or before August 5th. c) Public hearing on or before August 15th of each year, but at least ten days after publication of the notice of hearing. d) Adoption of the fmal budget on or before August 25th. The statutes allow for the governing body to increase the originally adopted budget for previously unbudgeted increases in revenue other than ad valorem property taxes. To do this, a notice of public hearing to amend the budget must be published in the local newspaper. At least ten days after publication the hearing may be held and the governing body may amend the budget at that time. Budgets for the following funds were amended in 1999: General fund, Flood and Drainage fund, Tourism and Convention fund, Special Alcohol fund, Special Gas Tax fund, Bicentennial Center fund, and Fair Housing fund. The statutes pennit management to transfer budgeted amounts between line items within an individual fund. However, such statutes prohibit expenditures in excess of the total amount of the adopted budget of expenditures of individual funds. Budget comparison statements are presented for each fund showing actual receipts and expenditures compared to legally budgeted receipts and expenditures. All legal annual operating budgets are prepared using the modified accrual basis of accounting, modified further by the encumbrance method of accounting. Revenues are recognized when cash is received. Expenditures include disbursements, accounts payable, and encumbrances. .Encumbrances are commitments by the municipality for future payments and are supported by a document evidencing the commitment, such as a purchase order or contract. All unencumbered appropriations (legal budget expenditure authority) lapse at year end. A legal operating budget is not required for capital projects funds, trust funds, and the following special revenue funds: Bicentennial Center Event, HUD Community Development, Community Development Revolving, Heritage Commission, Special Law Enforcement, Police Grants, Traffic Safety Grant, Housing Rehabilitation, Dare Donations, CDBG-SAA and CDBG-ED. A legal operating budget is not required for the following Enterprise funds: Solid Waste Construction,. Water and Sewer Principal and Interest, Water and Sewer Bond Reserve, Water and Sewer Construction and Reserve funds. Actual to budget comparisons for these funds that present budgets to the Commissioners are shown strictly for infonnational purposes. Spending in funds which are not subject to the legal annual operating budget requirements are controlled by federal regulations, other statutes, or by the use of internal spending limits established by the governing body. Compliance with Kansas Statutes. References made herein to the statutes are not intended as interpretation of law, but are offered for consideration by the Director of Accounts and Reports and interpretation by the County Attorney and legal representatives of the City. Expenditures exceeded available budget authority in the Central Garage internal service fund in the amount of $8,531. (KSA 79-2935) A-31 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 II. STEW ARDSHIP, COMPLIANCE AND ACCOUNT ABILITY - continued A. Budgetary Information - continued a) Preparation of the budget for the succeeding calendar year on or before August I st of each year. b) Publication in a local newspaper of the proposed budget and the notice of public hearing on the budget on or before August 5th. c) Public hearing on or before August 15th of each year, but at least ten days after publication of the notice of hearing. d) Adoption of the fmal budget on or before August 25th. The statutes allow for the governing body to increase the originally adopted budget for previously unbudgeted increases in revenue other than ad valorem property taxes. To do this, a notice of public hearing to amend the budget must be published in the local newspaper. At least ten days after publication the hearing may be held and the governing body may amend the budget at that time. Budgets for the following funds were amended in 1999: General fund, Flood and Drainage fund, Tourism and Convention fund, Special Alcohol fund, Special Gas Tax fund, Bicentennial Center fund, and Fair Housing fund. The statutes permit management to transfer budgeted amounts between line items within an individual fund. However, such statutes prohibit expenditures in excess of the total amount of the adopted budget of expenditures of individual funds. Budget comparison statements are presented for each fund showing actual receipts and expenditures compar~d to legally budgeted receipts and expenditures. All legal annual operating budgets are prepared using the modified accrual basis of accounting, modified further by the encumbrance method of accounting. Revenues are recognized when cash is received. Expenditures include disbursements, accounts payable, and encumbrances. . Encumbrances are commitments by the municipality for future payments and are supported by a document evidencing the commitment, such as a purchase order or contract. All unencumbered appropriations (legal budget expenditure authority) lapse at year end. A legal operating budget is not required for capital projects funds, trust funds, and the following special revenue funds: Bicentennial Center Event, HUD Community Development, Community Development Revolving, Heritage Commission, Special Law Enforcement, Police Grants, Traffic Safety Grant, Housing Rehabilitation, Dare Donations, CDBG-SAA and CDBG-ED. A legal operating budget is not required for the following Enterprise funds: Solid Waste Construction, Water and Sewer Principal and Interest, Water and Sewer Bond Reserve, Water and Sewer Construction and Reserve funds. Actual to budget comparisons for these funds that present budgets to the Commissioners are shown strictly for infonnational purposes. Spending in funds which are not subject to the legal annual operating budget requirements are controlled by federal regulations, other statutes, or by the use of internal spending limits established by the governing body. Compliance with Kansas Statutes. References made herein to the statutes are not intended as interpretation of law, but are offered for consideration by the Director of Accounts and Reports and interpretation by the County Attorney and legal representatives of the City. Expenditures exceeded available budget authority in the Central Garage internal service fund in the amount of $8,531. (KSA 79-2935) A-32 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 B. Proprietary Fund Type Budgets II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - continued Actual operations (budgetary basis) compared to budget for proprietary fund types for fiscal year 1999 are as follows: Enterprise Sanitation Revenues Expenditures Solid Waste Disposal Division Revenues Expenditures Other financing sources (uses) Golf Course Division Revenues Expenditures Water and Sewer Revenues Expenditures Other financing sources (uses) . Internal Service Risk Management Revenues Expenditures Workmen's Compensation Reserve Revenues Expenditures Central Garage Division Revenues Expenditures Other financing sources Information Services Revenues Expenditures Other financing sources C. Deficit Fund Equity Actual Budget Variance $ 1,487,948 $ 1,495,000 $ (7,052) 1,465,898 1,838,423 372,525 2,350,757 2,415,000 (64,243) 1,699,015 3,615,736 1,916,721 (346,490) (198,616) (147,874) 825,242 838,900 ( 13,658) 828,710 945,576 116,866 10,822,647 11 ,202,200 (379,553) 8,422,264 14,577,197 6,154,933 (3,219,614) (2,581,358) (638,256) 231,150 227,500 3,650 247,463 444,668 191,205 68,091 50,000 18,091 228,953 1,344,707 1,115,754 846,061 727,998 118,063 836,529 827,998 (8.531 ) 0 100,000 (100,000) 848,837 841,090 7,747 913,126 1,076,857 163,731 940 2,250 (1,310) The following funds had deficit fund equity at December 31, 1999: HUD Community Development $(201,210) and Housing Rehabilitation $(69,633). These deficits will be recovered from reimbursements from grantor agencies, or in the event certain costs are disallowed, from general funds. The Capital Projects fund had deficit fund equity of $(3,811,680). This deficit will be recovered when temporary fmancing of projects is replaced with long-tenn general obligation bond financing. A-33 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - continued D. Compliance With Bond Reserve Requirements Water & Sewer Bond Reserve Requirements The bond reserve contains a "net revenue" requirement of 125% of next year principal and interest payments. The Water & Sewer fund met this requirement for 1999. Actual Required Principal and interest account Bond reserve account $ 1,055,127 1,750,043 $ 394,198 1,711,600 The City was in compliance with the reserve account balance requirements at December 31, 1999. E. Legal Debt Margin The City is subject to the municipal finance law of the state of Kansas which limits the net bonded debt (exclusive of revenue bonds and special assessment bonds) the city may have outstanding to 30 percent of the assessed value of all tangible taxable property within the city, as certified to the county clerk on the proceeding August 25. At December 31, 1999, the statutory limit for the City was $94,346,335, providing a debt margin of$68,373,797. III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. Deposits and Intestments Deposits - At year-end, the carrying amount of the City's deposits was $(54,522) plus $6,588 cash on hand and the bank balance was $920,339. The difference between the carrying amount and the bank balance is outstanding checks and deposits in transit. Of the bank balance, $187,569 was covered by federal deposit insurance and the remaining $732,770 was collateralized by pledged securities held under joint custody receipts issued by a third- party bank in the City's name. The third-party bank holding the pledged securities is independent of the pledging bank. The pledged securities are held under a tri-party custodial agreement signed by all three parties: the City, the pledging bank, and the independent third-party bank holding the pledged securities. An unsecured and uncollateralized deposit of$6,895 was held by the Fiscal Agency Department of the Kansas State Treasurer. The carrying amount of deposits for the Housing Authority of the City of Salina, a discretely presented component unit, was $110,830 and the bank balance was $114,179. Of the bank balance, $114,179 was covered by federal depository insurance or by collateral held by the entity's agency in the Housing Authority's name. The carrying amount of deposits for the Salina Airport Authority, a discretely presented component unit, was $158,611 and the bank balance was $166,055. Of the bank balance, $166,055 was covered by federal depository insurance or by collateral held by the entity's agency in the Authority's name. A-34 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - continued A. Deposits and Investments - continued Investments - State statutes authorize the City to invest in US Treasury bills and notes, repurchase agreements, and the State's municipal investment pool. All investments must be insured, registered, or held by the City or its agent in the City's name. The City's investments are categorized to give an indication of the level of risk assumed by the entity at year end. Category I includes investments that are insured or registered, or for which the securities are held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the pledging bank's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the pledging bank but not in the City's name. The carrying amount of investments approximates fair value. At December 31, 1999, the City had invested $15,755,415 in the State's municipal investment pool. The municipal investment pool is under the oversight of the Pooled Money Investment Board. The board is comprised of the State Treasurer and four additional members appointed by the State Governor. The board reports annually to the Kansas legislature. State pooled monies may be invested in direct obligations of, or obligations that are insured as to principal and interest by the US government or any agency thereof, with maturities up to four years. No more than IO percent of those funds may be invested in mortgage-backed securities. In addition, the State pool may invest in repurchase agreements with Kansas banks or with primary government securities dealers. The City's investment in the State Treasurer's municipal investment pool is not subject to categorization as to risk. The fair value of the City's position in the municipal investment pool is substantially the same as the value of the pool shares. The categories of the City's investments are as follows: Category Carrying Amount 2 3 U.S. Treasury Bills $ 12,428,349 $ o $ o $ 12,428,349 Bond escrow-investment in U.S. Treasury Bills 10,950,600 o o 10,950,600 Pooled investment - State of Kansas 15,755,415 $ 39,134,364 Separate statutes regulate investment proceeds for most bond issues. Local units may invest bond proceeds in direct obligations of the United States Government and its agencies or make investments as authorized for other idle funds. Under existing Attorney General opinions maturity and interest rates are negotiable on such bonds. A-35 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 1, 1999 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - continued A. Deposits and Investments - continued The cash and investments by fund type at December 31, 1999 are as follows: Cash and Separate Investments Deposits Total Restricted Unrestricted Primary Government General $ 6,845,472 $ 0 $ 6,845,472 $ 0 $ 6,845,472 Special Revenue 3,177,391 0 3,177,391 0 3,177,391 Debt Service 779,992 6,895 786,887 0 786,887 Capital Projects 851,756 0 851,756 0 851,756 Enterprise 13,543,798 10,950,600 24,494,398 11,804,132 12,690,266 Internal Service 2,444,939 0 2,444,939 0 2,444,939 Trust & Agency 468,124 24,359 492,483 0 492,483 Subtotal primary government 28,111,472 10,981,854 39,093,326 11,804,132 27,289,194 Component Units Salina Airport Authority 158,661 0 158,661 85,000 73,661 Salina Housing Authority 627,743 0 627,743 67,888 559,855 Subtotal component units 786,404 0 786,404 152,888 633,516 Total reporting entity $ 28,897,876 $ 10,981,854 $ 39,879,730 $ 11,957,020 $ 27,922,710 B. Receivables Receivables as of year end, including the applicable allowances for uncollectible accounts, are as follows: Special Debt General Revenue Service Enterprise Total Primary Government Receivables: Accounts $ 519,107 $ 36,523 $ 0 $ 1,033,040 $ 1,588,670 Taxes 2,861,334 3,621,011 1,478,426 0 7,960,771 Interest 83,782 0 0 0 83,782 Notes 0 12,615 0 0 12,615 Gross receivables 3,464,223 3,670,149 1,478,426 1,033,040 9,645,838 Less: allowance for uncollectibles (305,999) (3,323) 0 (70,407) (379,729) Total $ 3,158,224 $ 3,666,826 $ 1,478,426 $ 962,633 9,266,109 Component Units Salina Airport Authority 836,284 Salina Housing Authority 75,784 Total 912,068 $ 10,178,177 A-36 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - continued C. Interfund Receivables and Payables The composition of interfund balances as of December 31, 1999. is as follows: Due from/to other funds: Receivable Fund Payable Funds Amount General Fund Special Revenue Funds HUDConununity Development Housing Rehabilitation $ 207,284 69,633 $ 276,917 D. Fixed Assets The following is a sununary of the changes in the general fixed assets account group during the current year. Balance Balance January 1, December 31, 1999 Additions Deletions 1999 Primary Government Land $ 2,589,193 $ 0 $ 0 $ 2,589,193 Land improvements 1,119,804 1,936,532 0 3,056,336 Buildings 11,250,757 78,509 0 [ 1,329,266 Machinery and equipment 9,885,555 832,258 238, [54 10,479,659 Sub total primary government 24,845,309 2,847,299 238,154 27,454,454 Component units Salina Housing Authority 6,823,571 122,305 0 6.945,876 Total reporting entity $ 31,668,880 $ 2,969,604 $ 238,154 $ 34,400,330 A-37 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 m. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - continued D. Fixed Assets - continued The following is a summary of proprietary fund-type fixed assets at December 3 I, 1999: Component Primary Government Unit Internal Salina Enterprise Service Airport Funds Funds Authority Land $ 514,050 $ 0 $ 8,427,792 Land improvements 5,038,582 0 0 Water plant and equipment 34,297,229 0 0 Sewer plant and equipment 39,045,192 0 0 Airfield and infrastructure 0 0 16,832,170 Equipment 2,868,806 1,702,677 1,420,300 Vehicles 1,481,616 13,911 0 Buildings 579,812 22,072 7,629,515 Construction in progress 6,130,856 0 0 89,956,143 1,738,660 34,309,777 Less accumulated depreciation 34,600,609 1,021,626 9,725,025 Net fixed assets $ 55,355,534 $ 717,034 $ 24,584,752 Interest costs are capitalized when incurred by proprietary funds and similar component units on debt where proceeds were used to fmance the construction of assets. .. Interest earned on proceeds of tax-exempt borrowing arrangements restricted to the acquisition of qualifying assets is offset against interest costs in determining the amount to be capitalized. E. General Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 1999: A-38 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1999 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - continued E. General Long-Term Debt - continued Balance Balance January I, December 31, 1999 Additions Reductions 1999 Proprietary Funds General obligations bonds $ 7,079,260 $ 0 $ 767,403 $ 6,311,857 Revenue bonds 26,300,000 0 700,000 25,600,000 Loans payable 935,855 2,164,840 0 3, I 00,695 Temporary notes 1,500,000 0 500,000 1,000,000 Capital financing leases 0 291,587 0 291,587 Accrued compensation 483,272 0 12,258 471,014 36,298,387 2,456,427 1,979,661 36,775,153 Total primary government $ 54,135,437 $ 17,267,519 $ 13,296,148 $ 58, I 06,808 Component Units General obligations bonds $ 6,170,000 $ I ,280,000 $ 1,880,000 $ 5,570,000 Revenue bonds 555,000 0 55,000 500,000 Loans payable 373,783 94,760 48,014 420,529 Mortgage Payable 658,480 0 24,429 634,051 $ 7,757,263 $ 1,374,760 $ 2,007,443 $ 7,124,580 The following is a detailed listing of the city's long-term debt including general obligation bonds, revenue bonds, temporary notes and loans payable: Original Interest Bonds Issue Rates Outstanding Primary Government General Obligation Broadway Overpass 1990, due 121112000 455,000 5.75% to 7.75% $ 45,000 I nternal Improvements 1991, due lOll 1200 I 1,300,000 5.20% to 7.25% 260,000 Street and Utilities 1991, due 10/1/2001 1,417,000 5.40% to 7.40% 280,000 Crawford Street 1991, due 10/1/2001 1,785,000 4.50% to 6.50% 350,000 Crawford Street 1992, due 10/1/2002 1,240,000 3.75% to 5.90% 375,000 [nternal Improvements 1993, due 10/1/2003 685,000 3.50% to 5.50% 280,000 Internal Improvemetns 1993, due 1011/2003 1,800,000 3.40% to 5.00% 750,000 Internal Improvemetns 1994, due 10/1/2004 1,175,000 4.70% to 6.50% 575,000 - Internal Improvements 1995, due 10/1/2005 2,434,000 4.75% to 6.50% 1,455,000 Internal Improvements 1996, due 8/01/2006 1,847,000 4.65% to 5.00% 1,295,000 Internal Improvements 1997, due 2/01/2012 1,650,000 4.50% to 5.25% 1,320,000 Internal Improvements 1998, due 8/01/2003 3,900,000 4.10% to 5.00% 3,590,000 Waterlsewer refunding 1998, due 8/01/2008 5,567,420 3.80% to 4.40% 5,063,530 Internal Improvements 1999, due 1011/2014 5,465,000 4.80% to 5.50% 5,465,000 Total general obligation bonds $ 21, 103,530 A-39 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - continued E. General Long-Term Debt - continued Original Interest Bonds Issue Rates Outstanding Revenue Bonds Water and Sewer 1992, due 10/1/2012 $ 15,000,000 5.40% to 7.40% $ 11,650,000 Water and Sewer 1993, due 10/1/2013 3,200,000 4.50% to 5.25% 2,560,000 Revenue Refunding 1994, due 9/1/2012 11,390,000 4.30% to 5.25% 11,390,000 Total revenue bonds $ 25,600,000 Loans Payable Kansas Public Water Supply, due 2/01/2020 3,100,696 4.29% $ 3,100,695 Temporary Notes Street and Subdivision, due 8/1/2000 5,275,000 3.05% to 3.2% $ 650,000 Library Project, due 6/ 1/2000 310,000 4.00% to 4.40% 100,000 Centennial Road, due 8/1/2000 2,000,000 3.70% 2,000,000 Landfill, due 9/1/0 I 1,500,000 3.75% to 3.87% 1,000,000 General obligation, due 8/1/2000 1,900,000 0 1,900,000 Total temporary notes $ 5,650,000 Capital Leases IBM AS/400 Model 720, due 3/1/2002 291,587 0 $ 291,587 Component Unit Salina Airport Authority General Obligation Bonds General Obligation 1993, due 2003 375,000 3.40% to 5.00% $ 170,000 General Obligation 1993, due 2003 275,000 3.85% to 4.75% 125,000 General Obligation 1998, due 2007 4,440,000 4.10% to 4.35% 3,995,000 General Obligation 1999, due 2006 725,000 6.25% to 6.90% 725,000 General Obligation 1999, due 20 I 0 555,000 3.90% to 5.10% 555,000 Total general obligation bonds 5,570,000 Revenue Bonds Leasehold revenue 1991, due 2006 850,000 5.00% to 7.25% 500,000 Loans Payable Kansas Dept of Commerce & Housing, due 2007 421,796 2.00% 420,529 Total bonds $ 6,490,529 Housing Authority o/the City o/Salina Mortgage Payable to Federal Financing Bank due 2013 925,423 3.375% $ 634,051 A-40 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - continued E. General Long-Term Debt - continued Interest paid in 1999 is as follows: Primary government General obligation bonds Revenue bonds Temporary notes Component Unit Salina Airport Authority Housing Authority of Salina $ 992,693 1,169,086 333,144 369,561 43,460 Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies _ General Obligation - Primary Government Bonds Interest Year Outstanding Due Total 2000 $ 2,945,234 $ 1,062,208 $ 4,007,442 2001 2,914,130 856,984 3,771,114 2002 2,487,288 710,779 3,198,067 2003 2,290,447 591,412 2,881,859 , 2004 2,053,975 484,365 2,538,340 To maturity 8,412,456 1,298,087 9,709,567 $ 21,103,530 .$ ,. 5,003,835 $ 26,106,389 General Obligation-Component Units Bonds Interest Year Outstanding Due Total 2000 $ 630,000 $ 272,219 $ 902,219 2001 645,000 228,954 873,954 2002 660,000 198,669 858,669 2003 680,000 167,360 847,360 2004 605,000 137,834 742,834 To maturity 2,350,000 279,410 2,629,410 $ 5,570,000 $ 1,284,446 $ 6,854,446 A-41 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1999 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - continued E. General Long-Term Debt - continued Annual debt service requirements to maturity for revenue bonds to be paid with service revenues- Year 2000 2001 2002 2003 2004 To maturity Revenue Bonds- Component Units Bonds Interest Outstandin8 Due $ 60,00 $ 35,006 $ 60,000 31,104 65,000 26,994 70,000 22,510 75,000 17,610 170,000 18,880 Total 95,006 91 , 104 91,994 92,510 92,610 188,880 500,000 $ 152,104 $ 652, I 04 $ Annual debt service requirements to maturity for temporary notes - to be paid through the issuance of general obligation bonds - Temporary Notes - Primary Government Notes Interest Year Outstanding Due Total 2000 $ 5,150,000 $ 216,158 $ 5,366,158 200 I 500,000 58,050 558,050 $ 5,650,000 $ 274,208 $ 5,924,208 Annual debt service requirements to maturity for mortgage to be paid from Housing Authority revenues- Mortgage - Component Unit Mortgage Interest Year Outstanding Due Total 2000 $ 26,041 $ 41,847 $ 67,888 2001 27,649 40,239 67,888 2002 29,584 38,304 67,888 2003 31,537 36,351 67,888 2004 33,618 34,270 67,888 To maturity 485,622 193,259 678,881 $ 634,051 $ 384,270 $ 1,018,321 A-42 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 IV. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - continued F. General Long-Term Debt - continued Annual debt service requirements to maturity for loans payable to be paid from service revenues- Loan - Primary Government Loan Interest Year Outstanding Due Total 2000 $ 49,740 $ 66,510 $ 116,250 2001 102,705 129,796 232,50 I 2002 107,158 125,343 232,50 I 2003 I I 1,804 120,697 232,50 I 2004 116,652 115,849 232,501 To maturity 2,612,637 991,125 3,603,762 $ 3,100,696 $ 1,549,320 $ 4,650,016 Loan - Component Unit Loan Interest Year Outstanding Due Total 2000 $ 48,978 $ 8,\67 $ 57,145 2001 49,963 7,182 57,145 2002 50,967 6,178 57,145 2003 51,99\ 5,\54 57,145 2004 53,036 4,109 57,145 To maturity 165,594 5,844 171,438 $ 420,529 $ 36,634 $ 457,163 The City has entered into a lease agreement as lessee for financing the acquisition of an IBM AS/400 computer system with the lease expiring in 2002. This lease agreement qualities as a capital lease for accounting purposes (titles transfer at the end of the lease terms) and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of it inception. A-43 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 III. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - continued E. General Long-Term Debt - continued The following is an analysis of equipment leased under capital leases as of December 31, 1999: Machinery and equipment $ 291,587 Minimum future lease payments under capital leases as of December 31, 1999 are: 2000 2001 2002 Internal Service Funds $ 103,729 103,729 103,729 3 11,187 19,600 $ 291,587 $ 0 Total minimum lease payments Less amount representing interest Present value of future minimum lease payments Payments made during 1999 Defeased bonds. In prior years, the City had defeased certain outstanding debt obligations by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust accounts and the defeased bonds are not included in the City's fmancial statements. At December 31, 1999, the following outstanding bonds are considered defeased: 1990 - A Refunding Issue defeased in 1996 1994 - B Revenue Issue defeased in 1998 1990 - A Revenue Issue defeased in 1998 1990 - B Revenue Issue defeased in 1998 $ 1,915,000 1,060,000 2,770,000 2,210,000 Special assessments. As provided by Kansas statutes, projects fmanced in part by special assessments are fmanced through general obligation bonds of the City and are retired from the debt service fund. Special assessments paid prior to the issuance of bonds are recorded as revenue in the appropriate project. Special assessments received after the issuance of bonds are recorded as revenue in the debt service fund. The special assessments are not recorded as revenue when levied against the respective property owners as such amounts are not available to fmance current year operations. The special assessment debt is a contingent liability of the City to the extent of property owner defaults, which have historically been immaterial. Conduit debt. The City has entered into several conduit debt arrangements wherein the City issues industrial revenue bonds to finance a portion of the construction of facilities by private enterprises. In return, the private enterprises have executed mortgage notes or leases with the City. The City is not responsible for payment of the original bonds, but rather the debt is secured only by the cash payments agreed to be paid by the private enterprises under the tenns of the mortgage or lease agreements. Generally, the conduit debt is arranged so that payments required by the private enterprises are equal to the mortgage payment schedule related to the original debt. At December 31, 1999, total outstanding conduit debt was $38,926,429. A-44 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 Ill. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS _ continued F. Reconciliation of Transfers Transfers are made between funds as the need arises. A reconciliation between funds follows: Transfers from Transfers to Special Capital General Revenue Projects General $ 0 $ 329,179 $ 675,000 $ Special Revenue Funds Business Improvement District 17,000 0 0 Tourism and Convention 0 302,894 0 $ 17,000 $ 632,073 $ 675,000 $ Total 1,004,179 17,000 302,894 1,324,073 Residual equity transfers were made at year end to close projects in the following fund. Transfers from Transfers to Capital Enterprise General Projects (Contributed Fund Fund Capital) Total $ 0 $ 15,244 $ 0 $ 15,244 207,[01 350,859 0 557,960 187,138 0 38,465 225,603 $ 394,239. $ 366,103 $ 38,465 $ 798,807 General Fund Special Revenue Funds Capital Projects Funds G. Contributed Capital The changes in the City's contributed capital accounts for its enterprise and internal service funds were as follows: Contributing Source General Other Capital Balance Fixed Enterprise Projects Balance January 1, Assets Funds Funds December 31, Internal Service Funds Central Garage $ 16,611 $ 0 $ 0 $ 0 $ 16,611 Information Services 604,932 0 0 0 604,932 Enterprise Funds Sanitation 34,521 10,732 0 0 45,253 Solid Waste 86,990 14,352 12,030 0 113,372 Municipal Golf Course 154,122 0 0 0 154,122 Water & Sewer 8,385,682 0 0 38,465 8,424,147 $ 8,994,706 $ 25,084 $ 12,030 $ 38,465 $ 9,358,437 A-45 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 IV. OTHER INFORMA nON A. Defined Benefit Pension Plan Plan description - The City participates in the Kansas Public Employees Retirement System (KPERS) and the Kansas Police and Firemen's Retirement System (KP&F). Both are cost-sharing multiple-employer defmed benefit pension plans as provided by Kansas statutes (KSA 74-490 I el seq). KPERS and KP&F provide retirement benefits, life insurance, disability income benefits and death benefits. Kansas law establishes and amends benefit provisions. KPERS and KP&F issue a publicly available fmancial report that includes fmancial statements and required supplementary information. Those reports may be obtained by writing to KPERS (611 S. Kansas Avenue, Suite 100, Topeka, Kansas 66603-3803) or by calling 1-888-275-5737. Funding policy - KSA 74-4919 establishes the KPERS member-employee contribution rate at 4% of covered salary. KSA 74-4975 establishes the KP&F member-employee contribution rate at 7% of covered salary. The employer collects and remits member-employee contributions according to the provisions of section 414(h) of the Internal Revenue Code. State law provides that the employer contribution rates be determined annually based on the results of an annual actuarial valuation. KPERS and KP&F are funded on an actuarial reserve basis. State law sets a limitation on annual increases in the employer contribution rates. The KPERS employer rate established for calendar year 1999 is 2.93%. The City employer contributions to KPERS for the years ending December 31, 1999, 1998 and 1997 were $234,495, $222,889, and $194,190, respectively, equal to the required contributions for each year. The KP&F employer rate established for 1999 is 11.6%. Employers participating in KP&F also make contributions to amortize the liability for past service costs, if any, which are determined separately for each participating employer. The City's contributions to KP&F for the years ended December 31, 1999, 1998 and 1997 were $700,643, $811,680, and $808,561, respectively, equal to the required contributions for each year. B. Deferred Compensation Plan The City offers its employees a deferred compensation plan ("Plan") created in accordance with Internal Revenue Code Section 457. The Plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Plan assets are transferred to a plan agent in a custodial trust and are not available to the claims of the city's general creditors e. Vacation and Sick Pay The City's policies regarding vacation and sick pay permit employees to accumulate a maximum of eighty to one hundred sixty hours of vacation time depending on years of service. Unused vacation time may be carried over to subsequent years. Current year accumulated vacation pay is payable upon employment termination. Sick leave may be accumulated without limitation. At December 31, 1999 accrued compensated absences totaled $2,360,996. D. Flexible Benefit Plan (1.R.e. Section 125) The City Commission has adopted by resolution a salary-reduction flexible benefit plan ("Plan") under Section 125 of the Internal Revenue Code. All City employees working more than 20 hours per week are eligible to participate in the Plan beginning after two full months of employment. Each participant may elect to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the plan include various insurance and disability benefits. A'-46 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 IV. OTHER INFORMA nON - continued E. Risk Management The city is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the city carries commercial insurance. Settlements of claims did not exceed coverage for the years ended December 31, 1999, 1998 or 1997. The city established a limited risk management program for workers' compensation in 1991. The program covers all city employees. Premiums are paid into the workers' compensation reserve fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $250,000 ($350,000 for claims involving employees classified as policemen or firemen). Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the Workers' Compensation Reserve Fund because it is expected to be liquidated with expendable available fmancial resources. Changes in the balances of claims liabilities during the past two years are as follows: 1999 1998 Unpaid claims, January I $ 42,881 $ 128,986 Incurred claims (including IBNRs) 458,576 90,023 Claim payments (192,321) (I 76, 128) , Unpaid claims, December 31 $ 309,136 $ 42,881 The city established a limited risk management program for employee health and dental insurance in 1997. The program covers eligible city employees. Premiums are paid into the health insurance fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $50,000. Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the Health Insurance Fund because it is expected to be liquidated with expendable available fmancial resources. Changes in the balances of claims liabilities during the past two years are as follows: 1999 1998 Unpaid claims, January I $ 250,000 $ 345,000 Incurred claims (including IBNRs) 2,629,358 2,331,122 Claim payments (2,590,818) (2,426,122) Unpaid claims, December 31 $ 288,540 $ 250,000 F. Capital Projects Capital projects often extend over two or more fiscal years. The following is a schedule which compares the project authorization including allowable interest revenue to total project expenditures from project inception to December 31,1999: A-47 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 IV. OTHER INFORMATION - continued F. Capital Projects - continued Project Name Project Authorization Magnolia/l-35 Interchange Subdivision 1996 Subdivision 1997 Subdivision 1998 Subdivision 1998 II Cart paths Schilling Drainage North Ohio Magnolia - Rockhurst to Belmont South Ninth Street Ninth/Claflin Drainage Centennial Road Reconstruction $ 5,939,000 880, 190 816,666 949,976 878,843 257,065 297,129 800,000 375,000 3,001,145 609,438 2,739,497 G. Subsequent Events Total Project Expenditures $ 5,447,291 900,000 550,925 778,157 628,415 148,319 129,377 24,650 1,031 2,610,583 42,928 284 On February I, 2000, the city issued $780,000 in temporary notes at a rate of 4.85-4.96%. The proceeds are to be used for internal improvements. Also on February 1,2000 the city issued $3,900,000 in temporary notes at a rate of 4.97%. The proceeds are to be used as financing street and drainage improvements. H. Contingent Liabilities The City receives significant [mancial assistance from numerous federal and state governmental agencies in the fonn of grants and state pass-through aid. The disbursement of funds received under these programs generally requires compliance with tenns and conditions specified in the grant agreements and is subject to audit. Any disallowed claims resulting from such audits could become a liability of the General Fund or other applicable funds. However, in the opinion of management, any such disallowed claims would not have a material effect on any of the [mancial statements of the City at December 31, 1999. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently detenninable, it is the opinion of the City's legal counsel that resolution of these matters will not have a material adverse effect on the financial condition of the city I. Municipal Solid Waste Landfill State and federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste, and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the City reports a portion of these closure and postclosure care costs as an operating expense of the solid waste fund in each period based on landfill capacity used as of each balance sheet date. The $1,007,235 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 20.7% of the estimated capacity of the landfill. The City's solid waste fund will recognize the remaining estimated cost of closure and postclosure care of $3,849,835 as the remaining estimated capacity is filled over the remaining life expectancy of96.2 years. A-48 City of Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 3 I, 1999 IV. OTHER INFORMA nON - continued I. Municipal Solid Waste Landfill- continued These amounts are based on what it would cost to perfonn all closure and postclosure care in 1999. Actual cost may be higher due to inflation, changes in technology, or changes in regulations. The City is required by State and Federal laws and regulations to provide assurances of financial responsibility for closure and post-closure care. The City has elected to utilize the Local Government Financial test promulgated by the US Environmental Protection Agency (at 40 CFR 258.74(0) and the Kansas Department of Health and Environment to provide these assurances. Any future closure or post-closure care costs will be provided through the nonnal budgeting and rate setting process, including the issuance of general obligation bonds, if necessary. J. Segment Information - Enterprise Funds The City maintains four enterprise funds which are intended to be self-supporting through user fees charged for services to the public. Financial segment infonnation as of and for the year ended December 31, 1999 is presented below. Solid Golf Water Waste Course and Sanitation Disposal Division Sewer Total Operating revenues $ 1,472,888 $ 2,367,328 $ 819,029 $ 10,753,843 $ 15,413,088 Depreciation expense 69,850 384,541 53,046 2,324,916 2,832,353 Net operating incom~ 17,455 690,407 52,612 1,029,833 1,790,307 Net income 37,703 657,821 51,3 10 907,296 1,654,130 Property, plant and equipment additions 11,654 120,069 72,526 4,043,138 4,247,387 Net working capital 450,23 I 616,407 87,459 20,729,466 21,883,563 Total assets 874,800 6,965,912 596,751 73,373,892 81,811,355 Bonds and temporary notes payable 0 2,101,872 147,431 33,763,249 36,012,552 Total equity 779,560 3,660,174 404,280 38,441,609 43,285,623 K. Environmental Matter The Kansas Department of Health and Environment (KDHE) issued a report in 1994 indicating the presence of volatile organic compounds at levels requiring remediation at the Salina Public Water Supply Wells Site (the Site). The City adopted a pro-active Policy and Action Plan to remediate the groundwater contamination, and on December 7, 1994, the City and KDHE entered into a Consent Order and Settlement Agreement under which the City assumed primary responsibility for the further investigation and remediation of the groundwater contamination. Field testing work has been completed. The necessary remediation work will be conducted over the next several years at a yet undetennined cost to the City's water utility fund. A-49 This page left blank intentionally. A-50 APPENDIX B Continuing Disclosure Instructions (THIS PAGE LEFT BLANK INTENTIONALLY) EXHIBIT B CONTINUING DISCLOSURE INSTRUCTIONS SECTION 1. Purpose of the Continuing Disclosure Instructions. These Continuing Disclosure Instructions (the "Instructions") are being executed and delivered by the City for the benefit of the beneficial owners of any series of the Bonds and in order to assist the Participating Underwriters in complying with Rule 15c2-12 (defmed below). These Instructions are to govern the continuing disclosure obligations of the City with respect to the City's General Obligation Temporary Notes, Series 2000-3 dated as of July 15, 2000 (the "Series 2000-3 Notes''), General Obligation Internal Improvement Bonds, Series 2000-A dated as of July 15,2000 (the "Series 2000-A Bonds") and any additional series of Bonds that the City hereafter elects to make subject to these Instructions. SECTION 2. Definitions. Unless otherwise defined in these Instructions, the following capitalized terms shall have the following meanings for pUlposes of these Instructions: "Beneficial owner" means any registered owner of the Bonds and any other person who, directly or indirectly, has investment power with respect to any of the Bonds. "Bond Counsel" means the fmn of Gilmore & Bell, P.C., or any other attorney or fmn of attorneys with a nationally recognized standing in the field of municipal bond fmancing selected by the City. "Bonds" means the Series 2000-3 Notes, Series 2000-A Bonds and any additional series of bonds, notes or other municipal obligations of the City that the City elects at the time of issuance to have subject to these Instructions for the purpose of constituting the undertaking of the City to provide continuing disclosure pursuant to Rule 15c2-12. "City" means the City of Salina, Kansas. "MSRB" means the Municipal Securities Rulemaking Board. "NRMSlR" means any information repository recognized by the Securities and Exchange Commission as a nationally recognized municipal securities information repository under Rule 15c2-12. "Participating Underwriter" means any of the original underwriters of the Series 2000-3 Notes and Series 2000-A Bonds and any future series of Bonds required to comply with Rule 15c2-12 in connection with the offering of any series of Bonds. "Rule 15c2-12" means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "SID" means any public or private information depository, if any, designated by the State of Kansas and the Securities and Exchange Commission as such for purposes of Rule 15c2-12. SECTION 3. Provision of Annual Reports. (a) Within 180 days after the close of each fiscal year, the City shall furnish to each NRMSlR and to the SID, if any, (i) a copy of the financial statements of the City prepared in accordance with generally accepted accounting principles and audited by its independent auditors (or if not available as of such date, the B-1 unaudited financial statements of the City and as soon thereafter as available such audited [mancial statements of the City), and (ii) the operating data of the City, updated for the fiscal year then ended, in substantially the scope and form contained in the Official Statement dated July 10,2000, with respect to the Series 2000-3 Notes and Series 2000-A Bonds in the tables under the following headings: 1. Debt Summary 2. Tax Levies 3. Assessed Valuation 4. Estimated Actual Valuation 5. Tax Collections 6. Largest Taxpayers (b) Any or all of the financial information or operating data required by this Section 3 may be incorporated by reference from other documents, including official statements of debt issues with respect to the City that have been filed with each NRMSIR or the Securities and Exchange Commission, and in the case of a final official statement, that is available from the MSRB. The City shall clearly identify in each annual report filed under this Section 3 each document incorporated by reference and the source from which it is available. SECTION 4. Reporting of Material Events. (a) The City shall disseminate to the SID, if any, and to each NRMSIR or to the MSRB, promptly upon the occurrence thereof notice of any of the following events with respect to each series of the Bonds, if material: (i) Any principal or interest payment delinquencies; (ii) Any non-payment related defaults; (iii) Any unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Any unscheduled draws on credit enhancements reflecting financial difficulties; (v) Any substitution of credit or liquidity providers, or their failure to perform; (vi) Any adverse tax opinions or events affecting the tax-exempt status of any series of the Bonds; (vii) Any modifications to rights of security holders; (viii) Any calls (other than mandatory sinking fund redemptions or redemptions at maturity); (ix) Any defeasances; (x) Any release, substitution or sale of property securing repayment of any series of the Bonds; and (xi) Any rating changes. B-2 (b) The City shall also provide to the SID, if any, and to each NRMSIR or to the MSRB, as promptly as practicable notice of any failure of the City to provide the NRMSIRs and the SID, if any, the annual fmancial information or operating data required by Section 3 on or before the date specified. SECTION 5. Termination of Reporting Obligation. The City's obligations under these Instructions shall terminate with respect to each series of Bonds upon the defeasance, prior redemption or payment in full of all of such series of Bonds. SECTION 6. Amendment: Waiver. (a) The provisions of these Instructions may be amended only by a written instrument executed by the Mayor of the City if the City receives an opinion from Bond Counsel to the effect that these Instructions, as so amended, are in compliance with Rule 15c2-12 and all current amendments thereto and interpretations thereof that are applicable to these Instructions. (b) If an amendment is made to these Instructions, the City shall describe in the next annual financial report submitted to the NRMSIRs pursuant to Section 3 the substance of the amendment, the reasons for such amendment and the impact of such amendment on the type of operating data or fmancial information required to be provided under these Instructions. SECTION 7. Additional Information. Nothing in these Instructions shall be deemed to prevent the City from disseminating any other information, or including any other information in any report or notice made hereunder, in addition to that which is required by these Instructions. If the City chooses to include any information in any report or notice made hereunder in addition to that which is specifically required by these Instructions, the City shall have no obligation hereunder to update such information or include it in any future report or notice. SECTION 8. Noncomoliance. The provisions of these Instructions shall be subject to specific enforcement or action in mandamus in a court of equity by any beneficial owner of any series of the Bonds. A breach of the provisions of this Section shall not constitute a default or event of default under the resolution adopted by the City authorizing any series of the Bonds. SECTION 9. Beneficiaries. These Instructions are for the benefit of the City, the Participating Underwriters and the beneficial owners of any series of the Bonds, and shall create no rights in any other person. SECTION 10. Applicability to Future Series of Bonds. These Instructions shall apply to any future series of Bonds of the City that the City elects to have subject to these Instructions at the time of issuance thereof. These Instructions shall constitute the undertaking of the City with respect to any such future series of Bonds for the purpose of any Participating Underwriters determining compliance with Rule 15c2-12. Nothing contained herein shall obligate the City to adopt these Instructions with respect to any future bonds or municipal obligations issued by the City. B-3 (THIS PAGE LEFT BLANK INTENTIONALLY) (THIS PAGE LEFT BLANK INTENTIONALLY)