Loading...
TranscriptTRANSCRIPT OF PROCEEDINGS AUTHORIZING THE ISSUANCE OF $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A DATED MAY 1,2010 Legal Opinion Gdmore & Bell, P.C. Kansas City, Missouri CITY OF SALINA, KANSAS $6,875,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A DATED MAY 1,2010 CLOSING LIST Copies of the transcript of proceedings for the above referenced issue (the “Bonds”), will be prepared and distributed as follows: 1. City of Salina, Kansas (the “Issuer”) 2. Attorney General of the State of Kansas 3. Country Club Bank, Prairie Village, Kansas (the “Original Purchaser”) 4. George K. Baum & Co., Kansas City, Missouri (‘[Financial Advisor”) 5. Gilmore & Bell, P.C., Kansas City, Missouri (“Bond Counsel”) PROCEEDLNGS AUTHORIZING THE MPROVEMENTS 1. Landfill, Cell 5 Construction 2. Bicentennial Center Renovation 3. Fire Station #1 Renovation 4. Scoular Addition 5. Stone Creek Addition PROCEEDINGS AUTHORIZING THE SALE AND ISSUANCE OF THE BONDS 6. Excerpt of Minutes of the governing body meeting evidencing adoption of Resolution No. 104718 7. Resolution No. 10-6718 authorizing the offering for sale of the Bonds 8. Notice of Bond Sale, Preliminary Official Statement and Certificate Deeming Preliminary Official Statement Final i 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. Affidavit of publication of the Summary Notice of Bond Sale in the Salina Journal Affidavit of publication of the Summary Notice of Bond Sale in the Kansas Register Official Statement Excerpt of Minutes of the governing body meeting evidencing opening of the bids, acceptance of the best bid of the Ongmal Purchaser and passage of Ordinance No. 10- 10540 and adoption of Resolution No. 10-6726 Ordinance No. 10-1 0540 authorizing the issuance of the Bonds Affidavit of publication of Ordinance No. 10-10540 Resolution No. 10-6726 prescribing the form and details of the Bonds REFUNDING DOCUMENTS Ordinance and Resolution authonzing Refunded Bonds Notice of Redemption; Material Event Notice CLOSING DOCUMENTS Transcript Certificate with attached Statement of Costs Uniform Facsimile of Signature Certificate Specimen Bond Agreement Between Issuer and Agent DTC Documents Blanket Letter of Representations Underwriting Safekeeping Agreement Rating Letters Closmg Certificate Exhibit A - Continumg Disclosure Instructions .. 11 25. Federal Tax Certificate with attachments as follows: ExlzibitA - Internal Reveriue Service Form 8038-G and evidence of filing Exhibit B - Receipt for Purchase Price Exhibit C - Receipt and Representation Exhibit D - Descnption of Propeity Comprising the Financed Improvements Schedule I - Debt Service Schedule & Proof of Yield 26. Certificate of Financial Advisor LEGAL OPINIONS 27. 28. Approving legal opinion of Gilmore & Bell, P.C. Approval letter of Attorney General MISCELLANEOUS DOCUMENTS 29, Closing Letter 30. Letter from Kansas State Treasurer Confirmation Registration Number ***** ... ill LANDFILL, CELL 5 CONSTRUCTION (Published in the Salina Journal on August /4 and A/ , 2009) RESOLUTION NUMBER 09-6648 A RESOLUTION PROVIDING FOR THE ISSUANCE OF APPROXIMATELY $1,600,000 OF TEMPORARY NOTES AND/OR GENERAL OBLIGATION BONDS OF THE Cl"Y OF WA, KANSAS TO FINANCE IMPROVEMENTS TO THE CITY'S SOD WASTE FACILITY. WHEREAS, the City of Salina, Kansas (the "City"), collects and disposes of solid waste as a municipal function under the laws of the State of Kansas, including K.S.A. 12-2101 e! seq. (the "Act); and WHEREAS, the governing body of the City hereby fmds and determines that it is necessary to make impro&ments to the City's solid waste facility (the "Project") and that the City lias insufficient funds to pay foi the entire cost of the Project at the present time; and WHEREAS, the City hereby finds and determines that it is necessary for the City to issue its temporary notes and/or general obligation bonds (the "Obligations") to pay the cost of the Project; NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS Section 1. It is hereby deemed and declared to be necessary for the City to make improvements to the City3 solid waste facility. Section 2. It is necessary for the City to issue its Obligations to pay the costs of the Project in the amount of approximately $1,600,000 plus the costs of issuance and interest on any temporary financing under the authority of the Act and K.S.A. 10-10hfseq. Section 3. Before issuing the Obligations, this resolution shall be published once each week for two consecutive weeks in the official City newspaper. The Obligations may be issued unless a petition in opposition thereto. tiled by not less than 5% of the electors of the City, is tiled with the County Election Officer of Saline County within 30 days following the second publication of the resolution. If such petition is tiled, the governing body of the City shall submit the question of the issuance of the Obligations for the Project to the electors of the City at an election called for such purpose as provided in the Act. If no sufficient petition is filed with the County Election Officer of Saline County within the period of time hereinbefore stated, then the governing body of the City shall proceed with the issuance of the Obligations for the Project. Section 4. The City has incurred preliminary expenditures and expects to make expenditures on and after the date of adoption of this resolution in connection with the Project, and intends to reimburse itself for such expenditures with the proceeds of the Obligations of the City which are expected to be issued in the maximum principal amount of $1,600,000 plus the costs of issuance and interest on any temporary financing. Section 5.' ADOPTED by the Governing Body on August 10,2009. That this resolution shall be in full force and effect from and after its adoption. Lieu AM Elsey, City Clerk Commission Action # 09-79 13 09-79 14 09-7924 CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS August 10,2009 4:OO p.m. The City Commission convened at 2:30 p.m. in a. Study Session on the 20 10 Budget: Issues and Options. The Regular Meeting of the Board of Commissioners was called to order at 4:04 p.m. in Room 107, City- County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Commissioner Tom Arpke; Comssioner Norman Jennmgs; Commissioner Aaron Peck Absent: None (6.1) Approve the minutes of August 3,2009. (6.2) Resolution No. 09-6647 levymg a transient guest tax in the amount of 6.7% on the gross receipts of sleeping accommodations for the promotion of tourism and conventions and repealing Resolution Nos. 91-4357 and 09-6617. Mayor M. Luci Larson, Chairman presiding; Comssioner Samantha Angell; CONSENT AGENDA (6.3) of Water bght No. 920 and submit to the Division of Water Resources. Authorize the Director of Utilities to execute the Voluntary Waiver of Hearing and Dismissal (6.4) (6.5) bonds to finance improvements at the Solid Waste facility. Approve the purchase of one grit pump from JCI Industries, Inc. in the amount of $22,456. Resolution No. 09-6648 providing the issuance of temporary notes andor general obligation Moved by Commissioner Arpke, seconded by Commissioner Peck, to approve the consent agenda as presented. Moved by Commissioner Angell, seconded by Comssioner Jennings, to amend the consent agenda to remove Item 6.3. Aye: (5). Aye: (0). Motion camed. Mayor Larson call the question to Motion 09-79 13 to approve Items 6.1, 6.2, 6.4 and 6.5 as presented. Aye: (5). Nay: (0) Motion carned. ADJOURNMENT Moved by Comrmssioner Angell, seconded by Commissioner Arpke, that the Regular Meetmg of the Board of Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 6:52 p.m. /dM. L~lW~ M. Luci Larson, Mayor [SEAL] I ATTEST: Lieu Ann Elsey, CMC, City Clerk I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governmg Body at its /d Lieci/Am€W on August 10,2009 regarding Resolution No. 09-4648. Lieu Ann Elsey, Cifl Clerk Page 1 -- Rrsi Publlshed In A e Sallna Journal. principal amount of $1 600 000 plus the costs of 'issiance and interest RESOLUTION' NdER on any temporary financ- A RESOLUTION PRO. Section 5. That this VIDING FOR THE issue resolution shall be In full ANCE OF APPROXI. force and elf- from and TEMPORARY NOTES ADOPTED by the GOV- AND/OR GENERAL OB- em109 BOdY on August 10. LIGATION BONDS OF 2009 THE CITY OF SALINA KANSAS TO FINANCg M LudLaSOn, IMPROVEMENTS TO Mayor THE CITY'S SOLID WHEREAS, the City 01 klTE&: August 14 2009 096648 ing MATELY si.600,ooo OF after 115 adoptnn WASTE FACILITY. SEAL Salina Kansas (the beu Ann Elsey. City Clerk poses 01 solid waste as a municipal function under the laws of the State of Kansas, includinq K S A -City'),' collects and dis (asp) Publisher's Affidavit I, Tiffany Modlin , being duly sworn declare that I am the Legal Coordinator of T€IE SALINA JOURNAL, a daily newspaper published at Salina, Saline County, Kansas, and of general circulation in said county, which newspaper has been admitted to the mails as second class matter in said county, and continuously and uninterruptedly published for five consecutive years prior to first publication of attached notice, and that the attached Resolution #09-6648 Notice has been correctly published in the entire issues of said newspaper two times, towit- once each week for consecutivc weeks, the first publication being given in the issue of Aupust 14, two - 20 09 - Subscribed and sworn io before me, this 2 yy' G dayof c ,I Ii5t A.D. 20 (?! Notary Public Printer's Fee $441.00 12-2101 et seq (the 'Acl): and __ WHEREAS the govem- ing body df the City hereby finds and deter mines that it is necessary to make improvements to the City's solid waste facil- ity (the 'Proje~Y) and that the City has insufficient funds lo ay for the enbre cost of #e Project at the present tlme; and WHEREAS. the City hereby finds and deter mines that It Is necessary for the Clty to issue Its temporary notes andlor eneral obllgation bonds he 'Obligations') to pay i\ BE IT 'RESOLVED BY I THE GOVERNING BODY I OF THE CITY OF SA. UNA. KANSAS. AS FOL- I LOWS: I Section 1. It is hereby deemed and declared to be necessary for the City to make improvements to the City's solld waste tacit- wkection 2. It is neces- sa for the Cit lo issue its%blioat!ons b Dav the costs oithe Project h lho amount 01 approximately $1 600 000 plus Ihc costs of 'issuance and interest on any lempora financ- ing under the aurhority of the Act and K SA 10-101 el seq. Section 3. Before issw ing the Obligations. this resolution shall be ub lished once each ,eeR to; two consecutive weeks In the official City newspa The Obligations may md unless a oetltlon in-opposition th~r~i~. liled by not less ihari 5% ot the electors of the City is filed wlth the County klecbon Officer of Saline County within 30 days lollowing the sewnd publicallon of the resobitlorl If such pe- tition is filed the overn ing bfldy of [he C& shall subrmt the uestion of the issuance 3 the Obliga. tlons for the Pro cct lo the electors of the kity at an election called for such purpose as provided in the ACI II no sufficient peti tion is filed with the County Election Officer of Saline County within the enod of time hereinbe- ore staled. lhen the gov- erning body of the CHy shall proceed with the is- suance of the Obligations for the ProjecL Section 4. The City has incurred orelirninarv ex. P pe;lhitcrcs and exp& to mke expenditures on and after the date of adoption of this resolution in con- nection with the Project. and intends lo reimburse Itse:r for such expend1 tures wnh the proceods of the Obligations of the City which are expecled to be issued in lhe maximum CERTIFICATE OF NO PROTEST The undersigned, Clerk of the City of Salina, Kansas (the “Issuer”), does hereby certify that the govemhg body of the Issuer duly adopted Resolution No. 09-6648, on August 10, 2009, declaring it necessary to make improvements to the City’s solid waste facility at an estimated cost of $1,600,000 plus costs of issuance and interest on any temporary financing, and to issue General Obligation Bonds as more specifically described in said Resolution, in an amount not to exceed $1,600,000 plus costs of issuance and interest on any temporary financing (the “Bonds”), under the authority of K.S.A. 12-2101 et seq. (the “Act”) in order to pay the costs of the improvements and financing costs. Resolution No. 09-6648 was duly published two times in The Salina Journal, the official newspaper of the Issuer on August 14 and August 21, 2009, as required by the Act. More than thirty (30) days has elapsed fiom the date of the second publication. There has been no sufficient written protest filed in my office against the improvements or against the issuance of the Bonds, as provided by the Act. WITNESS my hand and official seal on March 16,2010. Clerk BICENTENNIAL CENTER RENOVATION RESOLUTION NUMBER 09-6653 A RESOLUTION AUTHORIZING AND PROVIDING FOR THE CONSTRUCTION OF IMPROVEMENTS TO CERTAIN EXISTING PUBLIC BUILDINGS IN THE CITY OF SALINA. KANSM; AND PROVIDING FOR THE PAYMENT OF THE COSTS THEREOF. WHEREAS, K.S.A. 12-1736 provides, in part, that any city in the State of Kansas may erect 01 construct, acquire a public building or buildings and procure any necessary site therefore and may alter ‘repair, reconstruct, remodel, replace or make additions to, fumish and equip a public building 01 buildings; and WHEREAS, K.S.A. 12-1737 provides, in part, that the governing body of any city may, for t purposes of financing the costs associated with the foregoing, issue general obligation bonds of the City; IU WHEREAS, the governing body of the City of Salina, Kansas (the “City”), hereby finds anc detennines it to be necessary to authorize and provide for the construction of improvements to certair public buildings in the City, as more filly described herein, and to provide for the payment of the cosb thereof without the necessity of an election, all as provided by said K.S.A. 12-1736 et seq., as amendec and supplemented from time to time (the “Act”). THEMFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS: Section 1. Project Authorization. The construction of improvements to the Bicentennial Center including the following are hereby authorized and directed to be made (the “Project”): Renovation of Heritage Hall, arena, lobby, restrooms, second flbor meeting rooms, kitchen, concession stands, concourse and dressing rooms to include floors, finishes, walls, ceilings, electrical and mechanical systems,,heating ventilation and air conditioning, fire suppression, sound and lighting systems. Section 2. Bond Authorization. The estimated costs of the Project are in the amount of $2,500,000. The costs of the Project and associated financing costs shall be payable from the proceeds of tax-exempt, taxable or taxcredit general obligation bonds and/or temporary notes of the City issued under authority ol the Act (the “Bonds”). Seetion 3. Reimbursement. The Bonds may be issued to reimburse expenditures made on or after th date which is 60 days before the date of this Resolution, pursuant to Treasury Regulation f 1.150-2. Section 4. Effective Date. This Resolution shall take effect and be in full force from and after its adoption by the governing body of the City. ADOPTED AND APPROVED by the governing body of the City of Salina, Kansas, on August 24, 2009. ATTEST: Shaddi Wicks, Deputy City Clerk M. Lbci Ldrson, Mayd - Commission Action # CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS August 24,2009 4:OO p.m. The City Commission convened at 2:30 p.m. in a Study Session for Greeley Bridge Public Art and We Count Census. The Regular Meeting of the Board of Commissioners was called to order at 4:OO p.m. in Room 107, City-County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Mayor M. Luci Larson, Chairman presiding; Commissioner Samantha Angell; Commissioner Tom Arpke; Commissioner Norman Jennings; Commissioner Aaron Peck Absent: None ADMINISTRATION (8.2) for the Bicentennial Center. Resolution No. 09-6653 authorizing and providing for the construction of improvements 09-7943 Moved by Commissioner Jennings, seconded by Commissioner Arpke, to pass Resolution No. 09-6653. Aye: (4). Nay: (1) Angell. Motion carried. ADJOURNMENT 09-7948 Moved by Commissioner Peck, seconded by Commissioner Jennings, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 6: 17 p.m. I /dM. luGi/lwm M. Luci Larson, Mayor [SEAL] ATTEST: Lieu Ann Elsey, CMC, City Clerk /dl~AYLM/ZZWV I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting on August 24,2009 regarding Resolution No. 09-6653. U Lieu Ann Elsey, City Clerk Page 1 FIRE STATION #1 RENOVATION RESOLUTION NO. 09-6681 A RESOLUTION AUTHORIZING AND. PROVIDING FOR THE CONSTRUCIlON OF IMPROVEMENTS TO CERTAIN EXISTING PUBLIC BUILDINGS IN THE CITY OF SALINA, KANSAS; AND PROVIDING FOR THE PAYMENT OF THE COSTS THEREOF. WHEREAS, K.S.A. 12-1736 provides, in part, that any city in the State of Kansas may erect or construct, acquire a public building or buildings and procure any necessary site therefore and may alter, repair, reconstruct, remodel, replace or make additions to, furnish and equip a public building or buildings; and WIIEREAS, K.S.A. 12-1737 provides, in part, that the governing body of any city may, for the purposes of financing the costs associated with the foregoing, issue general obligation bonds of the City; and WHEREAS, the governing body of the City of Salina, Kansas (the “City”), hereby finds and determines it to be necessary to authorize and provide for the construction of improvements to certain public buildings in the City, as more hlly described herein, and to provide for the payment of the costs thereof without the necessity of an election, all as provided by said K.S.A. 12-1736 et seq., as amended-and supplemented from time to time (the “Act”). THEREFORE, BE lT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS: Section 1. Project Authorization. The renovation and expansion of,Fire Station # 1, a public building in the City located at 222 West Elm Street, including expansion of the second floor over the administrative offices, remodeling the living space on the second floor, and replacing the electncal, plybing and WAC systems, shall be made under the provisions of the Act (the “Project”). Section 2. Bond Authorization. The estimated costs of the Project are in the amount of $1,787,000.00. The costs of the Project and associated financing costs shall be payable from the proceeds of general obligation bonds of the City issued under authority of the Act (the “Bonds”). Section 3. Reimbursement. The Bonds may be issued to reimburse expenditures made on or after the date which is 60 days before the date of this Resolution, pursuant to Treasury Regulation 5 1.150-2. ktion4. Effective Date. This Resolution shall take effect and be in full force from and der its adoption by the governing body of the City. ADOPTED AND APPROVED by the governing bpdy of the City of Salina, Kansas, on November 23,2009. Clerk I \ Commission Action # 09-7841 09-7848 CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS November 23,2009 4:OO p.m. The City Commission convened at 2:OO p.m. in a Study Session on the Municipal Water Plan Revisions and Junkyards and Salvage Yards. The Regular Meetmg of the Board of Commissioners was called to order at 4:OO p.m. in Room 107, City-County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Mayor M. Luci Larson, Chairman presiding; Commissioner Samantha Angell; Commissioner Tom Arpke; Commissioner Norman Jennings; Commissioner Aaron Peck Absent: None CONSENT AGENDA (6.1) Approve the minutes of November 16,2009. (6.2) Set December 2 1,2009 as the public heanng date on the 2009 budget amendments. (6.3) Fire Station #1 (Project No. 08-2699). Resolution No. 09-668 1 authorizing and providing for the construction of improvements to (6.4) benefit services. Resolution No. 09-6682 authorizing a renewal agreement with CVS Caremark for prescription Moved by Commissioner Angell, seconded by Commissioner Jennings, to approve the consent agenda as presented. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT Moved by Commissioner Peck, seconded by Commissioner Arpke, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 5:37 p.m. dM. Luci;Lavson/ M. Luci Larson, Mayor [SEAL1 /dLkWAnuz/€Csey ATTEST: Lieu Ann Elsey, CMC, City Clerk I hereby certify that the foregomg is a true correct excerpt of the action taken by the Governing Body at its regular meeting on November 23,2009 regarding Resolution No. 09-668 1. Page 1 SCOULAR ADDITION City Clerk's Office Filed '0s ERY 2? ?ne: 10 PETITION 4311p TO THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS We, the nndersigned, owners of reeord of property located within the City of Salina, Kansas (the "City") do hereby respectively request that the Governing Body of the Cay create and designate an improvement district for the pprpose of making certain improvements in the manner provided by KSA 1Ma01, a sag. 1. The general nature of the proposed improvement is as foIlows: The installation of approximately 1.395 lineal feet of six-inch water main, fire hydrants, valves, fittings, and all appurtenances thereb along Eastmoor Drive and Country Club Road to the west pmperty line of the property m the improvement distnct, then south along said property line to the southwest comer of the property in the improvement district and then west to Eastmoor Drive (the "Improvments"). (the "Improvement"). 2. The estimated or probable cost of the Improvement Is: Seventy-five thousand four hundred fifty-two dolh and fifty cents ($75,452.50). 3. The extent of the proposed improvement district to be assessed Is: Lot 1. Block 1, Scoular Addition all in the City of Salina, Saline County, Kansas. (the "Improvement District"). 4. The proposed method of assessment SbaU be: Each lot and parcel of land m the Improvement District shall be assessed equally per lot. 5. The proposed apportionment of cost between the Improvement Distrid and the City at Large is. One hundred percent (1 W?) of the total cost of improvement shall be assessed to the Improvement District and no poxtion of costs shall be paid by the City at Large. 6. The signem of this Petition hereby reqnest that the Improvements be made without notice and henring as reqnlred by KS-4. 12-6a04 (a). 7. NAMES MAY NOT BE WITEDRAWN FROM THE PETITION BY "€E SIGNERS THEREOF AETER TEE GOVERNING BODY COMMENCES CONSIDERATION OF THE PETITION OR LATER THAN SEVEN (7) DAYS AETER FILLNG OF THE PETITION WITR TEE CITY CLERK, WHICHEVER OCCURS FIRST. The Scoular Compgny Charles L. Elsea, ChiefExecutive officer 1 LEGAL DESCRIPTION OF PROPERTY OWNED WITHIN THE PROPOSED IMPROVEMENTDISTRICT: Lot 1 Block 1, scoular Addition m the City of salina, Saline County, Kansas. STATEOFKANSAS ) 1 SALINECOUNTY ) U Notary Public My appointment expins: 2 . .' f A~;~~~CGISTER OF REBECCA DEEDS SALINE SEEHAN COUNTY KANSAS Book: 1196 Page: 1544 f->is a I 8 wn+a _a,. : i Rrcwding Fee: Other kd&?nc# Date Recorded: 7/1/2009 11046 PM Grantor Grantee Type of Document Certified Copy Of Resolution Recording Fees Mtg Reg Tax Total Amount Return Address $0.00 $0.00 $0.00 ROOM 201 (Published in the Salina Journal on RESOLUTION NUMBER 094630 A RESOLUTION SETTING FORTH FINDINGS AND DETERMINATIONS 01 THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS ON THI ADVISABILITY OF AND AUTHORIZING THE CONSTRUCTION OF CERTAIP IMPROVEMENTS PURSUANT TO K.S.A. 12-6a01 et seq. WHEREAS, a petition was filed with the City Clerk for the City of Salina, Kansas (th “City”) on May 27, 2009, proposing certain improvements pursuant to K.S.A. 12-6aO1 et seq. (th “Petition”); and WHEREAS, the Petition sets forth: (a) the general nature of the proposed improvements; (I the estimated or probable cost of the proposed improvements; (c) the extent of the propose improvement district to be assessed for the cost of the proposed improvements; (d).the propose method of assessment; (e) the proposed apportionment of the cost between the improvement distric and the City at large; and (f) a request that such improvements be made without notice and hearing a required by K.S.A. 12-6a04(a); and WHEREAS, all the owners of record of property located within the proposed improvemen district have signed the Petition, including all owners of record of property located within th proposed improvement distnct but outside of the City limits and directly adjacent to the City’ existing boundaries; and WHEREAS, no signatures have been withdrawn from the petition before the Governing B@ began consideration of the Petition; and WHEREAS, K.S.A. 12-6a04 provides that the Governing Body may authorize and orde public improvemen? without notice and hearing after a sufficient petition has been filed. NOW THEREFORE, BE IS RESOLVED BY THE GOVERNING BODY OF THI CITY OF SALINA, KANSAS, AS FOLLOWS Section 1. The Governing Body hereby finds that the Petition is sufficient, and furthe finds and determines that it is necessary and advisable to make the following improvements: The nature of the improvement is as follows: The installation of approximately 1,395 lineal feet of six-inch water main, firc hydrants, valves, fittings, and all appurtenances thereto along Eastmoor Drive an( Country Club Road to the west property line of the property in the improvemen district, then south along said property line to the southwest comer of the property ii the improvement district and then west to Eastmoor Drive (the “ImprovementS”). (the “Improvements”). The estimated cost of the Improvements is: Seventy-five thousand four hundred fifty-two dollars and fifty cents ($75,452.50). The boundaries of the improvement district to be assessed are: Lot 1 Block 1, Scoular Addition in the City of Salina, Saline County, Kansas. (the “Improvement District”). The method of assessment shall be: Each lot and parcel of land in the Improvement District shall be assessed equally per lot. The apportionment of cost between the Improvement District and the city at large is: One hundred percent (100%) of the total cost of the Improvements shall be assessed to the Improvement District, and no portion of the costs of the Improvements shall be paid by the City at large. Book: 1196 Page: 1% Section 2. The Governing Body hereby declares that the hprovements described in thi! Resolution are necessary, and authorizes them to be made in accordance with the findings set forth ir this Resolution, and Mer authorizes the levying of assessments and the issuance of bonds therefore all in accordance with K.S.A. 12-6a0 I ef seq. Section 3. The City expects to make capital expenditures from and after the date of thi! Resolution in connection with the Improvements described herein, and intends to reimburse itself fo: such expenditures with the proceeds of one or more series of general obligation bonds and tempo- notes of the City in the maximum principal amount of $75,452.50. Section 4. The City Clerk is hereby authorized and directed to make progress payment! to the contractors for materials hished and for labor performed under the contract when estimate! therefore are presented to him/her which have been properly certified by the City Engineer, so long as the aggregate payments do not exceed the total contract price. Section 5. The City Clerk shall file a certified copy of this Resolution with the Registe: of Deeds of Saline County, Kansas. Section 6. This Resolution shall take effect afk its passage and publication once in thc official city newspaper. ADOPTED AND PASSED this 22"* day of June, 2009. (SEAL) Lieu AM Elsey, CMC, City Ck&k I hereby certify that the foregoing is Resolution passed a true and correct copy of the on the 22nd day of June, 2009. Lieu Ann Elsey, CMC, City 2 original Clerk Commission Action # CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS June 22,2009 4:OO p.m. The City Commission convened at 2:30 p.m. in a Study Session on the 201 0 Budget (Transportation) and the Wayfinding and Interstate Landscaping project. The Regular Meeting of the Board of Commissioners was called to order at 4:OO p.m. in Room 107, City-County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Mayor M. Luci Larson, Chairman presiding; Commissioner Samantha Angell; Commissioner Tom Arpke; Commissioner Norman Jennings; Commissioner Aaron Peck Absent: None ADMINISTRATION (8.3) in the Scoular Addition. Resolution No. 09-6630 setting forth the advisability and authorizing water improvements 09-7867 Moved by Commissioner Jennings, seconded by Commissioner Angell, to adopt Resolution No. 09-6630. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT 09-7874 Moved by Commissioner Peck, seconded by Commissioner Arpke, that the Regular Meeting of the Board of Commissioners be adjourned. Aye:, (5). Nay: (0). Motion carried. The meeting adjourned at 452 p.m. /&/ %. L & M. Luci Larson, Mayor [SEAL1 ATTEST: /&/A & 6& Lieu Ann Elsey, CMC, City Clerk Body at its regular Page 1 make the following lm. ADOPTED AND pmvements. provement ts as follows: PASSED this Znd day d ' (a) The nature of the im June. 2009 The mstallation of ap M. Luci Larson. proximately 1,395 Im- Mayor eal feet of six-inch wa- ter main, fire hydrants, (SEAL) valves. fmings. and all Lieu AN EW appurtenances CMC, city clerk thereto along East. 111) moor Dnve and Coun- try Club Road to the west property llne of the property In the im- provement district, then south ahg md property llne to the southwest corner of the properly in the im- provement disb.lct and then west to Easbnwr Drive (the 'Improve merits?. (the 'Irnpnwements') ) Theestlmatedmst Seventy-fMe thousand four hundred lifty-two dollars and fifty cents ($75,45250) IC& The boundarles of the provement disMct to be assessed are: Lot 1 Block 1. Scoular Additlon in the City of Sanna, Saline County. Kansas" (the Improvement DistrlCP). (d) The method of as. sessment shall be: Each Id and parcel of land In.the Improve. ment District shall be assessed equally per (e) The apportionment of cost between the Im- provement District and the ckyatmis- One hundred percent (100%) of the total cost of the Improve- ments shall be as- sessed to the Im. provement District, and no portion of the costs of the Improve- ments shall be paw by ing Body hereby declares that the mpmvemenls de- Of Re Improvements is: ' lot &;%..*8ovem Publisher's Affidavit I, Tiffanv Modlin , being duly sworn declare that I am the of THE SALINA JOURNAL, a daily newspaper published at Salina, Saline County, Kansas, and of general circulation in said county, which newspaper has been admitted to the mails as second class matter in said county, and continuously and uninterruptedly published for five consecutive years prior to first publication of attached notice, and that the Legal Coordinator #09-66.3 Notice has been correctly published in the entire issues of said newspaperone time, publication being given in the issue of lune28, - 2009 Su bscrib Printer's Fee $337.85 - First Publii In Le Wina Journal. was filed with the Clty Clerk for the City of Sa. Una, Kansas (the Tity3 on May 27,2009. propos- Ing certain Improvements pursuant to K.S A. 12-6aO1 et seq. (the 'Petl- b%&iS thepemion sets f~ith: (aj the generat nature of the proposed Im provements; (b) the estl- mated or probable ccst of the proposed improve- ments' (c) the extent of the droposed ImDrove- meni district to be as- scribed in ihii Resolutbn sessed for the cost of the .are necessary, and roposed Improvementr authorizes them to be fd) the proposed mathod made m accordance with of assessment (e) the the findin 5 set forth m proposed sppohonment thls Resohion. and fur, of the cost between the tfkr authorizes he Ievymg improvement district and of assessments and the the C et large and (f) a issuance of bonds there- reque%thatsudi~pnwe- fore. all in accordance ments be made without wlth KS.A. 12-6aO1 'et notice and heanno as re- seo." ~~ ~ quired by .. K.S.A: &bn3. TheCl$ex: pwts to make capk ex 2-6aWa); and WHEREAS. all We own- PendituJas from and after ers of record- of property the date of this Resolution located wlthln the pro- In connection wlM the Im- posed improvement dis. prOVen3entS described trM have signed the Pet& hereln and mends to re- tion, lncludmg all owners Irnburie hseH for such ex- of record of property lo- penditures wlth the pro. cited wi%hin the proposed ceeds of one or more se- Im rovement district but ries of general obligation o&de of the City lii~ts bonds and temporary and directly adjacent to notes of the City In the the ccty's ewng bounda- maximum principal ne5 and amouni of $75 45250 AEREAS , no signa- Section 4~he city tures have been with. Clerk Is hereby authorized drawn from the petition and directed to make pro- before the Governing gress payments to the Body began mnslderation contractors for rnatenals of the Pettbon: and furnlshed and for labor WHEREAS , K S.A. perfoWtled under the con- 12-6aM pnwldes that the tract when estimates Governlng Body may therefore are presented to authorhe and order publlc himlher which have been improvements without no- Properly certified by the tice and heanng after a City Engineer. so long as sufficient petition has the aggregate payments been filed. do not exceed the total IS RESOLVED BY THE Section 5. The C~ty GOVERNING BODY OF Clerk shall file a certnied THE CITY OF SALINA Co y of thls Resolution KANSAS, AS FOUO~: wP the Register of keds SeEtlon 1. me Govern of Saime Coun Kansas. ing Ecdy hareby flnds that Section 6.$k Resolu- the Pebtlon is sufficient tion shall take effect after and further flnds and de- nS passage and publica- tennines that It is neces- tion once in the official city saw and advisable to newspaper. NOW THEREFORE, BE Contracl pW. Publisher’s Affidavit low. Written or oral objec- tions wll be msidered at the meeting and there. upon the amount of the I. T- , being duly sworn declare that I am the of THE SALINA JOURNAL, a daily newspaper published at Salina, Saline County, Kansas, and of general circulation in said county, which newspaper has been admitted to the mails as second class matter in said county, and continuously and uninterruptedly publishedfor five consecutive years prior to first publiratian of attached notice, and that the 1 .emor Special Assessment Notice Proj #0&27l4,0!3-2764 Notice has been correctly published in the entire issues of said newspaperone time, publication being given in the N&w Public Kansas. PROJECT NO. 08-2114 STONE CREEK ADDmON STREET DRAINAGE ANDhLlTY IMPROVEMENTS The improvements are generaOy desaibed as The curb, gutter. pave- ment and grading for approximately 810 heal leet of Stone Creek coyrt. The installation of ap proximately 247 lineal feet of storm sewer ppe, mlets, and all ap- purtenances thereto, The instailatton of ap proximately 482 lineal feet of six-inch water main. fire hydrants. vatves. fittings. service connections for water lines and all appurte nances thereto; and me insfdnabon of ap proximately 1,200 lineal feet of eight-inch Sani tary sewer mam, service connections for sewer Imes, manholes, and all appurtenances thereto. The above improvements were aulhonzed by Reso- 1 IUtionNo OE6547passed , by the Board of Commts- I sioneffi on August 18. C 2009. The total cost of such improvement is 8354.159.12 and k pro 1 posed to be assessed to the properties wthin the 1 impmvementdlstrlct I The extent of bounda. I ries ot the improvement disnict to be assessed is I desmbedasfollows . Lob 1 through 14. Blodc 1. Stone Creek Adddion all in the Oty of Salina, Saline Comty. Kansas PROJECT NO. 09.2764 SCOULAR ADDITION UWPROVEMEHTS WATER The improvements are generally described as: The instalktion of ap- proximately 1,395 fin- ea1 feet of slxinch wa- ter main. fire hydrants MIV~S. famgs. and ali appurtenances thereto along East moor Drive and COM- try Club Road to the west property lie of the property In the im- provement district. then south along .said properly line to the southwest corner of the properly in the im- provement dtshict and then west to Eastmoor DnW. The above improvements were authorized by Reso- lution No. 09-6630. 8ommlssbers assed b the Board on June of 22.2009. The total mst of such improvement IS 852,554.70 is proposed to be assessed to me prap elties within the improve- ment distrlcl. The extent of boundanes of the improvement ds@kf to be assessed IS de- salbed as follows Lot 1 Wodc 1. Scoular Adaition m thew of Sallna. Saline County. KanutS. Department of Finance 8 Administration TELEPHONE (785) 309-5735 FAX (785) 309-5738 TDD (785) 309-5747 e-mail: lieuann.elsey@salina.org Website: www.salina-ks.gov Office of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402-0736 Saim I, Lieu Ann Elsey, hereby certify that the attached document is a sample of the hearing notice letter mailed to property owners in the benefit districts in the 20 10-A General Obligation Bonds. These letters were mailed to the property owners on January 26,201 0. Lieu Ann Elsey City Clerk DepiiHMe’hl WFinance 8 Administration Oftice of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402-0736 TELEPHONE (785) 309-5735 FAX (785) 309-5738 TDD (785) 309-5747 e-rnail: lieuann.elsey@salina.org Website: www.salina-ks.gov January 26,2010 SCOULAR co 2027 DODGE ST OMAHA, NE 68102-1240 Dear Property Owner: Please consider this letter your notice of a publi Commissioners on Monday, February 22,20 of the City-County Building, 300 W. Ash, consider written or oral comments reg within the City of Salina. Your property Tract Number: 15996 Legal Description: Lot City of Salina, Saline C This property is included in the 09-2764. The prop0 advised that this is Commissioners will e Salina Board of place in Room 107 provements to property Lieu Ann Elsey City Clerk (Published in the Salina Journal on February a-, 2010) ORDINANCE NUMBER 10-10531 AN ORDINANCE LEVYING SPECIAL ASSESSMENTS ON LOTS, PIECES AND PARCELS OF GROUND IN THE CITY OF SALINA, KANSAS FOR THE PURPOSE CITY. 1 OF PAYING A PORTION OF THE COST OF CERTAIN IMPROVEMENTS IN THE ’ WHEREAS, the Governing Body of the City of Salina, Kansas (the “City”) has authorized the following improvements (collectively, the “Improvements”) in the City to be constructed pursuant to K.S.A. 12-6a01 and K.S.A. 12-6a19 et seq : PROJECT NO. 08-2714 STONE CREEK ADDITION STREET, DRAINAGE AND UTILITY IMPROVEMENTS The curb, gutter, pavement and grading for approximately 8 10 lincal fcet of Stone Creek Court ; 8 The installation of approximately 247 lineal feet of storm sewer pipe, inlets, and all appurtenances I thereto; . The installation of approximately 482 lineal feet of six-inch water main, fire hydrants, valves, i fittings, service connections for water lines and all appurtcnanccs thereto; and i The installation of approximately 1,200 lineal fcct of eight-inch sanitary sewer main, service i comcctions for sewer lines, manholes, and all appurtenances thereto. PROJECT NO. 09-2764 SCOULAR ADDITION WATER IMPROVEMENTS Thc installation of approximately 1,395 lineal feet of six-inch water main, fire hydrants, valves, fittings, and all appurtcnances thereto along Eastmoor Drive and Country Club Road to the west property line of the property in the improvement district, then south along said property line to the southwest corner of the property in the improvement district and then west to Eastmoor Drive. WHEREAS, the total costs of such improvements have been determined; the Governing Body has caused the assessments against each lot, piece or parcel of land deemed to bc bcncfited by such improvements, to be determincd in the manner set forth in the resolutions as to advisability of the improvements provided for pursuant to K.S.A. 12-6a04, and an assessment roll has bccn prepared; and WHEREAS, such assessment roll was filed with the City Clcrk and has been open to ’ public inspection; and WHEREAS, the City Clerk, at the direction of the Governing Body, caused notice of 8 thc hcaring on the special assessments to be published not less than 10 days prior to such hearing, and notice to be mailcd to the property owners to be assessed, in accordance mth K.S.A. 12-6a09; and WHEREAS, the Governing Body held a public hcaring to consider each of the proposed assessments. BE IT ORDAINED by the Governing Body of the city of Salina, Kansas: Section 1. Special Assessments to pay the cost of the following projects are hereby levied against several lots, pieces and parcels of land liable for special assessments for said Improvements, as follows: PROJECT NO. 08-2714 STONE CREEK ADDITION STREET, DRAINAGE AND UTILITY IMPROVEMENTS 26473 26474 Lot I, Block 1, Stone Creek Addition ............................................... ...__...__._... $25,297.08 Lot 2, Block I, Stone Creek Addition ................................................................ $25,297.08 26475 . 26476 26477 26478 26479 26480 26481 26482 26483 26484 26485 26486 Lot 3, Block 1, Stone Creek Addition ........................... .................................... $25,297.08 Lot 4, Block 1, Stone Creek Addition ............................................................ ... $25,297.08 Lot 5, Block 1, Stone Creek Addition ..... .......................................... ...) .... .... .$25,297.08 Lot 6, Block 1, Stone Creek Addition ................................................................ $25,297.08 Lot 7, Block 1, Stone Creek Addition ......................................................... ...... $25,297.08 Lot 8, Block 1, Stone Creek Addition ....... ........................................................ $25,297.08 Lot 9, Block 1, Stone Creek Addition ...._.. ....................................................... $25,297.08 Lot 10, Block 1, Stone Creek Addition ................................................................. $25,297.08 Lot 11, Block 1, Stone Creek Addition ............................................................... $25,297.08 Lot 12, Block 1, Stone Creek Addition ......................................................... .... $25,297.08 Lot 13, Block 1, Stone Creek Addition .............................. . ........... ............ .... $25,297.08 Lot 14, Block 1, Stone Creek Addition .......................... . ................................. $25,297.08 TOTAL COST TO THE IMPROVEMENT DISTRICT ............................ $354,159.12 TOTAL PROJECT COST ............................................................................. $354,159.12 TOTAL COST TO CITY AT-LARGE ...................................................................... 0.00 PROJECT NO. 09-2764 SCOULAR ADDITION WATER IMPROVEMENTS 15996 Lot 1, Block 1, Scoular Addition ........................................................... ............. $52,554.70 TOTAL COST TO IMPROVEMENT DISTRICT ....................................... $52,554.70 TOTAL COST TO CITY AT-LARGE ...................................................................... 0.00 TOTAL PROJECT COST ............................................................................... $52,554.70 Section 2. The special assessments provided for in Section 1 of this Ordinance shall be certified by the City Clerk to the County Clerk in the same manner and at the same time as other taxes are certified. The assessments and will be collected in fifteen (15) equal annual installments, together with interest on such amounts at a rate not exceeding the maximum rate therefore as prescribed by the Act. The first installmcnt shall become due with the first payment of general property taxes for the year 20 10. Interest on the assessed amount remaining unpaid between the effective date of this Ordinance and the date the first installment is payable, but not less than the amount of interest due during the coming year on any outstanding bonds issued to finance the Improvements, shall be addcd to the first installment. The interest for one year on all unpaid installments shall be added to each subsequent installment until paid. Section 3. The owner of any piece or parcel of property liable for any such assessments may redeem his property, in whole or in part, from such liability by paying to the City Treasurer the i entire amount, or a portion thereof, chargeable against said property, at any time on or before March 22, 2010, and to the extent of any such payment, the property so paid on shall not thereafter be liable for any further assessments for the cost of said improvements, nor for any interest due ' thereon. Section 4. This Ordinance shall take effect from and after its passage and publication in the ofiicial City newspaper. Introduced: January 25,2010 Passed: February 22,201 0 [SEAL1 Lieu Ann Elsey, CMC, Cit&lerk 2 Coinmission Action # CITY OF SALTNA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS January 25,2010 4:OO p.m. The City Commission convened at 2:30 p.m. in a Study Session for an Airport Industrial Infrastructure Improvements discussion. The Regular Meeting of the Board of Commissioners was called to order at 4:OO p.m. in Room 107, City-County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Mayor M. Luci Larson, Chairman presiding; Commissioner Samantha Angell; Commissioner Tom Arpke; Commissioner Norman Jennings Absent: Commissioner Aaron Peck ADMINISTRATION (8.2) public hearing. Certification of final cost for 2009 Special Assessment Projects and setting the date of (8.2a) First reading Ordinance No. 10-1053 1 levying special assessments for improvements. 10-00 1 G Moved by Commissioner Angell, seconded by Commissioner Jennings, to set February 22, 2010 as the date of public hearing and pass Ordinance No. 10- 1053 1 on first reading. Aye: (4). Nay: (0). Motion carried. " ADJOURNMENT 10-0018 Moved by Commissioner Angell, seconded by Commissioner Arpke, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (4). Nay: (0). Motion carried. The meeting adjourned at 8:30 p.m. /&/ % & & M. Luci Larson, Mayor [SEAL] ATTEST: d. /&&&& Lieu Ann Elsey, CMC, City Clerk 1 hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting on January 25,20 10 renardinn first reading Ordinance No. 10- 1053 1. Page 1 Commission Action # CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS February 22,2010 4:OO p.m. The City Commission convened at 2:OO p.m. in a Study Session for a Joint City-County Meeting. The Regular Meeting of the Board of Commissioners was called to order at 4:OO p.m. in Room 107, City- County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Mayor M. Luci Larson, Chairman presiding; Commissioner Tom Arpke; Commissioner Norman Jennings; Commissioner Aaron Peck Absent: Commissioner Samantha Angel1 PUBLIC HEARINGS AND ITEMS SCHEDULED FOR A CERTAIN TIME (5.1) Public hearing on 2009 special assessment projects. (5.la) Second reading Ordinance No. 10-10531. Mayor Larson opened the public hearing. There being no further comments, the hearing was closed. 10-0033 Moved by Commissioner Peck, seconded by Commissioner Jennings, to adopt Ordinance No. 10-1053 1 on second reading Aye: (4) Arpke, Jennings, Peck, Larson. Nay: (0). Motion carried. ADJOURNMENT 10-0048 Moved by Commissioner Arpke, seconded by Commissioner Jennings, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (4). Nay: (0). Motion carried. The meeting adjourned at 650 p.m. /&/% LL M. Luci Larson, Mayor [SEAL] ATTEST: /a/& & && Lieu Ann Elsey, CMC, City Clerk I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting on February 22,201 0 regarding the public hearing 1 second reading of Ordinance No. 10-10531. Lieu Ann Elsey, City Clerk Page 1 Publisher’s Affidavit I. Jffw Mod1 in , being duly sworn .- cieclare that I ani the of TI.IE SALINA JOURNAL, a daily newspaper published at Salina, Saline County, Kansas, and of general circulation in said county, ruluch newspaper has been admittcd to the mails as second class matter in said county, and coiitinuody and uninterruptedly published for five cotisecutivr years prior to first publication of attached notice, and that the Notice Ordinance #lo-10531 has been cortcctly published in the entire issues of said newspaper one time, publication being given in the T e&Cmxdb&or Printer’s Fee $4-11 00 (Published in the Sallna Journal February 27,2010) ORDtNANCE NUMBER 10-10531 AN ORDINANCE LEVY- ING SPECIAL ASSESS- MENTS ON LOTS PIECES AND PARCEL^ OF GROUND IN THE ClrY OF SALINA. IUN- AS FOR THE PUR. SOSE OF PAYING A PORTION OF THE COST OF CERTAIN IMPROVE- MENTS IN THE CITY. WHEREAS the Govern- ing Bcd 01 the Clty Of +aha. kansas (the "City") has authorized the follow- ing improveme7ts (couec- ttvel the Improve men&) in the City to be constructed pursuant 10 K.S A 12-6a01 and KS A 12-6a19 et Se pAdJECT NO. 08-&I4 . STONE CREEK ADDITION STREET DRAINAGE AND hILm IMPROVEMEWS The curb, gutter. Pave. men1 and grading for W- proximately 810 lineal leet of Stone Creek Coun The installation of approxi- mately 247 lineal feet 01 storm sewer pipe, inlets, and a11 appurtenances thereto. The installetion of a proxC mately 482 lineal Let 01 six-inch water main, tire hydranls. valves. tlnlngs. service connections for water lines and all appur- tenances thereto. and The installation of appmxb mately 1 .ZOO lineal feet 01 eight-Inch sanltaiy sewer main semce connectiom lor siwer lines. manholes. and all appurtenances thereto SCOULAA ADDmON WATER The instalation 01 apprOx\- matety t ,395 lineal feet of PROJECT NO 0+2764 IMPROVEYEHTS six-inch water main lire hydranls. valves, Iikngs. and all appurtenances thereto along Eastmoor Drive and Country Club Road lo the west propeny Ime of the pro eg in the improvement &lricl. then south along said propeny line to the souihwesl cor- ner of the property in the improvement district and then west to Eastmoor Dnve WHEREAS , Ihe total cos& of such Improve ments have been deter. mined. the Governin0 Body has caused the as- sessments against each lot pkce or am1 01 land de’emed to {e benetitad by such improvements to be determined in the man- ner sei forth m the resolu- IiOh as to advisability of the tm rovements pro vided for pursuant to US A 12-6a04 and an as- sessment roll has been prepared. and WHEREAS , such as- sessment roll was filed with the City Clerk and has been open to public Inspection. and WHEREAS the City- Clerk. al the direction of the Governin Body Caused notice o?the hear: ing on the speual assess- menb IO be published not less than to days prlor to such heanng. and notice 10 be mailed to the prop erty owners lo be as SeSSed in accordance with K s A. 12-6ao9. and WHEREAS . the Gov- erning Body held a public hearing lo consider each of the proposed assess ments BE IT ORDAINED by the Governing Body of Ihe CW of Salma, Kansas Sectlon 1. Spenal As- sessments to pay the cos1 ot the !allowing projects are hereby levied against several lots. pieces and parcels 01 land liable toi special assessments 101 sad Improvemenis. as follows PROJECT NO. ow714 STONE CREEK ADDITION STREET DRAINAGE AND bmm IMPROVEMENTS 26473 Lot 1. Block 1. Stone Creek Addition $25.297 08 26474 LO1 2 Block 1. Stone Creek Addltion $25 297 08 26475 Lot 3. Block 1. Stone Creek Addition S25.297 08 26476 Lot 4. Block 1, 301% Creek AddRion $25.297 08 26477 Lot 5. Block 1. Stone Creek Addition $25,297 08 26478 Lot 6 Block 1. Stone Creek Addition S25.297 08 26479 Lot 7, Block 1, Stone Creek Addmon $25,297 08 26480 Lot 8 Block 1. Stone Creek Additcon 26481 Lot 9, 525.297 Block 08 1. Stone Creek Adddion S25.297 08 26482 Lot 10, Block 1. Stone Creek Addition $25.297 08 26483 Lot 11. Block 1, Stone Creek Addition 525 297 08 26484 Lot 12. Block 1. Stone Creek Addition 825.297 08 26485 Lo1 13. Block 1. Stone Creek Addition S25.297 08 26486 Lot 14 Block 1, Stone Creek Adbiton $25.297 08 TOTAL COST TO THE IMPROVEMENT DIS. TRlCT 5354,159.12 TOTAL COST TO CITY AT-LARGE 000 TOTAL PROJECT COST 5354,159.12 PROJECT NO. 042764 SCOULAR ADDITION WATER IMPROVEMENTS 15996 Lot 1 Block 1, Smular AddlBoh $52.554 70 TOTAL COST TO TOTAL COST TO CRY AT-LARGE 0.00 TOTAL PROJECT COST $52,554.70 Section 2 The special assessments provided tor in Sectlon 1 of this Ordi nance shall be certltied by the Cit Clerk to the County Elerk in the same manner and at the same time as other taxes are certified The assess ments and will be col lected in fifteen (15) equal annual installments. to gether with interest on such amounts at a rate not exceeding the maxi mum rate therefore as rescribcd b the Act ?he tirst instaimen1 shall become due wlth the first payment of general prop- ert taxes tor the year 2070. lnteresl on the as- sessed amount remalnhg unpald between the eHec- tlve date 01 this Ordinance and the date the lirst in stallment is payable but not less than the amount of interest due durlng the coming year on any out standin bonds sued to fmanceghe Impmvernents, shall be added to the lint Installment The mteresI lor one year on all unpaid installments shall be added to each subsequent mslallment untll paid. Sectlon 3. The owner o( any piece or parcel of pro erly liable lor any suet assessments may IMPROVEMENT DISTRICT s2,w.m redeem his property. m whole or In part. from such llablli by paying to the City ?reasurer the entire amount or a portion thereof, chargeable agalnst said property a1 any time on or before March 22 2010 and to the exted 01 ahy such pa en1 the property so pzon ball not thereal- ter be llable for an lrather assessments lor La cost of for Mid any improvemenls, Interest due nor thereon. Sectlon 4 This Ordi- nance shall take eltect from and after its passage and ubllcatlon In the 0th- clal tity newspaper Introduced January 25,2010 Passed. February 22,2010 M. LUCI Larson. Mayor %2T. Lleu Ann Ekey. CMC, city Clerk (It) TELEPHONE (785) 309-5735 FAX (785) 309-5738 TDD (785) 309-5747 Department of Finance & Administration Office of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402-0736 e-mail: lieuann.elsey@salina.org Website: www.salina-ks.gov SaTRla I, Lieu Ann Elsey, hereby certify that the attached document is a sample of the prepayment notice letter and statement mailed to the property owners in the benefit districts included in the 2010-A General Obligation Bonds. Lieu-Ann Elsey City Clerk Department of Finance & Administration Office of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402-0736 TELEPHONE (785) 309-5735 FAX (785) 309-5738 TDD (785) 309-5747 e-mail: lieuann.elsey@salina.org Website: www.salina-ks.gov Salina February 23,2010 SCOULAR co 2027 DODGE ST OMAHA, NE 68102-1240 Dear Property Owner: On February 22,2010, the Salina City Commission he1 improvements to property you own. These special asses The following statement shows the amount of the as options: 1) have the following The assessment may be paid in full or statement, with your check, by 5:OO p. assessed by the method below. 2) You may choose to pay yo taxes over the next fifteen years. The dated and certified to the County Clerk to be ption, do not pay the amount on this statement. No . City will issue improvements. The principal would like to make If you have any questions regarding this matter, please feel free to contact our ofice. Sincerely, V Lieu Ann Elsey City Clerk CERTIFICATE OF PREPAYMENTS STATE OF KANSAS 1 COUNTY OF SALINE 1 ) ss: I, City Treasurer of the City of Salina, Kansas, do hereby certify that no payments have been received by the owners of the properties assessed within the Scoular Addition Improvement District (Project No. 09-2767) during the 30 day prepayment period established for said Improvement District. WITNESS my hand and official seal on April 8,2010. CityTr surer % STONE CREEK ADDITION City Clerk's Office Filed PETlTION q304 TO TEE GOVERNING BODY OF THE CITY OF SALINA, KANSAS: '08 Q!JG 11 PHI :43 We, the undersigned, owners of record of property located within the City of Salina, Kansas (the "City") do hereby respectively request that the Governing Body of the Ci create and designate an improvement district for the purpose of making certain improvements in the manner provided by K.S.A. lMa0l , et seq. 1. The general nature of the proposed improvements are as follows: The curb, gutter, pavement and grading for approximately 8 IO lineal feet of Stone Creek Court (the "Street Improvements"); The installation of approximately 247 lineal feet of storm sewer pipe, inlets, and all appurtenances thereto (the "Drainage Improvements"); The installation of approximately 482 lineal feet of six-inch water main, fire hydrants, valves, fittings, service C0nnecti011~ for water lines and all appurtenances thereto (the "Water System Improvements"); and The installation of approximately 1,200 lineal feet of eight-inch sanitary sewer main, service conndons for sewer lines, manholes, and all appurtenances thereto (the "Sanitary Sewer Improvements"); (the "Improvements"). 2. The estimated or probable cost of the Improvements iP: Four hundred forty thousand one hundred ninety-lhee dollars and twenty-nine cents ($440,19329). 3. The extent of the proposed improvement ddct to be aspessed is: Lots I through 14, Block 1, Stone Creek Addition dl in the City of salina, Saline county, Kansas. (the "improvement District"). 4. The proposed method of assessment shall be: Eacb lot in the improvement district shall be assessed equally per lot. 5. The proposed apportionment of mst between the improvement District and the City at Large is: One hundred percent (1Wh) of the total cost of improvements shall be assessed to the Improvement District and no portion of costs shall be paid by the City at Large. 6. The signera of this Petition hereby request that the Improvements be made Without notice and hearing as reqnired by KSA 12-6aoQ(a). 7. NAMES MAY NOT BE WITHDRAWN FROM THE PETITION BY THE SIGNERS THEREOF AFTER THE GOVERNING BODY COMMENCES CONSIDERATION OF TEE PETITION OR LATER THAN SEVEN (7) DAYS AFTER PILMC OF THE PETITIONWlTETHEClTYCLERK,WEIICHEVEROCCURSFLRST. Landcore Development, LLC Landcore Development, LLC Development, LLC Craig Piercy, Member Todd Welsh, Member LEGAL DESCRIPTION OF PROPERTY OWNED WITHIN TEE PROPOSED IMPROVEMENTDISTRICT: Lots 1 through 14, Block 1, Stone Creek Addition in the City of Salina, Saline county, ~ansas. STATEOFKANSAS ) 1 SALINECOUNTY ) I, the undersigned Notary Public, hereby certify that the signature appearing above is genuine and that this document was signed before me on this \ day of- - .2008. I *!pmmmTfmm,, ac .. My appointment expires: *.-* REBECCA SEEHAN *<*e. EGISTER OF DEEDS SALINE COUNTY KANSAS ""'-."*y Book: 1178 Page: 1477 Date Recorded: 8/26/200H 3J.942 PH Grantor Grantee Type of Document Certified Copy Of Resolution Recordinq Fees Mtg Reg Tax $0.00 $0.00 Total Amount $0.00 Return Address ROOM 206 CINDY I y!98 Page: 1478 .I., (Published in the Salina Journal on dUS&$&& (. - b- RESOLUTZON NUMBER 08-6547 A RESOLUTION SE’ITING FORTH FINDINGS AND DETERMINATIONS OF THE GOVERNING BODY OF TEIE CITY OF SALINA, KANSAS ON THE ADVISABILITY OF AND AUTHORIZLNG THE CONSTRUCTION OF CERTAIN JMPROVEMENTS PURSUANT TO K.S.A 12-6a01 el seq. WHERE/&, a petition was filed with the City Clerk for the City of Salina, Kansas (the “City”) or August 11,2008, proposing certain improvements pursuant to K.S.A. 12-6a01 ef seq. (the “Petition”); and WHEREAS, the Petition sets forth: (a) the general nature of the proposed improvements; @) thc estimated or probable cost of the proposed improvements; (c) the extent of the proposed improvement distric to be assessed for the cost of the proposed improvements; (d) the proposed method of assessment; (e) thc proposed apportionment of the cost between the improvement district and the City at large, and (f) a reques that such improvements be made without notice and hearing as required by K.S.A. 124a04(a); and WAEREAS, all the owners of record of property located within the proposed improvement distric have signed the Petition, including all owners of record of property located within the proposed improvemen district but outside of the City limits and directly adjacent to the City’s existing boundaries; and WHEREAS, no signatures have been withdrawn from the petition before the Governing Body begiil consideration ofthe Petition; and WHEREAS, K.S.A. 12-6a04 provides that the Governing Body may authorize and order public improvements without notice and hearing after a sufficient petition has been filed. NOW THEREFORE, BE IS RESOLVED BY THE GOVERNING BODY OF THE CITY 01 SALINA, KANSAS, AS FOUOWS: Section 1. The Governing Body hereby finds that the Petition is sufficient, and further finds anc determines that it IS necessary and advisable to make the following improvements: ?e nature ofthe improvements are as ~OIIOWS: The curb, gutter, pavement and grading for approximately 810 lineal feet of Stone Creek Court (the “Street Improvements”); The installation of approximately 247 lineal feet of storm sewer pipe, inlets, and al appurtenances thereto (the “Drainage Improvements”); The installation of approximately 482 lineal feet of six-inch water main, fire hydrants valves, fittings, service connections for water lines and all appurtenances thereto (the “Watei System Improvements”); and The installation of approximately 1,200 lineal feet of eight-inch sanitary sewer main, servicl connections for sewer lines, manholes, and all appurtenances thereto (the “Sanitary Sewe Improvements”) (collectively, the “Improvements”). The estimated cost of the Improvements is: Four hundred forty thousand one hundred ninety-three dollars and twenty-nine cents (S440.19329). The boundaries of the improvement district to be assessed are: Lots I through 14. Block I, Stone Creek Addition all in the City of Salina, Saline County, Kansas. (the “Improvement District”). The method of assessment shall be: Each lot in the Improvement District shall be assessed equally per lot The apportionment of cost between the Improvement District and the city at large is: One hundred percent (100%) of the total cost of the Improvements shall be assessed to the Improvement Diseict, and no portion of the costs of the Improvements shall be paid by the City at large. Book: 1170 Page: 1479 -. . Sectioo2. The Governing Body hereby declares that the Improvements described in this Resolution are necessary, and authorizes them to be made in accordance with the findings set forth in thi5 Resolution, and further authorizes the levying of assessments and the issuance of bonds therefore, all ir accordance with KSA. 12-6aOI el seq. Section3. The City expects to make capital expenditures from and after the date of this Resolution in connection with the Improvements described herein, and intends to reimburse itself for such expenditures with the proceeds of one or more series of general obligation bonds and temporary notes of the City in the maximum principal amount of $440,193.29. Section 4. The City Clerk is hereby authonzed and directed to make progress payments to the contractors for materials furnished and for labor performed under the contract when estimates therefore are presented to himlher which have been properly certified by the City Engineer, so long as the aggregate payments do not exceed the total contract price. Section 5. The City Clerk shall file a certified copy of this Resolution with the Register oi Deeds of Saline County, Kansas. Section 6. This Resolution shall take effect after its passage and publication once in the official city newspaper. ADOPTED AND PASSED this 18" day of August, 2008. I hereby certify that the foregoing is a true and correct copy of the original esolution passed by the Governing Body on the 18th day of August, 2008. 2 Commission Action # CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS August 18,2008 4:OO p.m. The City Commission convened at 3:OO p.m. in a Study Session on the Kansas Legislature new Comprehensive Transportation Program. The Regular Meeting of the Board of Commissioners was called to order at 4:OO p-m. in Room 107, City-County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Vice-Mayor Luci Larson, Chairman presiding; Commissioner Alan E. Jilka; Commissioner Aaron Peck; Commissioner R. Abner Perney Absent: Mayor John K. Vanier I1 ADMINISTRATION (8.4) Stone Creek Addition. Resolution No. 08-6547 approving the advisability and authorizing improvements in the 08-761 5 Moved by Commissioner Jilka, seconded by Commissioner Peck, to adopt Resolution No. 08-6547. Aye: (4). Nay: (0). Motion camed. ADJOURNMENT 08-76 17 Moved by Commissioner Jilka, seconded by Cornmissioner Peck, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (4). Nay: (0). Motion carried. The meeting adjourned at 6:40 p.m. /&/zqu4z 3% 2Ll.h 33 John K. Vanier 11, Mayor [SEAL] ATTEST: /*/& & 6& Lieu Ann Elsey, CMC, City Clerk I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting , on August 18,2008 regarding Resolution NO. 08- ,6547. Lieu Ann Elsey, City derk Page 1 Publisher's Affidavit I, Tiffanv Modlin , being duly sworn declare that I am the MaiodNational Accounts of THE SALINA JOURNAL, a ddy newspaper published at Salina, Saline County, Kansas, and of general circulation in said county, which newspaper has been admitted to the mails as second class matter in said county, and continuously and uninterruptedly publishedfor five consecutive years prior to first publication of attached notice, and that the Notice has been correctly published in the entire issues of said newspaperone time, publication being given in the issue of August 25 - u#)8 Subscri to before me, this dayof @ L)cIL& ~, A.D. 20 ob 1 Printer's Fee $334.95 the petibon before the Gov- ;,emrng *dy bgqn consid. :- eration of the Pen; and WHERE&% K.S.A. ! 124q04 pmttdd;'.that the : ,GovemIng eody may author- , *r~e,&id o@er,pubb impme , ments wlthout notice and j 'hearing bahffiaent MI- REFORE BE pGOVERNIffi BODY OF. THE- CIW~ OF SALINA, hereby finds that the n IS suffident, and fur- ther finds apd determines th&f jt'is-riwj-and ad. .rmprovements: . (a)'The nature of the im- I provements are as fob +n.tms bum filed. . 1. G'%&EED ; BY -'THE lchM=+AQMWWS:. Sclhl l:-;-The Go~mnrg. , yiiawe 6 mb the follw'I+J . (b} The &mated mst 5f' 'thelmRmyemg i1 I., F&rhundt&d ')tho& '- sand one hundred 1, .. ninely-three dobrs and. twenty-nine cents (c), e boundarles of the lmkment 'dtitrid ,to -ha=-=%* ,7,%.. -- - e' Lots i.-mtt!14, B& . 1'Stone Ct&k:Additkm - ail iithe"w-,L 'saline &=rity.&im I -+h$-%ippV&nep Dls- ,,t@r):a-:, .I r 9 ' (ci)-Fe m&od$ i+&+ ment.shafl,be;:: , . . ..E& 'rnenti&@x&$jdas-' ibt In the:!ifipmve- 1 I sessedequallyperlot. ' (e),he" epp'hiomnent oi 'cost between the. 1.m. . *&le.Cityatlageis;:.' hement Diict -end _- , . One hundred-percent 81 .(loo%) of %e.* wst , , of I the. Improvements . shallbeassessedfothe: - Improvement Pistrict, i. ' ,&sts- arid n6 of portio; the, tmprove. of the ' I ttieCiPyatJarga . I . Won 2. The,Gov&m /Bod ,hereby declares & 'the i!nprovements described In wi Resolution aim neces- saw and authorizes them to : be made- In accordance with the findings set foith hr this- Resolutlon, and further auploduis the btyi 'of as- sessments end.the %ante of,bonds therefore 'dl in ac- cordance- with' K.S.A. 124a01 u seq Section 3. me $ii ex. pects to make capltal expen- ditures 'from and after the date of- this .A&olutlon In 1 ' connection wlth the lmprwe ,' rnerds descllbed hereln and @tenas to rennbune'its&for such expendires with .the-: pIy73?dqof ow of more 68 ' des of general obligatidn! bdndsand tempqrary.riotes ! of<the,Ci in.the:maiiminn . ptincipd? amount of ' -22E.Th;e i&:tjIe* -(pp33.q: .' ' ' ," ments shUl be-paid py. ty*/ --- +,. -- ,- ,. .-_ . k- .I ' The: cum, :Jplte{, -.' ment.and gtadrp for* 3 pr&mateiy BIO lineal ' feet of Stone I Oreek court (the u~qet:tm~*e pnwements"); - I The ins!aIIation.of ap. ! proxim&ely 247. lifieal I &ofstonnsewer~. Idem, and all appurte.' ! *, ppces thereto (the ' Drainage Improve. * me- lnstaliation'.of ap- ' proximately 482 lineal' feet of six-lnch- wder I main, fire h'ydfarits; * valves, fmings. sewlce connections for water lines and< all? appui-te- ' & thekt0 (the'yV& ter ,,S$tem 'Implove-, ~.:- . - . .- nients");bd--: *_* x ---.- ._ ...,, The. InstalCatiori ot ap. proximately t ,!200 lineal ' ~s&ermain;'seMce I. conneciioyis:for;seypF appurtenances thereto (the 'sanrtarv Sewer 16- 'I- .fijet.;Ijj ~e1gtlt:n)Ctl'sanl. ? 'WS, -kwKiis,- and'q TELEPHONE (785) 309-5735 FAX (785) 309-5738 e-mail: lieuann.elsey@salina.org Website: wwwsalina-ks.gov Department of Finance & Administration Office of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402-0736 TDD (785) 309-5747 salina I, Lieu Ann Elsey, hereby certify that the attached document is a sample of the hearing notice letter mailed to property owners in the benefit districts in the 20 1 O-A General Obligation Bonds. These letters were mailed to the property owners on January 26,201 0. Lieu Ann Elsey City Clerk De~AHtWhYWFinance & Administration Office of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402-0736 TELEPHONE (785) 309-5735 FAX (785) 309-5738 TDD (785) 309-5747 e-mail: lieuann.elsey@salina.org Website: wwwsalina-ks.gov January 26,2010 LANDCORE DEVELOPMENT LLC 300 S 9TH ST STE 101 SALINA, KS 67401-3894 Dear Property Owner: Commissioners on Monday, February 22,201 of the City-County Building, 300 W. As within the City of Salina. Your property Tract Number: 26473 Legal Description: Lot 1, B City of Salina, Saline Coun take place in Room 107 ents for improvements in Engineering Project No. for the improvements is $ 25,297.07. Please be ut a notice of the hearing where the Board of Once established, you will be 09-27 14. The prop0 advised that this is essment to your property. fer, you may call me with questions or contact Dan Stack, City Sincerely, U Lieu Ann Elsey City Clerk low Wrinen or oral objec- tions will be cmidered at the meeting and there upon the amount of the Publisher's Affidavit 1. T- , being duly sworn declare that I am the of THE SALINA JOURNAL, a daily newspaper published at Salina, Saline County, Kansas, and of general circulation in said county, which newspaper has been admitted to the mails as second class matter in said county, and continuously and uninterruptedly published for five consecutive years prior to first pub!ication of attached notice, and that the 1,eval C-r Special Assessment Notice Proj #06-27l4,09-2764 Notice has been correctly published in the entire issues of said newspaper one time, publication being given in the City-Cdunty Buildin 3od West Ash Slreet. &lira, 2010 issue of February 1, - - .s4 Subscribed and sworn to before me, this 1 J Printer's Fee $232.50 appurtenances vlereto The above improvements Kansas PROJECT NO. oazm STONE CREEK ANDhLlTY ADDITION STREET DRAINAGE IMPROVEMENTS The improvements are generally described a5 The curb, guner, pave- ment and grading for approximately 810 kneal feet of Stone Creek court , The installation of ap proximately 247 lineal feet 01 storm sewer pipe. inlets, and all ap Purtenances thereto. The installation of ap proxlmately 482 lineal feet 01 six-inch water main. fire hydrants. valves. fittings. servce Connections for water lines and all appurte nances thereto. and The installation ot ap proximately 1,200 lineal leet of eight-inch sani tary sewer main. service connections lor sewer lines. manholes. and all were aulhonzed by Reso- lution No 086547 passed by the Board of Commis- sioners on August 18. 2009 The total cost 01 such improvement IS $354.159 12 and Is pro posed to be assessed to the properties mthin the improvement dstrlct. The exten! 01 bounda ries 01 the improvement district to be assessed IS descnbed as tollows LOIS 1 through 14, Block 1. Stone Creek Addition an In the City of Salina. Saline County, Kansas. PROJECT NO. 09.2764 SCOULAR ADDmON WATER IMPROVEMENTS The improvements are generally described as The installaton of ap- proximately t ,395 lin- eal leet 01 sulnch wa- ter man. (Ire hydrants, Valves. finings. and all appurtenances thereto along East moor Drive and Coun- try Club Road to the west property line of the property In the im- provement district, then south along sad property line to the Southwest corner of the property m the im- provement disinct and then west to Eastmoor The Drive above Improvements were authorized by Reso- lution No. 09-6630. gassed by the Board 01 ommissioners on June 22. 2009. The total cost of such improvement is 852.554.70 Is proposed 10 be assessed to the prop enl& wilhln the Improve The men1 extent distrlct. 01 boundaries 01 the improvement dlstrict lo be assessed is de scrlbed as follows. Lot 1 Block 1. Smular Addition in the Ccty of Salina, Saline County, Kansas. (Published in the Salina Journal on February a, 2010) ORDINANCE NUMBER 10-10531 AN ORDINANCE LEVYING SPECIAL ASSESSMENTS ON LOTS, PIECES AND PARCELS OF GROUND IN THE CITY OF SALINA, KANSAS FOR THE PURPOSE OF PAYING A PORTION OF THE COST OF CERTAlN IMPROVEMENTS IN THE CITY. WHEREAS, the Governing Body of the City of Salina, Kansas (the “City”) has authorized the following improvements (collectively, the “lmprovements”) in thc City to bc constructed pursuant to K.S.A. 12-6a01 and K.S.A. 12-6a19 et seq.: PROJECT NO. 08-2714 STONE CREEK ADDITION STREET, DRAINAGE AND UTILITY IMPROVEMENTS The curb, gutter, pavement and grading for approximately 810 lineal feet of Stone Creek Court ; The installation of approximately 247 lineal feet of storm sewer pipe, inlets, and all appurtenances : thcrcto; . The installation of approximately 482 lineal fect of six-inch water main, fire hydrants, valves, fittings, servicc conncctions for water lines and all appurtenances thereto; and i The installation of approximately 1,200 lineal feet of eight-inch sanitary scwcr main, service ; connections for sewer lines, manholes, and all appurtenances thereto PROJECT NO. 09-2764 SCOULAR ADDITION WATER IMPROVEMENTS The installation of approximately 1,395 lincal fcct of six-inch water main, fire hydrants, valves, ; fittings, and all appurtenances thcrcto along Eastmoor Drive and Country Club Road to the west property line of thc propcrty in the improvement district, then south along said property line to the j southwcst comcr of the property in thc improvement district and then west to Eastmoor Drivc. WHEREAS, the total costs of such improvcmcnts have been determined; the Governing I Body has caused the assessments against each lot, piece or parcel of land deemed to be benefited by I such improvements, to be determined in the manncr sct forth in the resolutions as to advisability of ’ thc improvements provided for pursuant to K S A. 12-6a04; and an assessment roll has been , prepared; and I WHEREAS, such assessment roll was filed with the City Clcrk and has been open to ’ public inspection; and WHEKEAS, the City Clcrk, at thc direction of thc Govcrning Body, causcd notice of I the hcaring on the special asscssmcnts to be published not less than IO days prior to such hearing, ’ and notice to be mailed to the property owners to bc asscsscd, in accordance with K.S.A 12-6a09; * and WHEREAS, thc Governing Body held a public hearing to consider each of the proposed assessments. BE IT ORDAINED by the Governing Body of thc city of Salina, Kansas Section 1. Spccial Asscssmcnts to pay the cost of the following projects are hereby levied against several lots, pieces and parcels of land liable for special assessments for said Improvcrnents, as follows. PROJECT NO. 08-2714 STONE CKEEK ADDITION STREET, DRAINAGE AND UTILITY IMPROVEMENTS 26473 26474 Lot I, Block I, Stonc Creek Addition. . . .... ...... . .. .... . . .... .... .. . ... ..... . .$25,297 08 Lot 2, Block I, Stone Creek Addition ..... .. ...... ..................... . .._ _. . ........... $25,297.08 26475 26476 26477 26478 26479 26480 2648 1 26482 26483 26484 26485 26486 Lot 3, Block 1, Stone Creek Addition Lot 5, Block 1, Stone Creek Addition. Lot 7, Block I, Stone Creek Addition Lot 8, Block I, Stone Creek Addition Lot 9, Block 1, Stone Creek Addition Lot IO, Block 1, Stone Creek Additio Lot 1 1, Block I, Stone Creek Additio Lot 12, Block 1, Stone Creek Additio $25,297.08 .................................... $25,297.08 ............................................ Lot 4, Block 1, Stone Creek Addition ............................................... $25,297.08 Lot 6, Block 1, Stone Creek Addition ............................................................ $25,297.08 ............................................ ..$25,297 08 ...... $25,297.08 ................ $25,297:08 ........... $25,297.08 Lot 13, Block 1, Stone Creek Additio ......... .$25,297.08 Lot 14, Block 1, Stone Creek Additio .......... $25,297 08 TOTAL COST TO THE IMPROVEMENT DISTRICT ............................ $354,159.12 TOTAL COST TO CITY AT-LARGE ...................................................................... 0.00 TOTAL PROJECT COST ............................................................................. 5354,159.12 PROJECT NO. 09-2764 SCOULAR AUDITION WATER IMPROVEMENTS 15996 Lot 1, Block 1, Scoular Addition. ................................................. $52,554.70 TOTAL COST TO IMPROVEMENT DlSTRICT ....................................... $52,554.70 TOTAL COST TO ClTY AT-LARGE ...................................................................... 0.00 TOTAL PROJECT COST ............................................................................... $52,554.70 Section 2. The special assessmcnts provided for in Scclion 1 of this Ordinance shall be certificd by the City Clerk to the County Clerk in the same manner and at the same time as other taxes are certified. The assessments and will bc collected in fifteen (15) equal annual installments, together with interest on such amounts at a rate not exceeding the maximum rate therefore as prescribed by the Act. The first installment shall become due with the first paymcnt of gcncral propcrty taxes for the year 2010. Intcrcst on thc assessed amount remaining unpaid between the effective date of this Ordinance and the date the first installment is payable, but not less than the amount of interest due during the coming year on any outstanding bonds issucd to finance the Improvements, shall be added to the first installmcnt. The interest for one year on all unpaid installments shall be added to each subsequent installment until paid. Section 3. The owner of any piece or parccl of propcrty liable for any such assessments may rcdccm his propcrty, in whole or in part, from such liability by paying to the City Treasurer the i entire amount, or a portion thereof, chargeablc against said property, at any time on or before March i 22, 2010, and to the extent of any such paymcnt, the property so paid on shall not thereafter be ! liable for any furthcr asscssmcnts for the cost of said improvements, nor for any interest due ' thereon. Section 4. This ordinance shall take effect from and after its passage and publication in the official City ncwspapcr. Introduced: January 25,2010 Passed. February 22,2010 [SEAL1 . Lieu Ann Elsey, CMC, Cit&lerk 2 Commission Action # CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS January 25,2010 4:OO p.m. The City Commission convened at 2:30 p.m. in a Study Session for an Airport Industrial Infrastructure Improvements discussion. The Regular Meeting of the Board of Commissioners was called to order at 4:OO p.m. in Room 107, City-County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Mayor M. Luci Larson, Chairman presiding; Commissioner Samantha Angell; Commissioner Tom Arpke; Commissioner Norman Jennings Absent: Commissioner Aaron Peck ADMINISTRATION (8.2) public hearing. Certification of final cost for 2009 Special Assessment Projects and setting the date of- (8.2a) improvements. First reading Ordinance No. 10-1053 1 levying special assessments for 10-0016 Moved by Commissioner Angell, seconded by Commissioner Jennings, to set February 22, 2010 as the date ofpublic hearing and pass OrdinanceNo. 10-1053 1 on first reading. Aye: (4). Nay: (0). Motion carried. ADJOURNMENT 10-0018 Moved by Commissioner Angell, seconded by Commissioner Arpke, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (4). Nay: (0). Motion carried. The meeting adjourned at 8:30 p.m. /a/ % & L M. Luci Larson, Mayor [SEAL] ATTEST: /a/& & 6& Lieu Ann Elsey, CMC, City Clerk I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting on January 25, 2010 regarding first reading Ordinance No. 10- 1053 1. - Page 1 Commission Action # CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS February 22,2010 4:OO p.m. The City Commission convened at 2:OO p-m. in a Study Session for a Joint City-County Meeting. The Regular Meeting of the Board of Commissioners was called to order at 4:OO p.m. in Room 107, City- County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Mayor M. Luci Larson, Chairman presiding; Commissioner Tom Arpke; Commissioner Norman Jennings; Commissioner Aaron Peck Absent: Commissioner Samantha Angel1 PUBLIC HEARINGS AND ITEMS SCHEDULED FOR A CERTAIN TIME (5.1) Public hearing on 2009 special assessment projects. (5.1 a) Second reading Ordinance No. 10-1 053 1. Mayor Larson opened the public hearing. There being no further comments, the hearing was closed. 10-0033 Moved by Commissioner Peck, seconded by Commissioner Jennings, to adopt Ordinance No. 10-1053 1 on second reading Aye: (4) Arpke, Jennings, Peck, Larson. Nay: (0). Motion carried. ADJOURNMENT 10-0048 Moved by Commissioner Arpke, seconded by Commissioner Jennings, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (4). Nay: (0). Motion carried. The meeting adjourned at 650 p.m. /a/ %. L & M. Luci Larson, Mayor [SEAL] ATTEST: /a/& & G& Lieu Ann Elsey, CMC, City Clerk I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular regarding meeting on February 22,20 10 Ordina the public hearing levying special assessments and second reading of Lieu AM Elsey, City Clerk Page 1 Publisher's Affidavit L .. rtffanv Modlin , being duly s\voI'Il declare that I a ti1 thr Ieaa C r v of THE SALINA JOURNAI,, a daily newspaper published at Salina, Saline County, Kansas, and of getieral circulation 111 said county, which newspaper has been admitted to the mails as second cldss matter in S~IL~ county, and continuously and unmterruptedly published for five consecutive years prior to first publication of attached notice, and that the 01 dinancc #lo-10531 Notice has been COI rectly published in the entire issues of said newspaper one time, publication being given in the issue ot February 27, 2010 d Notary Public Printer's Fec $4.11 00 (Published in the Salina Journal February 27.2010) ORDINANCE NUMBER 10-10531 AN ORDINANCE LEVY- ING SPECIAL ASSESS MENTS ON LOTS PIECES AND PARCEL$ OF GROUND IN THE ClN OF SALINA. KAN- AS FOR THE PUR. 8 OSE OF PAYING A PORTION OF THE COST OF CERTAIN IMPROVE- MENTS IN THE CITY. WHEREAS the Govern- ing Bod 01 the Cty Of ylina kansas (the "W") has authorized the follow- ing improvements (collec- tlvel the 'Improve men&) in the CRY to be constructed pursr;ant to K.S.A 12-Sa01 and K.S A 12-6a19 et S pRtjjECT NO 0&%4 ADDITION STREET DRAINAGE AND hlLm . STONE CREEK IMPROVEMENTS me curb, gutter. pave. ment and grading lor aP- proximately 810 lineal feet of Stone Creek Court The rnstaliation of approxi- mately 247 tineal leet 01 stom sewer pipe, inlets, and all appurtenances thereto. me installation of a proxi- mately 482 tineal get of six-inch water main. fire hydrants. valves. flHlngS. service connections lor water lmes and all appur- tenances thereto. and me installation 01 appmxb matety 1.200 lineal lee1 01 eight-inch sanitary sewer main sewce connections lor sewer tines. manholes, and all appurtenances thereto SCOULAA ADDlilON WATER IMPROVEMENTS The installation of approxi- mately 1,395 lineal feet of PROJECT NO. os2764 SiX-inch water main fire hydrants. valves, fikngs, and all appurtenances thereto along Eastmoor Drive and Country Club Road to the west propey line of the pro eriy in the improvement Jstrict. then south along said property line to the soulhwest cor- ner 01 the property in the improvement district and then west lo Eastmoor Dnve. WHEREAS . Ihe total costs of such improve menls have been deter. mined. the Governlnp Body has caused the as- sessments against each lot. plece or arcel of land deemed to ge benelrted by such bnprovements to be determined in the m'an- ner set lorth in the resolu- tions as to advisabllity of the tm rovements pro vided for pursuant lo ICs A 12-6a04, and an as- sessment roll has been prepared. and WHEREAS , such as- sessment roll was filed with the City Clerk and has been open to public inspeclion. and WHEREAS the City- Clerk, at the direction of the Governin Body caused notice o?the hear: mg on the special assess- ments to be published not less than 10 days prior lo such hearing, and notice to be mailed lo the prop erty owners lo be as sessed in accordance wdh K d A. 12-6ao9. and WHEREAS , the Gov- erning Body held a public hearing lo consider each of the proposed assess menta BE IT ORDAINED by the Govermng Body of Ihe clty of Salina. Kansas Sectlon 1 Special As- sessmenls to pay the cost of the lollowing projects are hereby levied against several lols. pieces and parcels 01 land iiable for special assessments lor sard Improvements. 8s loliows PROJECT NO. 08-2714 STONE CREEK ADDITION STREET DRAINAGE AND bTlLlN IMPROVEMENTS 26473 Lot 1, Block 1, Stone Creek Addition 525.297 08 26474 Lot 2 Block 1. Stone Creek Addttion 525.297 08 26475 Lot 3, Block 1. Stone Creek Addition $25.297 08 26476 Lot 4 Block 1, Stone Creek Ac'ddion $25.297 08 26477 Lot 5, Block 1. Stone Creek Addition $25,297 00 26478 Lot 6 Block 1, Stone Creek Addilion S25297 08 26479 Lo1 7. Block 1. Stone Creek Addition 125,297 08 26480 Lot 8 Block 1. Stone Creek Additon $25,297 08 26481 Lot 9, Block 1, Stone Creek Adddmn $25.297.08 26482 Lot 10 Block 1. Stone Creek Addition $25.297 08 26483 Lot 11, Block 1, Stone Creek Addrtion S25.297.08 26484 Lot 12 Block 1. Stone Cfeek Addition $25.297 08 26485 Lot 13. Block 1, Sone Creek Addition S25.297 08 26486 Lot 14 Block 1, Stone Creek Adbilon $25 297 08 TOTAL COST TO THE IMPROVEMENT DIS. TRlCT S354,159.12 TOTAL COST TO ClTy AT-LARGE 0.00 TOTAL PROJECT COST 9354,159.12 PROJECT NO. 09-2764 SCOULAR ADDITION WATER IMPROVEMENTS 15996 Lot 1. Block 1. Swular Addition $52.554 70 TOTAL COST TO IMPROVEMENT DISTRICT $52,554.70 TOTAL COST TO CrrV AT-LARGE 0.00 TOTAL PROJECT COST 952,554.70 Sectlon 2 me special assessments orovided lor in Section t b ttiis Ordi nance shall be certified by the Cit Clerk to the Countv &erk in the Same manner and at the same tlme as other taxes are certified The assess- ments and will be col- lected in litleen (15) equal annual installments. to gether with interest on such amounts at a rate not exceeding the maxi mum rate therefore as rescribsd b the Act. ?he lirst instahmt shall become due with the frrst payment of general prop- ert taxes for the year 2070. lnteresl on the as- sessed amount remaintng unpaid between the enec- Uve date of this Ordinance and the date the first in- stallment is payable but not less than the amount 01 interest due during the coming year on any out standin bonds issued to hnanceyhe Impmvements, shall be added to the lirst installment The inleresl lor one year on all unpaid installments shall be added to each subsequent rnstallment until paid. Sectlon 3 The owner 04 any plece or parcel of pro erly liable for any suci assessments may redeem hls properly. in whole or in pall. fmm such llabili by paying to the City Xeasurer the entire amount or a porlion thereoi. charaeable apalnst bid propkly at any time on or betore March 22. 2010. and to the extenl 01 anv such payment the prop'ey so paid on ;hall not thereal. ler be liable lor an IurIher assessments for he cost 01 said improvements. nor lor any interest due thereon. Sectlon 4. This Ordk nance shall take effect from and after its passage and ubticallon in the offi- cial& newspaper Introduced. January 25,2010 Passed. February 22,2010 M Lucl Larson. Mayor %%T Lieu Clerk Ann Ebey, CMC, Clty (11) Department of Finance & Administration Office of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402-0736 c%fd TELEPHONE (785) 309-5735 FAX (785) 309-5738 e-mail: lieuann.elsey@salina.org s Website: www.salina-ks.gov TDD (785) 309-5747 salina I, Lieu Ann Elsey, hereby certify that the attached document is a sample of the prepayment notice letter and statement mailed to the property owners in the benefit districts included in the 20 1 O-A General Obligation Bonds. Lieu AM Elsey City Clerk TELEPHONE (785) 309-5735 TDD (785) 309-5747 Dep;amnWi€WFinance & Administration c%'d office of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402-0736 FAX (785) 309-5738 e-mail: lieuann.elsey@salina.org s Website: www.salina-ks.gov salina January 26,20 10 LANDCORE DEVELOPMENT LLC 300 S 9TH ST STE 101 SALINA, KS 67401-3894 Dear Property Owner: Please consider this letter your notice of a public hearing, which will be held by the Salina Board of Commissioners on Monday, February 22,2010 at 4:OO p.m. The meeting will take place in Room 107 of the City-County Building, 300 W. Ash, Salina, Kansas. The purpose of this hearing will be to consider written or oral comments regarding proposed assessments for improvements to property within the City of Salina. Your property is described as follows: Tract Number: 26473 Legal Description: Lot 1, Block 00 1 , STONE CREEK ADD City of Salina, Saline County, Kansas This property is included in the proposed assessments for improvements in Engineering Project No. 09-2714. The proposed assessment to your property for the improvements is $ 25,297.07. Please be advised that this is NOT a request for payment, but a notice of the hearing where the Board of Commissioners will establish the actual assessment to your property. Once established, you will be sent a notice requesting payment for the assessment. At that time, you will have the option of paying the assessment or spreading it over a fifteen-year period that will show up on your real estate taxes and include interest. You are welcome to come to my office and examine the records regarding the proposed assessment. If you prefer, you may call me with questions or contact Dan Stack, City Engineer, at (785) 309-5725. Sincerely, Lieu AnnElsey " City Clerk TELEPHONE (785) 309-5735 FAX (785) 309-5738 TDD (785) 309-5747 Department of Finance & Administration Office of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402-0736 e-mail: lieuann.elsey@salina.org Website: www.salina-ks.gov Salina February 23,2010 LANDCORE DEVELOPMENT LLC 300 S 9TH ST STE 101 SALINA, KS 67401-3894 Dear Property Owner: On February 22, 2010, the Salina City Commission held a public hearing regarding special assessments for improvements to property you own. These special assessments were set by ordinance on that same day. The following statement shows the amount of the assessment to be $ 25,297.07. You have the following options: 1) The assessment may be paid in full or in part at this time. To do this, return the yellow copy of this statement, with your check, by 5:OO p.m., March 29, 2010. If paid in part, the unpaid balance will be assessed by the method below. 2) You may choose to pay your assessment with your property taxes over the next fifteen years. The City will issue 15-year general obligation bonds to provide for the long term financing of the improvements. The pnncipal and interest will be calculated and certified to the County Clerk to be included on your annual property tax bill. The interest rate will be set when the bonds are sold, but it is not expected to exceed 6.0%. To accept this option, do not pay the amount on this statemefit. No payment is required at this time and you do not need to notify our office of your decision, unless you would like to make a payment. Property Information: Legal Description Tract: 26473 Job Number 2009-2714 Principal Amount $25,297.07 Lot 1, Block 1, Stone Creek Addition WATER IMPROVEMENTS STORM SEWER STREET IMPROVEMENTS First year of Assessment - 20 10 Last year of Assessment - 2024 If you have any questions regarding this matter, please feel free to contact our office. Sincerely, U Lieu Ann Elsey City Clerk CERTIFICATE OF PREPAYMENTS STATE OF KANSAS 1 COUNTY OF SALME 1 ) ss: I, City Treasurer of the City of Salina, Kansas, do hereby certify that no payments have been received by the owners of the properties assessed within the Stone Creek Addition Improvement District (Project No. 08-2714) during the 30 day prepayment period established for said Improvement District. WITNESS my hand and official seal on April 8,201 0. Commission Action # CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS March 22,2010 4:OO p.m. The City Commission convened at 2:30 p.m. in a Study Session for the 2009 Year End Financial Reports. The Regular Meeting of the Board of Commissioners was called to order at 4:OO p.m. in Room 107, City-County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Mayor M. Luci Larson, Chairman presiding; Commissioner Samantha Angell; Commissioner Tom Arpke Absent: Commissioner Norman Jennings Commissioner Aaron Peck ADMINISTRATION (8.1) General Obligation Bonds and Notes. (8.la) Resolution No. 10-6718 authorizing the offering for public sale of general obligation temporary notes and bonds. (8.lb) First reading Ordinance No. 10-10540 authorizing the issuance and delivery of General Obligation Internal Improvement Bonds, Series 20 1 O-A. 10-0076 Moved by Commissioner Angell, seconded by Commissioner Arpke, to adopt Resolution No. 10-6718. Aye: (3). Nay: (0). Motion carried. 10-0077 Moved by Commissioner Angell, seconded by Commissioner Arpke, to pass Ordinance No. 10-10540 on first reading. Aye: (3). Nay: (0). Motion camed. ADJOURNMENT 10-0078 Moved by Commissioner Arpke, seconded by Commissioner Angell, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (3). Nay: (0). Motion camed. The meeting adjourned at 4:22 p.m. /&/a. L L M. Luci Larson, Mayor [SEAL] ATTEST: /a/L & G& Lieu Ann Elsey, CMC, City Clerk I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting on March 22,20 10 regarding Resolution No. 10-67 1 ce No. 10-10540. Page 1 ~. r---- I I RESOLUTION NO. 10-6718 RESOLUTION AUTHOmG i”HE OFFERING FOR SALE OF. GENERAL OBLIGATION TEMPORARY NOTES, SERIES 2010-1 .AND GENERAL OBLIGATION ~ERN&’WLMPROV&3lJWT AND REFUNDING BONDS, SERIES 2010-A, OR THE CITY OF SALINA, KANSAS. WHEREAS, the City of Salina, Kansas (the “Issuet”), has heretofore authorized certain internal improvements described as follows (the “Improvements”): Notea - Project Descri~tion ‘ Resolotion No. Authority Amount Grand Prairie Addition : 094675 K.S.A. 124a01 erseq. $1,600,000.00 TO!& 51,600,000.00 - Bonds Prom Deseriation s R~lhtion NO. Authority Amount Landfill, Cell 5 Construction 094648 K.S.A. 12-2101 ef seq. $1,600,000.00 Bicentennial Center Renovat ion 09-6653 . K.S.A. 12-1 736 et seq. 2,500,000.00 Fire Station #I Renovation 09-6681 K.S.A. 12-1736 efseq. 1,787.000.00 Scoular Addition 09-2764 K.S.A. 12-6a01 er seq 52,500.00 Stone Creek Addition 08-2714 K.S.A. 12-6a01 er seq. 354.100.00 Total.- S6,293,600.00 ; and WHEREAS, the Issuer desires to issue its general obligation temporary notes and general obligation ionds in order to finance the costs of shch Improvements; and -AS, the Issuer has selected the firm of George K. Barn & Co., Kansas City, Missom’ :“Financial Advisor”), as financial advisor for a series of general obligation temporary notes and a series of general obligation bonds of the Issubr to be issued in order in order to provide funds to finance the Improvements; and WREAS, the Issuer, has heretofore issued and has outstanding general obligation bonds; and WHEREAS, due to the cwent interest rate environment, the Issuer has the opportunity to issue its general obligation refunding bonds in order to achieve an interest cost savings on the debt represented by iuch general obligation bonds described as follows (the “Refunded Bonds”): &&s Dated Date - Film Amouni Redemvfion Dafe 2002-A 1/15R002 .’ 2011 to2013 $630,000 05J1 SI201 0 WEEREAS, the Issuer desires to authorize fhe Financial Advisor to proceed with the offering for ;ale of said general obligation tempow notes and general obligation bonds and related activities; and WHEREAS, one of the duties and responsibilities of the Issuer is to prepare and distribute a veliminary offjcial statement relating to said general obligation bonds; and WHEREAS, the Issuer desires to authorize the Financial Advisor, in conjunction with the Clerk, to iroceed with the preparation and distribution of a preliminary official statement and notice of bond sale and o authorize the distribution thereof and all other preliminary action necessary to sell said general obligation Bonds. BE IT RESOLVED BY THE’GOVERNING BODY OF TRE crry OF SALINA, KANSAS, AS ~OLLOWS: Sectionl. The Issuer is hereby authorized to offer at competitive public sale the Issuer’s pproximately $1,635,000 principal hount General Obligation Temporary Notes, Series 2010-1 (the Notes”) and approximately $6,600,000 principal amount General Obligation Internal Improvement and = I I I i I I I I Refunding Bonds in one or more series (the “Bonds”), as described in the Notice of Sale hereinafter refem to and as revised by the Clerk and the Director of Finance, after consultation with Bond Counsel and th Financial Advisor. Sectioet. The Preliminary Oficial Statement, dated March 22, 2010. is hereby approved i substantially the form presented to the governing body this date, with such changes or additions as the Mayc and Clerk shall deem necessary and appropriate, and such offcials and other representatives of the Issuer BT hereby authorized to use s6ch docmeht in COMeCtiOn with the public sale of the Notes and the Bonds. Section 3. The Clerk, in conjhction with the Financial Advisor and Gilmore & Bell, P.C., Kansa City (“Bond Counsel”), is hereby authorized and directed to givehotice of aid bond sale by publishing summary of the Notice of Bond Sale not less than 6 days before the date of the bond sale in a newspaper c general circulation in Salina County, Kansas, and the Kunras Register and by distributing copies of th Notice of Bond Sale and Preliminary Oflicial Statement to prospective purchasers of the Bonds. Proposal for the purchase of the Bonds shall be submitted upon the terms and conditions set forth in said Notice a Bond Sale, and shall be delivered to the governing body at its meeting to be held on such date, at whicl meeting the governing body shall review such bids and shall award the sale of the Bonds or reject al proposals. Section 4. For the purpose of enabling the purchasefls) of the Notes and the Bonds (th~ “Purchaser”) to comply with the requirements of Rule 15~2-12 of the Securities Exchange Commission (thi “Rule”), the appropriate officers of the Issuer are hereby authorized: (a) to approve the form of sail Preliminary Official Statement, and to execute the “Certificate Deeming Preliminary Official Statemen Final” in substantially the form attached hereto as Exliibil A, as approval of the Preliminary Oflicia Statemenf such official’s signature thereon being conclusive evidence of such official’s and the Issuer’, approval thereof. @) covenant to provide continuous secondary market disclosure by annually transmittinj certain financial information and operating data and other information necessary to comply with the Rule ti certain national repositories and the Mtmicipal Securities Rulemaking Board, as applicable; and (c) take sucl other actions or execute such other documents bs such officers in their reasonable judgment deem necessar] to enable the Purchaser to comply with the requirement of the Rule. Section 5. The Issuer agrees to provide to the Purchaser within seven business days of the date o the sale of Notes and the Bonds or withiin sufficient time to accompany any confumation that request payment from any customer of the Purchaser, whichever is earlier, sufficient copies of the final Officia Statement to enable the Purchaser to comply with the requirements of Rule 15c2-12(3) and (4) of thc Securities and Exchange Commission and with the requirements’ of Rule G-32 of the Municipal Securitie: Rulemaking Board. Section 6. The Financial Advisor is hereby authorized to submit a bid or,prticipate in a syndicati submitting a bid for the purchase of the Notes anq/or the Bonds. Section 7. The Mayor, Clerk and the other officers and representatives of the Issuer, the Financia Advisor and Bond Counsel are hereby authorized and directed to take such other action as may be necessaq to carry out the public sale of the Notes and Bonds. Section 8. This Resolution shall be in full force and effect from and after its adoption. BALANCE: OF ’IXIS PAGE INTENTIONALLY LEFT BLANK] MMLh ADOPTED by the goveming body onMq-22,2010. SEAL) 4TEST: Lieu Ann Elsey, Clef EXHIBIT A CERTIFICATE DEEMING PRELIMINARY OFFICIAL STATEMENT FINAL March 22,2010 To: [Purchaser Name] [Purchaser City, State] [Purchaser Name] [Purchaser City, State] Re: $1,600,000* City of Salina, Kansas, General Obligation Temporary Notes, Series 2010-1 and $5,500,000* City of Salina, Kansas, General Obligation Internal Improvement and Refunding Bonds, Series 2010-A Ladies and Gentlemen: The undersigneds are the duly acting Mayor and Clerk of the City of Salina, Kansas (the “Issuer”), and are authonzed to deliver this Certificate to the addressee (the “Purchaser”) on behalf of the Issuer. The Issuer has heretofore caused to be delivered to the Purchaser copies of the Preliminary Official Statement (the “Prelirmnary Official statement”), relating to the above-referenced notes and bonds (the “Secunties”). For the purpose of enabling the Purchaser to comply with the requirements of Rule 15c2-12(b)(l) of the Securities and Exchange Comssion (the “Rule”), the Issuer hereby deems the information regarding the Issuer contained in the Preliminary Official Statement to be ha1 as of its date, except for the omission of such information as is permitted by the Rule, such as offering prices, interest rates, selling conipensation, aggregate principal amount, principal per maturity, delivery dates, ratings, identity of the underwriters and other terms of the Securities depending on such matters. Very truly yours, CITY OF SALINA, KANSAS By: Title: Mayor By: Title: Clerk Preliminary; subject to change. PRELLMINARY OFFICIAL STATEMENT DATED MARCH 22,2010 In the opinion of Gilmore & Bell, P.C., 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 [(including any original issue discount properly allocable to an owner thereon] is excluded fiom 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 and is not taken into account in determining adjtLFted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The interest on the Bond [(including any original issue discount properly allocable to an owner thereof] is excluded fiom 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 but 4 taken into account in determining a@usred current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The interest on the Notes and Bonds is excludedfiom computation of Kansas adjusted gross income. The Notes and Bond are “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended See TAX MA lTERS herein. New Issues Book-Entry Only Bank Qualified Moody’s Ratings- “Applied For” Bidders Option Insurance- “Applied For” $2300,000 (subject to chan e) CITY OF SALINA, &SAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2010-1 $6,915,000 (subject to change) CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS v.ca f.2 2 23= .5 12 ; - A= zzg $E 253 2-j $ L -d =- d =I=* SERIES 2010-A f 2 2 Dated: May 1,2010 Due: As Shown Herein 35% -5 The- Series 2010-1 Notes (the “Notes”) will be issued as fully registered notes in the denomination of $5,000 or any 2 .? 5 integral multiple thereof. The Notes shall be initially registered in the name of Cede & Co., as nominee of The Depository Trust =cs c .e Company (“DTC”), New York, New York, to which payment of principal and interest will be made. Individual purchases of sz 2 3 2 5 Notes will be made in book-entry form. Purchasers will not receive certificates representing their interest in the Notes = 2. Z on the Notes will be payable by check, draft, or wire transfer kern the Treasurer of the State of Kansas (the ‘mote Paying d 5 < .E 2 3.2 0 % 2 E The Series 201 0-A Bonds (the “Bonds”) will be issued as fully registered bonds in the denomination of $5,000 or any 2 Z Z 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 g2.. :%!= .5 p 8 will not receive certificates representing their interest in the Bonds purchased. Principal on the Bonds will be payable on each 23 2 October 1 in the years shown herein. Interest on the Bonds will be payable semiannually on April 1 and October 1 of each year $2 until maturity, commencing on April I, 201 1. The principal of and interest on the Bonds will be payable by check, draft, or wire d 3 s ‘J ‘2 transfer from the Treasurer of the State of Kansas (the “Bond Paying Agent’). The Bonds are subject to redemption at the option c *G 5 8 ~. of the City as further described herein. -5* zo.i 81 = 2- 2 2- 2 ZZF interest on the Notes and Bonds as the same becomes due. See THE NOTES - “Security” and THE BONDS - “Security” herein. - m- z== - c .4 s _. t 2 9.- The Notes and Bonds are offered when, as and if issued by the City and received by the Underwriters subject to the =s; zs 5 approval of Bond Counsel. It is expected that the Notes and Bonds will be available for delivery through the facilities of DTC on - or about May 5,2010. g .: 2 2 Egg yr 3 *z .z CC .- c .- - 7zz - k-d Y 2 .% 53 .= ,o 2 purchased. Interest on the Bonds will be payable semiannually on February 1,201 1 and August 1, 20 1 1. Principal and interest 5; >, Agent”). The Notes are not subject to redemption prior to maturity. 3 - MATURITY SCHEDULES (see inside front cover) E+ E c-z .- - The full fkith, credit, and resources of the City are irrevocably pledged for the prompt payment of the principal and XI- BIDS FOR THE PURCHASE OF THE NOTES AND BONDS WILL BE RECEIVED PURSUANT TO THE NOTICE OF SALE: The Notes: On or before 1:OO pm., Central Daylight Time The Bonds: On or before 2:OO pm., Central Daylight Time On Monday, April 19,2010 G 9- - --% zm+ =s ‘2 2 THIS COVER PAGE CONTAINS INFORMATION FOR QUICK REFERENCE ONLY. IT IS OFFICLAL STATEhENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION A SUMMARY OF THE ISSUE INVESTORS MUST READ THE ENTIRE MATURITY SCHEDULES $2,500,000 (subject to change) GENERAL OBLIGATION TEMPORARY NOTES SERIES 2010-1 Base CUSLP“’ 794743 - Maturitv Amount Rate Yield 08-0 1-1 1 $2,500,000 The Notes are subject to redemption prior to maturity. $6,915,000 (subject to change) GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A Maturity 10-0 1-12 10-01-1 3 10-01 -14 10-01 -1 5 10-01 -1 6 10-01 -1 7 10-01 -1 8 10-01 - 19* 10-01-20* 10-01-2 1 * 10-0 1 -22* 10-01 -23 * 10-0 1 -24* 10-0 1-25* 10-01511 Base CUSIP“ ’ 794743 Amount Rate Yield - $785,000 880,000 895,000 695,000 285,000 290,000 300,000 3 10,000 320,000 330,000 340,000 350,000 365,000 380,000 390,000 *The Bonds maturing on or after October 1,2019, will be subject to redemption prior to maturity at the option of the City on October 1, 2018, and thereafter, in whole or in part on any 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. [The Term Bond is also subject to mandatory redemption.] See THE BONDS - “Redemption Provisions” herein. ri)CUsIp numbers have been assigned to this issue by Stan&rd & Poor’s CUSIP Senwe Bureau. a dwision of the McGraw-Hill Companies. Inc ~ and are included solely for the convenience of the Owners ojthe Notes and the Bonds. Neither the Issuer nor the Undenvriters shall be responsible for the selection or correcmess of the CUSIP numbers set forth above. NOTICE OF SALE CITY OF SALINA, KANSAS $2,500,000* GENERAL OBLIGATION TEMPORARY NOTES SERIES 2010-1 $6,915,000’ GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A (GENERAL OBLIGATION NOTES AND BONDS PAYABLE FROM UNLIMITED AD VALOREM TAXES) Bids. Written and electronic (as explained below) bids for the purchase of the above-referenced bonds (the “Bonds”) and notes (the ‘Wotes”), of the City of Salina, Kansas (the “Issuer”) herein described will be received on behalf of the Issuer by the undersigned City Clerk of the Issuer, in the case of written bids, at the address hereinafter set forth, and in the case of electronic bids, via PARITY@ on APRIL 19,2010 (the “Sale Date”) until the times set forth in the following table: SUBMITTAL HOUR Series 2010-1 Notes 1:00 p.m. Series 2010-A Bonds 2:OO p.m. SERIES [Central Daylipbt Time) All bids will be publicly evaluated at said time and place and the award of the Bonds and Notes will be acted upon by the governing body at its meeting to be held at 4:OO p.m. on the Sale Date. No oral or auction bids will be considered. NOTES Terms of the Notes. The Notes will consist of fully registered notes in the denomination of $5,000 or any integral multiple thereof (the “Authorized Denomination”). The Notes will be dated May 1, 201 0, and will become due on August 1,201 1. The Notes will bear interest from the date thereof at rates to be determined when the Notes are sold as hereinafter provided, which interest will be payable on February 1, 2011 and at maturity (the “Interest Payment Dates”). Adjustment of Issue Size. The Issuer reserves the right to increase or decrease the total principal amount of the Notes, depending on the purchase price and interest rates bid and the offering prices specified by the successful bidder. The principal amount of any maturity may be adjusted by the Issuer in order to properly size the Note issue based on the discount and interest rates bid on the Notes. The successful bidder may not withdraw its bid or change the interest rates bid as a result of any changes made to the principal amount of the Notes or principal of any maturity as described herein. If there is an increase or decrease in the final aggregate principal amount of the Notes or the schedule of principal payments as described above, the Issuer will notify the successful bidder by means of telephone or facsimile transmission, subsequently confirmed in writing, no later than 2:OO p.m., central daylight time, on the Sale Date. The Issuer will consult with the successful bidder regarding any increase or decrease in the total principal amount of the Notes in excess of 10% of the par value of the Notes. The actual purchase price for the Notes shall be calculated by applying the percentage of par value bid by the successful bidder - preliminary, subject to change. 1 against the final aggregate principal amount of the Notes, as adjusted, plus accrued interest from the date of the Notes to the date of delivery. Place of Payment. The principal of and interest on the Notes will be payable in lawful money of the United States of Anierica by check or draft of Treasurer of the State of Kansas, Topeka, Kansas (the “Paying Agent” and “Note Registrar”). The principal of each Note and the interest thereon will be payable at maturity to the owners thereof whose names are on.the registration books (the ‘Wote Register”) of the Note Registrar (the “Registered Owner”) upon presentation and surrender at the principal o6ce of the Paying Agent. Interest on each Note will be payable to the Registered Owner of such Note as of the fifteenth day (whether or not a business day) of the calendar month next preceding each Interest Payment Date (the ‘‘Record Date”): (a) mailed by the Paying Agent to the address of such Registered Owner as shown on the Note Register or at such other address as is furnished to the Paying Agent in writing by such Registered Owner; or (b) in the case of an interest payment to any Registered Owner of $500,000 or more in aggregate principal amount of Notes, by wire transfer to such Registered Owner upon written notice given to the Paying Agent by such Registered Owner, not less than 15 days prior to the Record Date for such interest, containing the wire transfer address to which such Registered Owner wishes to have such wire directed. Note Registration. The Notes will be registered pursuant to a plan of registration approved by the Issuer and the Attorney General of the State of Kansas. The Issuer will pay for the fees of the Note Registrar for registration and transfer of the Notes and will also pay for printing a reasonable supply of registered note blanks. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Note Registrar, will be the responsibility of the Registered Owners. Book-Entry-Only System. The Notes shall be initially registered in the name of Cede & Co., as the nominee of DTC and no beneficial owner will receive certificates representing their interests in the Notes. During the term of the Notes, so long as the book-entry-only system is continued, the Issuer will make payments of principal of, premium, if any, and interest on the Notes to DTC or its nominee as the Registered Owner of the Notes, DTC will make book-entry-only transfers among its participants and receive and transmit payment of principal of, premium, if any, and interest on the Notes to is participants who shall be responsible for transmitting payments to beneficial owners of the Notes in accordance with agreements between such Participants and the beneficial owners. The Issuer will not be responsible for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. In the event that (i) DTC determines not to continue to act as securities depository for the Notes, or (ii) the Issuer determines that continuation of the book-entry-only form of evidence and transfer of ownership of the Notes would adversely affect the interests of the beneficial owners of the Notes, the Issuer will discontinue the book-entry-only form of registration with DTC. If the Issuer fails to identify another qualified securities depository to replace DTC, the Issuer will cause to be authenticated and delivered to the beneficial owners replacement Notes in the form of fully registered certificates. Reference is made to the Preliminary Official Statement for further information regarding the book-entry-only system of registiation of the Notes and DTC. Redemption of Notes Prior to Maturity. GeneraL Whenever the Issuer is to select Notes for the purpose of redemption, it will, in the case of Notes in denominations greater than the minimum Authorized Denomination, if less than all of the Notes then outstanding are to be called for redemption, treat each minimum Authorized Denomination of face value of each such fully registered Note as though it were a separate Note in the minimum Authorized Denomination. . Optional Redemptwn. Notes will not be subject to redemption and payment prior to maturity. Authority, Purpose and Security for the Notes. The Notes are being issued pursuant to K.S.A. 10-101 et seq. (including particularly K.S.A. 10-123), K.S.A. 12-6a01 et seq., and a resolution adopted by the governing body of the Issuer (the ‘Wote Resolution”) for the purpose of paying a portion of providing financing for certain street., sewer, and water improvements within the boundaries of the City (the ‘‘Improvements~’). The Notes shall be 2 general obligations of the Issuer payable as to both principal and interest in part from special assessments levied upon the property benefited by the construction of said Improvements and in part from the proceeds of general obligation bonds of the Issuer, 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 Issuer. The full faith, credit and resources of the Issuer are irrevocably pledged for the prompt payment of the principal and interest on the Notes as the same become due. BONDS Terms of the Bonds. The Bonds will consist of fully registered bonds in the denomination of $5,000 or any integral multiple thereof (the “Authorized Denomination”). The Bonds will be dated May 1, 20 10, and will become due in principal installments on October 1 in the years as follows: Year 201 1 2012 201 3 2014 . 201 5 2016 201 7 201 8 - Principal Amount $785,000 880,000 895,000 695,000 .285,000 290,000 300,000 3 10,000 - Year 2019 2020 202 1 2022 2023 2024 2025 Principal Amount $320,000 330,000 340,000 350,000 365,000 380,000 390,000 The Bonds will bear interest from the Dated Date at rates to be determined when the Bonds are sold as hereinafter provided, which interest will be payable semiannually on April 1 and October 1 in each year, beginning on April 1, 201 1 (the “Interest Payment Dates”). Adjustment of Issue Size. The Issuer reserves the right to increase or decrease the total principal amount of the Bonds, depending on the purchase price and interest rates bid and the offering prices specified by the successful bidder. The principal amount of any maturity may be adjusted by the Issuer in order to properly size the Bond issue based on the discount and interest rates bid on the Bonds. The successful bidder may not withdraw its bid or change the interest rates bid as a result of any changes made to the principal amount of the Bonds or principal of any maturity as described herein. If there is an increase or decrease in the final aggregate principal amount of the Bonds or the schedule of principal payments as described above, the Issuer will noti@ the successful bidder by means of telephone or facsimile transmission, subsequently confirmed in writing, no later than 2:OO p.m., central daylight time, on the Sale Date. The Issuer will consult with the successful bidder regarding any increase or decrease in the total principal amount of the Bonds in excess of 10% of the par value of the Bonds. The actual purchase price for the Bonds shall be calculated by applying the percentage of par value bid by the successful bidder against the final aggregate principal amount of the Bonds, as adjusted, plus accrued interest from the date of the Bonds to the date of delivery. Place of Payment. The principal of and interest on the Bonds will be payable in lawful money of the United States of America by check or draft of the Treasurer of the State of Kansas, Topeka, Kansas (the “Paying Agent” and “Bond Registrar”). The principal of each Bond will be payable at maturity or earlier redemption to the owners thereof whose names are on the registration books (the “Bond Register”) of the Bond Registrar (the “Registered Owner”) upon presentation and surrender at the principal ofice of the Paying Agent. Interest on each Bond will be payable to the Registered Owner of such Bond as of the fifteenth day (whether or not a business day) of the calendar month next preceding each Interest Payment Date (the “Record Date”): (a) mailed by the Paying Agent to the address of such Registered Owner as shown on the Bond Register or at such other address as is furnished to the Paying Agent in writing by such Registered Owner; or (b) in the case of an interest payment to any Owner of $500,000 or more in aggregate principal amount of Bonds, by wire transfer to such Registered Owner upon written notice given to the Paying Agent by such Registered Owner, not less than 15 days prior to the Record 3 Date for such interest, containing the wire transfer address to which such Registered Owner wishes to have such wire directed. Bond Registration. The Bonds will be registered pursuant to a plan of registration approved by the Issuer and the Attorney General of the State of Kansas. The Issuer will pay for the fees of the Bond Registrar for registration and transfer of the Bonds and will also pay for printing a reasonable supply of registered bond blanks. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, will be the responsibility of the Owners. Book-Entry-Only System. The Bonds will initially be issued exclusively in “book entry” form and shall be initially registered in the name of Cede & Co., as the nominee of DTC and no beneficial owner will receive certificates representing their interests in the Bonds. During the term of the Bonds, so long as the book-entry-only system is continued, the Issuer will make payments of principal of, premium, if any, and interest on the Bonds to DTC or its nominee as the Registered Owner of the Bonds, DTC will make book-entry-only transfers among its participants and receive and transmit payment of principal of, premium, if any, and interest on the Bonds to its participants who shall be responsible for transmitting payments to beneficial owners of the Bonds in accordance with agreements between such participants and the beneficial owners. The Issuer will not be responsible for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. In the event that (i) DTC determines not to continue to act as securities depository for the Bonds, or (ii) the Issuer determines that continuation of the book-entry-only form of evidence and transfer of ownership of the Bonds would adversely affect the interests of the beneficial owners of the Bonds, the Issuer will discontinue the book-entry-only form of registration with DTC. If the Issuer fails to identify another qualified securities depository to replace DTC, the Issuer will cause to be authenticated and delivered to the beneficial owners replacement Bonds in the form of fully registered certificates. Reference is made to the Oficial Statement for further information regarding the book-entry-only system of registration of the Bonds and DTC. Redemption of Bonds Prior to Maturity. General Whenever the Issuer is to select Bonds for the purpose of redemption, it will, in the case of Bonds in denominations greater than the minimum Authorized Denomination, if less than all of the Bonds then outstanding are to be called for redemption, treat each minimum Authorized Denomination of face value of each such fully registered Bond as though it were a separate Bond in the minimum Authorized Denomination. Optional Redemption. At the option of the Issuer, Bonds or portions thereof maturing on October 1 , 201 9, and thereafter, will be subject to redemption and payment prior to maturity on October 1 , 201 8, and thereafter, as a whole or in part (selection of maturities and the amount of Bonds of each maturity to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the redemption price of 100% (expressed as a percentage of the principal amount), plus accrued interest to the date of redemption. Mandatory Redemption. A bidder may elect to have all or a portion of the Bonds scheduled to mature in 2019 to 2025 issued as term bonds (the “Term Bonds”) scheduled to mature in the latest of said consecutive years and subject to mandatory redemption requirements consistent with the schedule of serial maturities set forth above, subject to the following conditions: (a) not less than all Bonds of the same serial maturity shall be converted to Term Bonds with mandatory redemption requirements; and (b) a bidder shall make such an election by completing the applicable paragraph on the Official Bid Form. Notice and Eflect of Call for Redemption. Unless waived by any owner of Bonds to be redeemed, if the Issuer shall call any Bonds for redemption and payment prior to the maturity thereof, the Issuer shall give written notice of its intention to call and pay said Bonds to the Bond Registrar, the Bond Insurer, if any, and the original purchaser of the Bonds. In addition, the Issuer shall cause the Bond Registrar to give written notice of redemption to the registered owners of said Bonds. Each of said written notices shall be deposited in United States first class mail not less than 30 days prior to the date fixed for redemption. All notices of redemption shall state the date of redemption, the redemption price, the Bonds to be redeemed, the place of surrender of Bonds so called for 4 redemption and a statement of the effect of the redemption. The Issuer shall also give such additional notice as may be required by Kansas law or regulation of the Securities and Exchange Commission in effect as of the date of such notice. If any Bond be called for redemption and payment as aforesaid, all interest on such Bond shall cease fiom and after the date for which such call is made, provided funds are available for its payment at the price hereinbefore specified. Authority, Purpose and Security for the Bonds. The Bonds are being issued pursuant to K.S.A. 10-101 etseq., K.S.A. 12-6aO1 etseq., K.S.A. 12-1736 et seq., and.K.S.A. 12-2101 et seq., as amended, and an ordinance and resolution adopted by the governing body of the Issuer (jointly the “Bond Resolution”) for the purpose of providing financing for certain street, sewer, water and public building improvements within the boundaries of the City (the “Improvements”). The Bonds shall be general obligations of the Issuer payable as to both principal and interest in part fiom 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 the taxable tangible property, real and personal, within the territorial limits of the Issuer. The full faith, credit and resources of the Issuer are irrevocably pledged for the prompt payment of the principal and interest on the Bonds as the same become due. BIDS FOR BONDS AND NOTES Submission of Bids. Written bids must be made on forms which may be procured from the City Clerk or the Financial Advisor and shall be addressed to the undersigned, and marked “Proposal for General Obligation Internal Improvement and Rehnding Bonds, Series 201 0-A,” or “Proposal for General Obligation Temporary Notes, Series 2010-1.” Written bids submitted by facsimile should not be preceded by a cover sheet and should be sent only once to (785)309-5738. Confirmation of receipt of facsimile bids may be made by contacting the Financial Advisor at the number listed below. Electronic bids via PARITY@ must be submitted in accordance with its Rules of Participation, as well as the provisions of this Notice of Sale. If provisions of this Notice of Sale conflict with those of PARITY@, this Notice of Sale shall control. Bids must be received prior to the Submittal Hour on the Sale Date accompanied by the Deposit (as hereinafter defined), which may be submitted separately, provided such Deposit is received by the Issuer or the Financial Advisor prior to the Submittal Hour on the Sale Date. The Issuer shall not be responsible for any failure, misdirection or error in the means of transmission selected by any bidder. PARITY@. Information about the electronic bidding services of PARITY@ may be obtained from i-Deal LLC at 1359 Broadway, 2nd Floor, New York, New York 10018, Phone No. (212) 849-5000. Conditions of Bids. Proposals will be received for the Bonds and Notes bearing such rate or rates of interest as may be specified by the bidders, subject to the following conditions: For the Bonds: The same interest rate shall apply to all Bonds of the same maturity year. Each interest rate specified shall be a multiple of 1/8 or 1/20 of 1%. No interest rate may exceed a rate equal to the daily yield for I 0-year treasury bonds published by The Bond”Buyer in New York, New York, on the Monday next preceding the day of which the Bonds are sold, plus 3%. The difference between the highest rate specified and the lowest rate specified for the Bonds cannot exceed 2.5%. No bid of less than the principal amount of the Bonds and accrued interest thereon to the date of delivery will be considered and no supplemental interest payments will be considered. Each bid for the Bonds must spec@ the total interest cost to the City during the term of such Bonds on the basis of such bid, the premium or discount, if any, offered by the bidder, the net interest cost on the basis of such bid and an estimate of 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. For the Notes: The same interest rate shall apply to all Notes. Each interest rate specified shall be a multiple of MOO of 1%. No interest rate may exceed a rate equal to the daily yield for 10-year treasury bonds published by The Bond Buyer in New York, New York, on the Monday next preceding the day of which the Notes 5 are sold, plus 3%. No bid of less than 99.25% 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. Each bid for a series of the Notes must specify the total interest cost to the City during the term of the applicable series of Notes on the basis of such bid, the discount or 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 for a series of the Notes must also specify the average annual net interest rate to the City on the basis of such bid. Good Faith Deposit. Each bid shall be accompanied by a good faith deposit as follows: For the Notes: A good faith deposit will not be required for the Notes. For the Bonds: Each bid for the Bonds shall be accompanied by a 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 City. If a check is used for a Deposit, it must accompany each bid. If a Financial Surety Bond is used for a Deposit, 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 City’s financial advisor 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 or the Notes are awarded to a bidder utilizing a Financial Surety Bond, that purchaser (“Purchaseryy) 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:OO 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 and Notes, the Deposit will be applied to the purchase price of the Bonds and/or the Notes, as applicable, 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. Basis of Award. For the Bonds: The award of the Bonds will be made on the basis of the lowest true interest cost (“TIC”), which will be determined 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 the Dated Date, produces an amount equal to the price bid, including any adjustments for premium or discount, if any. Present value will be computed on the basis of semiannual compounding and a 360- day year of twelve 30-day months. Bidders are requested to supply an estimate of the TIC for the Bonds on the Official Bid Form, computed as specified herein on the basis of their respective bids, which shall be considered as informative only and not binding on either the bidder or the Issuer. If there is any discrepancy between the true interest cost specified and the bid price and interest rates specified, the specified bid price and interest rates shall govern and the true interest rates specified in the bid shall be adjusted accordingly. If two or more proper bids providing for identical amounts for the lowest TIC are received, the governing body of the Issuer will determine which bid, if any, will be accepted, and its determination is final. For the Notes: The award of each series of Notes will be made on the basis of the lowest net interest cost (expressed in dollars), which will be determined by subtracting the amount of the premium bid, if any, from or adding the amount of the discount bid, if any, to the total interest cost to the Issuer. If there is any discrepancy between the net interest cost specified and the interest rates specified, the specified net interest cost shall govern and the interest rates 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 of the Issuer will determine which bid, if any, will be accepted, and its determination is final. 6 The Issuer reserves the right to reject any andor all. bids and to waive any irregularities in a submitted bid. Any bid received after the Submittal Hour on the Sale Date will be returned to the bidder. Any disputes arising hereunder shall be governed by the laws of Kansas, and any party submitting a bid agrees to be subject to jurisdiction and venue of the federal and state courts within Kansas with regard to such dispute. Ratings. The Issuer has applied to Moody’s Investors for a rating on the Bonds and Notes herein offered for sale. Optional Municipal Bond Insurance. Applications have been submitted to Assured Guaranty Corp (“Ass&ed7’) and Financial Security Assurance Inc. (“FSA”) for municipal bond insurance relating to the Bonds. The Bonds may be purchased with or without this insurance at the option of the successful bidder. All expenses associated with the purchase of said insurance (including appropriate rating agency fees) will be the responsibility of the successful bidder. The amount of such premium and rating agency fees may be obtained from the above- named insurers. The insurance policy, if purchased, will insure the timely payment of the principal of and interest on the Bonds. Bidders desiring to purchase the optional municipal bond insurancemust so indicate on the Official’ Bid Form. CUSIP Numbers. CUSIP identification numbers will be assigned and printed on the Bonds and Notes, but neither the failure to print such number on any Bond or Note nor any error with respect thereto shall constitute cause for failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds and Notes in accordance with the terms of this Notice. All expenses in relation to the assignment and printing of CUSIP numbers on the Bonds and Notes will be paid by the Issuer. Delivery and Payment. The Issuer will pay for printing the Bonds and Notes and will deliver the Bonds and Notes properly prepared, executed and registered without cost on or about MAY 5, 2010, to DTC for the account of the successful bidder(s). The successful bidder(s) will be furnished with a certified transcript of the proceedings evidencing the authorizition and issuance of the Bonds and Notes and the usual closing documents, including a certificate that there is no litigation pending or threatened at the time of delivery of the Bonds and Note affecting their validity and a certificate regarding the completeness and accuracy of the Oficial Statement. Payment for the Bonds and Notes shall be made in federal reserve funds, immediately available for use by the Issuer. Certification as to Offering Prices. To provide the Issuer 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 Issuer prior to the delivery of the Bonds and Notes, a certificate regarding the “issue price” of the Notes or Bonds (as defined in Section 148 of the Code), reflecting the initial offering prices (excluding accrued interest and expressed as dollar prices) at which a substantial amount (ie., 10% or more) of the Bonds or Notes 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 Bonds or Notes 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 will not offer the Bonds or Notes for sale to the public. Preliminary Official Statement and Official Statement. The Issuer has prepared a Preliminary Official Statement dated March 22, 2010, “deemed final” by the Issuer except for the omission of certain information as provided in Securities and Exchange Commission Rule 1.5~2-12, copies of which may be obtained from the Clerk or from the Financial Advisor. Upon the sale of the Bonds and Notes, the Issuer will adopt the final Official Statement and will furnish the successful bidder, without cost, within seven business days of the acceptance of the successful bidder’s proposal, with a sufficient number of copies thereof in order for the successful bidder to comply with the requirements of Rule 15c2-12(b)(3) and (4) of the Securities and Exchange Commission and Rule G-32 of the Municipal Securities Rulemaking Board (jointly the “Rules”). Additional copies may be ordered by the ‘ 7 successful bidder at its expense. The Issuer’s acceptance of the successful bidder’s proposal for the purchase of the Bonds and Notes shall constitute a contract between the Issuer and the successful bidder for purposes of the Rules. Continuing Disclosure. The Securities and Exchange Commission (the “SEC”) has promulgated amendments to its Rule 1 5c2- 12 (the “Rule”) requiring continuous secondary market disclosure for certain issues. In the Bond Resolution and Note Resolution, the Issuer has covenanted 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 State repository, if any and the Municipal Securities Rulemaking Board, as applicable. This covenant is for the benefit of and is enforceable by any Registered Owner of the Bonds and Notes. For further information, reference is made to the caption “CONTINUING DISCLOSURE” in the Preliminary OfFicial Statement. Assessed Valuation and Indebtedness. The total assessed valuation of the taxable tangible property within the Issuer for the year 2009 is $447,800,878. The total general obligation indebtedness of the Issuer as of the date of delivery-of the Bonds and the Notes, including the Bonds and Notes being sold but excluding the bonds to be refunded from Bond proceeds, is $61,450,000. Legal Opinion. The Bonds and Notes will be sold subject to the approving legal opinion of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel, which opinion will be furnished and paid for by the Issuer, will be printed on the Bonds and Notes, if the Bonds and Notes are printed, and will be delivered to the successful bidder when the Bonds and Notes are delivered. Said opinion will also include the opinion of Bond Counsel relating to the exclusion of the interest on the Bonds and Notes from gross income for federal income tax purposes and from computation of Kansas adjusted gross income. Reference is made to the Preliminary Oficial Statement for further discussion of federal and Kansas income tax matters relating to the interest on the Bonds and Notes. Additional Information. Additional information regarding the Bonds and Notes may be obtained from the undersigned, or from the Financial Advisor, at the addresses set forth below: DATED: .March 22,2010. CITY OF SALINA, KANSAS By: Lieu Ann Elsey City Clerk Written and Facsimile Bid and Good Faith Deposit Delivery Address: 300 West Ash Salina, Kansas 67402 Attn: Rod Franz, Finance Director Phone No. (785)309-5735 Email: rfranz@salina.org Fax NO. (785)309-5738 Financial Advisor: George K. Baum & Co. 4801 Main Street, Suite 500 Kansas City, Missouri 641 12 Attn: David Arterbeny Phone No. (8 1 6)474- 1 1 00 Email: artebeny@gkbaum.com Fax NO. (816)283-5326 8 OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2010-1 TO: Lieu Ann Elsey, City Clerk City of Salina, Kansas April 19, 2010 For $2,500,000 principal amount of General Obligation Temporary Notes, Series 20 10-1, of the City of Salina, Kansas, to be dated May I, 2010, as described in your Notice of Sale dated March 22,2010, said Notes to bear interest as follows: Maturity Principal Interest Aueust 1 Amount - Rate 201 1 $2,500,000' Yo the undersigned will pay the par value of the Notes plus accrued interest to the date of delivery, less a total discount plus a total premium in the amount set forth below. Total interest cost to maturity at the rates specified ............................................................................................ $ Discount (if any) not to exceed 0.75% ................................................................................................................... $ Net interest cost ................................................................................................................................................... $ Premium (if any) ................................................................................................................................................ Average annual net interest rate .............................................................................................................................................. % This proposal is subject to all terms and conditions contained in said Notice of Sale, and if the undersigned is the successful bidder, the undersigned will comply with all of the provisions contained in said Notice. The acceptance of this proposal by the Issuer shall constitute a contract between the Issuer and the successful bidder for purposes of complying with Rule 15~2-12 of the Securities and Exchange Commission. Submitted by: [LIST ACCOUNT MEMBERS ON @VERSE] By: Telephone No.( ACCEPTANCE Pursuant to action duly taken by the Governing Body of the City of Salina, Kansas, the above proposal is hereby accepted on April 19,2010. Attest: Clerk Mayor NOTE: No additions or alterations in the above proposal form shall be made, and any erasures may cause rejection of any bid. Sealed bids may be filed with the City Clerk, Lieu Ann Elsey, 300 West Ash, Salina, Kansas 67402,'facsimile bids may be filed with the City Clerk, Lieu Ann Elsey, Fax No. (785) 309-5738, electronic bids may be submitted via PARITY@, at or prior to 1:OO p.m., Central Daylight Time, an April 19,2010. Any bid received after such time will be returned to the bidder. Preliminary, subject to change. OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 201 0-A TO: Lieu Ann Elsey, City Clerk City of Salina, Kansas April 19,2010 For $6,915,000' principal amount of General Obligation Internal Improvement and Refunding Bonds, Series 2010-A, of the City of Salina, Kansas, to be dated May 1,2010, as descnbed in your Nonce of Sale dated March 22.2010, said Bonds to bear interest as follows Stated Maturity October 1 2011 2012 2013 2014 2015 2016 2017 2018 Principal Amount $785,000 880,000 895,000 695,000 285,000 290,000 300,000 3 10,000 Annual Rate of Interest YO YO YO YO YO YO YO YO Stated Maturity October 1 2019 2020 202 1 2022 2023 2024 2025 Principal Amount $320,000 330,000 340,000 350,000 365,000 380,000 390,000 Annual Rate of Interest YO YO YO % % % % the undersigned will pay the par value of the Bonds plus accrued interest to the date of delivery, less a total discount, plus a total premium in the amount set forth below Total tnterest cost to matunty at the rates specified ........................................................................... Net interest cost ..................................................................................................................... $ ........................................................................................... Premium (if any) ........... ($A Average annual net interest rate ..................................................................................................... % True Interest Cost ........................................................................................................... % 0 The Bidder elects to have the following Term Bonds: Maturity Date YCarS Amount October 1, - to $ October 1, - to $ subject to mandatory redemption requirements in the amounts and at the times shown above. This proposal is subject to all terms and conditions contained in said Notice of Sale, and if the undersigned is the successful bidder, the undersigned will comply with all of the provisions contained in said Notice. A cashier's or certified check or a qualified financial surety bond in the amount of 2% of the pnncipal amount of the Bonds, payable to the order of the Issuer, accompanies this proposal as an evidence of good faith The acceptance of this proposal by the Issuer shall constitute a contract between the Issuer and the successful bidder for purposes of complying with Rule 15~2-12 of the Secunties and Exchange Commission Submitted by: [LIST ACCOUNT MEMBERS ON REVERSE] By: Telephone No ACCEFTANCE Pursuant to acbon duly taken by the Governing Body of the City of Salina, Kansas, the above proposal is hereby accepted on April 19,2010 Attest. Clerk Mayor NOTE. No additions or alterations in the above proposal form shall be made, and any emures may cause rejection of any bid. Sealed bids may be filed with the City Clerk, Lieu Ann Elsey, City Hall, 300 Wesl Ash, Salina, Kansas 67402, facsimile bids may be filed with the City Clerk, Fax No (785)309-5738, electronic bids may be submitted via PARIP, at or pnor to 2.00 pm., Central Daylight Time, on April 19,2010. Any bid received after such time wtll be returned to the bidder. ' Preluninary, subject to change. . CITY OF SALINA, KANSAS 300 West Ash CityKounty Building - Room 206 P. 0. Box 736 Salina, Kansas 67402-0736 CITY COMMISSION M. Luci Larson, Mayor Aaron Peck, Vice Mayor Samantha Angell, Commissioner Norman Jennings, Commissioner Tom Arpke, Commissioner CITY STAFF Jason Gage, City Manager Mike Schrage, Deputy City Manager Rodney Franz, Finance Director Lieu Ann Elsey, 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 unlawhl to make such offer or solicitation . All financial and other information presented herein. except for information expressly attributed to other sources. has been provided by the City fiom 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 given . TABLE OF CONTENTS Page INTRODUCTORY STATEMENT .................... 1 General ............................................................. Definitions ........................................................ Additional Information ..................................... THE NOTES ...................................................... Description ....................................................... Redemption Provisions ..................................... Authority ........................................................... Security ............................................................. Registration, Transfer and Exchange of Notes . Mutilated, Lost, Stolen or Destroyed Notes ...... Nonpresentment ofNotes ................................. Designation of Note Paying Agent and Bond Method and Place of Payment of the Notes ...... Payments Due on Saturdays, Sundays and Holidays .......................................................... Book-Entry Notes; Securities Depository ......... THE BONDS ...................................................... Registrar ......................................................... Description ....................................................... Redemption Provisions ..................................... Authority ........................................................... Security ............................................................. Registration, Transfer and Exchange of Bonds Designation of Bond Paying Agent and Bond Payments Due on Saturdays, Sundays and Book-Entry Bonds; Securities Deposit0 ry ........ THE DEPOSITORY TRUST COMPANY ........ BIDDERS OPTION MUNICIPAL BOND INSURANCE .................................................... THE FINANCING PLAN .................................. The Projects ...................................................... The Refimding Plan .......................................... SOURCES AND USES OF FUNDS .................. FINANCIAL OVERVIEW ................................ THE CITY OF SALINA, KANSAS ................... Location and Size ............................................. Government ...................................................... Kansas Public Employees Retirement System (KPERS) ............................................ Kansas Police and Fire Retirement ................... Population ......................................................... Police and Fire Protection ................................. Economic Characteristics ................................. Income .............................................................. Registrar ......................................................... Method and Place of Payment of the Bonds ..... Holidays .......................................................... 1 1 1 2 2 2 2 2 2 3 3 3 3 4 4 5 5 5 7 7 7 7 8 8 8 9 10 11 11 12 12 13 14 14 14 14 14 15 15 15 16 Page Building Permits Issued .................................... 16 The Salina Airport Authority ............................ 16 Major Employers .............................................. Unemployment Rate ......................................... Education .......................................................... Kansas State University at Salina ..................... Kansas Wesleyan University ............................ Transportation .................................................. Utilities and Inhstructure ................................ Health Facilities ................................................ Financial Institutions ........................................ Other Information ............................................. DEBT SUMMARY ............................................ Current Indebtedness ........................................ Overlapping Debt ............................................. Annual Debt Payments ..................................... 'Historical Debt Information ............................. Future Indebtedness .......................................... Legal Debt Limits ............................................. Debt Payment Record ....................................... FINANCIAL INFORMATION .......................... Financial Statement Summary .......................... Assessed Valuation .......................................... Estimated Actual Valuation .............................. Special Assessments ......................................... Largest Taxpayers ............................................ Tax Collections ................................................ Sales Tax .......................................................... Tax Levies ......................................................... Budgeting Procedures ....................................... Appraisal and Assessment Procedures ............. Property Assessment Rates .............................. Equalization Ratios .......................................... LEGAL MATTERS ........................................... TAX MATTERS ................................................ General ............................................................. Tax Matters Applicable to all Securities .......... Opinion of Bond Counsel ................................. RATING .............................................................. FINANCIAL ADVISOR .................................... UNDERWRITING ............................................. ABSENCE OF MATERIAL LITIGATION ...... CONTINUING DISCLOSURE ......................... CERTIFICATION OF THIS OFFICIAL STATEMENT ................................................... 17 17 17 17 18 18 18 18 18 19 19 19 20 21 21 21 22 22 23 23 24 24 24 25 25 26 27 27 27 28 29 29 29 29 29 30 31 31 31 31 32 32 APPENDIX A . Financial Statements APPENDIX B . Continuing Disclosure Instructions $2,500,000 (subject to change) CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2010-1 $6,915,000 (subject to change) CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-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 $2,500,000 (subject to change) General Obligation Temporary Notes, Series 20 10-1 (the “Notes”) and its $6,9 15,000 (subject to change) General Obligation Internal Improvement and Refunding Bonds, Series 2010-A (the “Bonds”), both dated May 1,2010. The Notes and Bonds are being issued to provide funds to permanently finance certain fire station, street, sewer, water, and public building improvements within the City and to refund an outstanding bond issue of the City. See mE FINANCING PLAN herein. 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 becomes due. See THE NOTES - “Security” and THE BONDS - “Security” herein. APPENDIX A, containing selected financial data relating to the City, is an Statement and should be read in its entirety. integral part of this Official the City’s financial advisor, Such information has been All financial and other information presented herein has been compiled by George K. Barn & Company, Kansas City, Missouri (the “Financial Advisor”). 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 MATTERS, CONTINUING DISCLOSURE, and APPENDIX B and, accordingly, expresses no opinion as to the accuracy or sufficiency of any other information contained herein. Definitions Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the resolution of the governing body of the City authorizing the Notes (the “Note Resolution”) and in the resolution and ordinance of the governing body of the City authorizing the Bonds (the “Bond Ordinance”), as applicable. Copies of the Note Resolution and the Bond Ordinance are available upon request to the City, the Financial Advisor or Bond Counsel. Additional Information Additional information regarding the City or the Bonds may be obtained fiom George K. Baum & Company, 480 1 Main Street, Kansas City, Missouri 64 1 12, telephone 8 16-474-1 100. THE NOTES Description The Notes shall consist of fully registered book-entq-only Notes in the denomination of $5,000 or any integral multiples thereof (the “Authorized Denomination”) and shall be numbered in such manner as the Note Registrar shall determine. All of the Notes shall be dated May 1,2010, shall become due in the amounts on the Stated Maturities, with option of prior redemption and payment prior to their Stated Maturities, and shall bear interest at the rates per annum set forth on the inside cover page of this Official Statement. The Notes shall bear interest (computed on the basis of twelve 3Oday months) fiom the later of de Dated Date or the most recent Interest Payment Date to which interest has been paid on the Interest Payment Dates in the manner hereinafter set forth. Redemption Provisions The Notes are not subject to redemption and payment prior to maturity. Authoritv The Notes are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq. (including particularly K.S.A. 10-123), and K.S.A. 12- 6a01 et seq., all as amended, and the resolution adopted by the City on April , 2010, authorizing the issuance of the Notes (the “Note Resolution”). Securitv The Notes shall be general obligations of the City, payable as to both principal and interest fiom special assessments levied upon the property benefited by the construction of certain improvements, or from the proceeds of the City’s 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 the taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Notes as the same become due. Registration, Transfer and Exchange of Notes As long as any of the Notes remain Outstanding, each Note when issued shall be registered in the name of the Owner thereof on the Note Register. Notes may be transferred and exchanged only on the Note Register as hereinafter provided. Upon surrender of any Note at the principal office of the Note Registrar, the Note Regisbar shall transfer or exchange such Note for a new Note or Notes in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Note that was presented for transfer or exchange. Notes presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Note Regisbar, duly executed by the Owner thereof or by the Owner’s duly authorized agent. In all cases in which the privilege of transferring or exchanging Notes is exercised, the Note Registrar shall authenticate and deliver Notes in accordance with the provisions of the Note Resolution. The Issuer shall pay the fees and expenses of the Note Registrar for the regismtion, transfer and exchange of Notes. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Note Registrar, are the responsibility of the Owners of the Notes. In the event any Owner fails to provide a correct taxpayer identification number to the Note Paying Agent, the Note Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The Issuer and the Note Registrar shall not be required (a) to register the transfer or exchange of any Note that has been called for redemption after notice of such redemption has been mailed by the Note Paying Agent and during the period of 15 days next preceding the date of mailing of such notice of redemption; or (b) to register the transfer or exchange of any Note during a period beginning at the opening of business on the day after receiving written notice from the Issuer of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest. Mutilated, Lost. Stolen or Destroyed Notes If (a) any mutilated Note is surrendered to the Note Registrar or the Note Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (b) there is delivered to the Issuer and the Note Registrar such security or indemnity as may be required by each of them, then, in the absence of notice to the Issuer or the Note Registrar that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and, upon the Issuer’s request, the Note Registm shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of the same Stated Maturity and of like tenor and principal amount. If any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Issuer, in its discretion, may pay such Note instead of issuing a new Note. Upon the issuance of any new Note, the Issuer may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Note Paying Agent) connected therewith. NonDresentment of Notes If any Note is not presented for payment when the principal thereof becomes due at Maturity, if funds sufficient to pay such Note have been made available to the Note Paying Agent all liability of the Issuer to the Owner thereof for the payment of such Note shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Note Paying Agent to hold such funds, without liability for interest thereon, for the benefit of the Owner of such Note, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part under this Note Resolution or on, or with respect to, said Note. If any Note is not . presented for payment within four (4) years following the date when such Note becomes due at Maturity, the Note Paying Agent shall repay to the Issuer the fi~~~ds theretofore held by it for payment of such Note, and such Note shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the Issuer, and the Owner thereof shall be entitled to look only to the Issuer for payment, and then only to the extent of the amount so repaid to it by the Note Paying Agent, and the Issuer shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Designation of Note Paving Agent and Note Registrar The Issuer will at all times maintain a paying agent and note registrar meeting the qualifications set forth in the Note Resolution. The Issuer reserves the right to appoint a successor paying agent or note registrar. No resignation or removal of the paying agent or note registrar shall become effective until a successor has been appointed and has accepted the duties of paying agent or note registrar. Every paying agent or note registrar appointed by the Issuer shall at all times meet the requirements of Kansas law. The Treasurer of the State of Kansas, Topeka, Kansas (the “Note Registrar” and “Note Paying Agent”) has been designated by the Issuer as paying agent for the payment of principal of and interest on the Notes and note registrar with respect to the registration, transfer and exchange of Notes. Method and Place of Pavment of the Notes The principal of, or Redemption Price, and interest on the Notes shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Note and the interest thereon shall be paid at Maturity to the Person in whose name such Note is registered on the Note Register at the Maturity thereof, upon presentation and surrender of such Note at the principal ofice of the Note Paying Agent. 3 The interest payable on each Note on any Interest Payment Date shall be paid to the Owner of such Note as shown on the Note Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Note Paying Agent to the address of such Owner shown on the Note Register or at such other address as is furnished to the Note Paying Agent in writing by such Owner; or (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Notes, by electronic transfer to such Owner upon written notice given to the Note Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Owner wishes to have such transfer directed. Notwithstanding the foregoing, any Defaulted Ivterest with respect to any Note shall cease to be payable to the Owner of such Note on the relevant Record Date and shall be payable to the Owner in whose name such Note is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed as hereinafter specified. The Issuer shall notify the Note Paying Agent m writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Note Paying Agent) and shall deposit with the Note Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respec! of such Defaulted Interest. Following receipt of such funds the Note Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Note Paying Agent shall notify the Issuer of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage prepaid, to each Owner of a Note entitled to such notice not less than 10 days prior to such Special Record Date. SO LONG AS CEDE & CO. REMAINS THE REGISTERED OWNER OF THE NOTES, THE NOTE PAYING AGENT SHALL TRANSMIT PAYMENTS TO THE SECURITIES DEPOSITORY, WHICH SHALL REMIT SUCH PAYMENTS IN ACCORDANCE WITH ITS NORMAL PROCEDURES. See “THE NOTES - Book-Entty Notes; Securities Depository.” Pavments Due on Saturdays, Sundavs and Holidays In any case where a Note Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Note Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Note Payment Date, and no interest shall accrue for the period after such Note Payment Date. Book-Entrv Notes: Securities Depositow The Notes shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Notes, except in the event the Note Registrar issues Replacement Notes. It is anticipated that during the term of the Notes, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Notes to the Participants until and unless the Note Registrar authenticates and delivers Replacement Notes to the Beneficial Owners as described in the following paragraphs. The Issuer may decide, subject to the requirements of the Operational Arrangements of DTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the Issuer determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes; or (b) if the Note Registrar receives written notice from Participants having interest in not less than 50% of the Notes Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of 4 any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes, then the Note Registrar shall noti@ the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Note Registrar shall register in the name of and authenticate and deliver Replacement Notes to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (a)(2) of this paragraph, the Issuer, with the consent of the Note Registrar, may select a successor securities depository in accordance with the following paragraph to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Note. Upon the issuance of Replacement Notes, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Note Registrar, to the extent applicable with respect to such Replacement Notes. If the Securities Depository resigns and the Issuer, the Note Registrar or Owners are unable to locate a qualified successor of the Securities Depository, then the Note Registrar shall authenticate and cause delivery of Replacement Notes to Owners, as provided herein. The Note Registrar may rely on information from the Securities Depository and its Participants as to the names of the Beneficial Owners of the Notes. The cost of printing, registration, authentication, and delivery of Replacement Notes shall be paid for by the Issuer. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the Issuer may appoint a successor Securities Depository provided the Note Registrar receives written evidence satisfactory to the Note Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Note Registrar upon its receipt of a Note or Notes for cancellation shall cause the delivery of the Notes to the successor Securities Depository in appropriate denominations and form as provided in the Note Resolution. THE BONDS Descrbtion The Bonds shall consist of hlly registered book-entry-only bonds in the denomination of $5,000 or any integral multiples thereof (the “Authorized Denomination”) and shall be numbered in such manner as the Bond Registrar shall determine. All of the Bonds will be dated May 1, 2010, shall become due in the amounts, on the Stated Maturities, and subject to redemption and payment prior to their Stated Maturities, and shall bear interest at the rates per annum set forth on the inside cover page of this Official Statement. The Bonds shall bear interest (computed on the basis of twelve 30-day months) fiom the later of the Dated Date or the most recent Interest Payment Date to which interest has been paid on the Interest Payment Dates in the manner hereinafter set forth. Redemution Provisions ODtional Redemption. At the option of the Issuer, Bonds or portions thereof maturing on October 1 , 20 19 and thereafter may be called for redemption and payment prior to their Stated Maturity on October 1, 2018, and thereafter as a whole or in part (selection of maturities and the amount of Bonds of each maturity to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. [ Mandatorv Redemption. The Bonds maturing (the “Term Bonds”) shall be subject to mandatory redemption and payment prior to their stated maturity pursuant to the mandatory redemption requirements hereinafter set forth, at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date. The City shall redeem on October 1 in each year the following principal amounts of such Term Bonds: 5 Principal Amount Year - *Final maturity of Term Bond] Selection of Bonds to be Redeemed. Bonds shall be redeemed only in an Authorized Denomination. When less than all of the Bonds are to be redeemed and paid prior to their Stated Maturity, such Bonds shall be redeemed in such manner as the Issuer shall determine, Bonds of less than a fill Stated Maturity shall be selected by the Bond Registrar in minimum Authorized Denomination in such equitable manner as the Bond Registrar may determine. In the case of a partial redemption of Bonds by lot when Bonds of denominations greater than a minimum Authorized Denomination are then Outstanding, then for all purposes in connection with such redemption each minimum Authorized Denomination of face value shall be treated as though it were a separate Bond of a minimum Authorized Denomination. If it is determined that one or more, but not all, of the minimum Authorized Denomination value represented by any Bond is selected for redemption, then upon notice of intention to redeem such minimum Authorized Denomination, the Owner or the Owner’s duly authorized agent shall forthwith present and surrender such Bond to the Bond Registrar: (1) for payment of the Redemption Price and interest to the Redemption Date of such minimum Authorized Denomination value called for redemption, and (2) for exchange, without charge to the Owner thereof, for a new Bond or Bonds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Owner of any such Bond fails to present such Bond to the Bond Paying Agent for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of the minimum Authorized Denomination value called for redemption (and to that extent only). Notice and Effect of Call for Redemption. Unless waived by any Owner of Bonds to be redeemed, if the issuer shall call any Bonds for redemption and payment prior to the Stated Maturity thereof, the Issuer shall give written notice of its intention to call and pay said Bonds to the State Treasurer and the Purchaser. In addition, the Issuer shall cause the Bond Registrar to give written notice of redemption to the Owners of said Bonds. Each of said written notices shall be deposited in the United States first class mail not less than 30 days prior to the Redemption Date. All official notices of redemption shall be dated and shall contain the following information: (a) the Redemption Date; (b) the Redemption Price; (c) if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption of any Bonds, the respective principal amounts) of the Bonds to be redeemed; (d) a statement th-at on the Redemption Date the Redemption Price will become due and payable upon each such Bond or portion thereof called for redemption and that interest thereon shall cease to accrue &om and after the Redemption Date; and (e) the place where such Bonds are to be surrendered for payment of the Redemption Price, which shall be the principal office of the Bond Paying Agent. The failure of any Owner to receive notice given as heretofore provided or an immaterial defect therein shall not invalidate any redemption. Prior to any Redemption Date, the Issuer shall deposit with the Bond Paying Agent an amount of money sufficient to pay the Redemption Price of all the Bonds or portions of Bonds that are to be redeemed on such Redemption Date. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall become due and payable on the Redemption Date, at the Redemption Price therein specified, and fiom and after the Redemption Date (unless the Issuer defaults in the payment of the Redemption Price) such Bonds or portion of Bonds shall cease to bear interest. For so long as the Securities Depository is effecting book-entry transfers of the Bonds, the Bond Registrar shall provide the notices specified to the Securities Depository. It is expected that the Securities Depository shall, in turn, notify its Participants and that the Participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of the Securities Depository or a Participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice ffom the Bond Registrar, the Securities Depository, a Participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. In addition to the foregoing notice, the Issuer shall provide such notices of redemption as are required by the Disclosure Instructions. The Bond Paying Agent is also directed to comply with any mandatory or voluntary standards 6 then in effect for processing redemptions of municipal securities established by the State or the Securities and Exchange Commission. Failure to comply with such standards shall not af€ect or invalidate the redemption of any Bond. Authority The Bonds are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq., K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., and K.S.A. 12-2101 et seq., all as amended, and an ordinance and resolution adopted by the City on April 2010, authorizing the issuance of the Bonds (jointly referred to herein as the “Bond Ordinance”). Securitv The Bonds shall be general obligations of the City, payable as to both principal and interest in part 6om special assessments levied upon the property benefited by the construction of certain public 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 principal and interest on the Bonds is payable 6om ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real or personal, within the temtorial limits of the City. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Bonds as the same become due. 0 Registration, Transfer and Exchange of Bonds As long as any of the Bonds remain Outstanding, each Bond when issued shall be registered in the name of the Owner thereof on the Bond Register. Bonds may be transferred and exchanged only on the Bond Register as hereinafter provided. Upon surrender of any Bond at the principal office of the Bond Registrar, the Bond Registrar shall .transfer or exchange such Bond for a new Bond or Bonds in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Bond that was presented for transfer or exchange. Bonds presented for transfer or exchange shall be accompanied by a Written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Bond Registrar, duly executed by the Owner thereof or by the Owner’s duly authorized agent. In all cases in which the privilege of transferring or exchanging Bonds is exercised, the Bond Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Bond Resolution. The Issuer shall pay the fees and expenses of the Bond Registrar for the registration, transfer and exchange of Bonds. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners of the Bonds. In the event any Owner fails to provide a correct taxpayer identification number to the Bond Paying Agent, the Bond Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The Issuer and the Bond Registrar shall not be required (a) to register the transfer or exchange of any Bond that has been called for redemption after notice of such redemption has been mailed by the Bond Paying Agent and during the period of 15 days next preceding the date of mailing of such notice of redemption; or @) to register the transfer or exchange of any Bond during a period beginning at the opening of business on the day afier receiving written notice 6om the Issuer of its intent to pay Defaulted Interest and ending at the close of business on the date ked for the payment of Defaulted Interest. . Designation of Bond Pavinp Agent and Bond Rwistrar The Issuer will at all times maintain a paying agent and bond registrar meeting the qualifications set forth in the Bond Resolution. The Issuer reserves the right to appoint a successor paying agent or bond registrar. No resignation or removal of the paying agent or bond registrar shall become effective until a successor has been appointed and has accepted the duties of paying agent or bond registrar. Every paying agent or bond registrar appointed by the Issuer shall at all times meet the requirements of Kansas law. 7 The Treasurer of the State of Kansas, Topeka, Kansas (the “Bond Registrar” and “Bond Paying Agent”) has been designated by the Issuer as paying agent for the payment of principal of and interest on the Bonds and bond registrar with respect to the registration, transfer and exchange of Bonds. Method and Place of Payment of the Bonds The principal of, or Redemption Price, and interest on the Bonds shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Bond shall be paid at Maturity to the Person in whose name such Bond is registered on the Bond Register at the Maturity thereof, upon presentation and surrender of such Bond at the principal ofice of the Bond Paying Agent. The interest payable on each Bond on any Interest Payment Date shall be paid to the Owner of such Bond as shown on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Bond Paying Agent to the address of such Owner shown on the Bond Register or at such other address as is furnished to the Bond Paying Agent in writing by such Owner; or @) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Owner upon written notice given to the Bond Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Owner wishes to have such transfer directed. Notwithstanding the foregoing, any Defaulted Interest with respect to any Bond shall cease to be payable to the Owner of such Bond on the relevant Record Date and shall be payable to the Owner in whose name such Bond is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed as hereinafter specified. The Issuer shall notie the Bond Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment (which date shall be at least 30 days afier receipt of such notice by the Bond Paying Agent) and shall deposit with the Bond Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Lnterest. Following receipt of such knds the Bond Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Bond Paying Agent shall notify the Issuer of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage prepaid, to each Owner of a Bond entitled to such notice not less than 10 days prior to such Special Record Date. SO LONG AS CEDE & CO., REMAINS THE REGISTERED OWNER OF THE BONDS, THE BOND PAYING AGENT SHALL TRANSMIT PAYMENTS TO THE SECURITIES DEPOSITORY, WHICH SHALL REMIT SUCH PAYMENTS IN ACCORDANCE WITH ITS NORMAL PROCEDURES. Pavments Due on Saturdays, Sundavs and Holidavs In any case where a Bond Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Bond Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Bond Payment Date, and no interest shall accrue for the period after such Bond Payment Date. Book-Entrv Bonds: Securities DeDositoly The Bonds shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds. It is anticipated that during the term of the Bonds, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Bond Registrar authenticates and delivers Replacement Bonds to the Beneficial Owners as described in the following paragraphs. 8 The City may decide, subject to the requirements of the Operational hgements of DTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the City determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds; or (b) if the Bond Registrar receives written notice 6-om Participants having interest in not less than 50% of the Bonds Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds, then the Bond Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Bond Registrar shall register in the name of and authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (aX2) of this section, the City, with the consent of the Bond Regisbar, may select a successor securities depository as hereinafter provided to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Bond. Upon the issuance of Replacement Bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Bond Registrar, to the extent applicable with respect to such Replacement Bonds. If the Securities Depository resigns and the City, the Bond Registrar or Owners are unable to locate a qualified successor of the Securities Depository, then the Bond Registrar shall authenticate and cause delivery of Replacement Bonds to Owners, as provided herein. The Bond Registrar may rely qn information fiom the Securities Depository and its Participants as to the names of the Beneficial Owners of the Bonds. The cost of printing, registration, authentication, and delivery of Replacement Bonds shall be paid for by the City. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the City may appoint a successor Securities Depository provided the Bond Registrar receives written evidence satisfactory to the Bond Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Bond Registrar upon its receipt of a Bond or Bonds for cancellation shall cause the delivery of the Bonds to the successor Securities Depository in appropriate denominations and form as provided in the Bond Resolution. THE DEPOSITORY TRUST COMPANY The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Notes and Bonds. The Notes and Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fi~lly registered Note or Bond certificate will be issued for each maturity of such series of the Notes or Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law; a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code; and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, 9 corporate and municipal debt issues, and money market instruments from over 85 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. . Purchases of Notes or Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Notes or Bonds on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Notes or Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Notes or Bonds, except in the event that use of the book-entry system for the Notes or Bonds is discontinued. To facilitate subsequent transfers, all Notes or Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Notes or Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes or Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Notes or Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Notes or Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the lssuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.3 consenting or voting rights to those Direct Participants to whose accounts Notes or Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Notes or Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Issuer, the Note Paying Agent, or the Bond Paying Agent, on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the Note Paying Agent, the Bond Paying Agent, or the Issuer, subject to any statutow or regulatory requirements as may be in effect fiom time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer, the Note Paying Agent or the Bond Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Notes or Bonds purchased or tendered, through its Participant, to the Note Paying Agent and the Bond Paying Agent, and shall effect delivery of such Notes or Bonds by causing the Direct Participant to transfer the Participant’s interest in the Notes or Bonds, on DTC’s records, to the Note Paying Agent and the Bond Paying Agent. The requirement for physical delivery of the Notes or Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Notes or Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Notes or Bonds to the Note Paying Agent’s or Bond Paying Agent’s DTC account. DTC may discontinue providing its services as depository with respect to the Notes or Bonds at any time by giving reasonable notice to the Issuer, the Note Paying Agent or the Bond Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. The Issuer may decide, subject to the requirements of the Operational Arrangements of DTC, to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Note or Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC’s book-entry system has been obtained fom sources that the Issuer, Bond Counsel, and the Financial Advisor believe to be reliable, but the Issuer, Bond Counsel, and the Financial Advisor 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 Assured Guaranty Municipal Corp. for a bidder’s option municipal bond insurance policy on the Bonds. Information concerning the availability of such a policy and the associated cost thereof will be available only from a representative of the company 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, including bond rating fees. THE FINANCING PLAN The Proiects Proceeds fiom the sale of the Notes will be used to provide financing for certain street, sewer, and water, improvements within newly developing residential subdivisions in the City and to pay the costs associated with the issuance of the Notes. Proceeds fiom the sale of the Bonds will be used to provide financing for certain landfill, convention center, fire station, street, sewer, and water improvements within the City and to pay the costs associated with the issuance of the Bonds. Additionally, proceeds will be used to refund certain outstanding general obligation bonds of the City as described below. 11 The Refunding Plan A portion of the proceeds from the sale of the Bonds, along with other available funds, will be used to execute a current refunding (the “Refunding Plan”) of the City’s outstanding General Obligation Water and Sewage System Refunding Bonds, Series 2002-A (the “Refunded Bonds”). According to the terms of the Refunding Plan, proceeds fiom the sale of the Bonds, along with other available funds, will be transferred to the paying agent ‘on the Refunded Bonds and used to pay the principal and accrued interest payable on the Refunded Bonds on May 15,20 10. The Refunding Plan is being undertaken in order to achieve interest cost savings and restructure the City’s current debt repayment schedule. The following is a summary of the Refunded Bonds: Principal Maturity Dates Principal Amount Amount to be of Bonds Amount Call Date Series Outstanding Refunded to be Refunded to be Called - 2002-A $820,000 $820,000 10-01-10 thru 10-01-13 $820,000 05-15-10 SOURCES AND USES OF FUNDS Funds to be used in the Financing Plan will be provided and applied approximately as follows, exclusive of accrued interest. Series Series 2010-1 Notes 201 &A Bonds Note and Bond Proceeds $2,500,000.00 $6,9 15,000.00 Issuer Contribution for Refunding 2002-A Bonds Sources of Funds: Total Sources of Funds Uses of Funds: Deposit to Improvement Fund Redemption of Bonds Costs of Issuance (includes underwriters discount and rounding amount) Total Application of Funds REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY 12 FINANCIAL OVERVIEW CITY OF SALINA, KANSAS Net of Debt (1) Gross Self-supporting Debt 2009 Estimated Actual Valuation (2) $ 2,893,359,541 .OO 2009 Assessed Valuation $ 447,800,878.00 General Obligation Bonds (3) $ 64,816,928.00 $ 58,950,000.00 - Population-2008 U.S. Census Bureau Estimate General Obligation Debt Per Capita $ 1,394.42 $ 1,268.2 1 2.24% 2.04% Ratio of General Obligation Debt to Assessed Valuation 14.47% 13.16% 46,483 Ratio of General Obligation Debt to Estimated Actual Valuation Outstanding Temporary Notes (4) Outstanding Lease Obligations Outstanding Revenue Bonds , Overlapping General Obligation Debt (5) Direct and Overlapping General Obligation Debt (6) $ 2,500,000.00 $ 30,000.00 . $ 2,320,000.00 $ 63,665,044.00 $ 130,981,972.00 $ 125,115,044.00 Direct and Overlapping Debt Per Capita $ 2,817.85 $ 2,69 1.63 Ratio of Direct and Overlapping Debt to Estimated Actual Valuation Ratio of Direct and Overlapping Debt to Assessed Valuation 4.53% 4.32% 29.25% 27.94% (1) The City intends to provide.for payment on the Kansas Revolving Loans with net revenues derived fkom the operation of its water and sewage system. The column titled ‘Wet of Self-Supporting Debt” therefore excludes the Kansas Revolving Loans. The Kansas Revolving Loans are ultimately secured, however, by the City’s ability to levy unlimited ad valorem taxes. (2) For a fiuther description of how Estimated Actual Valuation is calculated and additional historical figures see the section titled FINANCIAL INFORMATION - “Estimated Actual Valuation”. (3) Includes the Bonds. Does not include bonds to be refunded with proceeds from the sale of the Bonds and other .available funds of the City. (4) Includes the Notes. (5) For a more detailed explanation of the overlapping debt of the other jurisdictions, see DEBT SUMMARY - “Overlapping Debt”. (6) Includes outstanding general obligation bonds and temporary notes of the City and overlapping jurisdictions. 13 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 2008 U.S. Census Bureau estimate of 46,483. The City is the county seat for Saline County which had an estimated 2008 U.S. Census Bureau population of 54,657. Situated at the intersection of Interstate Highways 70 and 135, the City of Salina serves as the industrial, medical, retail, trade and service hub for north central Kansas. 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 20.3 1 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. 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 M. Luci Larson Aaron Peck Samantha Angel1 Norman Jennings Tom Arpke - - Title Term Expires Mayor 201 1 Vice Mayor 201 1 Commissioner 2013 Commissioner 2013 Commissioner ’ 201 1 Kansas Public Employees Retirement System (KPERS) The City participates in the Kansas Public Employees Retirement System (KF’ERS) which was established by the 1961 Kansas Legislature, There are approximately 250,000 current and former public employees in Kansas who are members of the Kansas Public Retirement System. These members represent over 1,500 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 instrumentaIities. 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. 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 2010, the City’s contribution will be 6.38% of each employee’s gross salary. Kansas Police and Fire Retirement The City has established membership in the Kansas Police and Fire Retirement System for its police and fire personnel. Benefits are determined by total years of service and final 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 benefits is the sole responsibility of KPBF. Currently 14 the City contributes 16.05% of employees' gross compensation, and the majority of employees contriiute 7.0% of their gross salary. Population The City of Salina has a population that is approaching metropolitan area status. This is defmed by the U.S. Census Bureau as cities with 50,000 inhabitants or more. According to the U. S. Census Bureau, the City's citizens had a median age of 36.5 years in 2007. The following table and graph show the population for the City for selected years as provided by the U.S. Census Bureau. Year 2008 - 2007 2006 2005 2004 U.S. Census Bureau Population 46,483 46,458 46,140 47,533 45,988 Police and Fire Protection The City of Salina provides police and fire protection services to residents of the City and surrounding areas. Fire fighting services are provided fiom four stations located throughout the City with 92 full-time firefighters. The fire department operates 36 vehicles and provides emergency medical services. The police department employs approximately 8 1 fidl-time police officers and operates 37 police vehicles, including patrol vehicles, motorcycles, and Cushmans. Economic Characteristics The City of Salina benefits fiom its location at the junction of lnterstate Highways 70 and 135. This convenient location has drawn numerous national and regional companies to open manufacturing or distribution centers in or adjacent to the City. Such companies include Hawker Beechcraft Corporation, Pepsi Cola, ElDorado Bus, Exide Battery, and Philips Lighting. Currently, manufacturing, retail trade, and service industries rank as the three primary employers in the City. No single industry is dominant. The government sector and wholesale trade industries make up the second tier of Salina employers. 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. The identified trade area for the City covers 23 counties with a total population of about 360,000 people. This designation as a regional trade center is supported by the fact that Saline County had the seventh highest "trade pull factor" of all Kansas counties in 2008 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 February 2010, the Kansas Department of Labor estimated the civilian labor force in the City of Salina to be 26,699 persons. The U.S. Census Bureau determined that in 2000 the median household income for the City was $36,066 and owner-occupied housing rates in the City were 66.1%. Saline County is located in the center of one of the most productive agricultural areas in the United States. In 2007-2008, 750 farms were located on 430,000 acres. Fann crops were valued at over $38 million harvested on 2 10,9 10 acres. Cattle and milk produced was valued at over $1 9 million. Salina is a city centered more on 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 can be offered as inducements to opening industrial facilities. 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 . 15 employees through the Salina Area Technical School and the Kansas State University at Salina. Additionally, a “build-to-suit-tenant” agreement is available on sites in the Airport Industrial Center that can provide 100% 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: Saline State of Year County Kansas 2007 $34,611 $36,525 2006 32,938 34,525 2005 30,4 16 32,130 2004 29,220 30,992 2003 27,972 29,799 - Source: Kansas Statistical Abstract, 2008 Building Permits Issued Building permits issued by the City currently maintain steady levels. This table reflects both private developments as well as the expansion to the educational facilities in the community. The five-year history of the total value of permits issued is: Year 2009 2008 2007 2006 2005 - The Salina Airport Authoritv Value $12,192,48 1 - .. 18,276,022 32,63 1,35 1 2 1,542,984 2 1,688,263 The Salina Airport Authority is a body corporate and politic. The Authority was created by the City of Salina in April 1965 pursuant to the authority granted by the City by the surplus properly and public airport authority act of the State of Kansas. The Authority was created for the purpose of accepting as surplus properly portions of the former Schilling A.F.B., which was closed by the United States Department of Defense in June 1965. By quitclaim deed the Authority received over 2,900 acres of land and numerous buildings for the purpose of operating and developing the Salina Municipal Airport and the Salina Airport Industrial Center. The Authority is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. The Salina Municipal Airport is the only commercial service airport serving SalindSaline County and the 22-county area, which comprises North Central Kansas. The Airport also services the corporate, business, private aviation and flight training needs of industry, business and individuals in the area. The Airport is also used by Kansas State University at Salina (KSUS). The campus of KSUS is located within the boundaries of the Authority adjacent to the main Airport runway. The college offers degrees in professional flight training, airfiame and power plant maintenance, and avionics technology. The Salina Municipal Airport and Airport Industrial Center is home for nearly 90 businesses and organizations. Forty-five of the businesses and organizations are tenants of the Authority. One of the primary functions of the Authority is to facilitate the continued growth of jobs and payroll at the Airport and Airport Industrial Center. The Authority works in partnership with the City of Salina, Saline County, and the Salina Area Chamber of Commerce for the retention of existing business and industry and the recruitment of new business and industry. 16 Maior Employers Industrial development during the past ten years has established a broad, industrial base in and around the City. A list of the major employers is as follows. All figures represent total full-time employment excluding seasonal and part-time employees. Estimated Name ProductBusiness Emplovment Schwan’s Global Supply Chain Frozen Pizza 1,850 Salina Regional Health Center Health Care 1,082 Unified School District No. 305 School System 935 Exide Technologies Automotive Batteries 800 City of Salina City Government 493 Great Plains Manufacturing Agricultural Equipment 650 Philips Lighting Company Fluorescent Lamps 600 El Dorado National Transit, Tour & Shuttle Buses 255 Raytheon Aircraft Corporation* Aircraft Subassemblies 240 Saline County County Government 233 *Recently announced closure Source: Salina Chamber of Commerce Unemplovrnent Rate According to the Kansas Department of Labor, the following table shows the annual unemployment rate trend for the City of Salina and the State of Kansas. Year 20 10 (Feb) - 2009 2008 2007 2006 City of Salina 6.0% 6.7 4.1 3.5 4.0 State of Kansas 6.8% 6.1 4.4 4.1 4.5 Education The City of Salina has a very complete and diverse educational system fkom the primary level up to its higher educational institutions. Unified School District No. 305 provides public education through its eight elementary, two middle, and two senior high schools. The District also operates alternative education, vocational- technical, and special education schools. Current enrollment is over 7,000. Additionally, there are a number of parochial institutions that operate two grade schools, two junior high schools, 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 230,000 volumes, two college libraries, a medical library, and a law library are located within the City. Kansas State Universitv at Salina 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 930 students are currently enrolled in the school. 17 Kansas Wesleyan University Kansas Wesleyan University was founded in 1886 and is located within the City. Currently, Kansas Wesleyan maintains an enrollment of approximately 800 students, the majority from Kansas and surrounding states. The school, based on a liberal arts foundation, offers more than 27 major programs, including graduate studies. Evening degree completion programs for adults are also available. Kansas Wesleyan is a member of the Associated Colleges of Central Kansas, a consortium of six academic institutions within 70 miles of the University through which students may enroll in courses and utilize resources. TransDortation In addition to 1-70 and 1-135, US-81 and US40 also intersect Salina. Several fieight 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. Union Pacific gives the City rail service in four directions out of the City and provides daily package-car service in and out of Salina. There are approximately 8 daily freights stopping in the City. Existing terminals have adequate capacity to handle present and greatly increased hture capacity. Approximately 30 miles of storage tracks are available. The City is served by the Salina Municipal Airport and scheduled air service is provided by Great Lakes Airlines. The airline offers weekday and weekend flights to the Kansas City and Denver. During 2009, the Airport enplaned 2,839 passengers and also accommodates a wide variety of aircraft including business jets, military, flight training and general aviation aircraft. During 2009, the Salina Air Traffic Control Tower logged over 65,000 aircraft operations serving the needs of over 7,000 business jets, the professional flight training department of University at Salina, general aviation and military aircraft. The two fixed base operators on the field at Salina specializing in aviation fuel delivered over 2.5 million gallons of fuel to the wide variety of aircraft utilizing the Airport during 2009. ’ Utilities and Infrastructure Westar Energy supplies electricity and Kansas Gas Service provides natural gas to the City. The City owns its own water and sewage system. Additionally, the City is responsible for street maintenance and police and fire protection. Health Facilities The City is served by Salina Regional Health Center (“SRHC”), a 330-bed regional facility divided between two Salina campuses. SRHC is an acute care facility for the diagnosis and treatment of all types of diseases and conditions, and includes a cancer treatment center and two medical office buildings. The institution is also a 50% partner in a separate surgical hospital adjacent to the Asbury campus of SRHC. Several other facilities providing mental health services, counseling, and alcohol and drug dependency treatment programs are located in the City. Financial Institutions Nine banks operating a total of 14 different facilities are located in the City. Five banks are headquartered in the City and reported combined deposits in excess of $1.97 billion as of December 31,2008. Two savings banks have branch offices in the City. 18 Other Information Public recreation facilities available to city residents include 27 parks, a golf course, basebalVsoftbal1 fields, a swimming pool, an art center, a community theater, a museum, tennis courts, and ice and roller skating facilities. Two private clubs provide additional recreational opportunities for residents of the City. Kenwood Cove,’ a $12.5 million aquatic park, is anticipated to open in May 2010. The Bicentennial Center, a 7,500-seat facility, is home to the Kansas Cagerz, a professional basketball team playing in the United States Basketball League. Numerous concerts, exhibitions, conventions, and other events are also held in the Center. There are several radio stations in the City. Five standard television stations fiom Wichita serve the Salina area. Additionally, Cox Communications provides cable television and broadband internet service to subscribing customers. DEBT SUMMARY Current Indebtedness The following is an overview of the City’s outstanding indebtedness by classification as of the dated date of the Bonds. Figures do not include bonds for which payment has been provided through the creation of designated escrow accounts. General Obligation Bonds: The City’s currently outstanding general obligation bonds have an underlying rating of “Aa3” from Moody’s. Some of the City’s outstanding bonds have also received a rating of “Aaa” tiom Moody’s as the result of a municipal bond insurance policy. Date Issued - 07-15-01 01-1 5-02 07-15-02 07-15-03 05-01-04 07- 15-04 07-15-05 03-15-06 07-15-06 06-15-07 07-1 5-08 12-1 5-08 07-1 5-09 05-01-1 0 PurDose Internal Improvements Water and Sewage System Refunding Internal Improvements Internal Improvements Refunding Internal Improvements Internal Improvements Internal Improvements Internal Improvements Internal Improvements Internal Improvements Internal Improvements Internal Improvements Refunding & Improvement Amount of Issue $ 5,350,000 2,045,000 1,980,000 . 4,350,000 5,585,000 4,053,000 4,2 10,000 885,000 6,545,000 3,720,000 3,525,000 23,695,000 6,9 15,000 - 2J00,000 Final Maturity 10-01 - 16 10-0 1 - 13 10-0 1-1 7 10-01-1 8 08-0 1-1 5 10-01 -1 9 10-0 1-20 10-0 1-26 10-01-2 1 10-0 1 -27 10-0 1-23 07-01-28 10-0 1-29 10-0 1-25 Amount Outstanding $ 2,485,000 820,000 * 820,000 2,405,000 2,225,000 2,150,000 2,870,000 1,870,000 675,000 5,8 15,000 3,500,000 3,525,000 23,695,000 6.91 5,000 $58,950,000 *To be refunded with proceeds tiom the sale of the Bonds. Total Amount Outstanding excludes this amount. A portion of the City’s outstanding general obligation bonds are payable tiom special assessments levied upon properties benefited by certain internal improvement projects and transfers fiom 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. 19 Stute Loans: The City intends to provide for payment of this debt with net revenues derived fiom 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. Date Amount Final Amount Issued Purpose of Issue Maturity Outstanding; 01 -05-98 Kansas Public Water Loan # 1 $3,600,000 08-01 -20 . $2,176,383 03-15-01 Kansas Public ,Water Loan #2 5,000,000 08-01-23 3,690,545 $5,866,928 Revenue Bonds: Revenue bonds are payable solely fiom the net revenues derived by the City fiom the operation of its combined indebtedness of the City for Date Issued 08-0 1-02 _- water and sewage system. which the City’s taxing ability has been pledged. Revenue bonds do not represent a- general -obligation Puruose Refunding Amount Final Amount of Issue $6,790,000 Maturitv 09-01 -1 2 Outstanding $2,320,000 Lease Purchase Obligations: Original Date Maturity Principal Amount Golf Carts 04-0 1-09 07-01-1 1 $30,000 $30,000 Proiect Issued - Date Amount Outstanding; Temporary Notes: Temporary notes represent general obligation indebtedness payable ultimately fiom 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 fiom the sale of long-term general obligation notes or other available funds. Final Original Date Maturity Note Amount Proiect Series Issued - Date Amount Outstanding Street, Water, and Sewer 2010-1 05-0 1-1 0 08-0 1-1 1 $2,500,000 $2,500,000 Overlauuinp Debt According to the Saline County Clerk’s office, 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. All debt outstanding is as of December 3 1,2009 unless otherwise noted. Amount Fstimated Share of the City Jurisdiction Outstanding Amount Percentage U.S.D. No. 305 $53,190,000 $49,275,2 16 92.64% Saline County (as of 06-30-09) 680,000 514,828 75.71 Salina Airport Authority 13,875,000 , 13.875.000 100.00 $63,665,044 20 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. Year 2010 201 I 2012 2013 2014 2015 2016 2017 2018 2019 2020 202 1 2022 2023 2024 2025 2026 2027 2028 2029 - Outstanding Bonds Principal $ 4,390,000 4,525,000 4,560,000 4,520,000 4,370,000 3,970,000 3,795,000 3,530,000 3,570,000 3,4 15,000 1,700,000 1,565,000 1,570,000 1,480,000 1,275,000 900,000 935,000 860,000 720,000 385.000 $52,035,000 Interest $ 1,033,328 1,929,961 1,782,854 1,590,45 1 1,398,528 1,2352 10 1,084,338 928,361 765,710 600,325 478,047 41 1,159 348,219 283,195 222,145 168,739 128,875 87,326 48,888 16.362 $14,542,021 Series 2010-A Bonds Principal Interest $ 0 785,000 880,000 895,000 695,000 285,000 290,000 300,000 3 10,000 320,000 330,000 340,000 350,000 365,000 380,000 390,000 0 0 0 0 $6,915,000 SRF Loans $ 319,839 639,678 639,678 639,678 639,678 639,678 639,678 639,678 639,678 639,678 504,708 369,737 369,737 184,869 0 0 0 0 0 0 $7,505,992 Total ‘P&I - - 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 Outstanding - Year December 31* 2009 $52,900,000 2008 3 1,645,000 2007 27,650,000 2006 24,165,000 2005 24,160,000 Debt to Assessed Valuation 11.81% 7.01 6.24 5.64 6.01 Debt to Estimated Actual Valuation 1.83% I .09 0.98 0.89 0.96 U.S. Census Potwlation 46,483 46,483 46,458 46,140 47,533 Debt Per Capita $1,138.05 680.79 595.16 523.73 508.28 *The City intends to provide for payment on the two outstanding State Revolving Fund loans with net revenues derived fiom the operation of its water and sewer system. Therefore, this figure exctudes the respective outstanding principal amounts, although the outstanding State Revolving Fund loans are ultimately secured by the City’s ability to levy unlimited ad valorem taxes. Future Indebtedness 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 fast capital improvements plan, the total cost of projects the City anticipates undertaking between now and 2014 is approximately $91.1 million, of which approximately $6.9 million is anticipated being financed through general obligation bonds. Borrowing requirements described above do not include future subdivision improvement projects financed with general obligation special assessment temporary bonds. The City 21 typically undertakes such projects after receiving and reviewing a valid petition fiom property owners. FINANCIAL INFORMATION - “Special Assessments”. See The City currently anticipates issuing water and sewer utility revenue bonds in 2010 to fund approximately $13 million of improvements to its wastewater system. The City has been involved with ongoing discussions concerning contamination in certain areas within the boundaries of the Salina Airport Industrial Center. This contamination was caused by activities occurring prior to 1964, when the site served as the Shilling Air Force Base. The City, the Salina Airport Authority, and other local governmental entities are pursuing federal funds to clean up the affected areas. In the event fimding cannot be secured in a timely fashion or in sufficient amounts, it may be necessary for the City to issue debt to relocate certain water wells. The exact timing and amount, if any, of such borrowing cannot be determined at this time. If City borrowing is necessary for this project, it is anticipated that utility revenue bonds will be the first type of debt considered. Legal 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 fiont 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 fiom 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. I Debt Pavment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. REMAINDER OF THIS PAGE LEFT BLANK IN’IENTIONALLY 22 FINANCIAL INFORMATION Financial Statement Summary The following is a summary of the combined revenues, expenditures, and fbnd balances for the City’s General Fund 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. Revenues: Property Taxes Sales Tax Other Taxes Intergovernmental Charges for Services Investment Revenue Miscellaneous Total Revenues Expenditures: General Government Public Safety Public Works Public Health and Sanitation Culture and Recreation Planning and Development Capital Outlay Total Expenditures Revenues Over (Under) Expenditures Other Sources (Uses) Net Change in Fund Balance Fund Balance January 1 Prior Period Adjustment Fund Balance January 1 Restated Fund Balance December 3 1 Audited 2005 $ 2,731,138 10,555,924 2,7 17,427 859,399 5,387,774 176,808 385.253 $22,813,723 - $ 2,485,060 10,62 1,702 4,536,63 1 892,110 2,074,639 1,328,376 828.996 $22,767,5 14 $ 46,209 -290.553 $ -244,344 $ 7,3 1 1,303 0 $ 7,311,303 $ 7,066,959 Audited - 2006 $ 2,572,355 11,136,946 4,137,9 1 1 1,360,583 5,661,733 43 1,349 438.576 $25,739,453 $ 2,486,348 11,138,545 4,73 1,85 1 1,001,135 2,130,694 1,598,084 1,375.638 $24,462,295 $ 1,277,158 $ 1,157,770 $ 7,066,959 0 $ 7,066,959 $ 8,224,729 - 1 19,388 Audited 2007 $ 2,214,508 11,471,629 4,445,154 1,040,593 5,479,483 428,197 5 17,447 $25,597,011 - $ 2,573,188 12,550,089 5,110,274 1,072,O 12 2,322,893 1,565,062 807.69 1 $26,001,209 $ -404,198 -489,900 $ -894,098 $ 8,224,729 0 $ 8,224,729 $ 7,330,631 Audited 2008 $ 2,546,938 11,985,856 4,68S,1 OS 91 1,305 5,793,253 244,769 496.742 $26,663,968 - $ 3,336,261 14,070,189 5,239,844 1,109,794 2,297,43 1 2,087,685 630.178 $28,77 1,382 $ 2,107,414 806.306 $ -1,301,108 - $ 7,330,631 0 $ 7,330,631 $ 6,029,523 Note: The City’s 2009 audited financial statements were not completed as of the date of this Official Statement. Preliminary unaudited statements, which are prepared on a cash basis, indicate a decrease in the general fund ending balance of approximately $1.2 million. REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY 23 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 2009 - 2008 2007 2006 2005 2004 2003 2002 2001 2000 Real Estate $358,979,211 356,678,7 12 342,045,389 32 1,695,326 296,537,399 282,517,284 277,456,8 13 267,175,443 254,343,715 24 1,62 1,655 Personal PropertV (1) $24,760,806 281373,980 34,507,464 39,691,690 38,662,356 35,4 10,526 35,3 86,133 3 5,093, I 54 31,823,431 32,439,566 State Assessed Utilities 13,730,609 14,929,456 16,175,634 16,530,171 17,624,030 17,334,372 15,750,780 14,866,008 14,847,520 14,088,875 Motor Vehicle $50,330,252 5 1,35 1,656 50,548,706 5035 1,299 49,367,870 48,687,121 46,679,292 45,965,839 43,248,108 43,246,020 Total Assessed Valuation $447,800,878 45 1,333,804 443,277,193 428,468,486 402,191,655 383,949,303 375,273,018 363,100,444 344,262,774 331,396,116 (1) Beginning in 2007, certain types of personal property were removed from the tax rolls. See footnote (3) to the table in 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 2009 - 2008 2007 2006 2005 2004 2003 2002 2001 2000 Residential Real Estate Equalization Ratio not available 1 1.66% 11.68 11.22 11.16 11.47 1 1 so 11.65 11.44 11.39 Estimated Actual Value $2,893,359,541 2,914,775,730 2,833,709,391 2,719,391,025 2,529,377,135 2,427,448,947 2,368,264,683 2,296,900,695 2,182,563,473 2,096,802,659 SDecial Assessments 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. 24 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 may or 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. Larpest Taxpavers According to the Saline County Clerk’s Office, the following table lists the largest taxpayers in the City, their 2009 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. Companv Schwan’s Sales (Tony’s Pizza) IPOFA Salina Central Mall LLC Salina Regional Health Center Westar Energy Wal-Mart Stores Gateway Adams Inc. (Midstate Plaza) Kansas Gas Service Southwestern Bell Telephone Sunflower Bank Great Plains Manufacturing Type of Business Frozen Pizza Regional Shopping Center Hospital and Medical Offices Utility Discount Retail Shopping Center Utility Utility Financial Institution Agricultural Equipment Assessed Valuation $10,144,446 8,704,250 5,584,46 1 5,191,056 3,813,855 3,556,009 3,499,873 3,455,419 2,749,200 2.526.984 $49,225,553 Yo of Total Valuation 2.27yo 1.94% 1.25% 1.16% 0.85% 0.79% 0.78% 0.77% 0.61% 0.56% 10.99% Tax Collections 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 May 10 of the following year. Taxes that are unpaid on the due dates are penalized at a statutorily prescribed rate 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 by the County for taxes and all legal charges on the first Tuesday in September. Properties that are sold and not redeemed within two years after the tax sale are subject to foreclosure sale, except homestead properties which are subject to foreclosure 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. 25 The following is a summary of tax collections for the years shown. Levy Year 2009* 2008 2007 2006 2005 2004 2003 2002 200 1 2000 - Tax Rate 25.855 25.886 23.959 23.789 23.999 24.063 24.013 24.092 24.365 24.876 - Taxes Levied $10,289,701 10,369,087 9,432,248 9,029,080 8,478,392 8,085,633 7,90 1,005 7,654,034 7,306,926 6,702,087 Current Tax Collections YO Amount - $5,303,152 51.5% 9,825,122 94.8 8,941,650 94.8 8,648,305 95.8 8,223,308 97.0 7,894,014 97.6 7,668,663 97.1 7,390,547 96.6 7,082,098 96.9 6,488,562 96.8 Current and Delinquent Tax Collections Amount YO $10,119,876 97.6 9,209,900 97.6 8,907,754 98.6 8,470,007 99.9 8,130,384 100.5 7,898,723 99.8 7,6 12,263 99.5 7,294,560 99.8 6,634,732 98.9 5734% *As of January 1,2010 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. The total sales tax for goods and services in the City is 7.20%, which consists of 5.3% imposed by the State, 1% countywide local option sales tax, and .90% citywide local option 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 SO% 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 voters renewed the .25% local option sales tax and are now using those collections for various city capital improvements. . In November 2008, voters in the City of Salina approved a .40% citywide retailers dedicated sales tax to pay the costs of various City capital improvements including constructing, operating and maintaining a $12.5 million aquatic park. The .40% sales tax replaced the 2004 .25% sales tax on April 1,2009 and terminates ten years after its commencement. The City of Salina deposits sales tax receipts ftom its 1992 tax into its General Fund. 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. 2004 .25% Citywide Local Option Year Sales Tax Receipts 2005 $2,292,573 2006 2,417,184 2007 2,483,734 2008 2,588,73 1 2009 2010 (2) 0 2008 .40% Citywide Local Option Sales Tax Receipts 0 0 0 0 1,143,711 $3,379,938 (1) 1992 SOYO Citywide Local Option Sales Tax ReceiDts $4,585,147 4,834,368 4,967,468 5,177,462 4,987,415 1,245,673 City's Portion of 1% Countywide Local Option Sales Tax Receipts $5,995,152 6,302,579 6,504,160 6,808,395 6,703,839 1,640,117 (1) The 2008 .40% sales tax became effective April 1,2009, at which time the 2004 sales tax stopped. This figure 26 is the combined total receipts of the 2004 sales tax and the 2008 sales tax for 2009. (2) Through March 20 10. Source: City Clerk Tax Levies 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. Jurisdiction City of Salina Salipa Library State Education & Other Unified School District No. 305 Airport Authority Central Kansas Extension District Saline County Total 2005 for 2006 Budget 23.999 5.325 1 SO0 55.182 2.94 1 1.194 28.579 1 18.720 Levy 2006 for 2007 Budpet 23.789 5.180 1 SO0 55.252 2.877 1.169 27.955 117.722 Levy 2007 for 2008 Budget 23.959 5.242 1 SO0 54.990 2.877 1.156 27.435 117.159 2008 for 2009 Budget 25.886 5.419 1 SO0 58.547 2.877 1.175 29.347 124.751 Levy 2009 for 2010 Budget 25.855 5.413 1 SO0 58.495 4.315 1.173 3 1.303 128.054 Levy Budpeting 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 Mer 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 fiom 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 stahtory 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 27 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. ProDertv 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 90. The following table shows the current assessment rates for the different classes of taxable tangible property within the State of Kansas. Real Propertv: Residential 11.5%. Commercial and Industrial- Real Property 25.0 Agricultural Land (1) 30.0 Agricultural Improvements 25.0 Vacant Lots 12.0 All Other 30.0 Mobile Homes 1 1.5% Mineral Leaseholds (large) 30.0 Mineral Leaseholds (small) 25.0 Commercial & Industrial Machinery & Equipment 25.0 All Other 30.0 Railroads federally mandated rate All Other Public Utilities 33.0% Motor Vehicles: 20.0% Property Exempt: Not-for-Profit (2) 12.0 Personal Prouertv: (3) Utilities: Property used for the following purposes, or portions thereof, are exempt fiom 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. (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 counhy clubs would be assessed at 12% for all land that does not accommodate buildings or improvements. (3) The 2006 Kansas Legislature exempted fkom all property or ad valorem property taxes levied under the laws of the State, all commercial, industrial, telecommunications, and railroad machinery and equipment acquired by qualified purchase or lease after June 30, 2006 or transported into the State after June 30,2006 for the purpose of expanding an existing business or creation of a new business. 28 EauaIization 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 2008 Kansas AppraisaVSales Ratio Study, the equalization ratio for residential real property in Saline County was 1 1.66%, and commercial and industrial property was 23.25%. 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 MATTERS, CONTINUING DISCLOSURE, and APPENDIX B. TAX MATTERS General _- The following is a summary of the material federal and state income tax consequences of holding and disposing of the Notes and the Bonds (the “Securities”). This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of holders subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Securities as a capital asset, tax-exempt organizations, individual retirement accounts and other tax deferred accounts, and foreign taxpayers), and, except for the income tax laws of the State of Kansas, does not discuss the consequences to an owner under state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Securities in the secondary market at a premium or a discount. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Securities. Tax Matters Applicable to All Securities Sale, Exclrange or Retirement of SewrtXes. Upon the sale, exchange or retirement (including redemption) of a Security, an owner of the Security generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Security (other than in respect of accrued and unpaid interest) and such owner’s adjusted tax basis in the Security. To the extent the Securities are held as a capital asset, such gain or loss will be capital gain or loss and will be long- term capital gain or loss if the Security has been held for more than 12 months at the time of sale, exchange or retirement. Reporting Requirements. In general, information repoxting requirements will apply to certain payments of principal, interest and premium paid on Securities, and to the proceeds paid on the sale of Securities, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in fill dividend and interest income. The amount of any backup withholding fiom a payment to an owner will be allowed as a credit against the owner’s federal income tax liability. 29 ODinion of Bond Counsel Federal Tax Exemption. In the opinion of Bond Counsel, under existing law, the interest on the Securities is excluded fiom gross income for federal income tax purposes. Interest on the Notes is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and is not taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinions set forth in this paragnph are subject to the condition that the Issuer 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 Securities in order that interest thereon be, or continue to be, excluded ffom gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Securities to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Securities. The Securities are “qualified tax-exempt obligations” for purposes of Code §265@)(3), and, in the case of certain financial institutions (within the meaning of Code Q265@)(5)), a deduction is allowed for 80% of that portion of such financial institutions’ interest expense allocable to interest on the Securities. r Securities Purchased at a Discount. In the opinion of Bond Counsel, subject to the conditions set forth above, the original issue discount for each Security, to the extent properly allocable to each owner of such Security, is excluded fiom gross income for federal income tax purposes with respect to such owner. Original issue discount on each Security is the excess of the “stated redemption price at maturity” of such Security, over the initial offering price to the public (excluding underwriters and intermediaries) at which price a substantial amount of such Securities were sold. For each Security, the stated redemption price at maturity includes all payments on the Security, except interest payable at least annually over the term of the Security (“qualified stated interest”). For the Securities, the original issue discount is the selling price of each Security originally sold at a price of less than 100% as set forth on the inside cover hereof. The Securities originally sold at a price of less than 100% as set forth on the inside cover hereof are the “OID Securities.” Under Code 9 1272 and 1288, original issue discount on tax-exempt Securities accrues on a compound basis. The amount of original issue discount that accrues during any accrual period generally equals (a) the issue price of such OID Security plus the amount of original issue discount accrued in all prior accrual periods, multiplied by (b) the yield to maturity of such OID 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 (c) any interest payable on such OID Security during such accrual period. The amount of original issue discount so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excluded fi-om gross income for federal income tax purposes, and will increase the owner’s tax basis in such OID Security. Owners of OID Securities should consult with their individual tax advisors to determine whether they are required to include, for State and local income tax purpodes, an amount of interest on the OID Securities as income even though no corresponding cash interest payment is actually received during the tax year.] . [ Securities Purchased at a Premium. Certain maturities of the Securities have an initial offering price which exceeds the stated redemption price at maturity as set forth on the inside cover hereof. The excess of the purchase price of a Security over its stated redemption price at maturity constitutes premium on such Security. A purchaser of a Security must amortize any premium over such Security’s term using constant yield principles, based on the purchaser’s yield to maturity. As premium is amortized, the amount of tax-exempt interest deemed received by the purchaser and the purchaser’s basis in such Security are reduced by a corresponding amount. The adjustment to a purchaser’s tax basis will result in an increase in the gain (or decrease in the loss) to be recognized for federal income purposes upon a sale or disposition of such Security prior to its maturity. Even though the purchaser’s basis is reduced, no federal income tax deduction is allowed. Purchasers of any Securities at a premium, whether at the time of initial issuance or afterward, should consult with their own tax advisors as to the determination and treatment of premium for federal income tax purposes and state and local tax consequences of owning such Securities.] Kansas Tar Exempiion. The interest on the Securities is excluded fiom computation of Kansas adjusted gross income. 30 Other Tax Consequences. Prospective purchasers of the Securities should be aware that ownership of the Securities may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Secw-ty or Railroad Retirement benefits, certain S corporations with “excess net passive income,” foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Securities. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Securities should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Securities, including the possible application of state, local, foreign and other tax laws. RATING The City has applied to Moody’s Investors Service for a rating on the Notes and Bonds. Any explanation of the significance of such ratings 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 service 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 and Bonds. The City’s other outstanding general obligation notes and bonds have been rated “MIG 1” and “Aa3”, respectively, by Moody’s Investors Service. FINANCIAL ADVISOR George K. Barn & Company, Kansas City, Missouri, has acted as Financial Advisor to the Issuer in connection with the sale of the Notes and Bonds and has assisted the Issuer in the preparation of this Official Statement and in other matters relating to the issuance of the Notes and Bonds. The Financial Advisor received written consent to submit a bid for the purchase of the Notes and Bonds from the Issuer. The fees of the Financial Advisor are contingent upon the issuance of the Notes and Bonds. . , UNDERWRITING The Notes were purchased at public sale on April 19, 2010, by (the “Notes Successful Bidder”) at a price equal to , plus accrued interest to the date of closing. The Bonds were purchased at public sale on April 19, 2010, by (the “Bonds Successful Bidder”) at a price equal to , plus accrued interest to the date of closing. The ,Notes Successful Bidder and the Bonds Successful Bidder are collectively referred to herein as (the “Successful Bidders”) ABSENCE OF MATERIAL LITIGATION The Transcript of Proceedings will contain a certificate 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 Bonds or the means provided for the payment of the Notes and Bonds. CONTINUING DISCLOSURE The Securities and Exchange Commission (the “SEC”) has promulgated amendments to Rule 15~2-12 (the “Ruleyy), requiring continuous secondary market disclosure. In the Note Ordinance and Bond Resolution, the City has covenanted to provide annually certain financial information and operating data and other information necessary 31 to comply with the Rule, and to transmit the same or cause the same to be transmitted to certain repositories and the Municipal Securities Rulemaking Board, as applicable. This covenant is for the benefit of and is enforceable by the owners of the Notes and Bonds. See APPENDIX B for Mer details concerning continuing disclosure requirements. The City is in compliance with all previous undertakings under the Rule. CERTIFICATION OF THIS OFFICIAL STATEMENT The preparation and distribution of this Official Statement has been authorized by the City. This Official Statement is hereby duly approved by the governing body of the City as of the date on the cover page hereof. Dated March 22,2010 CITY OF SALINA, KANSAS By Is/ Finance Director ATTEST: Is1 City Clerk 32 APPENDIX A Financial Statements Since 1992, the City’s comprehensive annual financial 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 financial 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 3 1 , 2008, prepared by the firm of Lowenthal Singleton Webb & Wilson, Professional Association, Certified Public Accountants, Lawrence, Kansas. The City’s 2009 audited financial statements were not completed as of the date of this Official Statement. According to City officials, preliminary unaudited financial statements indicate a decrease in the City’s General Fund unencumbered cash balance of approximately $400,000 during 2009. The decrease is primarily a result of certain revenues originally budgeted to be received in 2009 but not actually collected until early 2010. Additionally, certain capital project expenditures originally budgeted for 20 10 were accelerated into 2009. LOWENTHAL, WEBB & ODERMANN, P.A. 900 Massachusetts, Suite 301 Lawrence, Kansas 66044-2868 Phone: (785) 749-5050 Website: www.lswwcpa.com Fax: (785) 749-5061 David A. Lowenthat, CPA Patricra L Webb, CPA Audw M. Odennarm, CPA ALnam M. Chrislip, CPA Camline H. Eddinger, CPA Grant A Huddm, CPA Bnan W. Nyp, CPA Members of American lnstrtute and Kansas Society of Certified Public Accolmtlnts INDEPENDENT AU D IT0 R’S REPORT ON THE BASIC FINANCIAL STATEMENTS Mayor and City Commissioners City of Salina, Kansas We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of and for the year ended December 31, 2008, which collectively comprise the City’s basic financial statements as listed in the table of contents. These basic financial statements are the responsibility of the City‘s management. Our. responsibility is to express opinions on these basic financial statements based on our audit. We did not audit the financial statements of the Salina Airport Authority which statements reflect total assets of $46,315,776 as of December 31, 2008 and total revenues of $5,244,442 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets of $7,979,789 as of June 30, 2008 and total revenues of $2,359,284 for the year then ended, which are discretely presented component units in the accompanying financial 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 auditing standards generally accepted in the United States of America and the “Kansas Municipal Audit Guide.“ Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and signiffcant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, at December 31, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The management‘s discussion and analysis on pages 3 through 13 and the major fund budgetary comparisons on pages 49 through 57 are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement 11 and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. In accordance with "Government Auditing Standards," we have also issued our report dated December 8, 2009, on our consideration of City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to desuibe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with "Government Auditing Standards" and should be considered in assessing the results of our audit. Our audit was made for the purpose of forming opinions on the financial statements that collectively comprise the Crty's basic financial statements. The introductory section, combining and individual nonmajor fund financial Statements and schedules, and statistical tables as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards and the combining and individual nonmajor fund financial Statements and schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial Statements taken as a whole. We did not audit the data included in the introductory and statistical sections of this report and therefore, we express no opinion thereon. && / December 8,2009 17 Management Discussion and Analysis This section of the report contains an overview and analysis of the City of Salina’s financial statements for the fiscal year ended December 31, 2008. The information contained here, as well as the information contained in the letter of transmittal, are intended to provide the reader of the financial statements with a well rounded picture of the City’s financial condition. Financial Highlights + Net Assets increased by $1,270,000. This amount is entirely attributable to Business type activities of the City. Assets related to Governmental Activities declined by about $71,000. + On the whole, fund balances related to operations declined modestly. The General Fund Balance declined by about $1.3 million (17%). + Investment revenues dropped precipitously by $791,000. This is a reduction of 42%. + Revenues increased in 2008, but expenditures increased more, particularly in the Governmental Funds + A new comprehensive pay plan was adopted in mid-2007. The initial impact of that change continued into 2008. + The City experienced a major ice storm in December 2007. Disaster recovery costs continued well into 2008. + The City engaged in a tax increment district financing at the close of 2008. The Basic Financial Statements The basic financial statements of the City include the government-wide financial statements and the fund financial statements. The notes to the financial statements follow the basic financial statements, and are essential for the reader’s understanding of the financial statements. Other supplementary information, including the combining schedules for non-major funds and the budgetary comparison reports, are at the end of this report to provide additional information for the reader. Government-wide Financial Sfafements The government-wide financial statements present the resutts of the City’s operations using the accrual basis of accounting, the same basis as is used by private sector businesses. These statements focus on the long-term financial picture of the City as a whole The Statement of Net Assets reports all of the City’s assets and liabilities. Net assets, the difference between assets and liabilities, are an important measure of the City’s overall financial health. Net assets represent the total accumulated and unused resources available to the City for the purpose of providiqg services. Over time, the increases and decreases in net assets can be monitored to determine if the City’s financial position is improving or deteriorating. The Statement of Activities shows how the net assets have changed during the fiscal year. One unique feature of this statement is how it shows the revenues and expenses related to specific programs and how much of those programs were supported by the general taxes of the City. Since this statement is prepared on the accrual basis of accounting, all revenues and expenses are included, regardless of when cash is actually received. Both statements show the operations of the City broken down between governmental and business type activities. Governmental activities are the operations of the City generally supported by taxes, such as Public Safety (Police, fire, and EMS), Public Works, Public Health, and Culture 8 Recreation. Business-type Activities are operations of the City that are intended to recover a significant portion of their costs through user fees and charges. These include Water and Sewer, Refuse collection, the Golf Course, and operation of the City Solid Waste Facility. The government-wide financial statements include the Salina Airport Authority and Salina Housing Authority as discretely presented component units of the Cdy. Note 1, item A in the Notes to the Financial Statements provides a more complete explanation of the relationship between these entities and the City of Salina. Fund Financial Statements The City uses three types of funds to manage its resources: governmental funds, proprietary funds, and fiduciary funds. A fund is a fiscal entity with a set of self-balancing accounts recording financial resources together with all related liabilities and residual equities and balances, and the changes therein. These accounting entities are 13 separated for the purpose of carrying on specific activities or attaining certain objectives in accordance with regulations, restrictions, or limitations. Governmental fund financial statements are prepared on a modified accrual basis. Under this basis, revenues are recognized when they become measurable and available, and expenditures are recognized when the related fund liability is incurred with the exception of long term debt and similar items which are recorded when due. The focus is on the short-term financial picture of the operations of the individual fund, rather than long-term citywide view provided by the govemment-wide statements. Major Governmental Funds are presented in individual columns, while Non-major Governmental Funds are aggregated into an “Other Governmental Funds” column. A combining statement for the Non-major funds is presented as supplementary information in the back of the report. The information presented in these statements can be compared to the governmental activities information in the govemment-wide statements. The reconciliation at the end of the fund financial statements details the relationship between the two types of financial statements. Proprietary funds fall into two categories: enterprise funds and internal service funds. All proprietary funds are prepared on the accrual basis of accounting, and are used to account for business-type activities. Enterprise fund statements present the same information that is in the government-wide statements for business-type activities, but in greater detail. The City of Salina currently operates four enterprise funds: Sanitation Collection, Solid Waste Disposal, Golf Course, and Water and Sewer. Internal Service funds are used to account for the cost of operations shared by various departments of the City. The city operates five internal service funds. Three of these are for self- insurance activity: Risk Management, Workers Compensation Reserve, and Health Insurance. The remaining two account for our Information Services activity and for the Central Garage operation. A combining statement for these internal service funds can be found in the supplementary information following the notes to the financial statements. Fiduciary funds are used by the City to account for resources held by the City for a third party. Agency funds are a special class of Fiduciary Fund in which liabilities always equal assets, and thus there are no net assets. The City of Salina operates nine Agency funds. Schedules for these funds may be viewed in the supplementary section of this report. Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used. Permanent funds operated by the City include the Citizenship Trust, Cemetery and Mausoleum Endowments, and the Tri-centennial Commission fund. Notes to the financial Statements The notes to the financial statements are an integral part of the basic financial statements since they contain valuable additional information necessary for gaining a complete understanding of the City’s financial statements. Other lnfoma tion In addition to the basic financial statements and the notes described above, this report also presents the general fund and major special revenue fund’s budgetary statements as required supplementary information directly following the notes to the basic financial statements. The combining statements for the non-major funds are shown after the required supplementary information. Finally, the statistical section includes selected statistical data about the City’s operations and economy. The City as a Whole This section will identify, discuss, and analyze significant differences and trends that will enhance the reader’s understanding of the City’s financial position. Tax Base and Economy The City of Salina relies on three major groups of revenues to support it’s operations. Each of these revenue streams has a different revenue base. In declining order of magnitude, they are charges for service, sales taxes, and property taxes. Sales taxes and property taxes apply primarily to Governmental Activities, while charges for services apply to both Governmental (35%) and Business-type (65%) activities. Charqes for Services account for about 45% ($30,447,000) of the City’s revenue stream. Charges for Service depend on both the rate that is set for the activity, as well as the volume of services provided. The following table 14 illustrates service volume and rate adjustments for some of the more significant services for the year ending December 31,2008. De scrip ti0 n Monthly Ave Water Accounts Billed Water Mete red (In Billion Gallons) s an it at ion c us to m e rs Golf Rounds (18 Hole) Golf Rounds (Par 3) Golf Annual Mem berships Solid Waste Tonnage 2007 Vo lum e 1 9,9 08 1 5,2 67 33,518 5,O 83 287 100,626 1.94 2008 Vo lum e 19,971 1.85 15,397 27.301 3.962 99,818 299 Rate Comments Water Rates Increased 5.0% Wastewater In creased by 5 .O% Sanitation rates increased bt 4.0% The rate structure and options were significantly modified $1 (3.5%)per ton increase The number of Water accounts billed grew by about .l%, while the volume of water sold declined by 4%. The number of sanitation customers increased by about .2%. Golf activity shows a decrease (12.3%) in 18 hole rounds, as well as a decrease in annual patronage. Solid Waste tonnage showed a slight decrease. Sales taxes are the next largest component of the revenue mix, providing 22% ($14,575,000) of the total revenues. The City receives a .75% City-wide sales tax, and also a portion of the County-wide 1% sales tax. One-third (25%) of the City-wide sales tax is required to be used for special purposes. The remaining .5% along with the City portion of the Countywide tax is available for general purposes. Total revenue from the sales tax in 2008 was $ 14,575,000, up from $13,955,000 in 2007. This represents an increase of 4.4% in tax proceeds distributed to the City. A number of factors affect the sales tax. First are the regional and local economic conditions and relationships. These are reflected in the proceeds of the City-wide tax, which grew by about 4.3%. However, the City was favorably affected by the formula used to distribute the County-wide sales tax among participating jurisdictions (only Cities and the County participate, School and other special districts do not). The formula is based, in part, on the property tax efforts of each jurisdiction. Because the portion of the overlapping levy attributable to the City of Salina was increased for 2007, the City's allocated portion of the County-wide sales tax was increased from 61.9Oh in 2007 to 62.3% in 2008. As a result, the City share of the County-wide tax grew by 4.7%. On November 4,2008, Salina voters approved an increase of the special purpose 25% tax to a .40% tax. The extended tax is to sunset March 31, 201 8. The tax was also modestly re-purposed, for Capital and Economic Development purposes only. ProDertv Taxes are the third major component of the revenue mix, accounting for 16% ($10,467,000) of total revenues. Property taxes consist of two components: Real estate and personal property taxes which are determined by the mill levy set by the city and the assessed value of the property; and motor vehicle taxes, which are established by a countywide average tax rate, and the assessed value of the vehicle. Real estate and personal property assessed value grew by 6.5%. The total City mill levy was increased slightly, by .7%, while the overlapping levy was nearly stable Tax delinquency decreased from 3.7% to 3.5%. Motor Vehicle value increased by 1.6%. Motor vehicle taxes are distributed based on a formula using prior year's tax effort (similar to the Countywide Sales Tax Distribution). The following table summarizes the comparative property assessed values and tax levy rates: Fiscal (Budget) Year 2007 2 008 Real Estate and Personal Property Assessed Valuation City Mill Levy (8 per $1.000) 377,9 17,187 392,7 28,487 Operating (General Fund, Employee Benefits, Flood and Drainage Fund) 19.835 19.571 Debt Service Millage 3.954 3.912 Total City Levy Rate 23.789 23.959 Total Overlapping Levy 117.722 117.159 Percent of Current Taxes Collected 96.3% 96.5% Ratio of Total Taxes (including delinquent tax collections) to Taxes Levied 98.4% 99.3% Motor Vehicle Valuation 50,548,706 51,3 51,656 Change 14,811,300 (0.264) (0.04 2) 0 170 (0.56 3) 0.002 0.009 802.95 0 The unemployment rate in Saline County decreased slightly from 3.3% in 2007 to 3.9% in 2008, reflecting general economic conditions. This is below the statewide and national unemployment rate. The total labor force decreased to 29,222, a change of 5%. In 2008, the top ten property taxpayers accounted for 1 1.79% of total assessed value. This is slightly less concentrated than ten years ago (at 12.2%) Statement of Net Assets Net assets may, over time, provide an indicator of a government's financial position. In the case of the City of Salina, assets exceeded liabilities by $186,282,000 at December 31, 2008. This represents an increase in net assets of $1,290,000 over 2007. A comparative condensed Statement of Net Assets at December 31,2006 and 2007: Cash and Investments Othercurrent Assets Noncurrent (Capital) Assets Total Assets Current Liabilties Noncurrent Liabilities Total Liabilities Net Assets: Invested in capital assets, net of related debt Restiicted for Pwrnanent Funds Resticted for Debt Service Unrestricted Total Net Assets Percent of Total Assets Cash and Investments as a peroentage of current liablities Cornparabe Condensed Statement of Net Assets. 2007 and 2008 (In $CKlO) Governmental Acbvities Business Type Adivities Total Primary &emment %of %of 2006-2007 2007 2008 2007 2008 2007 Total 2008 Total Change $ 20,370 $ 16,500 $ 12.357 $ 12,266 $ 32,727 13% $ 28,766 11% $ (3.961) $ 12,526 $ 13.467 '$ 2,352 $ 3,280 $ 14,879 6% $ 16,750 7% $ 1.871 $ 142,265 $ 148,836 8 59,821 $ 58,170 5 202,086 81% $ 207,005 82% $ 4,919 $ 175,161 $ 178.804 $ 74,530 $ 73,716 $ 249,691 lUl% $ 252.520 XXl% $ 2,829 $ 20,921 $ 20,868 $ 3,274 3 2,731 $ 24.195 37% $ 23,598 36% $ (597) $ 26.245 9 30.013 $ 14.259 $ 12.646 $ 40.505 63% 9 42.860 65% 5 2.355 $ 47,167 $ 50,681 $ 17,533 $ 15,377 $ 64.699 No $ 66,258 1000/o 8 1,559 8 115.029 3 118,986 $ 45,435 $ 45,931 3 160,W 87% $ 164.897 89% 3 4,433 $ 399 $ 419 $ 399 0% 8 419 O?! $ 20 $ 1,210 $ 793 $ 1.151 $ 1.211 $ 2,362 1% $ 2.004 1% $ (358) $ 11.356 $ 7,745 $ 10,412 $ 11.199 $ 21.768 12% $ 18,942 10% $ (2,626) $ 127,994 $ 127,923 $ 56.998 8 58,339 $ 184.992 $ 186,282 $ 1.290 69% 69% 31% 31 % 100% 100% 97% 79% 377% 449% 135% 122% The largest segment of the City's net assets (89%) reflects its investment in capital assets (land, buildings, streets and drainage facilities, utility plant, vehicles, equipment, etc.), less any debt used to acquire those assets that is still outstanding. These assets are used to provide services to citizens. As a result, resources required to retire related debt can not come from liquidation of the asset. Such resources generally must be provided from other sources, such as future taxes or user charges. 16 A small portion of net assets (1%) is restricted for debt service. The remainder of net assets (10%) may be used to meet the City's obligations to citizens and creditors. In 2008, the amount invested in capital assets net of related debt increased by $4,523,000. Unrestricted net assets decreased by $2,826,000. This reflects a decline in cash and investments of $3,961,000. Total liabilities increased, with all of the increase attributable to non-current liabilities. Long term liabilities increased, reflecting primarily an increase in bonds payable. Total assets increased. This increase was primarily attributable to increases in capital assets. During the year ended December 31,2008, there were several significant events that changed the balance of net assets. Governmental Activities. 2008 saw a decrease in cash and investments in Governmental funds. This is due largely to increases in expenditures for both capital and operating requirements. Significant contributors to this trend are the impacts of the pay plan and an aggressive street maintenance program. Business-type Activities: Business Type activities were engaged largely in maintenance type activities. Scheduled debt paydowns resulted in a slight increase in net capital assets. Statement of Activities A condensed statement of activities is shown below. Condensed Compantii Statement of ActMties, 2007 and 2008 (In $000's) Govemmengl Adivities 2 007 2008 Program Revenues: Charges for Sewices $ 10,490 $ 10.703 Operating Grantsand Contributions $ 3.381 $ 3,752 Capital Grants and Contnbutions $ - Property Taxes $ 9.978 $ 10.467 Sales Taxes $ 13,955 $ 14.575 OtherTaxes $ 5.445 $ 5,747 Investment Revenue 8 1,255 8 805 Other Miscellaneous $ 890 $ 812 General Revenues. Total Revenues. Expenses: General Government Public Safety Public Works PuMi Health and Sanltation Culture and Recreation Planning and Development Sold Waste Disposal Waterand Sewer Sanibtion Golf Course Interest on Long Term Debt 45,394 6,732 16,877 9,258 1.281 5.658 2.814 - 1.295 46,861 6,79 1 18,440 9.706 1.31 0 5.582 3.480 - 1.454 Total Expenses $ 43,915 8 46.763 Increase in net assets bebre transfers 8 1,479 $ 98 Transfersandotherextraordinaryltems $ 672 $ 60 Increase in Net Assets $ 2,150 8 (46) Net Assets. January 1 $ 126,594 $ 127.994 Pnor Period Adjustment . $ (750) $ (26) Net Assels, January 1, restated $ 125,845 $ 127.968 Net Assets December 3 1 $ 127.994 $ 127,922 Bus~ness-Type ActMties 2 007 2008 $ 19.678 $ 19.744 $ 641 $ 300 $ 201 $ 118 $ 20.520 $ 20.162 - 2.088 12.227 2.038 884 17,237 3.283 (672 I 2,612 53.933 453 54.386 56,998 2,008 13.284 2.194 884 18.370 1,792 (6 0) 59.998 58.587 58,339 1,752 (41 1) 10[57 $' 30.168 L 3,381 $- s 9,978 $ 13.955 $ 5,445 s 1,896 $ 1,091 $ 65.914 $ 6,732 8 16.877 $ 9258 $ 1281 $ 5,658 $ 2.814 $ 2,088 8 12227 S 2.038 $ 884 0 1.2295 $ 61.152 8 4.762 s- 8 4.762 8 180,527 $ 180231 $ 184,992 $ (297) Total himary Government 56 2008 YO 2007-2008 change 46% .$ 30.447 45% $ 279 5% $ 3,752 6% $ 371 0% $ - 0% $ - 15% $ 10,467 21% $ 14.575 8% $ 5.747 3% $ 1.105 2% $ 930 100% $ 67.023 11% $ 6.791 28% $ 18,440 15% $ 9.706 2% $ 1,310 9% $ 5,582 5% $ 3.480 3% $ 2,008 20% $ 13,284 3% 0 2,194 1% 0 804 2% $ 1,454 100% $ 65,133 $ 1.890 s- , 8 1,706 $ 187,992 $ 186,555 8 186.261 - $- $ (437) 16% $ 489 22% $ 620 9% $ 302 2% $ (791) 1% $ (161) - 100% $ 1,109 10% $ 59 28% $ 1,563 15% s . 448 2% 8 29 9% 8 (76) 5% $ 666 3% $ (80) 3% 8 156 1% $ - 2% $ 159 100% $ 3,981 20% $ 1.057 B (2.872) 0- $ (3,056) s 7,465 S (140) S 6,324 .$ 1.269 Governmental Activities. Total expenses for Governmental Activities for the year ending December 31, 2008 were $46,861,000 compared to $45,394,000 in 2007. Governmental activities represent 70% of the City's total expenses. The largest element of Governmental Activity expense was Public Safety, at 28% of the City total, followed by Public Works at 15% of the total. 17 Charges for service attributable to Governmental Activities totaled $10,703,000 and operating grants for those purposes were $3,752,000. The balance of $32,406,000 was funded by general revenues. Sales taxes accounted for $14,575,000 of the general revenues, with property taxes providing $10,467,000. Net assets decreased by $46,000 as a result of Governmental Activities. Business TvDe Activities. Total expenses for Business-type Activities for the year were $18,370,000, or 30% of the City’s total expense. The majority of this expense ($13,284,000) is attributable to Water and Sewer operations, with the other activities (Solid Waste Disposal, Sanitation, and Golf Course) costing a combined total of $5,086,000. These activities are primarily supported by user charges, with only $41 8,000 coming from general revenues, representing largely the interest earned on fund balances held by the City. Net assets increased by $1,752,000 as a result of Business-type Activity operations. Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds for the years ended December 31,2007 and December 31,2008. Fund G ener al Employee Benefits Flood and Drainage Tourism and Convention Special Gas B icentennia I Center Debt Service Capital Projects Other Governmental Funds Total 20 07 7,3 30,631 845,846 5 48,952 2 78,921 1,785,911 2 26,930 1,210,457 (3,607,071) 4,4 51,923 13 ,O 72,500 2008 $ 6,029,523 $ . 789,647 $ 507,183 $ 274,668 $ 1,793,378 $ 135,931 $ 792,744 $ (3,666,332) $ 5,166,176 $ 11,822,918 Change (1,301 , 108) (56,199) (41,769) (4,253) 7,467 (90,999) (41 7,713) (59,261 ) 714,253 (1,249,582) Total Governmental Fund balances decreased by $1,249,582. The reasons for these changes are varied. The most significant change is in the General Fund. This is due to multiple issue, including pay plan impacts, disaster recovery impacts, and anemic revenue growth. 18 Revenues and Expenditures: The following table shows a comparison of revenues and expenditures (including other sources and uses) for major funds for the years ending December 31,2007 and 2008. Fund 2007 Revenues (Including Other Financing Sources) Genera I $ 25,597,Ol 1 Employee Benefits $ 5,902,024 Flood and Drainage Improvement 3 207,235 Tourism and Convention 3 1,000,624 Special Gas 3 1,653,747 Bicentennial Center 3 1,703.115 Debt Service $ 3,932,905 Capital Projects $ 7,632,226 Other Govemrn ental Funds' 3 4.520.206 200 8 $ 27,730,274 3 6,033,103 3 209,926 3 1,062,276 $ 1,667,515 $ 1,570,828 $ 3,483,312 3 4,243,108 3 8.405.750 Change 2 ,133,263 131,079 2,691 61,652 13,768 (1 32,28?) (449,593 ) (3,3 89.11 8) 3.885.544 Total Revenues 3 52,149,093 Less Other Sources 3 8,984,951 Revenues, net of other sources 3 43,164.142 Expenditures (Including Other Financing Uses) Ge nera I 3 26,491.109 Employee Benefits 3 5,774,011 Flood a nd D raina ge Im p rovemen t 44,40 8 Tourism and Convention $- 954,077 Special Gas $ 993,593 Bicentennial Center $ 1,586,717 Debt Service $ 3,457,680 Capital Projects $ 6,898.471 Other G overnrn ental Fu rids. $ 3,567,333 Total Expenditures $ 49,767,399 Less Other Uses 3 2,054,924 Expenditures, net of other uses 3 47,712,475 $ 3 54,406,092 $ 10,147,955 3 44,258,137 $ 29,031,382 $ 6,089,312 3 251,695 $ 1,066,529 3 1,660,048 $ 1,661,827 $ 3,901,025 3 4,302,369 3 7,691,497 $ 55,655.684 3 2,763,222 (b 52,892,462 $ $ 3 2.2 56,999 1,163,004 1,093,995 3 2,540,273 $ 3 15.301 3 207,287 $ 112,452 $ 666,455 $ 75,110 $ 4 43.345 $ (2,596.102) $ 4,724,164 $ 5,888.285 708,298 3 3 5,179,987 Total revenues and other sources increased by $2,256,999 from 2007 to 2008. The largest component of this change was in Other Governmental fund, resulting from the impacts of accounting for the settlement of the Tax Increment financing project.. Other changes include an increased General supplement for the Bi-Centennial Center, changes in temporary note activity, and reimbursements received from FEMA. A noticeable decline was also apparent in the capital projects funds, and is due to changes in financing activities for those Expenditure changes reflect transfers from the General Fund to the Bi-Centennial Center Fund as well as the Special Sales Tax Transfer (included in "Other Funds"). Implementation of the new pay plan at mid-year in 2007 had significant effects on the General and Employee Benefits fund expenditures for 2008. Special Gas Tax fund expenditures reflect an aggressive street maintenance program. 19 Proprietary Funds The City of Salina operates four Enterprise Funds as well as five Internal Service Funds. A summarized comparative Statement of Net Assets follows for each Enterprise Fund: Summary Statement of Net Assets C ur rent As se ts Capital Assets Total Assets Current Liabilities Noncurrent Liabilities Total Liabilities Assets Invested in Capital. net of related debt Restricted Net Assets Unrestricted Net Assets Total Net Assets Current Assets as a percentage of current liabilities C ur re nt As se ts CapitaIAssets Total Assets C u r ren t Liabilities N on cu rren t Liab ilitie s Total Liabilities , Assets Invested in Capital, net of related debt Restricted Net Assets Unrestricted Net Assets Total Net Assets Current Assets as a percentage of curre nt liabilities (in $000'~) Solid Waste Disposal 20 07 3,486 f 3,439 $ 6,925 S 628 $ 2,957 $ 3,585 8 1,823 5 1,517 16 3,340 16 55 5% 20 08 Change 3,369 $ (117: 3,225 $ (214: 6,595 $ (330: 506 $ (122: 2.485 $ (472: 2,991 $ (594: 1,982 f 159 d 1,621 $ 104 3,603 $ 263 666% Sanitation 20 07 865 f 471 $ 1,336 A$ 158 16 71 $ 229 $ 471 $ 636 $ 1,106 $ 20 08 Change 647 $ (218) 613 f 142 1,260 $ (76 1 64 16 (94 1 115 $ 44 179 $ (50 1 613 $ 142 488 $ (148) 1.081 0 (25 1 54 7% 101 1% Water and Sewer 200 7 8 10,307 $ $ 55.459 $ $ 65,766 $ 8 2.442 f $ 11.184 $ $ 13.626 $ 42,690 $ $ 1,151 $ f 8,300 $ $ 52.141 $ 422 % 2008 Change 11,435 $ 1,128 53,905 $ (1,554 65,340 $ (426 2,116 $ (326 $ (13,626 9,973 $ (1,211 219 60 831 53,251 S 1,110 42,909 $ 1,211 16 9,131 $ 540% Golf Course $ 51 f 95 0 44 $ 503 $ 522 $ 19 200 7 2008 Change $ 452 $ 427 $ (2 5 B 45 $ 45 $ 47 $ 74 $ 92 $ 118 6 452 $ 427 (2 3 410 (41) $ ' 404 6 6 B 6 27 t 26 113% 211% The Golf Course Fund shows declines in total net assets, due primarily to a reduction in current assets, however, capital assets also decline. Unrestricted net assets in this fund reflect a $23,000 deficit balance, which is an improvement over the prior year. The other enterprise funds all show modest improvement in net assets. Revenues, Expenses, and Changes in Net Assets The Solid Waste and Water and Wastewater Funds, showed healthy results from operations, with net assets increasing in both of those funds. Revenues were down, while operating expenses continued to grow. Operating losses for the course was $104,000, compared to a $132,000 loss in 2007. The Sanitation Fund is stable. The Golf Course, however, experienced significant losses on the year. Operating 20 Summary of Revenues, Expenses and Changes in Net Assets Operating Revenues Operating Expenses 0 pera tin g Income Non-ope rating revenues (expenses) Income (Loss) before Transfers Transfers in (out) Capital Contributions Change in Net Assets Net Assets, January 1 Restatement Net Assets, January 1, restated Net Assets, December 31 Operating Revenues Operating Expenses Operating Income Non-operating revenues (expenses Income (Loss) before Transfers Transfers in (out) Change in Net Assets Net Assets, January 1 Restatement Net Assets, January 1, restated Net Asset, December 31 Budgetary Highlights (In $000'~) Solid Waste Disposal 2007 200 8 Change $ 2,819 $ 2,760 $ (59: $ 2,033 $ 1,972 $ (61: $ 786 $ 788 $ 2 (85; $ 911 $ 826 $ $ (692) $ (180) $ 512 $ 219 $ 646 $ 427 $ 3,170 $ 3,340 $ 170 $ (48) $ (383) $ (3351 $ 3,121 $ 2,957 $ (164) $ 3,340 $ 3,603 $ 263 Sanitation 200 7 2008 Change 2,112 $ 2,172 $ 1,999 $ 2,209 $ 114 8 (37) $ (3) $ 31 $ 110 $ (6) $ $ 110 $ (6) $ 996 $ 1,106 $ s (20 $ 996 $ 1,086 $ 1,106 $ 1,081 $ Water and Sewer 2 007 2008 Change $ 14,198 $ 14,151 $ (47 3 11,546 $ 12,754 $ 1,208 $ 2,652 $ 1,397 $ (1,255 $ 2,394 $ 1,096 $ (1,298 3 (30) $ 38 $ 68 $ 2,364 $ 1,134 $ (1,230 $ 49,275 $ 52,141 $ 2,866 $ 501 $ (23) $ (524 $ 49,777 $ 52,117 $ 2,340 $ 52,141 $ 53,251 $ 1,110 GoHCourse 2 007 2008 Change 749 $ 779 $ 883 $ 884 $ (133) $ (105) $ 2$ I$ (132) $ (104) $ 50s 82 $ (82) $ (21) $ 492 $ 410 $ $ 15 $ 492 $ 425 $ 410 $ 404 $ The objective of budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the Fund level, in accordance with State Statutes. Management control is maintained at the departmental level. Within the departments, considerable discretion is permitted. The City uses an encumbrance accounting system, in which estimated purchase orders are recorded prior to the release of purchase orders to vendors. Open purchase orders are reported .as reservations of budgetary basis fund balances at December 31, 2008. Formal budgetary amendments are limited to those circumstances in which the need is perceived to alter the total fund budget. Re- allocation among departments or line items are not typically recorded as budgetary amendments. However, in addition to formal amendments, departments within the City are allowed to transfer budget between line items within a department. Budgets may also be transferred from department to department within each fund. As a 21 result of these transfers, the original budget and the final budgets may not be the same for departments within a fund. The General Fund budget was formally amended during the year to accommodate a change in contingencies. The City experienced a number of significant variances from budgeted items in the General Fund, however, the total fund was well with budget. Most revenue classes fell short of budget. This was offset by increased an increased level of transfers from other funds, in particular the Special Sales Tax fund Several expenditure items were also significantly over or under budget. Several Departments exceeded budgeted expenditures, most notably the Public Safety Departments, which exceeded budgeted levels by an aggregate of $422,000. The budget variations are due to two factors. First, the pay plan had much more significant effects on pay levels in Public Safety. Second, the revised pay schedules placed the City in a more competitive position with respect to the market, and as a result vacancy levels were much lower than anticipated. Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31,2008 was $202,708,000 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2008: Capital Asset Balances Net of Depreciation, 12/31/2007 and 12/31/2008 (In 000's) Equipment, Furniture and Fixtures Vehicles Buildings and Improvements Land lnfras tructure Construction in Progress Total Net of Aca mulated Depreciation Governmental Activity 200 7 2008 $ 1,142 $ 1,397 $ 2,082 $ 1,614 $ 13,255 $ 12,630 $ 22,689 $ 22,477 $ 80,413 $ 77,889 $ 22,686 $ 32,531 $ 142,267 $148,538 Business -typ e Activity 20 07 20 08 $ 1,554 $ 2,065 $ 1,085 $ 973 $ 13,647 $ 13,218 $ 1,542 $ 1,541 $ 41,953 $40,173 $ 40 $ 200 $ 59,821 $58,170 Total $ 2,696 $ $ 3,167 $ $ 26,902 $ $ 24,231 $ $ 122,366 $ $ 22,726 $ $ 202,088 $ 20 07 Changes to capital assets may be summarized as follows: Additions Retirements Adjustrn ents Net Additions Governrn ental Business-Type Acbvity Activrty Total $ 258 $ 441 $ 6 99 $ 580 $ 19 8 5 99 3 11,658 3 621 $ 12.279 3 10,820 s 161 $ io.9ai Depreciation Expense Applied $ 3,973 $ 2,310 $ 6,2 83 2008 3,462 2,587 25,848 24,018 118,062 32,73 1 206,708 Additional information on the City's capital assets can be found in Note 4,D. of the notes to the basic financial statements. 22 Debt Management The City's general policy for General Obligation Bonds is to issue them for no more than 10 years for the City at Large portion, with some exceptions permitted for extraordinary projects. On special assessment bonds, the maturity may extend to 15 years. The outstanding General Obligation Bonds at 12/31/2008 totaled $32,649,999. Temporary notes outstanding total $5,005,000. Total General Debt is thus $37,654,999. In addition, Business-type activities had $3,030,000 in Revenue Bonds outstanding, as well as $6,428,759 in loans provided through the Kansas Development Finance Authority. Revenues generated by user fees are pledged to retire all of the Bonds issued by Business-type activities. The City engaged in several debt transactions during 2008. One General Obligation Bond issues, Series 2008A was sold in the total principal amount of $3,720,000. A second issue, 2008-8 was issued in the amount of $3,525,000 for the purposes of financing an economic development project. While this is a General Obligation issue, property and sales tax increments from the project are pledged to repay the debt, and are anticipated to be sufficient to do so. Moody's rating service extended a rating of Aa-3 to both issues. Additional information on the City's debt can be found in Note 4, E. of the notes to the basic financial statements. Requests for Information This financial report is intended to give the reader a general overview of the Ctty's finances. Questions about information in this report or requests for additional information should be directed to the Director of Finance, Room 206, 300 West Ash Street, Salina, Kansas, 67401. 23 BASIC FINANCIAL STATEMENTS 25 CrrY OF SALINA, KANSAS STATEMENT OF NET ASSETS December 31,2008 Pnmary Government Component Unlts Total Total Total Salina Salma Governmental Business-type Pnmary Housing krport Activities Actrnttes Government Authority Authority ASSETS Current assets: Cash and investments Receivables (net of allowance for uncollectibles) Accounts Taxes Interest Notes tnventory Restncled cash and investments Prepaid expenses Net investment in financing leases Deferred charges Total current assets Noncurrent assets: Notes recelvable Capital assets, nondepreciable Construction in progress Land Caprtal assets, depreciable Less: Accumulated depreciation Total noncurrent assets Total assets Liabilities. Current Iiabitities: Accounts payable Retainage payable Accrued liabilities Matured bond principal and interest ACCN~~ interest payable Deposits payable Unearned revenue Due to other governments Cunent portion of compensated absences Current portion of temporary notes payable Current portion of loam payable Current portion of revenue bonds payable Cunent portion of financing leases payable Current portion of special assessment debt payable Cunent portion of general obligation bonds payable Total current liibilitles Noncurrent liabilities: Accrued liabilities Compensat=d absences Nel OPEB obligation Temporary notes payable Loam payable Revenue bonds payable Financing leases payable Speclal assessment debt payable Gemral obligabon bonds payable Landfill pastclosure care liabilities Total noncurrent liiliis Total ribiks Net As- Invested In capital assets. net of related debt Restricted for. Permanent funds: Expendable Debt service Unrestricted Total net assets $ 16.500.373 2.031.1 50 10.658.825 159.657 276.130 $ 12,265.626 1.195203 $ 28,765.999 3226,353 10,658,825 159,657 936,076 1,211.221 s 1,348,109 43,646 2293 15.330 363.044 52.874 $ 1,871.999 69.326 1281,413 659.946 1.211.221 5.247 443,123 81,888 3,752.996 214241 15.546237 341,445 29.967.580 555.686 45,513.817 1,825,296 10.895 32.531.277 200.461 32.731,738 346,606 8.821.320 22,477,191 1.541.002 24.018.193 1.481.891 9,675.910 168,684.152 95,611,282 2S4.295.434 6,844.553 44.202.916 74.856.692 39.182,522 114,039214 2.529.452 20.137.366 148.835.928 58,170.223 207.006.151 6.154.493 42.562.780 $ 178,803.508 $ 73.716.460 $252,519.968 $7.979.789 $46,315,776 $ 489.084 12,706 501,050 10.145 297.679 10.354.161 1.331.007 5,005.000 $ 475.864 s 964.948 12.706 501,050 10.145 466,161 102,497 10,354,161 1,607.796 5,005,000 373,962 710.000 $ 21.933 40.254 $ 603.249 114.129 320.591 1.410.104 35,331 24.106 168.482 102.497 276.789 373.962 710.000 73.347 177.495 26.614 2.269 305.284 1,895284 687.608 9,475 20.421 305.284 2,289,417 813.746 6.054.797 2.320.000 e- 29,159.999 1.566.636 42.509.879 $ 66.108.305 394.133 126.138 6.054.797 2320.000 2.156.770 1,566.636 1261 8.474 $ 15.349.367 10.975.000 323,500 207,948 5.770.000 27,003,229 29.896 $ 371,808 29.891 ,a $ 50.758.938 17.276.448 $ 20,538,958 $ 118.965.998 $ 45.931.395 $ 164.897.393 $6,143,598 $24.471.896 418.585 418,585 280,222 792,744 1.21 1,221 2.003.965 7,867,243 ii,z4,477 19,091,720 1,184,161 1.304.922 $128.044.570 $ 58.367.093 $ 186.411.663 $7,607,981 $25.776.818 The notes to the basic fmancial statements are an integral part of this statement. 27 CITY OF SALINA. KANSAS STATEWT OF ACTIVITIES Fa the Year Ended December 31.2008 Net [Expenses] Revenue and Changes in Net Assets Program Reveruas Prlmary Government Component Umh Operating Captal Total Total TOM SallM salina Chargasfor Granlsand Grantsand Govemmerdal Business-type Pronary Housing Auparl Authority ktNklaS GOVHlUllent Authaity Expenses SeMCes Contrlbutm ContnMons ActNibes $ 6.669.320 $ 4.580.529 $ 1.179.162 $ - $ [909.629] $ - $ (809.6291 $ -$ 18.439.889 3.586.107 702,313 - [14.151.469] - (14.151.4691 9,705,916 120.280 1,435,739 - (8.149.89n - 18,149,8971 1,310,109 36.817 162.593 - (1.110.6991 - [1.110,699] 3.480.799 239.978 109.100 - p.131.7211 - (3,131.721] 5.582.100 2.139.006 162.593 - [3.280.501] - r3.280.50ii 1.453.793 [1.453.793] - 11.453.7931 - 46.641.926 10.702.717 3.751.500 - p2.187.7W - [32.187.709] - Governmental activities: General government public safety Public wks PUMic health and sanitation Culture and recreation PkIUlkQ and developmenl Interest on tong-term debt Total governmental acbvi Business-type activities: solid Waste Disposal Water and Sewer Sarutalm Goff casse Total busiitype adnrities Total prlmafy govemmerd Component units: Satm Hcusirg Author* -~pat-ity Total companent units 2.005.070 2.748.519 743.449 743.449 13.247.432 14.072.513 825.081 825.081 2,189,005 2.171.938 (17.057l (17.0671 880.669 751,252 [124.6171 (129.617) - 18.322.378 19,744222 - 1.421.846 1.421.846 - S 64.964.302 $30,446,939 $ 3.751.500 $ - [32.187.709] 1.421.846 [30.765.863] - $ 2,235,215 $ 470.777 $ 1,697,736 $ 137,892 71.190 4.874.650 2.088.458 - 1.650.041 - [1.136.151] $ 7,109,865 $ 2559,235 S 1.697.736 $ 1.787.933 - 71.190 (1.136.151J General Revenues: acperty taxes levled foc Motor vehde tax salestax General purposes Debt 5BMce Gedpurpcses General ppo!3es setecibe pur~oses GeneralFlufpcses OtherLaXaS Investment revewes Mscellaneous Transfers. net 7,817,634 1.528.594 1.119.504 1 1,985.856 2.588.731 5.747.176 604.934 811,810 59.698 299.888 118.142 159,6961 7.817.834 1.528.594 1,119,504 11,935,856 2,508,731 5.747.176 904.822 929,752 52.879 1.256.81 6 185.215 16.321 47,591 subtotd general revemas 32263.935 358.334 32.622.269 52.879 1,505,943 Change in net assets Net assets - beginnmg prior mod adptmmt Net assets - bsgbunrg. restated Net assets - endug 76.226 1.780.180 1.856.406 124,069 369,792 127.994.368 56,997.724 180,527.280 7.483-912 25.407.026 128.024] [410.811] 1436.q - 127.968.344 56.586.913 184.555.257 7.483.912 25.407.026 $ 128.04k570 0 58.367.093 $186.411.663 $7,607.981 $25,776,818 The rota to rhe basic fmnual statemants are an integral part d tho statement. 28 ClTy OF SALINA, KANSAS ASSETS Cash and investments Receivables (net) Accounts Taxes Interest inventory Due from other funds Cash with fiscal agent Total assets LIABILITIES AND FUND BALANCE Liabilitii: Accounts payable Retainage payable Deferred revenue Due to other funds Matured principal and interest Temporary notes payable Total liabilities Fund balance: Reserved for encumbrances Reserved for debt service Unreserved, undesignated General fund Special revenue funds Permanent funds Capital proj& funds Total fund balances Total liabilities and fund balance BALANCE SHEET GOVERNMENTAL FUNDS December 31 , 2008 Flood & Tourism Employee Drainage and General Benefits lmmovernent Convention $ 3,926,341 $ 789,647 $ 507,183 $ 1,572 1,643,142 - - 273,096 3,495,907 5,203,488 * - - 159,657 - - - 126,429 - - - 460.667 - - $ 9,812,143 $ 5,993,135 $ 507.183 $ 274.668 $ 286,713 $ -$ 3,495,907 5,203,488 - - - - 3,782,620 5,203.488 - - 273.594 - - 4,029 - - 5,755.929 - - - - 789,647 503,154 274,668 6,029,523 789,647 507.1 83 274,668 $ 9,812,143 $ 5,993,135 $ 507,183 $ 274,668 30 Other Total - Gas Center service Proiects Funds Funds Special Bicentennial Debt Capital Governmental Governmental $ 1,498,635 $ 96.904 $ 792,744 $ - $ 5,190,678 $ 12,803,704 - 62,354 - - 52,558 2,031,150 304,664 - 1,654,766 - - 10,658,825 - - - - - 159.657 - - - - - 126,429 - - - - - 460,667 - 10,145 - - 10.145 $ 1,803,299 $ 159,258 $ 2,457,655 $- $ 5,243,236 $ 26,250,577 $ 9,921 $ 23,327 $ - $ 52,521 $ 12,498 $ 384,980 - - - 12,706 - 12,706 - - 1,654,766 - - 10,354,161 - - - 3963 05 64,562 460,667 - - 10,145 - - 10,145 - - - 3.205.000 - 3.205.000 9,921 23,327 1,664.91 1 3,666,332 77,060 14,427.659 301,063 - - 1,876,469 7,769,860 4,225,015 - - 792,744 - 694,887 1,487,631 - - - - - 5,755,929 1,492.31 5 '1 35,931 - - 2,282,844 5,478,559 - - - - 41 8,585 418,585 - - - [5,542,801) - [S,W2,801 J 1,793.378 135,931 792.744 (3,666,3321 5.166.176 11,822,918 $ 1,803,299 $ 159,258 !$ 2,457,655 $ - $ 5,243,236 $ 26,250,577 The notes to the basic financial statements are an integral part of this statement. 31 CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET ASSETS OF GOVERNMENTAL ACTIVITIES December 31,2008 Total Governmental Fund Balances Amounts reported for governmental activities in the statement of net assets are different because Bond issuance costs are shown as current year expenditures in the funds. Bond issuance costs Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds The cost of capital assets is Accumulated depreciation is An internal service fund is used by the City's management to charge the costs of the worker's compensation program. The assets and liabilities of the internal service fund are included with governmental activities. The following liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. These liabilities at year end consist of: Compensated absences Net OPEB obligation Temporary notes payable Bonds payable Accrued interest on the bonds Net Assets of Governmental Activities $ 11,822,918 341,445 222,831,746 74,101,264 148,730,482 2,943,808 3,138,866 687,608 , 1,800,000 29,869,930 297,679 [35,794,083] $128,044,570 The notes to the basic financial statements are an integral part of this statement. 33 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31,2008 Tourism Flood i3 Employee Drainage and General Benefits Improvement Convention REVENUES: Taxes Real estate taxes Delinquent taxes Motor vehicle taxes General sales taxes Selective sales taxes Other taxes Intergovernmental Special assessments Licenses and permits Charges for services Investment revenue Reimbursements Miscellaneous Total revenues EXPENDITURES: Current General government Public safety Public works Public health and sanitation Culture and recreation Planning and development Miscellaneous Capital outlay Debt service Principal retirement Interest and other charges Total expenditures Excess [deficiency] of revenue and other sources OTHER FINANCING SOURCES [USES] over [under] expenditures and other [uses] Issuance of bonds Bond premium Temporary note premium Transfers in Transfers [out] Total other financing sources [uses] Net change in fund balance Fund balance - Beginning of year Fund balance - End of year $ 2,240,701 $ 5,177,657 64,306 148,538 241,931 668,205 11,985.856 4.685.1 05 91 1,305 - 5,793.253 244,769 496.742 - 38,703 26,663,968 6,033,103 3,336,261 14,0703 89 5,2 39,844 1,109,794 2,297,431 2,087,685 630,178 263,444 3,874,688 1,000,874 33.1 91 585,935 331,180 - $ 181,056 5,576 23.294 - - - - - - - - $ - - 1,062,071 - 205 209,926 - 5.214 - - 246,481 1,062,276 - 639,917 - 251,695 639,917 28,771,382 6,089,312 [2,107.414] [56,209] [41,769] 422,359 - .1,066,306 - - [260,000] - - [426,612] 806.306 - [426,612 J [1,301 ,I 081 [56,209] [41,769] [4,2531 7,330,631 845,856 548,952 278.921 $ 6,029,523 $ 789,647 $ 507,183 $ 274,668 - 34 Other Total - Gas Center Service Proiects Funds Funds Special Bicentennial Debt Capital Governmental Governmental $ -$ - $ 1,484,503 $ -$ - $ 9,083,917 - - 44,091 - 262,511 - - 186,074 - 1,119,504 - - - 11,985.856 - - - - 2,588,731 2,588,731 - - - - 5,747,176 1,425,090 - - 1,404,956 3,741,351 - - 1,178,122 - - 1,178.122 - - - - 10,149 10,149 - 934,216 - - 687,804 7,415,273 37,257 - 54,017 39,574 1 13,994 489.81 6 - - 2 - 38,705 25.1 68 - *- - 75,116 597.026 1.48751 5 934,216 2,946,807 39,576 4,880,750 44,258,137 - - 346,786 - - - 1,313.262 - 1,649,483 - - 12,344 3,889,829 - 132.851 608,734 31 8,524 45 4,489,253 3,599.705 17,944,877 6.592.71 8 1,275,836 5,141,583 3,377.306 45 10,581,347 - - 2,786,702 - 25,000 . 2,811,702 - - 1,114,323 412,540 40,480 1,567.343 1,660,048 1,661,827 . 3,901,025 4,302,369 5,614,887 52,892,462 [172.533] [727,611] [954,218] [4.262,7931 [734,137] [8,634,325] - - - 3,720,000 3,525,000 7,245,000 - - - 43,532 - 43.532 - - 36,505 - - 36,505 180,000 636,612 500,000 440.000 - 2,822,918 - - - - [2,076.610] [2,763.222] 180,000 636.612 536,505 4,203,532 1,448,390 7,384,733 7,467 [90,999] [417,713] [59,26 11 714,253 [1.249,592] 1,785,911 226,930 1,210,457 [3,607,071] 4,451,923 13,072,510 L $ 1,793,378 $ 135,931 $ 792,744 $ [3,666= =,166,1s $ 11,822,918 The notes to the basic financial statements are an integral part of this statement. 35 CITY OF SALINA, KANSAS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, For the Year Ended December 31,2008 AND CHANGES IN FUND BALANCE WITH THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES Total Net Change In Fund Balances - Governmental Funds $ [1,249,592] Amounts reported for governmental activities in the statement of activities are different because Capital outlays to purchase or build assets are reported in governmental funds as expenditures. However, for governmental activities those costs are shown , in the statement of net assets and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the amount by which capital outlays exceeds depreciation in the period. Gain on sale of assets. 11,756 Proceeds from sale of assets [29,695] Capital outlays 10,587,951 Depreciation expense [3,957,053] 6,612,959 Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the Statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This is the amount by which interest increased. An internal service fund is used by the city's management to charge the costs of certain activities to the individual funds. The revenues and expenses of certain internal service fund is reported with governmental activities. Some expenses reported in the statement of activities, such as compensated absences and other post employment benefits, do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Bond and temporary note proceeds are other financing sources in the governmental funds, but they increase long-term liabilities in the statement of net assets and do not affect the statement of activities. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. Repayment of bond principal and bond issuance costs is an expenditure in the governmental funds, but it reduces long-term liabilities in the statement of net assets and does not affect the statement of activities. Changes In Net Assets of Governmental Activities 14,100 77,120 [957,609] 2,811,702 $ 76,226 The notes to the basic financial statements are an integral part of this statement. 37 CITY OF SALINA. KANSAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31.2008 ASSETS Current assets Cash and investments Receivables (net of allowance for uncollectibles) Inventory and prepaid supplies Restricted cash and investments Deferred charges Total current assets Capital assets: Accounts Nondepreciable capital assets: Construction in progress Land Depredable capital assets: Capital assets Less: accumulated depreciation Total capital assets Total assets Lia biliis: Current liabilities Accounts payable Interest payable Meter deposits payable Current portion of ampensated absences payable Current portion of amed daims payable Current portion of loans payable Current portion of general obligation bonds payable Current portion of revenue bonds payable Total current liabilities Noncurrent liabifii: Compensated absences payable Acaued claims payable Net OPE6 Obligation Payable from restricted assets Loans payable General obligation bonds payable Revenue bonds payable Landfill postclosure care llabiliities Total noncurrent fiabillties Total liabilies Net Assets Invested in capital assets, net of related debt Restricted Unrestrided Total net assets Restricted for bond retirement Business-Type Activities: Enterprise Funds Total Internal Soli Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $3,091,303 $ 8.577.929 $ 519.520 $ 76,874 $12,265,626 $3.686.524 266.293 801.892 127,018 - 1,195203 - 1,211,221 - 1,211,221 11.715 202,526 214,241 641,538 - 18.408 659.946 149.701 3.369.31 1 11,435,106 646,538 95.282 15,546.237 3,836225 200.461 200.461 682,000 844,002 - 15.000 1,541,002 6,510,833 86,756.884 1,351,466 992,099 95.61 1282 860,874 3367,500 33,896,667 738,305 580.050 39.182,522 755.428 3,225,333 53,904,680 613,161 427.049 58,170,223 105,446 $6,594,644 $65,339.786 $1.259,699 $ 522,331 $73.716.460 $3.941.671 $ 99,009 10,587 23.147 373,000 505,743 $ 368,964 157.895 102.497 152,670 373,962 250.299 710,000 2.1 16,287 $ 3.351 60.913 64.264 $ 4.540 40.059 44.599 $ 475,864 168,482 102,497 276,789 373.962 623.299 710.000 2.730.893 $ 104.104 36,067 501,050 641221 32.960 21 7.395 86.737 57.041 394.133 51.358 12.988 76.913 22.666 13.571 126.138 - 305284 - 6.054.797 - 6.054.797 - 2,156,770 - 2,320,000 - 2,320,000 1,566,636 - 1.566.636 2482.584 9,955.875 109,403 70.612 12.618.474 ' 356.642 $2,988.327 $12.072.162 $ 173,667 $ 115211 $15.349.367 $ 997.863 870.000 1.286.770 $1.982.333 942,908,852 $ 613,161 $ 427,049 $45,931,395 $ 105,446 - 1,211.221 - 1211,221 1,623,984 9,147.551 472.871 119,9291 11,224.477 2,838,362 $3.606.317 953,267,624 $1,086,032 $ 407,120 $58,367,093 $2.943.808 The notes to the basic financial statements are an integral part of this statement. 38 CITY OF SALINA, KANSAS Operating revenues Charges for services Reimbursed revenues Miscellaneous Total operating revenues Operating expenses General government Public works Recreation Depreciation Total operating expenses STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31,2008 Business-Type ActiViies: Enterprise Funds Total internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $2,748,519 $14,072,513 $2,171,938 $ 751.252 $19,744,222 $9,379,116 1 1,430 69.803 492 27,747 109,472 205.574 2.759.949 14,150,986 2,172.430 778.999 19,862,364 9,584,690 8,670 8,670 - 9,570.649 1,599,591 10,943,488 2,097,557 - 14,640,636 - 841,004 841,004 369,940 1,793,908 106,448 39,865 2,310.161 16,184 1,969,531 12,737,396 2,204,005 880,869 17,791,801 9,586,833 Operating income [loss] 790,418 1,413,590 [31,575] [101,870] 2,070,563 [2.143] Nonoperating revenues [expenses] Investment revenue 74.1 18 208,641 15,935 1.194 299.888 78.613 Gain/@oss] on disposal of fixed assets 14.840 2.500 15,000 32.340 650 Amortization of bond issuance costs [5,859] (19,7311 [25,590] Total nonoperating revenues [expenses] 38.579 (301,395J 30.935 1.194 [230,687] 79.263 Debt service [44,520] [492,805] - [537,325] 'Income [loss] before transfers Transfers from [to] other funds Transfers in Transfers [out] Total transfers Change in net assets Net assets, January 1 Restatement Net assets, January 1, restated Net assets. December 31 828.997 1,112.195 [64OJ [100,676] 1,839,876 77.120 38,179 82,125 120.304 [180,000] [180,000] [180.000] 38.179 82,125 [59,696] 648,997 1,150,374 16401 [18,551] 1,780.180 77.1 20 3.340.342 52.140.537 1,106,441 410,404 56,997,724 2,887,333 [383,022] p3,287] [19,769] 15,267 [410.811] P0.645] 2,957,320 52,117,250 1,086,672 425,671 56,586,913 2,866,688 f 3,606,317 $53.267.624 $1,086,032 $ 407.120 $58,367.093 92,943,808 The notes to the basic financial statements are an integral part of this statement. 39 CITY OF SALINA, KANSAS STAEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31,2008 Business-Type Activities Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Funds Disposal Seyer Sanitation GoHCourse Funds - Cash flows from operating acbvities Cash received from customers and users $2,677,896 $14,046,652 $2.165.515 $ 751,251 $19,641.314 $9,468,137 Cash paid to suppliers of goods or services [1,360.476] P,879,527J [1.390.660] [400,942] [11,031.605] [8.971,083] Cash paid to employees [459,7353 [2,846.766] [762.435] [410.650] [4.479.586] [638,8611 Other operating receipts 11,430 78,473 492 27.747 118,142 205.574 Net cash provided by [used in] operating actrvities 869.115 3.398.832 12,912 132.5941 4,248.265 63,767 Cash flows from capital and related financing activities Purchase and construction of Gapital assets [630.000] 1262,7421 1268.5961 - [1,161.338] Proceeds from sale of capital assets 105,600 2.500 15.000 123.100 650 Principal payments -general obligation bonds [373,000] r35.2991 - [1.108,299] Prinupal payments - revenue bonds - [680,000] - [680.000] Interest paid [47.587] (515,4591 - [563,046] Principal payments - loans payable [358.344] [358,344] Net cash provided by [used in] capital and related financing activities I944.987) [2.549.344] 1253,596) - 13,747,927) 650 Cash flows from investing activities Interest received 74.118 208,642 15.935 1.195 299,890 78.612 Cash Rows from noncapital financing activities Transfers in 38.179 - 82.125 120.304 Transfen [out] [l80,000] 11 80,000) Net cash provided by [used in] noncapital financing activities [180,000] 38.179 - 82.125 [59,696] Net increase [decrease] in cash and cash equivalents [181,754] 1,096,309 1224,7491 50,726 740.532 143.029 3,273,057 8.692,841 744.269 26.148 12.736,315 3.543.495 Cash and cash equivalents. January 1 Cash and cash equivalents, December 31 Cash and investments Restricted cash and investments $3,091,303 $ 9,789.150 $ 519,520 $ 76,874 $13,476.847 $3,686.524 $3,091,303 $ 85'7,929 S 519,520 $ 76,874 $12,265.626 $3,686,524 - 1,211,221 - 1,211,221 Total cash and cash equivalents $3,091,303 8 9,789.150 $ 519,520 $ 76.874 $13,476.847 $3.686.524 The notes to the basic financial statements an? an integral part of this statement. 41 CITY OF SALINA, KANSAS Reconciliation of operating poss] income to net cash Operating income [loss] provided by [used in] operating activities STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31.2008 Business-Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitahon GolfCourse Funds - Funds Adjustments to reconcile operating income [ross] to net cash provided by [used in] operating activities Depreciation expense [Increase] decrease in accounts receivable [Increase] decrease in inventory Increase [decrease] In accounts payable Increase [decrease] in acaued compensated absences Increase [decrease] in claims payable Increase [dewease] in landfill postdosure liabilities Increase [decrease] in net OBEB obligation Increase [decrease] in meter deposits payable Net cash provided by [used in] operating activities $ 790.418 $1,413,590 $[31.575] $ [101.870] $2,070,563 $ (2.143) 369,940 (70.6231 [ 1 22.7291 11,837 [ 122.71 6) 12,988 1,793.908 [28.319] 138,569 24,568 [22.8561 76,913 2,459 106.448 (6.4231 196,2171 18,013 22.666 39.865 6,606 F’431 9,977 13.571 2,310.161 [105.365] [16.250] [81,120] 64,395 [122.716] 126.1 38 2.459 16.184 [23.132) [16,772] 609 89,021 $ 869.115 $3,398,832 $ 12,912 $ [32,594J $4,248.265 $ 63,767 The notes to the basic finanaal statements are an integral part of this statement 42 CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS December 31,2008 ASSETS Cash and investments Total assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Total liabilities $ 496,887 $ 496,887 $ 496,887 $ 496,887 The notes to the basic financial statements are an integral part of this statement. 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A Reporting Entity The City of Salina, Kansas (the City) is a municipal corporation governed by a mayor and a five-member commission. These financial statements present the City and its component units, entities for which the government is considered to be financially accountable. Each discretely presented component unit is reported in a separate column in the government wide statements to emphasize that it is legally separated from the government. Discretelv Presented Component Units City of Salina Airport Authority - The Salina Airport Authority was created for the purpose of accepting as surplus property portions of the former Schilling AF.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 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 Mayor of the City of Salina appoints the governing board. The City Commission may remove commissioners of the Housing Authority. The City must issue revenue bonds for the Housing Authority. 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 has a June 30 fiscal year end. Information in the accompanying financial statements covers the fiscal year ended June 30,2008. Complete financial statements for. each of the individual component units may be obtained at the entity's administrative offices. !Housing Autknty of i \the City of Salina __ _J !Salina, KS 7- 7 . -- - :Salina f- - Airport ____ Authority __-, ' - -- -d I 1 ----i ~-___- -lz;s. 5th -- 13237 hold A=. -- --- i - -. .--. __ 1. --- Salina, KS i--. -..----I ---- f -- 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 City and County organized the Salina County-City Building Authority 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 financial statements are available from the governing boards of each joint venture. -...-- - .. - -- .--_ -- - -- - --. --. _. Board of , Building ' Health- i Authority 1 x $1,468,260 $3,083,977 : i 214,145 f 35,826: 4,123,794 i 826,564 I 988,390 _- 290,329 i --1_1. -- - .. -_, - - _- -- ---- -- -_ -.-. ~ ..^ ~ - __ ' (Un,;;ditS) 1 . -. - --1 i (Audited) ..___ - - - -- -_ Total net assets, December 31, 2008 .Total change in net assets, December 31, 2008 ,Total rewnues, year ended Decerkr 31, 2008 ,Total menus fromCity of Salina - -- -._. II",..,----..u--I ,. - r- .---I---.----. .- -_I___ _-_- --..- - -4 .I_ ..- ._ ,. - --. .- +-- t --. i t _-_-_-_ _-_ --_I-_ -_ - -- _- ._ - -_-- . - .. I *-- , --*.. -- ^^I 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 . Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Reporting Entity (Continued) Joint Ventures (Continued) Complete financial statements for each of the joint ventures may be obtained at the entity’s administrative offices. _- - -c ,Salina CCunty-City’ - - - ----- i Building Authority : 1300 west Ash simi ; I i ,125 West Elm Street , !%rngSx& County &ad of Health I-- -_--- ---T-- - [Salina, I ~ KS I--- - .A- - - - _--- +- ~____._I L _- -_- - -- I-- -- i - - - -- ---- I -- --- - I I Salina, _- Ks’ 3- _____.& -- B. Government-wide and fund financial statements The statement of net assets and the statement of activities report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Exceptions to this general rule are charges between the City’s governmental and business-type activities. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational requirements of a particular program. Taxes and other items, which are not classified as program revenues, are presented as general revenues of the city. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and presented in a single column in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to certain compensated absences and claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Property taxes and interesf associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expendituredriven grants are recognized as revenue when the quallfying expenditures have been incurred and all other grant requirements have been met. The City applies all applicable Governmental Accounting Standards Board (GASB) pronouncements as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: FASB Statements and Interpretations, APB Opinions, and ARBS. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net total assets. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing goods and services in connection with a proprietary fund’s ongoing operajions. The principal operating revenues of the City‘s proprietary funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenues and expenses. . The internal service funds account for risk management, worker’s compensation, health insurance, central garage and information services that are provided to other departments or agencies of the government, or to other governments, on a cost-reimbursement basis. Agency funds are custodial in nature and do not measure results of operations or have a measurement focus. Agency funds do however use the accrual basis of accounting. Agency funds are used to account for assets held as an agent for individuals, other governmental units, private organizations andlor other funds. The City reports the following major governmental funds: The general fund is used to account for resources traditionally associated with government, which are not required legally, or by sound financial management to be accounted for in another fund. Employee benefits fund - To account for the costs of various benefds provided to governmental employees. Flood and drainage improvement fund - To account for property tax revenues to be used for capital improvements to the flood control and stormwater drainage systems. Tourism and convention fund - To account for transient guest tax revenues, which are specifically restricted to promotion and tourism activities. Special gas fund - To account for the City’s share of motor fuel tax revenues, which are legally restricted to the maintenance, or improvement of streets within the City. Bicentennial Center fund - To account for the activities of the Ciws convention center. The debt service fund is used to account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources and special assessment bond principal and interest from special assessment levies when the City is obligated in some manner for the payment. 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) The capital projects fund is used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. The City reports the following major proprietary funds: Sanitation fund - To account for the operations of the Ciys refuse collection service. Solid waste disposal fund - To account for the activities of the CWs landfill. Golf course fund - To account for the operations of the municipal golf course. Water and sewer fund - To account for the activities of the City's water and sewer operations. D. 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 in the financial statements as "Cash and Investments." The city's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term 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. 2. Receivables and Payables Transactions between funds that are representative of Iendinglborrowing arrangements outstanding at the end of the year are referred to as either "interfund receivables/payables" (i.e., the current portion of interfund loans) or "advances tofirom other funds" (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as "due tohm other funds." Accounts Receivable. The City records revenues when services are provided. All receivables are shown net of an allowance for doubtful accounts. property taxes receivable. Collection of current year property tax by the County Treasurer is not completed, apportioned or 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 and, therefore, are not susceptible to accrual. Accruals of uncollected current year property taxes are offset by deferred revenue and are identical to the adopted budget for 2009. It is not practicable to apportion delinquent taxes held by the County Treasurer at the end of the accounting period, and further, the amounts thereof are not material in relationship to,the financial statements taken as a whole. CITY OF SALINA KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 0. Assets, Liabilities and Equity (Continued) 2. Receivables and Payables (Continued) The determination of assessed valuations and the collection of property taxes for all political subdivisions in the State of Kansas are the responsibility of the various counties. The County Appraiser annually determines assessed valuations on January 1 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 finance the budget of the ensuing year. Property taxes are levied and liens against property are placed on November 1 of the year prior to the fiscal year for which they are budgeted. Payments are due November 1, becoming delinquent, with penalty, December 21. Payments of 50% are accepted through December 20, with the second 50% then being due on or before May 10 of the following year. This procedure eliminates the need to issue tax anticipation notes since funds will be on hand prior to the beginning of each fiscal year. The City Treasurer draws down all available funds from the County Treasurer's office in two-month intervals. Taxes remaining due and unpaid at February 15 and July 1 are subject to collection procedures prescribed in state statutes. 3. Inventories and Prepaid Items Inventories are valued at cost using the first-inifirst-out (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 4. Restricted Assets -- Certain proceeds of the City's business-type fund revenue 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." 5. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements.. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Capital assets used in governmental fund types of the City are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their estimated fair value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets lives are not capitalized. 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 .. Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. ' Assets, Liabilities, and Equity (Continued) 5. Capital Assets (Continued) Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type is included in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Property, plant and equipment of the primary government, are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Other equipment Vehicles Infrastructure Years 50 5 -15 6 -10 30 -50 6. 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 11 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. In 2001, a limited buy back policy was instituted. All regular employees are entitled to paid vacation time. Such leave is granted each year of employment and unused leave may accumulate w-thout 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 financial resources is reported as an expenditure and a fund liability in the government fund financial statements that will pay it. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Vested or accumulated vacation leave of the business-type funds and government wide financial statements are recorded as an expense and liability of those funds as the benefits accrue to employees. A liability is recorded for accumulated rights to receive sick pay benefits that are payable upon termination of employment. The General Fund, Bicentennial Center Fund, Central Garage Fund, Information Systems Fund, Sanitation Fund, Solid Waste Fund, Golf Course Fund, and Water and Sewer Fund have been used in prior years to liquidate the liability for compensated absences. 7. Temwrarv Notes Upon authorization for the issuance of general obligation bonds for certain improvements, Kansas law permits the temporary financing of such improvements by the issuance 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. CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 8. Lonnterm Obliaations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. 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. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental. fund types recognize bond premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 9. Fund Eauity In the fund financial statements, governmental funds report reservations of fund balance amounts that are not appropriable or are legally segregated for a specific purpose. Reservations of business-type net assets are limited to outside third-party restrictions. Designations of fund balance represent tentative management plans that are subject to change. IO. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 11. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Note 2. 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 fund, and enterprise funds. 51 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budgetary Information (Continued) The statutes provide for the following sequence and timetable in the adoption of the legal annual operating budget: 1. Preparation of the budget for the succeeding year on or before August 1. 2. Publication in local newspaper of the proposed budget and notice of public hearing on the budget on or before August 5. 3. Public hearing on or before August 15, but at least ten days after publication of notice of hearing. 4. Adoption of the final budget on or before August 25. The statutes allow 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. The 2008 budget was amended for the General Fund, Tourism and Convention Fund, Bicentennial Fund, Business Improvement District Fund, and the Central Garage 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 compared to legally budgeted receipts and expenditures. . All legal annual operating budgets are prepared using the statutory basis of accounting, in which, revenues are recognized when cash is received, and 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, CDBG-ED, HOME V, Special Law Enforcement, Police Grants, Dare Donations, War Memorial Maintenance and Disaster Recovery. 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. A legal operating budget is also not required for the Internal Service funds. Actual to budget comparisons for these funds that present budgets to the Commissioners are shown strictly for informational 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. 52 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) B. Statutory Violations Actual exceeded budgeted expenditures at December 31,2008 in the Business Improvement City Fund and in the Special Alcohol Fund, which violates KSA 79-2935. C. Compliance With Bond Reserve Requirements Water & Sewer Bond Reserve Requirements The bond reserve requirement is to establish and maintain a reserve account. The Water 8 Sewer fund met this requirement for 2008. Resew requirement . .. $1.655.531 _- Actual reseds- Bond reserk account ‘ I31 ;211 ,zi Total actual resems ,, I_ - . -L .p$1,211,221 ....... .- The City was in compliance with the reserve account balance requirements at December 31,2008. D. Legal Debt Margin The City is subject to the municipal finance law of the state of Kansas which limits the 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, 2008, the statutory limit for the City was $132,983,158, providing a debt margin of $98,900,971. Note 3. RESTATEMENT OF EQUITY Following the dose of the previous fiscal year, it was discovered that several capital assets were misclassified or recorded incorrectly. Accordingly, the beginning net assets balances were restated, the effects of which are as follows: ---- L .., I -I.- -. _-- - - .- -- -. ~ .-.t. - ._--- -1 -- Net Assets, December%. 2007 . $127,994,368 ’ $3,340,342 $52,140,537 $1,106.441 i $410,404 $245,281 . $287,712; (26,0241’ [383.022] [23;i’87Ii [19.769]: 15,267 13,374 _- .~ [34.019], --__. Capital Asset Adjustment I December31 2007, Restated , $127,968,344 82,957.320 $52,117,250 1 $1,086,672 2-- $425,671 -.- $258.655 i $253.693 - .,A I --.. I --_ - .- -- ...--I . ” ...I- .“A*. _,_I--.”.-- .-“ . _.._ - __ - _- -- ~ -- *- z ! .- I -- - _- - ., ..- _. - ,Net - Assets, - - -- - __ --I - 4- - - ..’ ___ ___ P- 2 53 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments The City's cash is considered to be active funds by management and is invested according to KSA 9-1401. The statute requires that banks eligible to hold active funds have a main or branch bank in the county in which the City is located or in a county adjacent to the City and the banks provide an acceptable rate for active funds. Various City investments are considered to be idle funds by management and are invested according to KSA 12-1675. The statute requires that the City invest its idle funds in only temporary notes of the City, bank certificates of deposit, repurchase agreements, and if eligible banks do not offer an acceptable rate for the funds: U.S. Treasury bills or notes or the Municipal Investment Pool (KMIP). Maturities of the above investments may not exceed two years by statute. Some of the Cws investments are of bond proceeds invested pursuant to KSA 10-131. This statute allows additional investment authority beyond that of KSA 12-1 675. Investments of bond proceeds may follow KSA 12-1675 or include other investments such as the KMIP, direct obligations of the US. government or any agency thereof, investment agreements with a financial institution the obligations of which at the time of investment are rated in either of the three highest rating categories by Moody's investors service or Standard and Poor's corporation, and various other investments as specified in KSA 10-131. At December 31,2008, the City has the following investments: .. . -- - - Inmstment Type ..-... I- Kansas Municipal investment Pool .-*-. .. .*,.-- . - . - . - ", --.-. .- I -- . -I- ,_..-.-- - r - - , _.-, ___^L -_ I ---.- -- : $24,636,622 . -,-_ I ___-- "- .- Total fair mlue . .......- - -----_ - -.- 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 10 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 policy provides direction on concentration risk. The City policy states that funds shall be diversified to reduce the extent of losses due to having an unbalanced portfolio in terms of maturities, instrument type, and issuers. Therefore, portfolio maturities shall be staggered to avoid undue concentration of assets in a specific maturity sector. Liquidity, free of market risk, shall be assured through practices insuring that the next disbursement date and payroll date are covered through maturing investments, marketable U.S. Treasury Bills, the Municipal Investment Pool, or money market accounts. Default risk shall be minimized by requiring that all security purchases occur on a delivery vs. payment basis, and that all securities are adequately collateralized. Risk of market price volatility shall be controlled through the adoption of a "buy and hold" strategy whereby the City holds each investment to maturity, coupled with maintenance of an adequate liquidity position to insure the ability to meet normal anticipated cash flow needs. CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A. B. Deposits and Investments (Continued) When advantageous, it is allowable to sell investments to realize a gain due to price fluctuations; however, such transactions shall not be a part of the normal course of business. The City recognizes that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Portfolio diversification is employed as a way to control risk due to issuer default. In the event of a default by a specific issuer, the Director of Finance and Administration shall review, and, if appropriate, proceed to liquidate securities having comparable credit risks. Custodial credit risk is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City's deposit policy for custodial credit risk require that the depository banks will maintain 100% security in the form of FDIC coverage and pledged collateral according to KSA 9-1402. Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: -. _- .. . 55 CITY OF SALINA. KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) C. lnterfund Receivables and Payables The composition of interfund balances as of December 31,2008, is as follows: Fund Types General Fund Capital Projects Fund Ocher Gowmment Funds ~ __. Due From DueTo $ 460,667 $ - - 396,iOS - 64,562 __ -- I $ 460,667 '; $ 460,667-' The City uses interfund receivables and payables as needed when pooled cash is negative within a fund until investments mature or grant proceeds are received. All payables are cleared in less than one year. . 56 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DFTAILED NOTES ON ALL FUNDS (Continued) 0. Capital Assets Capital asset activity for the year ended December 31,2008, was as follows: Cilygovemmental-activities. __ ___ Governmental adivities: *.- Capital .. __ asseg. noi being depyeeted Construction in progreiS Land Capltal asseg; being depreciated __ IntastructurG' Buildings - .- and improwments - Vehicles Equipment, fumitu&Tnd fidu& .- ...-_ .. ---. -1___ - , I _---- -.-_ ". ._- -_ - -....- Total capital assets Les2-a-&fn_utatedep reciatioifir- . - .- - _- .. Infrastructure ___ - Buildings - ___ and iEprowments ..-- - Vehides Equipment furniture and fixlures - . - - __. - - _-___ ~. Total accumulated depreciation Pdj Bal. Balance 12/31/2007 Adjusbnents 12/31/2007 Additions Retirements 12131/2008 _. $ 22,685,858 $ 11,6971 S 22.684,161 $9,879,150- $ 32,034 , $ 32,531,277 22,688,817 p11,626] 22,477,191 - 22,477.191 132,967,790 366.816 133,334,606 . ._ ,- - 133,334,606 23,548.952 - 23,548,952 ' - -23,528,952 I 6,f78,742 [393,529] 6,385,213 . 272,700 , 171,379 6,486,534 4,100,746 800.576 4,901,322 468,135 55,397 5,314;060 25g.810 223,692,620 ,.- . . 52,575,114 ' 206,348 52,761,462 2,6g,798 ,^ L. , I - 55,446,260; 4,697.490 [12,497] 4,664,993 386,31_2 - 196,238: 4,675,067 ,_ --- 3,617.429 2,959206 39c742 10,293.918 . [&,029] 10,287.889 i 630,047 - . 10,917,936 -_ . .. .. 3,357,948 ; 2721080 12,599 ,- . . .__.__.I -- L 8 I 70,505,728 586;564 71,092,292 ' 3,973,237 268.837 74,856,692- 'r - - -. - - - - I -' - J-__.__-_--._- ,.----...__ .- .-_ --_. -.- "__..__._~ --.- 1 ..--__ " - __^.._ 'Governmental adidties capital assets, net 8 142265.177 S p6,0241 S 142,239,153 S 6,646.748 $ 49,973 ; $148,835,928 2 11- I ._ - __ -I -._ -- I- 'Business-type activities!- -_ - __ - - - - , - --.-- -.LII-l ..-- ,_--.- 9,631 :$ . l-go,s~o $,,- .- - - - .--I- Capital assets, not being depreciated , - $ 200.461 _-. ~ - 1.541.002 : Co_nstruction'in progress ' $ 39,763-, $ [3%:i32] $ Land ' 1.544.1 10 r-- [3,108] 1,541,002 -: - _"_ : Infrastructure -_I_* -- Buildings a-nd improvements __ I -- -_-I^ I ,.. I 24,039,412 373,396 : 24.412.808 ' 1,406,103 2.006 8.906.376 445.478 ~ -.- -..,.* , e.9-~.37.0";,. . . ,- --- --. .c. - -__-- -, .-I_-. - Vehides Equipment, furniture and fidures _--- ' _-_I ~ . 36,792,3613 426,86?-L 37,222,228 5,310.i61 i 349,867 :- 39,182,522 -. . 7 --- L _. .- - _- - ,Total accumulated depreciation -< .. 57 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets (Continued) The City's depreciation expense was charged to governmental functions as follows: E. Long-Term Debt Governmental Activities: General gowmrnent Putic'saGty Public works .Public health Culiure and recreation Planning and development _- ,- ' ,Tot ai^ hepieciation Business-type Activities: Solid Waste Disposal Wster and Sewer Sanitation Golf.Course Division Total depreciation I- -_ _. _- $ 62,440 31 9.069 3,037,172 34,273 416,790 $3.973.237 __ 103,493'! __I_._" $ 369.940 1,793.908 106,448 39,865 $2,310,161 , Following is a summary of changes in long-term debt for fiscal year 2008: _- - - 1- - - -- - - -1 _--- , Balance , Amnts . Decerrber 31. DE Win 2008 OneYear -- -_ - 7 - - -- Balance . _- - -- -_ - ..- ---I < ^_.. _.... f - .- .. -..,-- --- -- -' January 1, , 2008 -- Additions Deletions -- -...-.-I ._-_ .__._^._ - ~ I__- -. - Governmental activities: i I I General ob!igatbn bonds / $25,436.632 --c--- $ 7,245,000 _--- $ 2,81y,70ZT - $29869,930 -I_ ~ ..I_ $ 2,866,701 ,- I - Accrued ---------. conpensation . :- -2.955,6?; ?pJ:515 , go06 -.I-,.- 3,226,291 ' c- 1,331,007 _I- , Tenporary notes 7,625.000 3,205.000 5,825,000 5,005,000 , 5,005,000- Total $36.017.314 $12,051,615 $ 9,967,708 $36,101,221 $ 9,202,708 ' Business-type activities: I General obligation bonds -- - -- .. -- __-__.__ - .. I. -_ -. __, ,__---- I- -- --- _. .-- - ,- -_ -- - .__^_ . -- ,_ - *I - -, ...,... .. ." _- ! t I i -- -.. - __ .! - , $ - 3,888,368, -$ - - ! $ 1,108,299 ! $ 2,780,069 -$ 623,299 ' WGGnuebonds 3.710.ooO 68o.ooo . . 3030.000 710.000 Total 58 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) The following is a detailed listing of the city's long-term debt including general obligation bonds, revenue bonds. temporary notes and loans payable: Primary Government .General Obligation Bonds lntemal Improwments 2000, due 10/1/2015 lntemal Improwments ..--.,... 2001, .-.. due - 10/%2016- 'Water/s&wer refunding 2002A, due iGl/2Oi3 Internal IrnprowGents 20028, due 10/1/2017 Internal Impmements 2003A, due 10/1/2018 Refunding -_ .- .. 2004A, due 8/1/2015 lntemal Impro\Rments Z?OiB, due 10/1/2019 Internal Imp6kments 2005A, 'due 10/92020 ,Internal Impnikments SOOSA, due io/ii2026 . - -!Internal lmpro\Rment~2006~~due~lO/l/2021 . - -~. _-- ... !nemal lk~prowme% 2007A. - due ~ _- .~ 10/1/2027 jlntemal Imp&ments 2008A, due 10/1/2023-' finternal Impbwments 20088. due 7/1/2028 i - <.,,,. . ~ . ". I __ -_ T&l general obligation bonds . -- --__ ._ -__ ~ Original Interest Bonds Issue Rates Outstanding $ 3,885,000 4.625%to 6.50% $ . 330,000 2,045,000 3.00%to 4.50% 1,665,000 1,980,000 2.709Odto-4.50% 985,000 ' 4,350,000 2.13% to 3.85% ' 2,725,000 5,585,000 2.10% to 4.00% - 2,880,000 4,053,0h-- 3.00% io 4.00% 2.530.000 4,210,660 2.95'2to 4:55% 3,205,000 2,200,000 ' 3.5$?3 io 5.50% 1,9801000 8%,000 ' 4.Od'?oib 4.50% 745,000 I 6;G5,000 4.25% to 4.625Vo : - .- 6,180,000 ,. 3,720,000 -K25?%-to 4.00% 3,720,000 3,525,000 . 3.6%! to 5.00% ; 3,525,000 $ 32,650,000 5,350,000 4.00% to4.90% . 2,840,000 .-,-,. _- - . - - - - - - - - - : .-~ ..---- ~ ,-. . - -._-I... !I ---_ - ~ ,Loans Payable 3, :Kansas Public Water Supply, due 2/1/2020 I ;Kansas Public Water Supply, due 2/1/2023 Total loans payable ,i Temporary Notes r, Sen&-200&1 .-due 8/1/2009 --.- _.- - , - i i Series-26061, du&8/1/2009 .-*--- ----. _-.. _._"_ - - - . - -_.. -__. .-- _I -.. , - ,-- I --.- - I .. ~ -.-.-,, ---, - - -- - __ .- 3.600.00~ 4.29% ' $ 2,430,462 4.13% . 3,998.298 . -" ..-._ , ._ - $ 6,428,760 - I.- .I- I- -.-I .~- - -5000,000 I ..-. .I- - -- 1,8Ofi;OOO . 3.49% . .- , i $ .. I 1;8oo,doo: i 3.205,- : $ 5:003$66 -. 3,205,000 2.75%- -__ - . - .-_- I - ,,, , 59 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) ~ Issue Component Unit Salina Airport Authority General Obligation Bonds -.- " ~ _. -,,- , - - - - Gene61 Obligation 19998, due 2010 $ 555,000- 1;385,000 2,635,66- - General - ---. Obligation -..- ~ 2001A, due 2012 ,. I General Obliaation 2002A, due 2012 E. Long-Term Debt (Continued) __ _- -r Bonds Original lnteresi Rates Outstanding 3.90% to5.2d% $ 135,000 4.45%'to 5.6090. 650,000 2.45GO to 3.76% 1,160,OOO General Obligation 20b5A;'die 2020 3,635,000 .4.75% to 5.2b% 3,635,000 : 1,005,000 4.60% to.6.00% 945,000 6,525,000 - --_ - - , -I- - - ------- -.-. .i L General Oblig%on 2007A. due 2022 -I , I__ _-- _- --- ,-, . -, -1 -- Total general obligation bonds Temmrarv Notes I " -. - I__ -. __.-.--. . , 5.600% 10,975,000 __ 10,975,000 -_ - -I -- 10,975,000 . __ Series 2007-1. due 2010 __ - ---- I - .-.5 ~ ---- . ~ Total temporary notes --.- - - -. ___. - .. ! . _. ... -- - -- Special Assessment Debt . . ..-- ~ - 207,177 27,599'; - .- 4.47% 24,877 , 232,054" -_ 565,235 1 3.79% --- - -. Airport Industrial Center, die 2016 ' ..^. ~ -._.-_- ~, ---- ~ ---- - - Hangar - 600 Sanitary Sewer, due 2021 _- .- - - ---- __.-- . ~,._,I. I . ".... Total special assessment debt -.--,_^-.-"..--I-.-.- --- - - _.. . ~ . --_ L ... - ~ 358,831 -.--_..I.- ~.. 425,000 i 6.609% : I-- ,." -. -- --, .I- - --.- .._ Financing Lease, due 2015 - -- - .... L. . . ~ .-..---,-_I-- .- Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: .__ ._----.-.--- . -- - - -_ r- I - General Obligation - Primary Gowmment -- 1 1 - - ! : Bonds I Interest ' - - - 3,180,m-j .. - ~ 4,349,384 - __ 1,169,384 - . --- - -.- - 201 0 !. 3,075,000 1 1,052,710 4,127,710 1 938,351 I 4,023,351 j i' i-_ t-. 1- 201 1 3, 085;odo ~ I 111 I 2,990,000. 821 063 ' 3,811,0631 5;-&,3$7 2012 ._. ___--_. , - ^_.__._ --. ^. ---*.---. .-- .-- -1- -I . - -1 , 201 3 I 2014-2018 9295,000 , 2,670,088 .. -----+.- ,.---- 11,965,088 - - f 6,131,816 I __I--. 1 - -- 2019-2023 I ,.- 4,935,000 ~ l-,L?6W816 2024-2028 __. _,__,- -- 340,647 i' - . - .- __ ---._I 2,660,ocib ] ..-_ - *__. _- --__ --,- : Total ii $ 32,6&,000-[5~5,060 - e $- 42,095,060 -,-I.-_. . 60 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) General Obligation - Component Units : Bonds Interest &I __- - Year i Outstanding Due 2009 $ 755,000 $ 316,316 $ 1,071,316. 1,082,148 : 999,799 : 1,004,501 ! 501,878 2,542,057 2014-2018 201 9-2022 1,135,OOO 107,025‘ ’ 1,242,025 - -. 282,148 2010 800,000 ; 201 1 755,000 244,799 795,000 209,501 2012 201 3 I. 330,000 587,057 1,955,000 ..“_I_ - - _- -- -- ;. -. i71,878 L. ; -----A - - .-..---- -I - --. _-_... ^ -~. . C._ -- d- Total $ 6,525,000 ’ $- 1,91$f,T24 -$ 8,443;724 . Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: Annual debt service requirements to maturity for temporary notes - to be paid through the issuance of general obligation bonds: - - __ - __ - -. - - - - I- 1 1- Tem-po-r&y Notes - Primary Gowmment f ----, ”_ _.-_ :I- 9 .e-*- ~-. . -- - ,- ~ -24- --___ - 7-- - - q-- __: z-- .-x - -- !i Notes Interest -. , . -.I Total , __---- Due - Year ‘I Outstandin 2609- -- .k$ 5,005,000 $ 154,873 1 $ 5,159,875 1 ! ! Total . ~i $ 5.005.00Oi $ 154,875 $ 5,159,875 I - -- - 1- - -- - _. I .- - Temporary Notes - Component Units .. i -- - , Notes , Interest i 61 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 ' Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Annual debt service requirements to maturity for financing lease - to be paid from rental revenue: Financing Lease - Component Units Lease Interest Outstanding .- Due Total __ Year 2009 $ 35,331 $ 23,141 $ 58,472 201 0 37,705 I 20,767 58,472 58,472 201 1 40,238 ' 201 2 42,941 15,531 58,472' 20i3 45,826 12,646 58,472 175,415 . $ 358,831 $ 108,&, $ 467,775 I ,. 18,.2&- ' -- _- 1 56,790 18,625 . --,..-.. - ,201 4-201 6 .. - Total .- The City has engaged in loans with the Kansas Public Water Supply Fund. The following displays annual debt service requirements to maturity for loans payable to be paid from service revenues, for the full proceeds amount: Loans - Primary Gowmment Due I .- . Interest 1 j- -- -I 243,52i $ _- 61 7,483' 201 0 ,I 228:966 ' 618.866-' Total i -_ i Loans -- - .- -- ! _---. __ i Year - i Outstandinq _ . -- I - - --_c- !- ~ - 2009 - 1;- $-- -~ 373,962 38g~840-..- $ - - ._I ,_--__. . _. -. - - ~ I 4by392 . -- ~ 213,795 I 620,187-' r -'. --I--- - - ,.. - 201 1 201 2 423.646 i97.976 621.622 I "-- -~ .- 20t3 41.634 ; 1811485 i 623,119 I - 201 9-2023 . 2014-Zlj1j3- -\-I-- 2,.50c896j -_ --- 1634;553-1 6-1 ,-~27- : - - -- 3,140,399 L- I $- 6,428,760 !.$ ---1186f,673 :-$ 8,290,433 2,oi6,817 > __ - -._- __ - - - - - - - 1,887,390 - ;, - _- - IL -I_ '-- I- - Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: i i Special Assessment Debt - Component Units -; i j Assessment Interest Due * I_ -_ - -__I- - .--- _._I.__, ._-c --._-- ..-_ - -- - - Total- -, yeaj- ' ! -Outstanding __ 33,070 i - -7 I i '- $ 24,106 . $ 8,964 ! $ 33,070 i 2009 201 0 201 1 25,988 7,082- 33,070 , j -_ .-- I . -, -.". .~_"_. . " - ,_ - __ -2- . - -L - - ._ -- - I - _- -I -- 25,029 8,041 I __ - . . - - - -- - -J-- ___- - __ -. . , --.-__ 33,070 .. 104,339 1 62 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Special assessments. As provided by Kansas statutes, projects financed in part by special assessments are financed 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 finance current year operations. The special assessment debt is a contingent obligation of the City to the extent of property owner defautts, 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 Crty. 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 terms 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 payments schedule related to the original debt. At December 31,2008, total outstanding wnduit debt was $106,413,033. Defeased debt. In prior years the City has defeased certain other 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 financial statements. At December 31, 2008, the total outstanding defeased debt for all issues was $905,000. 63 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4, DETAILED NOTES ON ALL FUNDS (Continued) F. Reconciliation of Transfers A reconciliation of intetfund transfers follows: Transfer In Transfer Out Major Funds: General fund . $1,066,306 $ 260,000 I Tourism and conention -- fund Special gas fund 180,000 Debt senice - 500;OOO - Other goEmment2 funds -' 2:0?6;6lO-i Water and sewer fund ' Golf course fund- - 426,612 - Bicentennial center fund 636,612 --! Capital project fund .- . Solid waste disposal fund - -180,000 ' 440,000 38,179 ' - 82,125 - ~ - -. -. - Total Transfers - $2,943,222 $2,943,% 1 .- I^ The City uses interfund transfers to share administrative costs between funds. Note 5. OTHER INFORMATION A. Defined Benefit Pension Plan PIan description. The City participates in the Kansas Public Employees Retirement System (KPERS) and the Kansas Police and Firemen's Retirement System (KPBF). Both are cost-sharing multipleemployer defined benefit pension plans as provided by Kansas statutes (KSA 74-4901 et seq). KPERS and KPBF provide retirement benefits, life insurance, disability income benefits and death benefits. Kansas law established and amends benefit provisions. KPERS and KPBF issue a publicly available financial report that includes financial statements and required supplementary information. Those reports may be obtained by writing to 61 1 South Kansas, Suite 100; Topeka, Kansas 66603 or by calling 1-888-275-5737. Funding Policy. K.S.A. 744919 establishes the KPERS memberemployee contribution rate at 4% of covered salary. K.S.A. 744975 establishes the KPBF member-employee contribution rate at 7% of covered salary. The employer collects and remits memberemployee 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 KPBF are funded on an actuarial reserve basis. State law sets a limitation on annual increases in the employer contribution rates. The KPERS employer rate was 6.09% from January 1 to December 31,2008. The Clty employer contributions to KPERS for the years ending December 31, 2008, 2007, and 2006 were $789,277, $647,231 and $530,939, respectively, equal to the required contributions for each year. The KPBF employer rate established for fiscal years beginning in 2008 is 17.01 YO. Employers participating in KPBF 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 KPBF for the years ended December 31, 2008, 2007, and 2006 were $1,722,988, $1,474,558 and $1,229,837, 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 daims of the City's general creditors. 64 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 5. OTHER INFORMATION (Continued) C. Flexible Benefit Plan (I.R.C. 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 Crty 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. D. 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; natural disasters and other events for which the City carries commercial insurance. No significant reductions in insurance coverage from that of the prior year have occurred. Settlements have not exceeded insurance coverage for each of the past three years. The City has established a limited risk management program for workers' compensation. 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 financial resources. Of the liability, $125,335 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as __- follows: >- i- 268 im $ 238,229 $ 196,285 , ----i-* -- -- . I--,_ -I.- Unpaid claims, January 1 ;Incurred claims (including I ,..-"I---- -- .-_ - --. -, - -. . - ,.- - . . ---..-.,. , .. "._... -. 399,042 : 248,596 *- - -- - -_ IBNRs) ._._ - __- -- __- Claim payments Unpaid claims, December 31 . _- I. I - . $ 430,619 i $ 238,229 I - __ The Clty 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 in the Health Insurance Fund because it is expected to be liquidated with expendable available financial resources. Therefore, all of the liabilrty is considered to be due within one year. Changes in the balances of claims -_ liabilities during the past r -- two - years are as follows: ___ 3 f- 2008 1' & i .."-- _. I"....- . ..- - .,---_- ,. "-- . - -- .._. , - ... .Unpaid claims, January 1 I $ 479.084 1 $ 361,791 1 !Incurred claims (including I I---- - i 4,775,317 4,177,100 , ' IBNRs) {Claim payments ' i [4,879;317] j [4,059,807], !Unpaid claims, December 31 -is '3~0~74f<0~~ 65 LI" II -- -- .-_ . ...--I- -I- - -..- - _- - - -- ~ . - -_I^..----- - ,- --- - c-.-.--. . - -. +- _.I--__ .-..-- . ._.," _-.- 1- . 1 ---- . ----- -----.- ..I_ CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 5. OTHER INFORMATION (Continued) E. 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 31,2008. Proiect Authorization Expenditures N Ohio Grade Separation i $ 6,200,000 $ 6,099,814 South Ohio Corridor 1,250,000 1,206,370 North Broadway Corridor 2,260300 2,209.606 * Fire Station ki RenoGtion -- 1,200.0007 1,303,669 , Pacific Awnue 300,000 -' ' -71.6%' bowntown Signals - .-, 692,042 816,664 Library Addition Sewer 570,5&' -- 467,674 Lakes ide 'Addition 860,859 646,820 West Diamond Drive Infrastructure ' 825,000 ' 731,058 Liberty Addition Infrastructure, II 868,059 i 646,820 ' Quail Meadows Phase 111 334,465 ' 237,629 Golden Eagk?No 4, Ph. - 111 .. 530,046'' - 357,138' Magnolia-Hik _- Subdivision ___ __ Phase __ ~ II . 566,3% 530,150 %99.508 1 - 561.007 Eaalecrest Twinhomes ---. .- - _- -- I Quail Meadows Phase N SSuTh &h Co~id~~Phas&'N .. I _...- _, . ., .- --- -._ 1- . .-'-.-I--...-' 56,041 632,643-" 587,369 ' 440,193 , 800 I-. 1,358,187 - .--... i - 1,346,775 - -... _.. - _- 66,648 i #. . _. _- _. -- Glenn Ave Sewer - Stone Creek Addition Energy ---. Irnprowment . I-.--- Project .-.. Red Fox- Addition 1 -- .--, -.-, -I_ .-.-__-, - - ^___. i Project overages in the Fire State #2 Renovation and Downtown Signals projects will be reimbursed by special sales tax proceeds. F. Contingent Liabilities The City receives significant financial assistance from numerous federal and state governmental agencies in the form of grants and state pass-through aid. The disbursement of funds received under these programs generally requires compliance with terms 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 financial statements of the City at December 31,2008. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the Citfs legal counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City. G. 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 $1,566,636 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 28.2% of the estimated capacity of the landfill. 66 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 5. OTHER INFORMATION (Continued) G. Municipal Solid Waste Landfill (Continued) The City's solid waste fund will recognize the remaining estimate cost of closure and postclosure care of $3,985,998 as the remaining estimated capacity is filled over the remaining life expectancy of 73.7 years. These amounts are based on what it would cost to perform all closure and postdosure care in 2008. 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 U.S. Environmental Protection Agency (at 40 CFR 258.74(f)) and the Kansas Department of Health and Environment to provide these assurances. Any future closure or postclosure care costs will be provided through the normal budgeting and rate setting process, including the issuance of general obligation bonds, if necessary. H. Environmental Matters 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 proactive 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 Crty 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 undetermined cost to the City's Water and Sewer Fund. The U.S. Government Department of Defense transferred property located at the foyer Schilling Air Force Base to the Authority September 9, 1966. The property is now known to contain areas of extensive soil and groundwater contamination, primarily from the use and disposal of chlorinated solvents and petroleum products caused by activities at the former base during its period of active military duty from 1942 to 1965. The U.S. Government Department of Defense is responsible for the investigation and remediation of contamination caused by military activities at current and former military bases. The U.S. Army Corps of Engineers (USACE) is the lead agency for the Department at formerly used defense sites. The Corps has completed investigation of soil and groundwater contamination at the former base under the regulatory oversight of the US. Environmental Protection Agency and the Kansas Department of Health and Environment. The former base is not designated as a National Priority List Superfund site, but investigation and remediation is required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act. Potential liability for contamination under the Act extends broadly to parties associated with the release or presence of hazardous substances, including not only those entities involved with contaminant use and disposal, but in some cases other current and former owners and operators of contaminated sites. As a current owner of extensive amounts of property at the former base, the Authority is potentially liable under the act. The Authority has determined. that while a possible liability exists, it is not probable and at this time no reasonable estimate of the possible liability can be made. Therefore, no liability relating to that matter has been recorded. The Authority is under no administrative orders from the U.S. Environmental Protection Agency or the Kansas Department of Health and Environment. The Authority is considered to be a Potentially Responsible Party for the former base site, primarily due to its status as a property owner. The Salina Airport Authority, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University at Salina) collectively own over 90% of the nearly 4,000 acres of the former Schilling Air Force Base property. 67 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Beginning in August 2007, the four local public entities including the Salina Airport Authority, the City of Salina, the Salina School District and Kansas State University at Salina initiated negotiations with the U.S. Federal Government. The negotiation objectives include transferring the responsibility for completing the cleanup from the USACE to the Salina public entities. The local objective is to reach a settlement agreement with the U.S. Federal Government that provides the Salina public entities sufficient funds to complete cleanup operations over a 30-year period. During calendar year 2008, the Salina public entities prepared a detailed Cost to Complete Estimate (CTC). The CTC preparation included consultation with the EPA and KDHE. The Salina public entities’ CTC was completed in June of 2008 and submitted to the USACE. Subsequently, on January 23, 2009, the Salina public entities delivered a demand letter to the USACE. The letter demands that Settlement negotiations begin immediately with the U.S. Dept. of Justice. On May 14, 2009, the Authority was notified that the USACE referred the former SAFB demand letter to the U.S. Department of Justice on May 12, 2009. It is expected that the negotiations will result in a settlement Consent Decree that will specify terms, conditions and funding enabling the Salina public entities to complete site clean-up. I. Postemployment Health Care Plan Plan Description. The City operates a single employer defined benefit healthcare plan administered by the City. The Employee Benefit Plan (the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KSA 12-5040 requires all local governmental entities in the state that provide a group health care plan to make participation available to all retirees and dependents until the retiree reaches the age of 65 years. No separate financial report is issued for the Plan. Funding Policy. The contribution requirements of plan participants and the City are established and amended by the City. The required contribution is based on projected pay-as-you-go financing requirements. Plan participants contributed approximately $96,672 to the Plan (approximately 100% of total premiums) through their required contribution of $416 per month for retiree-only coverage and $702 for spouse coverage. Annual OPEB Cost and Net OPEB Obligation. The City‘s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the Plan for the year, the amount actually contributed to the plan, and the changes in the City’s net OPEB obligation to the Plan: Annual required contribution Annual OPEB cost (expense) Benefit payments Change in net OPEB obligation Net OPEB obligation - beginning of year Net OPEB obligation - end of year c- -_ - ----- - ...- - ~ ..^ I. - -- --- - -_ - ----- - , - --- --I .- \-. _- - - _-,.-+I-- .._. ,,_. --.- - - 68 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31 , 2008 Note 5. OTHER INFORMATION (Continued) 1. Postemployment Health Care Plan (Continued) The Cis annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the year ended December 31, 2008 was as follows: Annual Fiscal Annual OPEB Net ! Year OPEB cost OPEB Ended Contributed--Obligation ! December 31,-2008 $ 910,418 $ 96,672 $ 813.746 L- _- _-.. The information for the two preceding years was not available. Funding Status and Funding Progress. As of the year ended December 31, 2008, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $8,917,346 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $8,917,346. The covered payroll (annual payroll of active employees covered by the plan) was $21,874,112, and the ratio of the UAAL to the covered payroll was 40.8%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statement, presents multiyear trend information about whether the actuarial value of plan assets (if any) are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan participants) and include the types of benefits provided at the time each valuation and the historical pattern of sharing of benefit costs between the employer and plan participants to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial acaued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the year ended December 31.2008, actuarial valuation, the projected unit credit.actuarial cost method was used. The actuarial assumptions include a 4.50% investment rate of return, which is the rate of the employer’s own investments as there are no plan assets and an initial annual healthcare cost trend of 6.80% for medical and 5.67% for dental, reduced by decrements to ultimate rates of 4.50% and 4.00% after eighty and thirteen years, respectively. The UAAL is being amortized as a level dollar over an open thirty-year period. J. Related Party Transactions The Ci paid $851 during the year ended December 31, 2008, to a travel agency owned by a City Comm issioner. 69 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 5. OTHER INFORMATION (Continued) K. Subsequent Events In July, 2009, the City issued Series 2009-A general obligation internal improvement bonds in the amount of $23,695,000. The bond proceeds will be used to fund various capital projects. The City will make the first payment on bonds on April 1, 2010 and the last payment on October 1,2029. The interest rate on the bonds ranges from 2.00 to 5.00%. 70 APPENDIX B Form of Continuing Disclosure Instructions for the Bonds and the Notes EXHIBIT B FORM OF CONTINUING DISCLOSURE INSTRUCTIONS %6,9 15,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A DATED MAY 1,2010 THESE CONTINUING DISCLOSURE INSTRUCTIONS (the “Disclosure Instructions”) are executed and delivered by the Issuer in connection with the issuance of the above-described bonds (the “Bonds”) which are being issued simultaneously herewith as of May 5, 20 10, pursuant to the Bond Resolution, in which the Issuer covenants to enter into this undertaking to provide certain financial and other information with respect to the Bonds in order to assist the Participating Underwriter in complying with the provisions of the SEC Rule. The Issuer is the only “obligated person” with responsibility for continuing disclosure with respect to the Bonds. Section 1. Definitions. In addition to the definitions set forth in the Bond Resolution, which apply to any capitalized term used in these Disclosure Instructions, unless otherwise defined herein, the following capitalized terms shall have the following meanings: “Annual Report” means any Annual Report provided by the Issuer pursuant to, and as described in, Section 2 of these Disclosure Instructions. “Beneficial Owner” means any registered owner of any Bonds and any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. “Bond Resolution” means jointly the ordinance and the resolution of the governing body of the Issuer authorizing the issuance of the Bonds. .-- “CAFR” means the Issuer’s Comprehensive Annual Financial Report. “Designated Agent” means Gilmore & Bell, P.C. or one or more other entities designated in writing by the Issuer to serve as a designated agent of the Issuer for purposes of these Disclosure Instructions. “Dissemination Agent” means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to these Disclosure Instructions and which has filed with the Issuer a written acceptance of such designation substantially in the form attached hereto as Exltibit B. ”EMMA” means the Electronic Municipal Market Access system for municipal securities disclosures (www.emmamsrb.org). “Financial Information” means the financial information of the issuer described in Section 2(a)(I) hereof. ”Fiscal Year” means the one year period ending December 31, or such other date or dates as may be adopted by the Issuer for its general accounting purposes. B- 1 “GAAP” means generally accepted accounting principles, as applied to governmental units, as in effect at the time of the preparation of the Financial Information. “Issuer” means the City and any successors or assigns. “Material Events” means any of the events listed in Section 3(a) hereof. “MSRB” means the Municipal Securities Rulemaking Board. “Official Statement” means the Issuer’s Official Statement for the Bonds. “Operating Data” means the operating data of the Issuer described in Section 2(0)(2) hereof. “Participating Underwriter” means any of the original underwriters of the Bonds required to comply with the SEC Rule in connection with offering of the Bonds. “Repository” means the MSRB via EMMA. “SEC” means the Securities and Exchange Commission of the United States. “SEC Rule” means Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 2. Provision of Annual Reports. (a) The Issuer shall, or shall cause the Dissemination Agent to, not later than 180 days after the end of the Issuer’s Fiscal Year, commencing with the Fiscal Year ended in 2009, provide to the Repository, the Issuer’s CAFR, which will contain the Financial Information and Operating Data (jointly, the “Annual Report”), as follows: . (1) The financial statements of the Issuer for such prior Fiscal Year, accompanied by an audit report resulting from an audit conducted by an Independent Accountant in conformity with generally accepted auditing standards. Such financial statements will be prepared on a modified accrual basis of accounting other than GAAP for all governmental funds, expendable trust and agency funds. The accrual basis of accounting is used for proprietary and nonexpendable trust funds. A more detailed explanation of the accounting basis is contained in Appendix A to the Official Statement. If such audit report is not available by the time the Annual Report is required to be filed pursuant to this Section, the AMMI Report shall contain unaudited financial statements and the audit report and accompanying financial statements shall be filed in the same manner as the Annual Report promptly after they become available. The method of preparation and basis of accounting of the Financial Information may not be changed to a basis less comprehensive than contained in the Official Statement, unless the Issuer provides notice of such change in the same manner as for a Material Event under Section 3(6) hereof. Financial InformatiOn. ‘(2) Operating Data. Updates as of the end of the Fiscal Year of substantially all of the information and data contained in those sections of the Official Statement entitled: (i) Debt Summary (ii) Tax Levies (iii) Assessed Valuation (iv) Estimated Actual Valuation (v) Tax Collections (vi) Largest Taxpayers. B-2 Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Issuer is an “obligated person” (as defined by the SEC Rule), which have been filed with the Repository, the MSRB or the SEC. If the document included by reference is a final official statement, it must be available from the MSRB via EMMA. The Issuer shall clearly identify each such other document so included by reference. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in this Section; provided that the audit report and accompanying frnancial statements may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Issuer’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Material Event under Section 3(b). (b) If no Dissemination Agent has been appointed, the Issuer shall file the Annual Report as specified by Section 2(u) hereof; or if the Annual Report is not filed within the time period specified in Section 2(u) hereof, the Issuer shall send a notice to each Repository in substantially the form attached as ExhibitA. Section 3. Reporting of Material Events. (a) Pursuant to the provisions of this Section, the Issuer shall give, or cause the Dissemination Agent, if any, to give, notice of the occurrence of any of the following events with respect to the Bonds, if the Issuer deems such events to be material: principal and interest payment delinquencies; non-payment related defaults; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; adverse tax opinions or events affecting the tax-exempt status of the Bonds; modifications to rights of bondowners; optional, contingent or unscheduled bond calls; defeasances; release, substitution or sale of property securing repayment of the Bonds; or rating changes. (b) Such notice shall be given by promptly filing a notice of such occurrence with the Repository. Notwithstanding the foregoing, notice of Material Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Bonds pursuant to the Bond Resolution. Section 4. Dissemination Agent. (a) General. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under these Disclosure Instructions, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. @) Annual Reports. If a Dissemination Agent is appointed, not later than 15 Business Days prior to the date specified in Section 2(a) for providing the Annual Report to the Repository, the Issuer shall provide the Annual Report to the Dissemination Agent or the Repository. The Dissemination Agent shall file a report with the Issuer certifying that the Annual Report has been provided pursuant to these Disclosure Instructions, stating the date it was provided, or that the Issuer has certified to the Dissemination Agent that the Issuer has provided the Annual Report to the Repository. If the Dissemination Agent has not received an Annual Report or has not received a written notice from the Issuer that it has provided an Annual Report to the Repository, by the date B-3 required in Section 2(a), the Dissemination Agent shall send a notice to the Repository in substantially the form attached as Exhibit A. (c) Materiizl Event Notices. (1) The Dissemination Agent shall, promptly after obtaining actual knowledge of the occurrence of any event that it believes may constitute a Material Event, contact the chief financial officer of the Issuer or his or her designee, or such other person as the Issuer shall designate in writing to the Dissemination Agent from time to time, inform such person of the event, and request that the Issuer promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to Section 4(c) (3). (2) The Issuer will promptly respond in writing to any such request. Whenever the Issuer obtains knowledge of the occurrence of a Material Event, because of a notice from the Dissemination Agent pursuant to this subsection (c) or otherwise, the Issuer shall promptly determine if such event would be material under applicable federal securities law. If the Issuer has determined that knowledge . of the occurrence of a Material Event would be material under applicable federal securities law, the Issuer shall promptly so notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to Section 4(c)(3). If the Issuer has determined that knowledge of a Material Event would not be material under federal securities law, the Issuer shall promptly so notie the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent not to report the occurrence pursuant to Section 4(c)(3). (3) If the Dissemination Agent has been given written instructions by the Issuer to report the occurrence of a Material Event, the Dissemination Agent shall promptly file a notice of such occurrence with the Repository, with copies to the Issuer. Notwithstanding the foregoing, notice of Material Events described in Sections 3(u)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Bonds pursuant to the Bond Resolution. (a) Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in these Disclosure Instructions, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to these Disclosure Instructions. (e) Orher Designated Agents. The Issuer may, fiom time to time, appoint or designate a Designated Agent to submit Annual Reports, Material Event notices, and other notices or reports pursuant to these Disclosure Instructions. The Issuer hereby appoints the Dissemination Agent and the Designated Agent(s) solely for the purpose of submitting Issuer-approved Annual Reports, Material Event notices, and other notices or reports pursuant to these Disclosure Instructions. The Issuer may revoke this designation at any time upon written notice to the Designated Agent. Section 5. Termination of Reporting Obligation. The Issuer’s obligations under these Disclosure Instructions shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If the Issuer’s obligations hereunder are assumed in full by some other entity as permitted in the Bond Resolution, such person shall be responsible for compliance with under these Disclosure Instructions in the same manner as if it were the Issuer, and the Issuer shall have no further responsibility hereunder. If such termination or substitution occurs prior to the fmal maturity of the Bonds, the Issuer shall give notice of such termination or substitution in the same manner as for a Material Event under Section 3(b). B-4 Section 6. Amendment; Waiver. Notwithstanding any other provision of these Disclosure Instructions, the Issuer and the Dissemination Agent, if any, may amend of these Disclosure Instructions (and the Dissemination Agent shall not unreasonably refuse to execute any amendment so requested by the Issuer) and any provision of these Disclosure Instructions may be waived, provided that: (a) Bond Counsel or other counsel experienced in federal securities law matters provides the Issuer and the Dissemination Agent, if any, with its opinion that the undertaking of the Issuer contained herein, as so amended or after giving effect to such waiver, is in compliance with the SEC Rule and all current amendments thereto and interpretations thereof that are applicable to these Disclosure Instructions; (b) if the amendment or waiver relates to Sections 2(a) or 3(u), it may only be made in connection with a change in circumstances that arises from a change in law or legal requirements, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; and (c) the amendment or waiver is either (1) approved by the Owners of the Bonds in the same manner as provided in the Bond Resolution with consent of the Owners, or (2) does not in the opinion of Bond Counsel materially impair the interests of the Owners or Beneficial Owners of the Bonds. If there is an amendment or waiver of a provision of these Disclosure Instructions, the Issuer shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the'reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of Financial Information or Operating Data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements: (a) notice of such change shall be given in the same manner as for a Material Event under Section 3@), and (b) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepwed on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 7. Additional Information. Nothing in these Disclosure Instructions shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in these Disclosure Instructions or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by these Disclosure Instructions. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is specifically required by these Disclosure Instructions, the Issuer shall have no obligation under these. Disclosure Instructions to update such information or include it in any fhture Annual Report or notice of occurrence of a Material Event. Section 8. Noncompliance. In the event of a failure of the Issuer or the Dissemination Agent, if any, to comply witli any provision of these Disclosure Instructions, the Participating Underwriter or any Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer or the Dissemination Agent, if any, as the case may be, to comply with its obligations under these Disclosure Instructions. Noncompliance with the provisions of these Disclosure Instructions shall not be deemed an Event of Default under the Bond Resolution, and the sole remedy under these Disclosure Instructions in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with these Disclosure Instructions shall be an action to compel performance. Section 9. Notices. Any notices or communications to or among any of the parties referenced in these Disclosure Instructions may be given as follows: (a) To the Issuer at: 300 West Ash Salina, Kansas 67402 Attention: Clerk (b) To the Participating Underwriter at the address set forth in the Bond Resolution or such other address as is furnished in writing to the other parties referenced herein. (c) To the Dissemination Agent at the address set forth on Exhibit B attached hereto. B-5 Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent. Section 10. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Section 11. Beneficiaries. These Disclosure Instructions shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, the Participating Underwriter and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Section 12. Severability. If any provision in these Disclosure Instructions, the Bond Resolution or the Bonds relating hereto, shall be invalid; illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 13. Governing Law. These Disclosure Instructions shall be governed by and construed in accordance with the laws of the State of Kansas. CITY OF SALINA, KANSAS B-6 FORM OF CONTINUING DISCLOSURE INSTRUCTIONS $2,500,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2010-1 DATED MAY 1,2010 THESE CONTINUING DISCLOSURE INSTRUCTIONS (the “Disclosure Instructions”) are executed and delivered by the Issuer in connection with the issuance of the above-described notes (the ‘Wotes”) which are being issued simultaneously herewith pursuant to the Note Resolution, in which the Issuer covenants to enter into this undertaking to provide notice of certain material events with respect to the Notes in order to assist the Participating Underwriter in complying with the provisions of the SEC Rule. The Issuer is the only “obligated person” with responsibility for continuing disclosure with respect to the Notes. Section 1. Definitions. In addition to the definitions set forth in the Note Resolution, which apply to any capitalized term used in these Disclosure Instructions, unless otherwise defined herein, the following capitalized terms shall have the following meanings: “Beneficial Owner” means any registered owner of any Notes and any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Notes (including persons holding Notes through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Notes for federal income tax purposes. “Designated Agent;’ means Gilmore & Bell, P.C. or one or more other entities designated in writing by the Issuer to serve as a designated agent of the Issuer for purposes of these Disclosure Instructions. “Dissemination Agent” means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to these Disclosure Instructions and which has filed with the Issuer a written acceptance of such designation substantially in the form attached hereto as Exhiba A. “EMMA” means the Electronic Municipal Market Access system for municipal securities disclosures (www.einma.msrb.org). “Fiscal Year” means the one year period ending December 3 I, or such other date or dates as may be adopted by the Issuer for its general accounting purposes. “Issuer” means the City and any successors or assigns. “Material Events” means any of the events listed in Section 2(u) hereof. “MSRB” means the Municipal Securities Rulemaking Board. “Note Resolution” means the resolution of the governing body of the Issuer authorizing the issuance of the Notes. “Official Statement” means the Issuer’s Official Statement for the Notes dated April 19,2010. “Participating Underwriter” means any of the original underwriters of the Notes required to comply with the SEC Rule in connection with offering of the Notes. “Repository’’ means the MSRB via EMMA. B-7 “SEC” means the Securities and Exchange Commission of the United States. “SEC Rule” means Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 2. Reporting of Material Events. (a) Pursuant to the provisions of this Section, the Issuer shall give, or cause the Dissemination Agent, if any, to give, notice of the occurrence of any of the following events with respect to the Notes, if the Issuer deems such events to be material: principal and interest payment delinquencies; non-payment related defaults; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; adverse tax opinions or events affecting the tax-exempt status of the Notes; modifications to rights of Noteowners; optional, contingent or unscheduled note calls; defeasances; release, substitution or sale of property securing repayment of the Notes; or rating changes. (b) Such notice shall be given by promptly filing a notice of such occurrence with the Repository. Notwithstanding the foregoing, notice of Material Events described in subsections (a)@) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Notes pursuant to the Note Resolution. Section 3. Dissemination Agent. (a) General. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under these Disclosure Instructions, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. (b) Material Event Notices. (1) The Dissemination Agent shall, promptly after obtaining actual knowledge of the occurrence of any event that it believes may constitute a Material Event, contact the chief financial officer of the Issuer or his or her designee, or such other person as the Issuer shall designate in writing to the Dissemination Agent from time to time, inform such person of the event, and request that the Issuer promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to Section 3(b)(3). (2) The Issuer will promptly respond in writing to any such request. Whenever the Issuer obtains knowledge of the occurrence of a Material Event, because of a notice from the Dissemination Agent pursuant to this subsection (c) or otherwise, the Issuer shall promptly determine if such event would be material under applicable federal securities law. If the Issuer has determined that knowledge of the occurrence of a Material Event would be material under applicable federal securities law, the Issuer shall promptly so notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to Section 3(b)(3). If the Issuer has determined that knowledge of a Material Event would not be material under federal securities law, the Issuer shall promptly so notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent not to report the occurrence pursuant to Section 3(6)(3). B-8 (3) If the Dissemination Agent has been given written instructions by the Issuer to report the occurrence of a Material Event, the Dissemination Agent shall promptly file a notice of such occurrence with the Repository, with copies to the Issuer. Notwithstanding the foregoing, notice of Material Events described in Sections 2(a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Notes pursuant to the Note Resolution. (c) Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in these Disclosure Instructions, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Notes. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to these Disclosure Instructions. (d) Other Designated Agents. The Issuer may, from time to time, appoint or designate a Designated Agent to submit Material Event notices, and other notices or reports pursuant to these Disclosure Instructions. The Issuer hereby appoints the Dissemination Agent and the Designated Agent(s) solely for the purpose of submitting Issuer-approved Material Event notices, and other notices or reports pursuant to these Disclosure Instructions. The Issuer may revoke this designation at any time upon written notice to the Designated Agent. Section 4. Termination of Reporting Obligation. The Issuer’s obligations under these Disclosure Instructions shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Notes. If the Issuer’s obligations hereunder are assumed in fill by some other entity as permitted in the Note Resolution, such person shall be responsible for compliance with under these Disclosure Instructions in the same manner as if it were the Issuer, and the Issuer shall have no firther responsibility hereunder. If such termination or substitution occurs prior to the final maturity of the Notes, the Issuer shall give notice of such termination or substitution in the same manner as for a Material Event under Sectwn 2@). Section 5. Amendment; Waiver. Notwithstanding any other provision of these Disclosure Instructions, the Issuer and the Dissemination Agent, if any, may amend of these Disclosure Instructions (and the Dissemination Agent shall not unreasonably refuse to execute any amendment so requested by the Issuer) and any provision of these Disclosure Instructions may be waived, provided that: (a) Bond Counsel or other counsel experienced in federal securities law matters provides the Issuer and the Dissemination Agent, if &y, with its opinion that the undertaking of the Issuer contained herein, as so amended or after giving effect to such waiver, is in compliance with the SEC Rule and all current amendments thereto and interpretations thereof that are applicable to these Disclosure Instructions; (b) if the amendment or waiver relates to Sections 2(’), it may only be made in connection with a change in circumstances that arises fiom a change in law or legal requirements, or change in the identity, nature or status of an obligated person with respect to the Notes, or the type of business conducted; and (c) the amendment or waiver is either (1) approved by the Owners of the Notes in the same manner as provided in the Note Resolution with consent of the Owners, or (2) does not in the opinion of Bond Counsel materially impair the interests of the Owners or Beneficial Owners of the Notes. In the event of any amendment or waiver of a provision of these Disclosure Instructions, the Issuer shall be given in the same manner as for a Material Event. Section 6. Additional Information. Nothing in these Disclosure Instructions shall be .deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in these Disclosure Instructions or any other means of communication, or including any other information in any notice of occurrence of a Material Event, in addition to that which is required by these Disclosure Instructions. If the Issuer chooses to include any information in any notice of occurrence of a Material Event, in addition to that which is B-9 specifically required by these Disclosure Instructions, the Issuer shall have no obligation under these Disclosure Instructions to update such information or include it in any future notice of occurrence of a Material Event. Section 7. Noncompliance. In the event of a failure of the Issuer or the Dissemination Agent, if any, to comply with any provision of these Disclosure Instructions, the Participating Underwriter or any Beneficial Owner of the Notes may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer or the Dissemination Agent, if any, as the case may be, to comply with its obligations under these Disclosure Instructions. Noncompliance with the provisions of these Disclosure Instructions shall not be deemed an Event of Default under the Note Resolution, and the sole remedy under these Disclosure Instructions in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with these Disclosure Instructions shall be an action to compel performance. Section 8. Notices. Any notices or communications to or among any of the parties referenced in these Disclosure htructions may be given as follows: (a) To the Issuer at: 300WestAsh Salina, Kansas 67402 Attention: Clerk (b) To the Participating Underwriter at the address set forth in the Note Resolution or such other address as is furnished in writing to the other parties referenced herein. (c) Any person may, by written notice to the other persons listed above, designate a different address or To the Dissemination Agent at the address set forth on ExhibitA attached hereto. telephone number@) to which subsequent notices or communications should be sent. Section 9. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Section 10. Beneficiaries. These Disclosure Instructions shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, the Participating Underwriter and Beneficial Owners from time to time of the Notes, and shall create no rights in any other person or entity. Section 11. Severability. If any provision in these Disclosure Instructions, the Note Resolution or the Notes relating hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 12. Governing Law. These Disclosure Instructions shall be governed by and construed in accordance with the laws of the State of Kansas. CITY OF SALINA, KANSAS B-10 CERTIFICATE DEEMING PRELIMINARY OFFICIAL STATEMENT FINAL March 22,2010 TO: Country Club Bank Prairie Vlllage, Kansas Country Elub Bank Prairie Village, Kansas Re: $2,500,000* City of Salina, Kansas, General Obligation Temporary Notes, Series 2010-1 and $6,915,000’ City of Salina, Kansas, General Obligation Internal Improvement and Refunding Bonds, Series 201 0-A Ladies and Gentlemen: The undersigneds are the duly acting Mayor and Clerk of the City of Salina, Kansas (the “Issuer”), and are authorized to deliver this Certificate to the addressee (the “Purchaser”) on behalf of the Issuer. The Issuer has heretofore caused to be delivered to the Purchaser copies of the Preliminary Official Statement (the “Preliminary Official Statement”), relating to the above-referenced notes and bonds (the “Securities”). For the purpose of enabling the Purchaser to comply with the requirements of Rule 15c2-12(b)( 1) of the Securities and Exchange Commission (the “Rule”), the Issuer hereby deems the information regarding the Issuer contained in the Preliminary Official Statement to be final as of its date, except for the omission of such information as is permitted by the Rule, such as offering prices, interest rates, selling compensation, aggregate principal amount, principal per maturity, delivery dates, ratings, identity of the undenvnters and other terms of the Securities depending on such matters. Very truly yours, - CITY OF SALINA, KANSAS Title: Clerk 0 * Prelimmary; subject to change. (First Published in the Se- lina Journal 18,2010) SUMMARY%mCE OF Publisher's Affidavit L Tiffanv Modlin , being duly sworn declare that I am the of THE SALINA JOURNAL, a daily newspaper published at Salina, Saline County, Kansas, and of general circulation' in said county, which newspaper has been admitted to the mails as second class matter in said county, and continuously and uninterruptedly pddished for fivc consecutive years prior to first publication of attached notice, and that the Bond Sale Series 2010-A & Series 2010-B has bccn correctly published m the entlre issues of said newspaper one time, publication being given in the 2010 l- Notice day of AD.20 [a Printer's Fce $363.00 BOND SALE IXV OF SAUNA, KANSAS 52,630,OW GENERAL OBLIGATION INTERNAL IMPROVE- MENT AND REFUNDING BONDS IMPROVEMEMT BONDS SERIES 2010-8 BUILD AMERICA BOkDS -DIRECT PAY) (GENERAL OBLIGATION BONDS PAYABLE FROM UNLIMITED AD VALOREM TAXES) Bids. Subiect to the.Nc- 8ce of Bond Sale dated March 22 2010 written and electmnh bids WfU be recewed on behalf d the Clerk of the City 01 Salina. Kansas (the "Issuer') in the case 01 written blds. at the address set forth be- low, and in the case of electronic bids. through PARITYO until 1.00 p.m. Central Time on APRlL 19.2010 for the ourchase of .the above-reierenced bonds (the Bonds-) No bld of less than 100.046 of lhe phcipal amount of the Series 20310-A Bonds and accrued interest thereon lo the dale of dellvery will be msldered. No bid of less than 99.0% of the arlnciaal amount of the Series 2010-8 Bonds and accrued interest thereon to the date of delivery will be considered Bond Details The Bonds WIII comst of iuuy regislered bonds in thc denomlngion o! $5,000 or any inte rai multiple thereof. ?he Bonds will be deled May 1 2010 and mll become hue 04 October 1 tn the years as follows: 201 1 $61 0 000 2012 s35:OOo 2013 640,000 2014 435,000 2015 25,000 2016 25.000 2017 25 000 2018 30:ow 2019 30.000 2020 30.000 2021 30.000 2022 ~,wo 2023 30.000 2024 25,000 2025 30.W fERlEs 2MD-8 BONDS PrtnclPle Year 201 1 2012 250,000 2013 255,000 2014 255.000 2015 260.000 201 8 265,000 2017 275,000 201 8 28O.ooo 201 9 290.W 2020 2021 2022 320000 2024 950 W 2025 3W:WO * Preliminary; subject to %5% 3% 2023 3353000 change The Bonds wlll bear inter- est fmm the date thereof et rates to be determined when the Bonds era sold es hereinatter provlded. which interest will be py; able smlannmlly on pril 1 and October 1 in each year, beglnmng on Apni 1, 2011. Book-Entry-Only Sys. tem TheBondsshallbe regislered under a booksntry-only system aarnlnlsterea through DTC. Paylng Agent and Bond Registrar . Treasurer cl the State 01 Kansas, Topeka, Kansas. Good Faith Deposlt Each bid lor a senes of the Bonds shall be accom- panled by a good lakh de- posit in me form 01 a cash- ier's or cedifled check drawn on a bank located In the United States of America or a qualified fl. nandal surey bond in the amount 01 2 A of the pdn- cipal amount of the appll- cable Series of Bonds. Delivery. The Issuer will pay for pnnting the Bonds and will deliver the same properly prepared, exe cuted and registered with- out cost to the Euccessful bidder on or about May 5. 2010. to DTC lor the EC- count of the successful bidder Assessed Valualion and Indebtedness. The Equalhed hessed Tan- gible Valuation lor Compu. tation of Bonded Deb1 Urnitations for the year 2009 Is $2 893 359 541 The iota1 g;lne&l othge- . lion indebtedness 01 the Issuer as 01 the Dated Date. mcluding the Bonds being soid. 16 559,925,000. Approval of Bonds. The Bonds will be sold subject to the legal opin Ion of Gllmore & Bell P.C.. Kansas City. Mis: souri Bcnd Counsel whose approving legal opinion as to Me vafid the Bonds wlil be?;! nkhed end pad lor by the Issuer. orinted on the delivered Addltlonsl Intormatlon. If the Cty determines that the sale of Build Amerlca Bonds is not In its best m- teres& the Series 2010-8 Bonds'mq be combined wlth the Series 20104 Bonds. .Inlormetion re parding the Cltpi dectlon o issue Build America Bonds and any other eddi- tional information regard- ing he Bonds may be ob lained from the under. slgned or from the Fman- cia1 Abvlsor, at the ad- dresses set forth belo*nr DATED March 22,201 0. CITY OF SALINA, KANSAS By: Ueu Ann Elsey. City Clerk Written and Facsimile Bid and Good Falth h posit Delimy Address: 300 Salina West Kansas Ash 67402 AM: * Rod Fanz. Fi nance Director Phone -_-- No. Emall: MQsalma.oQ Financial Advisor: Ge eKBaumBCa. 4~0Xain Street, Suite 500 Kansas City. Missouri (816)474-1100 Phone No. Fax NO. (816)283-5326 Ernall. 309-5735 c"), ax o (785)309-5738 Attn 64112 DavidArterberry State of Kansas Office of Secretary of State Chris Biggs AfJidavit of Publication I, Chris Biggs, Secretary of State of the State of Kansas, do hereby certify that I am the publisher of the Kansas Register, a newspaper published pursuant to K.S.A. 75-430, and that the attached is a true copy of the notice which appeared therein on the date given below: April 8,2010 In Testimony Whereof: I hereto set my hand and cause to be affixed my official seal. Done at the 9th City of Topeka this day of April 2010 A.D. Chris Biggs Secretary of State 452 - Kansas Register HearingBond Sale Street (including parking garage and Tammen Hall); and 1729 Humboldt Street; (f) in Arvada, Colorado, at 7981 A and B, 7991 and 8001 (including rear) West 71st Avenue; (g) in Lafayette, Colorado, at 200 and 300 Exempla Cir- cle; and (h) in Wheat Ridge, Colorado, at 3210, 3400, 3455 (in- cluding Suites 210 and 270), 3550,3555 and 3655 Lutheran Parkway; 8098, 8136,8298 and 8300 West 38th Avenue; current basis the Colo- nue Bonds Series 1989 ) (Exempla 1989 Bonds); ay certain costs assoa- The bonds, when issued, w limited obligation of the KDFA and will not cons The public hearing is re Internal Revenue Code of uals who appear at the h previously filed with Kansas Ave., Suite 202, In accordance with the Americans with Disabilities Act, any person with a disability as defined by the AQA need- ing special accommodations to participate in the public hearing should contact Rebecca Floyd at (785) 357-4445 not later than tuso business days prior to the public hear- Steven R. Weatherford President ing. Doc. No. 038187 (Pubhhed in lhe Kansas Regster Apnl8.2010 ) Summary Notice of Bond Sale City of Salina, Kansas $2,630,000* General Obligation Internal Improvement and Refunding Bonds Series 2010-A !$4,290,000* Taxable General Obligation Internal Improvement Bonds Series 2010-B (Build America Bonds - Direct Pay) (General obligation bonds payable from unlimited ad valorem taxes) I Bids Subject to the notice of bond sale dated March 22,2010, written and electronic bids will be received on behalf of the clerk of the city of Salina, Kansas (the issuer), in the case of written bids, at the address set forth below, and in the case of electronic bids, through PARITY, until 1 p.m. April 19,2010, for the purchase of the above-refer- enced bonds. No bid of less than 100.0 percent of the prin- cipal amount of the Series 2010-A Bonds and accrued in- terest thereon to the date of delivery will be considered. No bid of less than 99.0 percent of the principal amount of the Series 2010-B Bonds and accrued interest thereon to the date of delivery will be considered. Bond Details The bonds will consist of fully registered bonds in the denomination of $5,000 or any integral multiple thereof. The bonds will be dated May 1,2010, and will become due on October 1 in the years as follows: Series 2010-A Bonds Principal Year Amount, 201 1 $610,000 2012 635,000 2013 640,000 2014 435,000 2015 25,000 2016 25,000 2017 25,000 201 8 30,000 2019 30,000 2020 30,000 2021 30,000 2022 30,000 2023 30,000 2024 25,000 2025 . 30,000 Series 2010-B Bonds . Principal Year AmOUItt+ 2011 $185,000 2012 250,000 2013 255,000 2014 255,000 2015 260,000 0 Kansas Secretq of State zmo Vol. 29, No. 14, April 8, 2010 463 ' .., Bond Sale/Notice Kansas Register 2016 2017' 2018 2019 2020 2021 2022 2023 2024 2025 265,000 275,000 280,000 290,000 300,000 310,000 320,000 335,000 350,000 360,000 The bonds will bear interest from the date thereof at rates to be determined when the bonds are sold as here- inafter provided, which interest will be payable semian- nually on April 1 and October 1 in each year, beginning April 1,2011. Book-Entry-Only System system administered through DTC. Paying Agent and Bond Registrar Good Faith Deposit Each bid for a series of the bonds shall be accompanied by a good faith deposit in the form of a cashier's or cer- tified check drawn on a bank located in the United States or a qualified financial surety bond in the amount of 2 percent of the principal amount of the applicable series ... of bonds. Delivery The issuer will pay for printing the bonds and will de- liver the same properly prepared, executed and regis- tered without cost to the successful bidder on or about May 5, 2010, to DTC for the account of the successful bidder. Assessed Valuation and Indebtedness The equalized assessed tangible valuation for compu- tation of bonded debt limitations for the year 2009 is $2,893,359,541. The total general obligation indebtedness of the issuer as of the dated date, including the bonds being sold, is $59,925,000. Approval of Bonds The bonds will be sold subject to the legal opinion of Gilmore & Bell, P.C., Kansas City,-Missouri, bond coun- sel, whose approving legal opinion as to the validity of the bonds will be furnished and paid for by the issuer, printed on the bonds and delivered to the successful bid- der when the bonds are delivered. Additional Information Jf the city determines that the sale of Build America Bonds is not in its best interests, the Series 2010-B Bonds may be combined with the Series 2010-A Bonds. Mor- mation regarding the city's election to issue Build Amer- ica Bonds and any other additional information regarding the bonds may be obtained from the undersigned, or from the'financial advisor, at the addresses set forth below. Written and Facsimile Bid and Good Faith Deposit The bonds shall be registered under a book-entry-only . Kansas State Treasurer, Topeka, Kansas. l (- Delivery Address: 300 W. Ash Salina, KS 67402 Attn: Rod Franz, Finance Director (785) 309-5735 FW (785) 309-5738 E-mail: rfranz@salina.org George K. Baum & Co. 4801 Main St., Suite 500 Kansas City, MO 64112 Attn: David Arterberry (816) 474-1100 Fax (816) 283-5326 E-mail: arteberry@gkbaum.com Dated March 22,2010. Financial Advisor: City of Salina, Kansas By: Lieu Ann Elsey, City Clerk *Preliminary; subject to change. Doc. No. 038194 Private Letter P-ZOlMOl Pet een private letter rulings and at a Kansas quarry and delivered Joan Wagnon Secretary of Revenue Doc No. 038188 Vol. 29, No. 14, April 8,2010 In the opinion of Gilmore di Bell, P.C., Kansas Ci&, Missouri, Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of1986, as amended, the interest on the Notes is excludedfrom gross income for federal income tax purposes, and is not an item of tax preference for purposes ofthe federal alternative minimum tax imposed on individuals and corporations and is not taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The interest on the Bonak is excludedfiom gross income for federal income tax purposes, and is not an item of tax preference for purposes ofthe federal alternative minimum tax imposed on individuals and corporations but & taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The interest on the Notes and Bonh is excluded from computation of Kansas adjusted gross income 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 TAXMAiTEm herein. New Issues Book-Entry Only Bank Qualified Moody’s Ratings: Bonds- “Aa3” Notes- “MIG 1” $2,500,000 CITY OF SALINA. KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2010-1 $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A Dated: May 1,2010 Due: As Shown Herein The Series 2010-1 Notes (the ‘Wotes”) 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 Bonds will be payable semiannually on February 1, 2011 and August 1, 2011. Principal and interest on the Notes will be payable by check, draft, or wire transfer from the Treasurer of the State of Kansas (the ‘Wote Paying Agent”). The Notes are subject to redemption prior to maturity. The Series 2010-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 1 and October 1 of each year until maturity, commencing on April 1, 201 1. The principal of and interest on the Bonds will be payable by check, draft, or wire transfer ftom the Treasurer of the State of Kansas (the “Bond Paying Agent”). The Bonds are subject to redemption at the option of the City as fiuther described herein. MATURITY SCHEDULES (see inside front cover) The full faith, credit, and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the Notes and Bonds as the same becomes due. See THE NOTES - “Security” and THE BONDS - “Security” herein. The Notes and Bonds are offered when, as and if issued by the City and received by the Underwriters subject to the approval of Bond Counsel. It is expected that the Notes and Bonds will be available for delivery through the facilities ofDTC on or about May 5,2010. The date ofthis Official Statement is April 19,2010 THIS COVER PAGE CONTAINS INFORMATION FOR QUICK REFERENCE ONLY IT IS THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION A SUMMARY OF THE ISSUE INVESTORS MUST READ MA TURITY SCHEDUL ES $2,500,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2010-1 Yield - Rate - Maturity Amount 08-01-1 1 $2,500,000 1.000% 0.700% Base 794743 V27 cu s1 P(’) The Notes are not subject to redemption prior to maturity. $6,875,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A Maturity 10-01-11 10-0 1-1 2 10-01-13 10-01-14 10-01 -1 5 10-01-1 6 10-01-1 7 10-01-18 10-01-19* 10-0 1-20* 10-01-2 1 * 10-01-22* Maturity 10-0 1-25 * Amount $775,000 865,000 880,000 695,000 285,000 290,000 300,000 3 10,000 320,000 330,000 340,000 350,000 SERIAL BONDS - Rate 2.000% 2.000 2.000 2.000 2.000 2.300 2.600 2.850 3.000 3.150 3.300 3.400 TERM BOND Amount - Rate $1,135,000 3.875% Yield 0.750% 1 .ooo 1.300 1.650 2.000 2.300 2.600 2.850 3.000 3.150 3.300 3.400 Yield 3.550% - Base 794743 v35 v43 V50 V68 V76 V84 V92 W26 w34 W42 w59 W67 CUSIP“’ Base 794743 w91 CUSIP“’ *The Bonds maturing on or after October 1,2019, will be subject to redemption prior to maturity at the option of the City on October 1, 2018, and thereafter, in whole or in part on any 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. The Term Bond is also subject to mandatory redemption. See THE BONDS - “Redemption Provisions” herein. ‘“CUSIP numbers have been assigned to this issue by Stanhrd & Poor S CUSIP Service Bureau, a division of the McGraw-Hill Companies, Inc.. Neirher rhe Issuer nor the Undemnters shall be and are included sorely for the convenience of rhe Owners of the Notes and the Ban& responsible for the selection or correctness of the CUSIP numbers set forrh above CITY OF SALINA, KANSAS 300 West Ash CityKounty Building - Room 206 P. 0. Box 736 Salina, Kansas 67402-0736 CITY COMMISSION M. Luci Larson, Mayor Aaron Peck, Vice Mayor Samantha Angell, Commissioner Norman Jennings, Commissioner Tom Arpke, Commissioner . CITY STAFF Jason Gage, City Manager Mike Schrage, Deputy City Manager Rodney Franz, Finance Director Lieu Ann Elsey, 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 Underwriters 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 Ofiicial 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 Underwriters . 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 financial 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 infomation is given . TABLE OF CONTENTS Page INTRODUCTORY STATEMENT ..... .............. 1 General ............................................................. Definitions ........................................................ Additional Infomation ..................................... THE NOTES ...................................................... Description ....................................................... Redemption Provisions ..................................... Security ............................................................. Registration, Transfer and Exchange of Notes . Mutilated, Lost, Stolen or Destroyed Notes ...... Nonpresentment ofNotes ................................. Designation of Note Paying Agent and Bond Registrar ......................................................... Method and Place of Payment of the Notes ...... Payments Due on Saturdays, Sundays and Holidays .......................................................... Book-Entry Notes; Securities Depository ......... THE BONDS ...................................................... Description ....................................................... Redemption Provisions ..................................... Authority ........................................................... Security ............................................................. Registration, Transfer and Exchange of Bonds Designation of Bond Paying Agent and Bond Registrar ......................................................... Method and Place of Payment of the Bonds ..... Payments Due on Saturdays, Sundays and Holidays .......................................................... Book-Entry Bonds; Securities Depository ........ THE DEPOSITORY TRUST COMPANY ........ BIDDERS OPTION MUNICIPAL BOND INSURANCE .................................................... THE FINANCING PLAN .................................. The Projects ...................................................... The Refunding Plan .......................................... SOURCES AND USES OF FUNDS .................. FINANCIAL OVERVEW ................................ THE CITY OF SALINA, KANSAS ................... Location and Size ............................................. Government ...................................................... Kansas Public Employees Retirement System (KPERS) ............................................ Kansas Police and Fire Retirement ................... Police and Fire Protection ................................. Economic Characteristics ................................. Income .............................................................. Authority ........................................................... Population ......................................................... 1 1 1 2 2 2 2 2 2 3 3 3 3 4 4 5 5 5 7 7 7 7 8 8 8 9 10 11 11 12 12 13 14 14 14 14 14 15 15 15 16 Page Building Permits Issued .................................... 16 The Salina Airport Authority ............................ 16 Major Employers .............................................. Unemployment Rate ......................................... Education .......................................................... Kansas State University at Salina ..................... Kansas Wesleyan University ............................ Transportation .................................................. Utilities and Infrastructure ................................ Health Facilities ................................................ Financial Institutions .......................................... Other Information ............................................. DEBT SUMMARY ............................................ Current Indebtedness ........................................ Overlapping Debt ............................................. Annual Debt Payments ..................................... Historical Debt Information ............................. Future Indebtedness .......................................... Legal Debt Limits ............................................. Debt Payment Record ....................................... FINANCIAL INFORMATION .......................... Financial Statement Summary .......................... Assessed Valuation .......................................... Estimated Actual Valuation ............................. Special Assessments ......................................... Largest Taxpayers ............................................ Tax Collections ................................................ Sales Tax .......................................................... Tax Levies ........................................................ Budgeting Procedures ....................................... Appraisal and Assessment Procedures ............. Property Assessment Rates .............................. Equalization Ratios .......................................... LEGAL MATTERS ........................................... TAX MATTERS ................................................ General ............................................................. Tax Matters Applicable to all Securities .......... Opinion of Bond Counsel ................................. RATING ............................................................. FINANCIAL ADVISOR .................................... UNDERWRITING ............................................. ABSENCE OF MATERIAL LITIGATION ..... CONTINUING DISCLOSURE ......................... CERTIFICATION OF THIS OFFICIAL STATEMENT ................................................... 17 17 17 17 18 18 18 18 18 19 19 19 20 21 21 21 22 22 23 23 24 24 24 25 25 26 27 27 27 28 28 29 29 29 29 29 30 30 31 31 31 31 APPENDIX A . Financial Statements APPENDIX B . Continuing Disclosure Instructions $2,500,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2010-1 $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-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 $2,500,000 General Obligation Temporary Notes, Series 2010-1 (the “Notes”) and its $6,875,000 General Obligation Internal Improvement and Refunding Bonds, Series 2010-A (the “Bonds”), both dated May 1, 2010. The Notes and Bonds are being issued to provide fhds to permanently finance certain fire station, street, sewer, water, and public building improvements within the City and to refund an outstanding bond issue of the City. See THE FINANCING PLAN herein. 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 becomes due. See THE NOTES - “Security” and THE BONDS - “Security” herein. APPENDIX A, containing selected financial data relating to the City, is an integral part of this Official Statement and should be read in its entirety. All financial and other information presented herein has been compiled by the City’s financial 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 MATTERS, CONTINUING DISCLOSURE, and APPENDIX B and, accordingly, expresses no opinion as to the accuracy or sufficiency of any other information contained herein. Definitions Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the resolution’of the governing body of the City authorizing the Notes (the “Note Resolution”) and in the resolution and ordinance of the governing body of the City authorizing the Bonds (the “Bond Ordinance”), as applicable. Copies of the Note Resolution and the Bond Ordinance are available upon request to the City, the Financial Advisor, or Bond Counsel. Additional Information Additional information regarding the City or the Bonds may be obtained from George K. Baum & Company, 4801 Main Street, Kansas City, Missouri 641 12, telephone 816-474-1 100. THE NOTES Description The Notes shall consist of fully registered bookentry-only Notes in the denomination of $5,000 or any integral multiples thereof (the “Authorized Denomination”) and shall be numbered in such manner as the Note Registrar shall determine. All of the Notes shall be dated May 1,2010, shall become due in the amounts on the Stated Maturities, with option of prior redemption and payment prior to their Stated Maturities, and shall bear interest at the rates per annum set forth on the inside cover page of this Official Statement. The Notes shall bear interest (computed on the basis of twelve 30-day months) fiom the later of the Dated Date or the most recent Interest Payment Date to which interest has been paid on the Interest Payment Dates in the manner hereinafter set forth. Redemption Provisions . The Notes are not subject to redemption and payment prior to maturity. Authority The Notes are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq. (including particularly K.S.A. 10-123), and K.S.A. 12- 6a01 et seq., all as amended, and the resolution adopted by the City on April 19, 2010, authorizing the issuance of the Notes (the “Note Resolution”). Security The Notes shall be general obligations of the City, payable as to both principal and interest tlom special assessments levied upon the property benefited by the construction of certain improvements, or from the proceeds of the City’s 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 the taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Notes as the same become due. RePistration, Transfer and Exchanee of Notes As long as any of the Notes remain Outstanding, each Note when issued shall be registered in the name of the Owner thereof on the Note Register. Notes may be transferred and exchanged only on the Note Register as hereinafter provided. Upon surrender of any Note at the principal office of the Note Registrar, the Note Registrar shall transfer or exchange such Note for a new Note or Notes in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Note that was presented for transfer or exchange. Notes presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Note Registrar, duly executed by the Owner thereof or by the Owner’s duly authorized agent. In all cases in which the privilege of transferring or exchanging Notes is exercised, the Note Registrar shall authenticate and deliver Notes in accordance with the povisions of the Note Resolution. The Issuer shall pay the fees and expenses of the Note Registrar for the registration, transfer and exchange of Notes. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Note Registrar, are the responsibility of the Owners of the Notes. In the event any Owner fails to provide a correct taxpayer identification number to the Note Paying Agent, the Note Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The Issuer and the Note Registrar shall not be required (a) to register the transfer or exchange of any Note that has been called for redemption aher notice of such redemption has been mailed by the Note Paying Agent and during the period of 15 days next preceding the date of mailing of such notice of redemption; or (b) to register the I 2 transfer or exchange of any Note during a period beginning at the opening of business on the day after receiving written notice from the Issuer of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest. Mutilated, Lost, Stolen or Destroved Notes If (a) any mutilated Note is surrendered to the Note Registrar or the Note Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (b) there is delivered to the lssuer and the Note Registrar such security or indemnity as may be required by each of them, then, in the absence of notice to the Issuer or the Note Registrar that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and, upon the Issuer's request, the Note Registrar shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of the same Stated Maturity and of like tenor and principal amount. If any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Issuer, in its discretion, may pay such Note instead of issuing a new Note. Upon the issuance of any new Note, the Issuer may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Note Paying Agent) connected therewith. Nonpresentment of Notes If any Note is not presented for payment when the principal thereof becomes due at Maturity, if funds sufficient to pay such Note have been made available to the Note Paying Agent all liability of the Issuer to the Owner thereof for the payment of such Note shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Note Paying Agent to hold such funds, without liability for interest thereon, for the benefit of the Owner of such Note, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part under this Note Resolution or on, or with respect to, said Note. If any Note is not presented for payment within four (4) years following the date when such Note becomes due at Maturity, the Note Paying Agent shall repay to the Issuer the funds theretofore held by it for payment of such Note, and such Note shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the Issuer, and the Owner thereof shall be entitled to look only to the Issuer for payment, and then only to the extent of the amount so repaid to it by the Note Paying Agent, and the Issuer shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Designation of Note Paving Agent and Note Registrar The lssuer will at all times maintab a paying agent and note registrar meeting the qualifications set forth in the Note Resolution. The Issuer reserves the right to appoint a successor paying agent or note registrar. No resignation or removal of the paying agent or note registrar shall become effective until a successor has been appointed and has accepted the duties of paying agent or note registrar. Every paying agent or note registrar appointed by the Issuer shall at all times meet the requirements of Kansas law. The Treasurer of the State of Kansas, Topeka, Kansas (the Tote Registrar" and "Note Paying Agent?) has been designated by the Issuer as paying agent for the payment of principal of and interest on the Notes and note registrar with respect to the registration, transfer and exchange of Notes. Method and Place of Pavrnent of the Notes The principal of, or Redemption Price, and interest on the Notes shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Note and the interest thereon shall be paid at Maturity to the Person in whose name such Note is registered on the Note Register at the Maturity thereof, upon presentation and surrender of such Note at the principal office of the Note Paying Agent. 3 The interest payable on each Note on any Interest Payment Date shall be paid to the Owner of such Note as shown on the Note Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Note Paying Agent to the address of such Owner shown on the Note Register or at such other address as is furnished to the Note Paying Agent in writing by such Owner; or (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Notes, by electronic transfer to such Owner upon written notice given to the Note Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Owner wishes to have such transfer directed. Notwithstanding the foregoing, any Defaulted Interest with respect to any Note shall cease to be payable to the Owner of such Note on the relevant Record Date and shall be payable to the Owner in whose name such Note is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed as hereinafter specified. The lssuer shall notify the Note Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Note Paying Agent) and shall deposit with the Note Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest. Following receipt of such funds the Note Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date ofthe proposed payment. The Note Paying Agent shall notify the Issuer of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage prepaid, to each Owner of a Note entitled to such notice not less than 10 days prior to such Special Record Date. SO LONG AS CEDE & CO. REMAINS THE REGISTERED OWNER OF THE NOTES, THE NOTE PAYING AGENT SHALL TRANSMIT PAYMENTS TO THE SECURITlES DEPOSITORY, WHICH SHALL REMIT SUCH PAYMENTS IN ACCORDANCE WITH ITS NORMAL PROCEDURES. See “THE NOTES - Book-Entry Notes; Securities Depository.” Payments Due on Saturdays, Sundays and Holidays In any case where a Note Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Note Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Note Payment Date, and no interest shall accrue for the period after such Note Payment Date. Book-Entry Notes: Securities DeDositorv The Notes shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Notes, except in the event the Note Registrar issues Replacement Notes. It is anticipated that during the term of the Notes, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Notes to the Participants until and unless the Note Registrar authenticates and delivers Replacement Notes to the Beneficial Owners as described in the following paragraphs. The Issuer may decide, subject to the requirements of the Operational Arrangements of DTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the Issuer determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes; or 4 (b) if the Note Registrar receives written notice from Participants having interest in not less than 50% of the Notes Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes, then the Note Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Note Registrar shall register in the name of and authenticate and deliver Replacement Notes to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (a)(2) of this paragraph, the Issuer, with the consent of the Note Registrar, may select a successor securities depository in accordance with the following paragraph to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Note. Upon the issuance of Replacement Notes, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Note Registrar, to the extent applicable with respect to such Replacement Notes. If the Securities Depository resigns and the Issuer, the Note Registrar or Owners are unable to locate a qualified successor of the Securities Depository, then the Note Registrar shall authenticate and cause delivery of Replacement Notes-to Owners, as provided herein. The Note Registrar may rely on information from the Securities Depository and its Participants as to the names of the Beneficial Owners of the Notes. The cost of printing, registration, authentication, and delivery of Replacement Notes shall be paid for by the issuer. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the Issuer may appoint a successor Securities Depository provided the Note Registrar receives written evidence satisfactory to the Note Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Note Registrar upon its receipt of a Note or Notes for cancellation shall cause the delivery of the Notes to the successor Securities Depository in appropriate denominations and form as provided in the Note Resolution. THE BONDS Description The Bonds shall consist of fully registered book-entry-only bonds in the denomination of $5,000 or any integral multiples thereof (the “Authorized Denomination”) and shall be numbered in such manner as the Bond Registrar shall determine. All of the Bonds will be dated May 1, 2010, shall become due in the amounts, on the Stated Maturities, and subject to redemption and payment prior to their Stated Maturities, and shall bear interest at the rates per annum set forth on the inside cover page of this Official Statement. The Bonds shall bear interest (computed on the basis of twelve 30-day months) from the later of the Dated Date or the most recent Interest Payment Date to which interest has been paid on the Interest Payment Dates in the manner hereinafter set forth. RedemDtion Provisions Outional Redemption. At the option of the issuer, Bonds or portions thereof maturing on October 1, 20 19 and thereafter may be called for redemption and payment prior to their Stated Maturity on October 1, 2018, and thereafter as a whole or in part (selection of maturities and the amount of Bonds of each maturity to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. Mandatorv Redemption. The Bonds maturing October 1, 2023 through October 1, 2025 (the “Term Bond”) shall be subject to mandatory redemption and payment prior to their stated maturity pursuant to the mandatory redemption requirements hereinafter set forth, at a redemption price equal to 100% of the principal 5 amount thereof, plus accrued interest to the redemption date. The City shall redeem on October 1 in each year the following principal amounts of such Term Bond: P ri n ci pa I Amount $365,000 380,000 390,000 Year 2023 - 2024 2025 * *Final maturity of Term Bond Selection of Bonds to be Redeemed. Bonds shall be redeemed only in an Authorized Denomination. When less than all of the Bonds are to be redeemed and paid prior to their Stated Maturity, such Bonds shall be redeemed in such manner as the Issuer shall determine, Bonds of less than a full Stated Maturity shall be selected by the Bond Registrar in minimum Authorized Denomination in such equitable manner as the Bond Registrar may determine. In the case of a partial redemption of Bonds by lot when Bonds of denominations greater than a minimum Authorized Denomination are then Outstanding, then for all purposes in connection with such redemption each minimum Authorized Denomination of face value shall be treated as though it were a separate Bond of a minimum Authorized Denomination. If it is determined that one or more, but not all, of the minimum Authorized Denomination value represented by any Bond is selected for redemption, then upon notice of intention to redeem such minimum Authorized Denomination, the Owner or the Owner’s duly authorized agent shall forthwith present and surrender such Bond to the Bond Registrar: (1) for payment of the Redemption Price and interest to the Redemption Date of such minimurn Authorized Denomination value called for redemption, and (2) for exchange, without charge to the Owner thereof, for a new Bond or Bonds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Owner of any such Bond fails to present such Bond to the Bond Paying Agent for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of the minimum Authorized Denomination value called for redemption (and to that extent only). Notice and Effect of Call for Redemution. Unless waived by any Owner of Bonds to be redeemed, if the Issuer shall call any Bonds for redemption and payment prior to the Stated Maturity thereof, the Issuer shall give written notice of its intention to call and pay said Bonds to the State Treasurer and the Purchaser. In addition, the Issuer shall cause the Bond Registrar to give written notice of redemption to the Owners of said Bonds. Each of said written notices shall be deposited in the United States first class mail not less than 30 days prior to the Redemption Date. All official notices of redemption shall be dated and shall contain the following information: (a) the Redemption Date; (b) the Redemption Price; (c) if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption of any Bonds, the respective principal amounts) of the Bonds to be redeemed; (d) a statement that on the Redemption Date the Redemption Price will become due and payable upon each such Bond or portion thereof called for redemption and that interest thereon shall cease to accrue fiorn and after the Redemption Date; and (e) the place where such Bonds are to be surrendered for payment of the Redemption Price, which shall be the principal office of the Bond Paying Agent. The failure of any Owner to receive notice given as heretofore provided or an immaterial defect therein shall not invalidate any redemption. Prior to any Redemption Date, the Issuer shall deposit with the Bond Paying Agent an amount of money sufficient to pay the Redemption Price of all the Bonds or portions of Bonds that are ro be redeemed on such Redemption Date. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall become due and payable on the Redemption Date, at the Redemption Price therein specified, and fiom and after the Redemption Date (unless the Issuer defaults in the payment of the Redemption Price) such Bonds or portion of Bonds shall cease to bear interest. For so long as the Securities Depository is effecting book-entry transfers of the Bonds, the Bond Registrar shall provide the notices specified to the Securities Depository. It is expected that the Securities Depository shall, in turn, notify its Participants and that the Participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of the Securities Depository or a Participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice fiom the Bond Registrar, the Securities Depository, a Participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. 6 In addition to the foregoing notice, the Issuer shall provide such notices of redemption as are required by the Disclosure Instructions. The Bond Paying Agent is also directed to comply with any mandatory or voluntary standards then in effect for processing redemptions of municipal securities established by the State or the Securities and Exchange Commission. Failure to comply with such standards shall not affect or invalidate the redemption of any Bond. Authoritv The Bonds are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq., K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., and K.S.A. 12-2101 et seq , all as amended, and an ordinance and resolution adopted by the City on April 19, 2010, authorizing the issuance of the Bonds (jointly referred to herein as the “Bond Ordinance”). Security The Bonds shall be general obligations of the City, payable as to both principal and interest in part fiom special assessments levied upon the property benefited by the construction of certain public improvements, and if not so paid, fiom 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 Bonds is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real or personal, within the territorial limits of the City. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Bonds as the same become due. Registration, Transfer and Exchanpe of Bonds As long as any of the Bonds remain Outstanding, each Bond when issued shall be registered in the name of the Owner thereof on the Bond Register. Bonds may be transferred and exchanged only on the Bond Register as hereinafter provided. Upon surrender of any Bond at the principal office of the Bond Registrar, the Bond Registrar shall transfer or exchange such Bond for a new Bond or Bonds in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Bond that was presented for transfer or exchange. Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Bond Registrar, duly executed by the Owner thereof or by the Owner’s duly authorized agent. In all cases in which the privilege of transferring or exchanging Bonds is exercised, the Bond Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Bond Resolution. The Issuer shall pay the fees and expenses of the Bond Registrar for the registration, transfer and exchange of Bonds. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners of the Bonds. In the event any Owner fails to provide a correct taxpayer identification number to the Bond Paying Agent, the Bond Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The Issuer and the Bond Registrar shall not be required (a) to register the transfer or exchange of any Bond that has been called for redemption after notice of such redemption has been mailed by the Bond Paying Agent and during the period of 15 days next preceding the date of mailing of such notice of redemption; or (b) to register the transfer or exchange of any Bond during a period beginning at the opening of business on the day after receiving written notice fiom the Issuer of its intent to pay Defaulted Interest and ending at the close of business on the date fvted for the payment of Defaulted Interest. r 7 Designation of Bond Paving Aeent and Bond Reeistrar The Issuer will at all times maintain a paying agent and bond registrar meeting the qualifications set forth in the Bond Resolution. The Issuer reserves the right to appoint a successor paying agent or bond registrar. No resignation or removal of the paying agent or bond registrar shall become effective until a successor has been appointed and has accepted the duties of paying agent or bond registrar. Every paying agent or bond registrar appointed by the Issuer shall at all times meet the requirements of Kansas law. The Treasurer of the State of Kansas, Topeka, Kansas (the “Bond Registrar” and ‘Bond Paying Agent”) has been designated by the Issuer as paying agent for the payment of principal of and interest on the Bonds and bond registrar with respect to the registration, transfer and exchange of Bonds. Method and Place of Payment of the Bonds The principal of, or Redemption Price, and interest on the Bonds shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Bond shall be paid at Maturity to the Person in whose name such Bond is registered on the Bond Register at the Maturity thereof, upon presentation and surrender of such Bond at the principal office of the Bond Paying Agent. The interest payable on each Bond on any Interest Payment Date shall be paid to the Owner of such Bond as shown on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Bond Paying Agent to the address of such Owner shown on the Bond Register or at such other address as is furnished to the Bond Paying Agent in writing by such Owner; or (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Owner upon written notice given to the Bond Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Owner wishes to have such transfer directed. Notwithstanding the foregoing, any Defaulted Interest with respect to any Bond shall cease to be payable to the Owner of such Bond on the relevant Record Date and shall be payable to the Owner in whose name such Bond is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed as hereinafter specified. The Issuer shall notify the Bond Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Bond Paying Agent) and shall deposit with the Bond Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest. Following receipt of such funds the Bond Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Bond Paying Agent shall notify the Issuer of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage-prepaid, to each Owner of a Bond entitled to such notice not less than 10 days prior to such Special Record Date. SO LONG AS CEDE & CO., REMAINS THE REGISTERED OWNER OF THE BONDS, THE BOND PAYING AGENT SHALL TRANSMIT PAYMENTS TO THE SECURITIES DEPOSITORY, WHICH SHALL REMIT SUCH PAYMENTS IN ACCORDANCE WITH ITS NORMAL PROCEDURES. Payments Due on Saturdays, Sundays and Holidays In any case where a Bond Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Bond Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Bond Payment Date, and no interest shall accrue for the period after such Bond Payment Date. 8 Book-Entw Bonds: Securities Depository The Bonds shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds. It is anticipated that during the term of the Bonds, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Bond Registrar authenticates and delivers Replacement Bonds to the Beneficial Owners as described in the following paragraphs. The City may decide, subject to the requirements of the Operational Arrangements of DTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the City determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds; or (b) if the Bond Registrar receives written notice fiom Participants having interest in not less than 50% of the Bonds Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds, then the Bond Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Bond Registrar shall register in the name of and authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (a)(2) of this section, the City, with the consent of the Bond Registrar, may select a successor securities depository as hereinafter provided to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Bond. Upon the issuance of Replacement Bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Bond Registrar, to the extent applicable with respect to such Replacement Bonds. If the Securities Depository resigns iind the City, the Bond Registrar or Owners are unable to locate a qualified successor of the Securities Depository, then the Bond Registrar shall authenticate and cause delivery of Replacement Bonds to Owners, as provided herein. The Bond Registrar may rely on information from the Securities Depository and its Participants as to the names of the Beneficial Owners of the Bonds. The cost of printing, registration, authentication, and delivery of Replacement Bonds shall be paid for by the City. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the City may appoint a successor Securities Depository provided the Bond Registrar receives written evidence satisfactory to the Bond Registrar with respect to the ability of the successor Securities Depositow to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terns. The Bond Registrar upon its receipt of a Bond or Bonds for cancellation shall cause the delivery of the Bonds to the successor Securities Depository in appropriate denominations and form as provided in the Bond Resolution. 9 THE DEPOSITORY TRUST COMPANY The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Notes and Bonds. The Notes and Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Note or Bond certificate will be issued for each maturity of such series of the Notes or Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law; a member of the Federal Reserve System, a “clearing corporation’’ within the meaning of the New York Uniform Commercial Code; and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities’ transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC‘). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Notes or Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Notes or Bonds on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Notes or Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Notes or Bonds, except in the event that use of the book-entry system for the Notes or Bonds is discontinued. To facilitate subsequent transfers, all Notes or Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Notes or Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes or Bonds; DTC’s records reflect only the identity ofthe Direct Participants to whose accounts such Notes or Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 10 Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Notes or Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Notes or Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Notes or Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information fiom the Issuer, the Note Paying Agent, or the Bond Paying Agent, on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the Note Paying Agent, the Bond Paying Agent, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer, the Note Paying Agent or the Bond Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Notes or Bonds purchased or tendered, through its Participant, to the Note Paying Agent and the Bond Paying Agent, and shall effect delivery of such Notes or Bonds by causing the Direct Participant to transfer the Participant’s interest in the Notes or Bonds, on DTC’s records, to the Note Paying Agent and the Bond Paying Agent. The requirement for physical delivery of the Notes or Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Notes or Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Notes or Bonds to the Note Paying Agent’s or Bond Paying Agent’s DTC account. DTC may discontinue providing its services as depository with respect to the Notes or Bonds at any time by giving reasonable notice to the Issuer, the Note Paying Agent or the Bond Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. The Issuer may decide, subject to the requirements of the Operational Arrangements of DTC, to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Note or Bond certificates will be printed and delivered. The information in this section concerning DTC and DTCS book-entry system has been obtainedfiom sources that the Issuer, Bond Coukel, and the Financial Advisor believe to be reliable, but the Issuer, Bond Counsel, and the Financial Advisor take no responsibility for the accuracy thereoJ and neither the DTC Participants nor the Benejcial Owners should rely on the foregoing information with respect to such matters but should instead con$rm the same with DTC or the DTC Participants, as the case may be. THE FINANCING PLAN The Proiects Proceeds from the sale of the Notes will be used to provide financing for certain street, sewer, and water, improvements within newly developing residential subdivisions in the City and to pay the costs associated with the issuance of the Notes. Proceeds from the sale of the Bonds will be used to provide financing for certain landfill, convention center, fire station, street, sewer, and water improvements within the City and to pay the costs associated with the issuance of the Bonds. Additionally, proceeds will be used to refund certain outstanding general obligation bonds of the City as described below. 11 The Refunding Plan A portion of the proceeds from the sale of the Bonds, along with other available funds, will be used to execute a current refunding (the “Refunding Plan?’) of the City’s outstanding General Obligation Water and Sewage System Refunding Bonds, Series 2002-A (the “Refunded Bonds”). According to the terms of the Refunding Plan, proceeds from the sale of the Bonds, along with other available funds, will be transferred to the paying agent on the Refunded Bonds and used to pay the principal and accrued interest payable on the Refunded Bonds on May 15,2010. The Refunding Plan is being undertaken in order to achieve interest cost savings and restructure the City’s current debt repayment schedule. The following is a summary of the Refunded Bonds: Principal Maturity Dates Principal Amount Amount to be of Bonds Amount Call Date Series Outstanding Refunded to be Refunded to be Called - 2002-A $820,000 $820,000 10-01-10 thru 10-01-13 $820,000 05-1 5-1 0 SOURCES AND USES OF FUNDS Funds to be used in the Financing Plan will be provided and applied approximately as follows, exclusive of accrued interest. Series Series 2010-1 Notes 2010-A Bonds Note and Bond Proceeds $2,500,000.00 $6,875,000.00 Reoffering Premium 9,225.00 91,324.05 Issuer Contribution for Refunding 2002-A Bonds 0.00 201.757.50 Total Sources of Funds $2,509,225 .OO $7,174,08 1.55 Sources of Funds: Uses of Funds: Deposit to Improvement Fund $2,499,750.00 $6,246,193.22 Redemption of Bonds 0.00 824,340.72 Costs of Issuance (includes underwriters discount and rounding amount) 9,475.00 103,547.61 Total Application of Funds $2,509,225.00 $7,l74,081.55 REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY 12 FINANCIAL OVERVIEW CITY OF SALINA, KANSAS 2009 Estimated Actual Valuation (2) 2009 Assessed Valuation General Obligation Bonds (3) Population-2008 US. Census Bureau Estimate General Obligation Debt Per Capita Cross Debt $ 2,893,359,541.00 - $ 447,800,878.00 $ 64,776,928.00 46,483 $ 1,393.56 Ratio of General Obligation Debt to Estimated Actual Valuation 2.24% Ratio of General Obligation Debt to Assessed Valuation 14.47% Outstanding Temporary Notes (4) $ 2,500,000.00 Outstanding Lease Obligations $ 30,000.00 Outstanding Revenue Bonds Overlapping General Obligation Debt (5) Direct and Overlapping General Obligation Debt (6) Direct and Overlapping Debt Per Capita $ 2,320,000.00 $ 63,665,044.00 $ 130,941,972.00 $ 2,816.99 Ratio of Direct and Overlapping Debt to Estimated Actual Valuation Ratio of Direct and Overlapping Debt to Assessed Valuation 4.53% 29.24% Net of Self-supporting Debt (1) $ 58,910,000.00 $ 1,267.35 2.04% 13.16% $ 125,075,044.00 $ 2,690.77 4.32% 27.93% (1) The City intends to provide for payment on the Kansas Revolving Loans with net revenues derived fiom the operation of its water and sewage system. The column titled “Net of Self-supporting Debt” therefore excludes the Kansas Revolving Loans. The Kansas Revolving Loans 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) Includes the Bonds. Does not include bonds to be refunded with proceeds from the sale of the Bonds and other available funds of the City. (4) Includes the Notes. (5) For a more detailed explanation of the overlapping debt of the other jurisdictions, see DEBT SUMMARY - “Overlapping Debt”. (6) Includes outstanding general obligation bonds and temporary notes of the City and overlapping jurisdictions. 13 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 2008 U.S. Census Bureau estimate of 46,483. The City is the county seat for Saline County which had an estimated 2008 U.S. Census Bureau population of 54,657. Situated at the intersection of Interstate Highways 70 and 135, the City of Salina serves as the industrial, medical, retail, trade and service hub for north central Kansas. 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. 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 M. Luci Larson Aaron Peck Samantha Angel1 Norman Jennings Tom Arpke - - Title Term Emires Mayor 201 1 Vice Mayor 201 1 Commissioner 2013 Commissioner 2013 Commissioner 201 1 Kansas Public Employees Retirement System (KPERS) The City participates in the Kansas Public Employees Retirement System (KPERS) which was established by the 1961 Kansas Legislature. There are approximately 250,000 current and former public employees in Kansas who are members of the Kansas Public Retirement System. These members represent over 1,500 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 fill-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. 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 2010, the City’s contribution will be 6.38% of each employee’s gross salary. Kansas Police and Fire Retirement The City has established membership in the Kansas Police and Fire Retirement System for its police and fire personnel. Benefits are determined by total years of service and final 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 benefits is the sole responsibility of KP&F. Currently 14 the City contributes 16.05% 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 US. Census Bureau as cities with 50,000 inhabitants or more. According to the U. S. Census Bureau, the City's citizens had a median age of 36.5 years in 2007. The following table and graph show the population for the City for selected years as provided by the U.S. Census Bureau. U.S. Census - Year 2008 2007 2006 2005 2004 Bureau Population 46,483 46,458 46,140 47,533 45,988 Police and Fire Protection The City of Salina provides police and fire protection services to residents of the City and surrounding areas. Fire fighting services are provided from four stations located throughout the City with 92 full-time firefighters. The fire department operates 36 vehicles and provides emergency medical services. The police department employs approximately 8 1 full-time police officers and operates 37 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 or adjacent to the City. Such companies include Hawker Beechcraft Corporation, Pepsi Cola, ElDorado Bus, Exide Battery, and Philips Lighting. Currently, manufacturing, retail trade, and service industries rank as the three primary employers in the City. No single industry is dominant. The government sector and wholesale trade industries make up the second tier of Salina employers. The City serves as a regional trade center for north central Kansas. Many individuals and businesses within a 70-mileradius travel to the City to purchase consumer goods and services. The identified trade area for the City covers 23 counties with a total population of about 360,000 people. This designation as a regional trade center is supported by the fact that Saline County had the seventh highest "trade pull factor" of all Kansas counties in 2008 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 February 2010, the Kansas Department of Labor estimated the civilian labor force in the City of Salina to be 26,699 persons. The U.S. Census Bureau determined that in 2000 the median household income for the City was $36,066 and owner-occupied housing rates in the City were 66.1%. Saline County is located in the center of one of the most productive agn'cultural areas in the United States. In 2007-2008, 750 farms were located on 430,000 acres. Farm crops were valued at over $38 million harvested on 210,910 acres. Cattle and milk produced was valued at over $19 million. Salina is a city centered more on 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 can be offered as inducements to opening industrial facilities. 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 at Salina. Additionally, a “build-to-suit-tenant’’ agreement is available on sites in the Airport Industrial Center that can provide 100% financing for land and building costs. Income The following table during the years indicated: - Year 2007 2006 2005 2004 2003 shows the per capita personal income for residents of Saline County and the State Saline countv $34,611 32,938 30,416 29,220 27,972 State of Kansas $36,525 34,525 32,130 30,992 29,799 Source: Kansas Statistical Abstract, 2008 Building Permits Issued Building permits issued by the City currently maintain steady levels. This table reflects both private developments as well as the expansion to the educational facilities in the community. The five-year history of the total value of permits issued is: - Year 2009 2008 2007 2006 2005 Value $1 2,192,48 1 - 18,276,022 32,631,351 21,542,984 ‘ 21,688,263 The Salina Aimort Authoritv The Salina Airport Authority is a body corporate and politic. The Authority was created by the City of Salina in April 1965 pursuant to the authority granted by the City by the surplus property and public airport authority act of the State of Kansas. The Authority was created for the purpose of accepting as surplus property portions of the former Schilling A.F.B., which was closed by the United States Department of Defense in June 1965. By quitclaim deed the Authority received over 2,900 acres of land and numerous buildings for the purpose of operating and developing the Salina Municipal Airport and the Salina Airport Industrial Center. The Authority is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. The Salina Municipal Airport is the only commercial service airport serving SalindSaline County and the 22-county area, which comprises North Central Kansas. The Airport also services the corporate, business, private aviation and flight training needs of industry, business and individuals in the area. The Airport is also used by Kansas State University at Salina (KSUS). The campus of KSUS is located within the boundaries of the Authority adjacent to the main Airport runway. The college offers degrees in professional flight training, airframe and power plant maintenance, and avionics technology. The Salina Municipal Airport and Airport Industrial Center is home for nearly 90 businesses and organizations. Forty-five of the businesses and organizations are tenants of the Authority. One of the primary functions of the Authority is to facilitate the continued growth of jobs and payroll at the Airport and Airport Industrial Center. The Authority works in partnership with the City of Salina, Saline County, and the Salina Area Chamber of Commerce for the retention of existing business and industry and the recruitment of new business and industry. 16 Maior Emplovers Industrial development during the past ten years has established a broad, industrial base in and around the City. A list of the major employers is as follows. All figures represent total full-time employment excluding seasonal and part-time employees. Estimated - Name ProductlBusiness Employment Schwan’s Global Supply Chain Frozen Pizza 1,850 Salina Regional Health Center Health Care 1,082 Exide Technologies Automotive Batteries 800 Great Plains Manufacturing Agricultural Equipment 650 Philips Lighting Company Fluorescent Lamps 600 El Dorado National Transit, Tour & Shuttle Buses 255 Raytheon Aircraft Corporation* Aircraft Subassemblies 240 Saline County County Government 233 Unified School District No. 305 ,School System 93 5 City of Salina City Government 493 *Recently announced closure Source: Salina Chamber of Commerce Unemployment Rate According to the Kansas Department of Labor, the following table shows the annual unemployment rate trend for the City of Salina and the State of Kansas. Year 2010 (Feb) - 2009 2008 2007 2006 City of Salina 6.0% 6.7 4.1 3.5 4.0 State of Kansas 6.8% 6.1 4.4 4.1 4.5 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 No. 305 provides public education through its eight elementary, two middle, and two senior high schools. The District also operates alternative education, vocational- technical, and special education schools. Current enrollment is over 7,000. Additionally, there are a number of parochial institutions that operate two grade schools, two junior high schools, 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 230,000 volumes, two college libraries, a medical library, and a law library are located within the City. Kansas State University at Salina 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 930 students are currently enrolled in the school. 17 Kansas Weslevan University Kansas Wesleyan University was founded in 1886 and is located within the City. Currently, Kansas Wesleyan maintains an enrollment of approximately 800 students, the majority from Kansas and surrounding states. The school, based on a liberal arts foundation, offers more than 27 major programs, including graduate studies. Evening degree completion programs for adults are also available. Kansas Wesleyan is a member of the Associated Colleges of Central Kansas, a consortium of six academic institutions within 70 miles of the University through which students may enroll in courses and utilize resources. TransDortation In addition to 1-70 and 1-135, US-81 and US40 also intersect Salina. Several 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. Union Pacific gives the City rail service in four directions out of the City and provides daily package-car service in and out of Salina. There are approximately 8 daily freights stopping in the City. Existing terminals have adequate capacity to handle present and greatly increased future capacity. Approximately 30 miles of storage tracks are available. The City is served by the Salina Municipal Airport and scheduled air service is provided by Great Lakes Airlines. The airline offers weekday and weekend flights to the Kansas City and Denver. During 2009, the Airport enplaned 2,839 passengers and also accommodates a wide variety of aircraft including business jets, military, flight training and general aviation aircraft. During 2009, the Salina Air Traffic Control Tower logged over 65,000 aircraft operations serving the needs of over 7,000 business jets, the professional flight training department of University at Salina, general aviation and military aircraft. The two fixed base operators on the field at Salina specializing in aviation fuel delivered over 2.5 million gallons of fuel to the wide variety.of aircraft utilizing the Airport during 2009. Utilities and Infrastructure Westar Energy supplies electricity and Kansas Gas Service provides natural gas to the City. The City owns its own water and sewage system. Additionally, the City is responsible for street maintenance and police and fire protection. Health Facilities The City is served by Salina Regional Health Center ("SRHC"), a 330-bed regional facility divided between two Salina campuses. SRHC is an acute care facility for the diagnosis and treatment of all types of diseases and conditions, and includes a cancer treatment center and two medical office buildings. The institution is also a 50% partner in a separate surgical hospital adjacent to the Asbury campus of SRHC. Several other facilities providing mental health services, counseling, and alcohol and drug dependency treatment programs are located in the City. Financial Institutions Nine banks operating a total of 14 different facilities are located in the City. Five banks are headquartered in the City and reported combined deposits in excess of $1.97 billion as of December 31,2008. Two savings banks have branch offices in the City. 18 Other Information Public recreation facilities available to city residents include 27 parks, a golf course, baseball/softball fields, a swimming pool, an art center, a community theater, a museum, tennis courts, and ice and roller skating facilities. Two private clubs provide additional recreational opportunities for residents of the City. Kenwood Cove, a $1 2.5 million aquatic park, is anticipated to open in May 2010. The Bicentennial Center, a 7,500-seat facility, is home to the Kansas Cage- a professional basketball team playing in the United States Basketball League. Numerous concerts, exhibitions, conventions, and other events are also held in the Center. There are several radio stations in the City. Five standard television stations from Wichita serve the Salina area. Additionally, Cox Communications provides cable television and broadband internet service to subscribing customers. DEBT SUMMARY Current Indebtedness The following is an overview of the City’s outstanding indebtedness by classification as of the dated date of the Bonds. Figures do not include bonds for which payment has been provided through the creation of designated escrow accounts. General Obligation Bonds: The City’s currently outstanding general obligation bonds have an underlying rating of “Ad” from Moody’s. Some of the City’s outstanding bonds have also received a rating of “Aaa” from Moody’s as the result of a municipal bond insurance policy. Date Issued 07-15-0 1 01 -1 5-02 07-15-02 07-15-03 05-0 1-04 07-1 5-04 07-15-05 03-15-06 07-15-06 06-15-07 07-15-08 12-15-08 07-15-09 05-0 1- 10 Purpose Internal Improvements Water and Sewage System Rehding Internal Improvements Internal Improvements Refunding Internal Improvements Internal Improvements Internal Improvements Internal Improvements Internal Improvements Internal Improvements Internal Jmprovements Internal Improvements Refunding & Improvement Amount of Issue $ 5,350,000 2,045,000 1,980,000 4,350,000 5,585,000 4,053,000 4,210,000 2,200,000 885,000 6,545,000 3,720,000 3,525,000 23,695,000 6,875,000 Final Maturity 10-0 1 - 16 10-0 1-1 3 10-0 1-1 7 10-0 1-1 8 08-0 1-1 5 10-0 1-19 10-01-20 10-0 1-26 10-01 -21 10-0 1-27 I 0-0 1-23 07-0 1-28 10-0 1-29 10-01-25 Amount Outstanding $ 2,485,000 820,000 * 820,000 2,405,000 2,225,000 2,150,000 2,870,000 1,870,000 675,000 5,815,000 3,500,000 3,525,000 23,695,000 6.875.000 $58,9 10,000 *To be refbnded with proceeds from the sale of the Bonds. Total Amount Outstanding excludes this amount. 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 FlNANCIAL INFORMATJON - “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. 19 State Loans: 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. Date Amount Final Amount Issued Purpose of Issue Maturity Outstandinp; 0 1-05-98 Kansas Public Water Loan #1 $3,600,000 08-01-20 $2,176,383 03-15-01 Kansas Public Water Loan #2 5,000,000 08-0 1-23 . 3.690.545 $5,866,928 Revenue Bonds: Revenue bonds are payable solely from the net revenues derived by the City from the Revenue bonds do not represent a general obligation operation of its combined water and sewage system. indebtedness of the City for which the City’s taxing ability has been pledged. Date Amount Final Amount Issued Purpose of Issue Maturitv Outstanding 08-0 1-02 Refunding $6,790,000 09-0 1-1 2 $2,320,000 Lease Purchase Obligations: Original Date Maturity Principal Amount Golf Carts 04-01-09 07-01-1 I $30,000 $30,000 Proiect Issued - Date Amount Outstanding Temporary Notes: Temporary notes represent 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 of long-term general obligation notes or other available funds. Final Original Date Maturity Note Amount Proiect - Series Issued - Date Amount Outstanding: Street, Water, and Sewer 2010-1 05-0 1-1 0 08-01-1 1 $2,500,000 $2,500,000 Overlapping Debt According to the Saline County Clerk’s office, 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. All debt outstanding is as of December 3 1, 2009 unless otherwise noted. Amount Estimated Share of the City Jurisdiction Outstanding Amount Percentage U.S.D. No. 305 $53,190,000 $49,275,216 92.64% Saline County (as of 06-30-09) 680,000 5 14,828 75.71 Salina Airport Authority 13,875,000 13,875,000 100.00 $63,665,044 20 Annual Debt Pavments 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. Year 2010 201 1 2012 2013 2014 2015 2016 2017 2018 2019 2020 202 1 2022 2023 2024 2025 2026 2027 2028 2029 - $ 4,390,000 4,525,000 4,560,000 4,520,000 4,370,000 3,970,000 3,795,000 3,530,000 3,570,000 3,415,000 1,700,000 1,565,000 1,570,000 1,480,000 1,275,000 900,000 935,000 860,000 720,000 385,000 $52,035,000 Outstanding Bonds Principal Interest $ 1,033,328 1,929,961 1,782,854 1,590,45 1 1,398,528 1,235,2 10 1,084,338 928,361 765,710 600,325 478,047 411,159 348,219 283,195 222,145 168,739 128,875 87,326 48,888 16,362 $14,542,021 Series 2010-A Bonds Principal Interest $ O$ 0 775,000 255,568 865,000 164,90 1 880,000 147,60 1 695,000 130,001 285,000 116,101 290,000 1 10,40 1 300,000 103,731 3 10,000 95,93 1 320,000 87,096 330,000 77,496 340,000 67,101 350,000 55,881 365,000 43,98 1 380,000 29,838 390,000 15,113 0 0 0 0 0 0 0 0 $6,875,000 $1,500,741 SRF Loans $ 319,839 639,678 639,678 639,678 639,678 639,678 639,678 639,678 639,678 639,678 504,708 369,737 369,737 184,869 0 0 0 0 0 0 $7,505,992 Total $ 5,933,167 8,325,207 8,222,433 7,997,730 7,233,207 6,245,989 5,9 19,417 5,501,770 5,38 1,3 19 5,062,099 3,090,25 1 2,752,997 2,693,837 2,357,045 1,906,983 1,473,852 1,063,875 947,326 768,888 401.362 $83,278,754 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 U.S. Debt Outstanding Assessed Estimated Actual Census Per - Year December 31 * Valuation Valuation PoDulation Capita 2009 $52,900,000 11.81% 1.83% 46,483 $1,138.05 2008 3 1,645,000 7.01 1.09 46,483 680.79 2007 27,650,000 6.24 0.98 46,458 595.16 2006 24,165,000 5.64 0.89 46,140 523.73 2005 24,160,000 6.01 0.96 47,533 508.28 *The City intends to provide for payment on the two outstanding State Revolving Fund loans with net revenues derived from the operation of its water and sewer system. Therefore, this figure excludes the respective outstanding principal amounts, although the outstanding State Revolving Fund loans are ultimately secured by the City’s ability to levy unlimited ad valorem taxes. Future Indebtedness The City annua!ly 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 last capital improvements plan, the total cost of projects the City anticipates undertaking between now and 2014 is approximately $91.1 million, of which approximately $6.9 million is anticipated being financed through general obligation bonds. Borrowing requirements described above do not include future subdivision improvement projects financed with general obligation special assessment temporary bonds. The City 21 typically undertakes such projects after receiving and reviewing a valid petition from property owners. FINANCIAL INFORMATION - “Special Assessments”. See The City currently anticipates issuing water and sewer utility revenue bonds in 20 IO to fund approximately $13 million of improvements to its wastewater system. The City has been involved with ongoing discussions concerning contamination in certain areas within the boundaries of the Salina Airport Industrial Center. This contamination was caused by activities occurring prior to 1964, when the site served as the Shilling Air Force Base. The City, the Salina Airport Authority, and other local governmental entities are pursuing federal hnds to clean up the affected areas. In the event funding cannot be secured in a timely fashion or in sufficient amounts, it may be necessary for the City to issue debt to relocate certain water wells. The exact timing and amount, if any, of such borrowing cannot be determined at this time. If City borrowing is necessary for this project, it is anticipated that utility revenue bonds will be the first type of debt considered. Lepal 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. Debt Payment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY 22 FINANCIAL INFORMATION Financial Statement Surnrnarv The following is a summary of the combined revenues, expenditures, and hnd balances for the City’s General Fund 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. Revenues: Property Taxes Sales Tax Other Taxes Intergovernmental Charges for Services Investment Revenue Miscellaneous Total Revenues Expenditures: General Government Public Safety Public Works Public Health and Sanitation Culture and Recreation Planning and Development Capital Outlay Total Expenditures Revenues Over (Under) Expenditures Other Sources (Uses) Net Change in Fund Balance Fund Balance January 1 Prior Period Adjustment Fund Balance January 1 Restated Fund Balance December 3 1 Audited 2005 $ 2,731,138 10,555,924 2,717,427 - 859,399 5,387,774 176,808 385.253 $22,813,723 $ 2,485,060 10,621,702 4,536,63 1 892,110 2,074,639 1,328,376 828.996 $22,767,514 $ 46,209 -290,553 $ -244,344 $ 7,311,303 0 $ 7,311,303 $ 7,066,959 Audited - 2006 $ 2,572,355 11,136,946 4,137,911 1,360,583 5,661,733 43 1,349 438.576 $25,739,453 $ 2,486,348 11,138,545 4,73 1,85 1 1,OO 1,135 2,130,694 1,598,084 1.37563 8 $24,462,295 $ 1,277,158 -1 19,388 $ 1,157,770 $ 7,066,959 0 $ 7,066,959 $ 8,224,729 Audited 2007 $ 2,214,508 1 1,47 1,629 4,445,154 1,040,593 5,479,483 428,197 5 17,447 $25,597,011 - $ 2,573,188 12,550,089 5,110,274 1,072,012 2,322,893 1,565,062 807.691 $26,001,209 $ -404,198 -489,900 $ -894,098 $ 8,224,729 0 $ 8,224,729 $ 7,330,631 Audited - 2008 $ 2,546,938 11,985,856 4,685,105 9 I 1,305 5,793,253 244,769 496,742 $26,663,968 $ 3,336,261 14,070,189 5,23 9,844 1,109,794 2,297,43 1 2,087,685 630.1 78 $28,77 1,382 $ 2,107,414 806.306 $ -1,301,108 $ 7,330,631 0 $ 7,330,631 $ 6,029,523 Note: The City’s 2009 audited financial statements were not completed as of the date of this Official Statement. Preliminary unaudited statements, which are prepared on a cash basis, indicate a decrease in the general fund ending balance of approximately $1.2 million. REMAWDER OF THIS PAGE LEFT BLANK INTENTIONALLY 23 Assessed Valuation According to the Saline County Clerk’s Office, the following table gives the assessed valuation of the City in the years indicated. State Total Assessed Assessed Motor Real Personal - Year 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Estate $358,979,211 356,678,712 342,045,3 89 32 1,695;326 296,537,399 282,517,284 277,456,813 267,175,443 254,343,715 241,621,655 - Propem (1) $24,760,806 28,373,980 34,507,464 39,691,690 38,662,356 3 5,410,526 35,386,133 35,093,154 3 1,823,43 1 32,439,566 Utilities $13,730,609 14,929,456 16,175,634 16,530,171 17,624,030 17,334,372 15,750,780 14,866,OO 8 14,847,520 14,088,875 Vehicle $50,330,252 5 1,351,656 50,548,706 50,551,299 49,367,870 48,687,121 46,679,292 45,965,839 43,248,108 43,246,020 Valuation $447,800,878 45 1,333,804 443,277,193 428,468,486 402,191,655 383,949,303 375,273,018 363,100,444 3 44,262,774 331,396,116 (1) Beginning in 2007, certain types of personal property were removed from the tax rolls. See footnote (3) to the table in 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 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Residential Real Estate Equalization Ratio not available 1 1.66% 11.68 11.22 11.16 11.47 11.50 1 1.65 11.44 11.39 Estimated Actual Value $2,893,359,541 2,914,775,730 2,83 3,709,3 9 1 2,719,391,025 2,529,377,135 2,427,448,947 2,368,264,683 2,296,900,695 2,182,563,473 2,096,802,659 Special Assessments 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. 24 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 may or 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. Largest Taxpayers According to the Saline County Clerk’s Office, the following table lists the largest taxpayers in the City, their 2009 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. Yo of Type of Ass esse d Total Companv Business Valuation Valuation Schwan’s Sales (Tony’s Pizza) Frozen Pizza $10,144,446 2.27% IPOFA Salina Central Mall LLC Regional Shopping Center 8,704,250 1.94% Salina Regional Health Center Hospital and Medical Oftices 5,584,461 1.25% Westar Energy Utility $1 91,056 1.16% Gateway Adams Inc. (Midstate Plaza) Shopping Center 3,556,009 0.79% Kansas Gas Service Utility 3,499,873 0.78% Southwestern Bell Telephone Utility 3,45 5,4 19 0.77% Sunflower Bank Financial Institution 2,749,200 0.61% $49,225,553 10.99% Wal-Mart Stores Discount Retai I 3,813,855 0.85% Great Plains Manufacturing Agricultural Equipment 2.526.984 0.56% Tax Collections Tax statements are mailed November 1 each year and may be paid in fill or one-half on or before December 20 with the remaining one-half due on or before May 10 of the following year. Taxes that are unpaid on the due dates are penalized at a statutorily prescribed rate 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 by the County for taxes and all legal charges on the first Tuesday in September. Properlies that are sold and not redeemed within two years after the tax sale are subject to foreclosure sale, except homestead properties which are subject to foreclosure 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. 25 The following is a summary of tax collections for the years shown. Current Levy - Year 2009* 2008 2007 2006 2005 2004 2003 2002 2001 2000 Tax Rate 25.886 23.959 23.789 23.999 24.063 24.013 24.092 24.365 24.876 25.855 Taxes Levied 10,369,087 9,432,248 9,029,080 8,478,392 8,085,633 7,901,005 7,654,034 7,306,926 6,702,087 $lorn01 Tax Collec Amount $5,303,152 9,825,122 8,941,650 8,648,305 8,223,308 7,894,O 14 7,668,663 7,390,547 7,082,098 6,488,562 :tions - YO 94.8 94.8 95.8 97.0 97.6 97.1 96.6 96.9 96.8 5i3% Current and Delinquent Tax Collections Amount O!O $10,119,876 97.6 9,209,900 97.6 8,907,754 98.6 8,470,007 99.9 8,130,384 100.5 7,898,723 99.8 7,6 12,263 99.5 7,294,560 99.8 6,634,732 98.9 5T5% *Collections as of January 1,2010 Sales Tax Sales tax collections are the respon’sibility 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. The total sales tax for goods and services in the City is 7.20%, which consists of 5.3% imposed by the State, 1% countywide local option sales tax, and .90% citywide local option 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 SOYO citywide sales tax for purposes of helping hnd 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 fimd educational technology. The voters renewed the .25% local option sales tax and are now using those collections for various city capital improvements. . t In November 2008, voters in the City of Salina approved a .40% citywide retailers dedicated sales tax to pay the costs of various City capital improvements including constructing, operating and maintaining a $12.5 million aquatic park. The .40% sales tax replacedthe 2004 .25% sales tax on April 1,2009 and terminates ten years after its commencement. The City of Salina deposits sales tax receipts from its 1992 tax into its General Fund. 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. 2004 2008 1992 City’s Portion of .25% Citywide .40% Citywide -50% Citywide 1% Countywide Local Option Local Option Local Option Local Option - Year Sales Tax Receipts Sales Tax Receipts Sales Tax ReceiDts Sales Tax Receipts 2005 $2,292,573 0 $4,585,147 $5,995,152 2006 2,417,184 0 4,834,368 6,302,579 2007 2,483,734 0 4,967,468 6,504,160 2008 2,588,731 0 5,177,462 6,808,395 2009 $3,379,938 (I) 4,987,415 6,703,839 2010 (thru Mar) 0 1,143,711 1,245,673 1,640,l 17 (1) The 2008 .40% sales tax became effective April I, 2009, at which time the 2004 sales tax stopped. This figure is the combined total receipts of the 2004 sales tax and the 2008 sales tax for 2009. Source: City Clerk 26 Tax Levies 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. Jurisdiction City of Salina Salina Library State Education & Other Unified School District No. 305 Airport Authority Central Kansas Extension District Saline County Total 2005 Levy for 2006 Bude;et 23.999 5.325 1 so0 55.182 2.941 1.194 28.579 1 18.720 2006 Levy for 2007 Budget 23.789 5.180 I SO0 55.252 2.877 1.169 27.955 11 7.722 2007 Levy for 2008 Budeet 23.959 5.242 1 so0 54.990 2.877 1.156 27.435 117.159 2008 Levy for 2009 Budget 25.886 5.419 1 SO0 58.547 2.877 1.175 29.347 124.751 2009 Levy for 201 0 Budpet 25.855 5.413 1 so0 58.495 4.315 1.173 3 1.303 128.054 Budgeting Procedures Applicable Kansw statutes require that budgets be legally adopted for all funds (including debt service and enterprise fimds) 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 ofeach 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 fimd 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. 27 Propertv 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%. The following table shows the current assessment rates for the different classes of taxable tangible property within the State of Kansas. Real ProDertv: Residential 11.5% Commercial and Industrial- Real Property 25.0 Agricultural Land (1) 30.0 Agricultural Improvements 25 .O Vacant Lots 12.0 Not-for-Profit (2) 12.0 All Other 30.0 Mobile Homes 11.5% Mineral Leaseholds (large) 30.0 Mineral Leaseholds (small) 25.0 Commercial & Industrial Machinery & Equipment 25.0 All Other 30.0 Railroads federally mandated rate All Other Public Utilities Personal Property: (3) Utilities: 33 .O% Motor Vehicles: 20.0% Propertv Exempt: Property used for the following purposes, or portions thereof, are exempt fiom 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. (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) The 2006 Kansas Legislature exempted fiom all property or ad valorem property taxes levied under the laws of the State, all commercial, industrial, telecommunications, and railroad machinery and equipment acquired by qualified purchase or lease after June 30,2006 or transported into the State after June 30,2006 for the purpose of expanding an existing'business or creation of a new business. Equalization 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 2008 Kansas AppraisaVSales Ratio Study, the equalization ratio for residential real property in Saline County was 11.66%, and commercial and industrial property was 23.25%. 28 LEGAL MAlTERS 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 MATTERS, CONTINUING DISCLOSURE, and APPENDIX B. TAX MATTERS General The following is a summary of the material federal and state income tax consequences of holding and disposing of the Notes and the Bonds (the “Securities”). This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of holders subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Securities as a capital asset, tax-exempt organizations, individual retirement accounts and other tax deferred accounts, and foreign taxpayers), and, except for the income tax laws of the State of Kansas, does not discuss the consequences to an owner under state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Securities in the secondary market at a premium or a discount. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Securities. Tax Matters ADDlicable to All Securities Sale, Mange or Retirement of Securities. Upon the sale, exchange or retirement (including redemption) of a Security, an owner of the Security generally will recognize.gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Security (other than in respect of accrued qnd unpaid interest) and such owner’s adjusted tax basis in the Security. To the extent the Securities are held as a capital asset, such gain or loss will be capital gain or loss and will be long- term capital gain or loss if the Security has been held for more than 12 months at the time of sale, exchange or retirement. * Reporting Requirements In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on Securities, and to the proceeds paid on the sale of Securities, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner’s federal income tax liability. - ODinion of Bond Counsel Federal Taw Exemption. In the opinion of Bond Counsel, under existing law, the interest on the Securities is excluded hm gross income for federal income tax purposes. Interest on the Notes is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and is not taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinions set forth in this paragraph are subject to the condition that the Issuer 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 Securities in 29 order that interest thereon be, or continue to be, excluded fiom gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Securities to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Securities. The Securities are “qualified tax-exempt obligations” for purposes of Code §265(b)(3), and, in the case of certain financial institutions (within the meaning of Code §265(b)(5)), a deduction is allowed for 80% of that portion of such financial institutions’ interest expense allocable to interest on the Securities. Securities Purcliused ut a Premium. Certain maturities of the Securities have an initial offering price which exceeds the stated redemption price at maturity as set forth on the inside cover hereof. The excess of the purchase price of a Security over its stated redemption price at maturity constitutes premium on such Security. A purchaser of a Security must amortize any premium over such Security’s term using constant yield principles, based on the purchaser’s yield to maturity. As premium is amortized, the amount of tax-exempt interest deemed received by the purchaser and the purchaser’s basis in such Security are reduced by a corresponding amount. The adjustment to a purchaser’s tax basis will result in an increase in the gain (or decrease in the loss) to be recognized for federal income purposes upon a sale or disposition of such Security prior to its maturity. Even though the purchaser’s basis is reduced, no federal income tax deduction is allowed. Purchasers of any Securities at a premium, whether at the time of initial issuance or afterward, should consult with their own tax advisors as to the determination and treatment of premium for federal income tax purposes and state and local tax consequences of owning such Securities. Kunsus Tax Ejcemption. The interest on the Securities is excluded fiom computation of Kansas adjusted gross income. Other Tax Consequences. Prospective purchasers of the Securities should be aware that ownership of the Securities may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with “excess net passive income,” foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Securities. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Securities should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Securities, including the possible application of state, local, foreign and other tax laws. RATING The Notes and Bonds and the City’s other outstanding general obligation notes and bonds have been rated “MIG 1” and “Aa3”, respectively, by Moody’s Investors Service. Any explanation of the significance of such ratings may be obtained only fiom 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 service 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 and Bonds. FINANCIAL ADVISOR George K. Baum & Company, Kansas City, Missouri, has acted as Financial Advisor to the Issuer in connection with the sale of the Notes and Bonds and has assisted the Issuer in the preparation of this Official Statement and in other matters relating to the issuance of the Notes and Bonds. The Financial Advisor received written consent to submit a bid for the purchase of the Notes and Bonds from the Issuer. The fees of the Financial Advisor are contingent upon the issuance of the Notes and Bonds. 30 UNDERWRITING The Notes were purchased at public sale on April 19, 2010, by County Club Bank, Kansas City, Missouri (the ‘motes Underwriter”), at a price equal to the principal amount of the Notes, plus a bid premium of $5,000.00, plus accrued interest to the date of closing. The Bonds were purchased at public sale on April 19,2010, by County Club Bank, Kansas City, Missouri (the “Bonds Underwriter”), at a price equal to the principal amount of the Bonds, plus a bid premium of $41,592.37, plus accrued interest to the date of closing. The Notes Underwriter and the Bonds Underwriter are collectively referred to herein as (the “Underwriters”) ABSENCE OF MATERIAL LITIGATION The Transcript of Proceedings will contain a certificate 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 Bonds or the means provided for the payment of the Notes and Bonds. CONTINUING DISCLOSURE The Securities and Exchange Commission (the “SEC”) has promulgated amendments to Rule 15~2-12 (the “Rule”), requiring continuous secondary market disclosure. In the Note Ordinance and Bond Resolution, the City has covenanted to provide annually certain financial information and operating data and other information necess& to comply with the Rule, and to transmit the same or cause the same to be transmitted to certain repositories and the Municipal Securities Rulemaking Board, as applicable. This covenant is for the benefit of and is enforceable by the owners of the Notes and Bonds. See APPENDIX B for further details concerning continuing disclosure requirements. The City is in compliance with all previous undertakings under the Rule. CERTIFICATION OF THIS OFFICIAL STATEMENT The preparation and distribution of this Official Statement has been authorized by the City. This Official Statement is hereby duly approved by the governing body of the City as of the date on the cover page hereof. Dated April 19,20 10 CITY OF SALINA, KANSAS By Is/ Rod Franz Finance Director ATTEST: Is1 Lieu Ann Elsev City Clerk 31 APPENDIX A Financial Statements Since 1992, the City’s comprehensive annual financial 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 financial 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 3 1, 2008, prepared by the fm of Lowenthal Singleton Webb & Wilson, Professional Association, Certified Public Accountants, Lawrence, Kansas. The City’s 2009 audited financial statements were not completed as of the date of this Official Statement. According to City officials, preliminary unaudited financial statements indicate a decrease in the City’s General Fund unencumbered cash balance of approximately $400,000 during 2009. The decrease is primarily a result of certain revenues originally budgeted to be received in 2009 but not actually collected until early 2010. Additionally, certain capital project expenditures originally budgeted for 2010 were accelerated into 2009. LOWENTHAL, WEBB & ODERMANN, P.A. 900 Massachusetts, Suite 301 Lawrence, Kansas 66044-2868 Phone: (785) 749-5050 Fax: (785) 749-5061 Website: www.lswwcpacoin David A. Lowenlhal, CPA Patricia L Webb, CPA Audrey M. Odermann. CPA Abmm M Chnslip, CPA Caroline H. Eddinger, CPA Grant A. Huddm, CPA Brian W. Nyp, CPA - Memben of American lnshtute and Kansas Society of Cerhfied Pubhc Accountants INDEPENDENT AUDITOR'S REPORT ON THE BASIC FINANCIAL STATEMENTS Mayor and City Commissioners City of Salina, Kansas We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of and for the year ended December 31, 2008, which collectively comprise the City's basic financial statements as listed in the table of contents. These basic financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these basic financial statements based on our audit. We did not audit the financial statements of fhe Salina Airport Authority which statements reflect total assets of $46,315,776 as of December 31, 2008 and total revenues of $5,244,442 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets of $7,979,789 as of June 30, 2008 and total revenues of $2,359,284 for the year then ended, which are discretely presented component units in the accompanying financial 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 auditing standards generally accepted in the United States of America and the "Kansas Municipal Audit Guide." Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, at December 31, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The management's discussion and analysis on pages 3 through 13 and the major fund budgetary comparisons on pages 49 through 57 are not a required part of the basic financial statements but are supplementary information required by accounting principles enerally accepted in the United States of America. We have applied certain limited procedures, which consiste Q principally of inquiries of management regarding the methods of measurement 11 and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. In accordance with ”Government Auditing Standards,” we have also issued our report dated December 8, 2009, on our consideration of City’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with “Government Auditing Standards” and should be considered in assessing the results of our audit. Our audit was made for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tables as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards and the combining and individual nonmajor fund financial statements and schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects. in relation to the basic financial statements taken as a whole. We did not audit the data included in the introductory and statistical sections of this report and therefore, we express no opinion thereon. December 8,2009 12 Management Discussion and Analysis This section of the report contains an overview and analysis of the City of Salina’s financial statements for the fiscal year ended December 31, 2008. The information contained here, as well as the information contained in the letter of transmittal, are intended to provide the reader of the financial statements with a well rounded picture of the City’s financial condition. Financial Highlights + Net Assets increased by $1,270,000. This amount is entirely attributable to Business type activities of the City. Assets related to Governmental Activities declined by about $71,000. + On the whole, fund balances related to operations declined modestly. The General Fund Balance declined by about $1.3 million (17%). + Investment revenues dropped precipitously by $791,000. This is a reduction of 42%. + Revenues increased in 2008, but expenditures increased more, particularly in the Governmental Funds + A new comprehensive pay plan was adopted in mid-2007. The initial impact of that change continued into 2008. + The City experienced a major ice storm in December 2007. Disaster recovery costs continued well into 2008. + The City eqgaged in a tax increment district financing at the close of 2008. The Basic Financial Statements The basic financial statements of the City include the government-wide financial statements and the fund financial statements. The notes to the financial statements follow the basic financial statements, and are essential for the reader’s understanding of the financial statements. Other supplementary information, including the combining schedules for non-major funds and the budgetary comparison reports, are at the end of this report to provide additional information for the reader. Government-wide Financial Statements The government-wide financial statements present the results of the City’s operations using the accrual basis of accounting, the same basis as is used by private sector businesses. These statements focus on the long-term financial picture of the City as a whole The Statement of Net Assets reports all of the City’s assets and liabilities. Net assets, the difference between assets and liabilities, are an important measure of the City’s overall financial health. Net assets represent the total accumulated and unused resources available to the City for the purpose of providiqg services. Over time, the increases and decreases in net assets can be monitored to determine if the City’s financial position is improving or deteriorating. The Statement of Activities shows how the net assets have changed during the fiscal year. One unique feature of this statement is how it shows the revenues and expenses related to specific programs and how much of those programs were supported by the general taxes of the City. Since this statement is prepared on the accrual basis of accounting, all revenues and expenses are included, regardless of when cash is actually received. Both statements show the operations of the City broken down between governmental and business type activities. Governmental activities are the operations of the City generally supported by taxes, such as Public Safety (Police, Fire, and EMS), Public Works, Public Health, and Culture & Recreation. Business-type Activities are operations of the City that are intended to recover a significant portion of their costs through user fees and charges. These include Water and Sewer, Refuse collection, the Golf Course, and operation of the City Solid Waste Facility. The government-wide financial statements include the Salina Airport Authority and Salina Housing Authority as discretely presented component units of the City. Note 1, item A in the Notes to the Financial Statements provides a more complete explanation of the relationship between these entities and the City of Salina. Fund Financial Statements The City uses three types of funds to manage its resources: governmental funds, proprietary funds, and fiduciary funds. A fund is a fiscal entity with a set of self-balancing accounts recording financial resources together with all related liabilities and residual equities and balances, and the changes therein. These accounting entities are 13 separated for the purpose of carrying on specific activities or attaining certain objectives in accordance with regulations, restrictions, or limitations. Governmental fund financial statements are prepared on a modified accrual basis. Under this basis, revenues are recognized when they become measurable and available, and expenditures are recognized when the related fund liability is incurred with the exception of long term debt and similar items which are recorded when due. The focus is on the short-term financial picture of the operations of the individual fund, rather than long-term citywide view provided by the government-wide statements. Major Governmental Funds are presented in individual columns, while Non-major Governmental Funds are aggregated into an "Other Governmental Funds" column. A combining statement for the Non-major funds is presented as supplementary information in the back of the report. The information presented in these statements can be compared to the governmental activities information in the government-wide statements. The reconciliation at the end of the fund financial statements details the relationship between the two types of financial statements. Proprietary funds fall into two categories: enterprise funds and internal service funds. All proprietary funds are prepared on the accrual basis of accounting, and are used to account for business-type activities. Enterprise fund statements present the same information that is in the government-wide statements for business-type activities, but in greater detail. The City of Salina currently operates four enterprise funds: Sanitation Collection, Solid Waste Disposal, Golf Course, and Water and Sewer. Internal Service funds are used to account for the cost of operations shared by various departments of the City. The city operates five internal service funds. Three of these are for self- insurance activity: Risk Management, Workers Compensation Reserve, and Health Insurance. The remaining two account for our lnformation Services activity and for the Central Garage operation. A combining statement for these internal service funds can be found in the supplementary information following the notes to the financial statements. Fiduciary funds are used by the City to account for resources held by the City for a third party. Agency funds are a special class of Fiduciary Fund in which liabilities always equal assets, and thus there are no net assets. The City of Salina operates nine Agency funds. Schedules for these funds may be viewed in the supplementary section of this report. Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used. Permanent funds operated by the City include the Citizenship Trust, Cemetery and Mausoleum Endowments, and the Tn-centennial Commission fund. Notes to the Financial Statements The notes to the financial statements are an integral part of the basic financial statements since they contain valuable addibonal information necessary for gaining a complete understanding of the City's financial statements. Other lnformation In addition to the basic financial statements and the notes described above, this report also presents the general fund and major special revenue fund's budgetary statements as required supplementary information directly following the notes to the basic financial statements. The combining statements for the non-major funds are shown after the required supplementary information. Finally, the statistical section includes selected statistical data about the City's operations and economy. The City as a Whole This section will identify, discuss, and analyze significant differences and trends that will enhance the reader's understanding of the City's financial position Tax Base and Economy The City of Salina relies on three major groups of revenues to support it's operations. Each of these revenue streams has a different revenue base. In declining order of magnitude, they are charges for service, sales taxes, and property taxes. Sales taxes and property taxes apply primarily to Governmental Activities, while charges for services apply to both Governmental (35%) and Business-type (65%) activities. Charqes for Services account for about 45% ($30,447,000) of the City's revenue stream. Charges for Service depend on both the rate that is set for the activity, as well as the volume of services provided. The following table 14 illustrates service volume and rate adjustments for some of the more significant services for the year ending December 31,2008. De scrip ti0 n Monthly Ave Water Accounts Billed Water Metered (In Billion Gallons) Sanitation Customers Golf Rounds (18 Hole) Golf Rounds (Par 3) GolfAnnuaIMem berships Solid Waste Tonnage 2007 Volume 19,908 1.94 15.267 33,518 5.0 83 287 100,626 2008 Vo lume 19,971 1.85 15.397 27.301 3.962 299 99,818 - C hang e 63 -0.09 130 (6,217) (1.121) 12 (80 8) Rate Comments Water Rates Increased 5.0% Wastewater lnaeased by 5.0% Sanitation rates increased bt 4.0% The rate stru dure and options we re significantly m od ifie d $1 (3.5%)per ton increase The number of Water accounts billed grew by about .I %, while the volume of water sold declined by 4%. The number of sanitation customers increased by about .2%. Golf activity shows a decrease (12.3%) in 18 hole rounds, as well as a decrease in annual patronage. Solid Waste tonnage showed a slight decrease. Sales taxes are the next largest component of the revenue mix, providing 22% ($14,575,000) of the total revenues. The City receives a .75% City-wide sales tax, and also a portion of the County-wide 1% sales tax. One-third (.25%) of the City-wide sales tax is required to be used for special purposes. The remaining 5% along with the City portion of the Countywide tax is available for general purposes. Total revenue from the sales tax in 2008 was $ 14,575,000, up from $13,955,000 in 2007. This represents an increase of 4.4Ok in tax proceeds distributed to the City. A number of factors affect the sales tax. First are the regional and local economic conditions and relationships. These are reflected in the proceeds of the City-wide tax, which grew by about 4.3%. However, the City was favorably affected by the formula used to distribute the County-wide sales tax among participating jurisdictions (only Cities and the County participate, School and other special districts do not). The formula is based, in part, on the property tax efforts of each jurisdiction. Because the portion of the overlapping levy attributable to the City of Salina was increased for 2007, the City's allocated portion of the County-wide sales tax was increased from 61.9% in 2007 to 62.3% in 2008. As a result, the City share of the County-wide tax grew by 4.7%. On November 4,2008, Salina voters approved an increase of the special purpose .25% tax to a .40% tax. The extended tax is to sunset March 31, 2018. The tax was also modestly re-purposed, for Capital and Economic Development purposes only. Property Taxes are the third major component of the revenue mix, accounting for 16% ($10,467,000) of total revenues. Property taxes consist of two components: Real estate and personal property taxes which are determined by the mill levy set by the city and the assessed value of the property; and motor vehicle taxes, which are established by a countywide average tax rate, and the assessed value of the vehicle. Real estate and personal property assessed value grew by 6 5%. The total City mill levy was increased slightly, by .7%, while the overlapping levy was nearly stable Tax delinquency decreased from 3.7% to 3.5%. Motor Vehicle value increased by 1 6%. Motor vehicle taxes are distributed based on a formula using prior year's tax effort (similar to the Countywide Sales Tax Distribution). 15 The following table summaries the comparative property assessed values and tax levy rates: Fiscal (Budget) Year 2007 2008 Real Estate and Personal Property Assessed Valuation City Mi11 Levy ($ per $1.000) 377.9 17,187 392,728.487 Operating (General Fund, Employee Benefits, Flood and Drainage Fund) 19.835 19.571 Debt Service Millage 3.954 3.912 Total City Levy Rate 23.789 23.959 Total Over lapping Levy 11 7.722 117.159 Percent of Current Taxes Collected 96 3% 96.5% Ratio of TotaITaxes (including delinquent tax collections) to Taxes Levied 98.4% 99.3% Motor Vehicle ValuaTon 50,548,706 51,351,656 Change 14.81 1.30 0 (0 264) (0.04 2) 0 170 (0.56 3) 0 002 0 .oo 9 802.95 0 The unemployment rate in Saline County decreased slightly from 3.3% in 2007 to 3.9% in 2008, reflecting general economic conditions. This is below the statewide and national unemployment rate. The total labor force decreased to 29,222, a change of 5%. In 2008, the top ten property taxpayers accounted for 11.79% of total assessed value. This is slightly less concentrated than ten years ago (at 12.2%) Statement of Net Assets Net assets may, over time, provide an indicator of a government's financial position. In the case of the City of Salina, assets exceeded liabilities by $186,282,000 at December 31, 2008. This represents an increase in net assets of $1,290,000 over 2007. A comparative condensed Statement of Net Assets at December 31,2006 and 2007: Cornparatibe Condensed Statement of Net kssets. 2007 and 2008 Cash and Investments Other C ment Assets Noncurrent (Capital) Assets Total Assets current Liabillles Noncurrent Lialnllt e s Total Liabilities NetASSets: Invested in capbl assets, net of related debt Restnded for Permnent Funds Restncted for Debt Service Unrwtncted Total NetAssets Percent of Total Assets Cash an3 Investments as a percentage of current lablilies Governmental Activities 2007 2008 $ 20,370 $ 16,500 $ 12,526 $ 13.467 $ 142,265 $ 140,826 $ 175,161 $ 178.804 $ 20,921 $ 20,868 $ 26.245 $ 30.013 $ 47.167 $ 50,881 $ 115.029 $ 118,986 $ 399 $ 41 9 $ 1,210 $ 793 $ 11.356 $ 7,745 $ 127.994 $ 127,923 69% 69% 97% 79% (In SOOO) Business Type Adhities 2007 2008 $ 12,3!57 $ 12,266 $ 2,352 $ 3,280 8 59,821 $ 58,170 $ 74.530 $ 73.716 8 3,274 $ 2.731 $ 14.259 S 12.646 $ 17,533 $ 15.377 $ 45,435 $ 45.931 $ 1,151 $ 1,211 $ 10,412 $ 11.199 $ 56,998 $ 58.339 31% 31 % 377% 449% Total Prinary Gowmment %of %of 2006-2007 2007 Total 2008 Total Change $ 32,727 13% $ 28,766 11% $ (3,961) $ 14,879 6% $ 16,750 7% $ 1,871 $ 202,086 81% $ 207,005 82% 0 4,919 $ 249.691 lQE6 S 252.520 XU% $ 2,829 $ 24,195 37% $ 23.598 36% $ (597) $ 40.505 .63% $ 42.860 65% $ 2355 $ 64.699 100% $ 66,258 100% $ 1,559 $ 160,464 87% $ 164,897 89% $ 4,433 20. $ 8 2.362 1% $ 2,004 1% $ (358) $ 21.768 12% $ 18.942 1oOh $ (2,826) $ 184,992 limb $ 186,282 m $ 1,290 399 0% $ 419 Wo $ 100% 100% 1 35% 122Yo The largest segment of the City's net assets (89%) reflects its investment in capital assets (land, buildings, streets and drainage facilities, utility plant, vehicles, equipment, etc.), less any debt used to acquire those assets that is still outstanding. These assets are used to provide services to citizens. As a result, resources required to retire related debt can not come from liquidation of the asset. Such resources generally must be provided from other sources, such as future taxes or user charges. 16 A small portion of net assets (I YO) is restricted for debt service. The remainder of net assets (10%) may be used to meet the City's oblig.ations to citizens and creditors. In 2008, the amount invested in capital assets net of related debt increased by $4,523,000. Unrestricted net assets decreased by $2,826,000. This reflects a decline in cash and investments of $3,961,000. Total liabilities increased, with all of the increase attributable to non-current liabilities. Long term liabilities increased, reflecting primarily an increase in bonds payable. Total assets increased. This increase was primarily attributable to increases in capital assets. During the year ended December 31,2008, there were several significant events that changed the balance of net assets. Governmental Activities. 2008 saw a decrease in cash and investments in Governmental funds. This is due largely to increases in expenditures for both capital and operating requirements. Significant contributors to this trend are the impacts of the pay plan and an aggressive street maintenance program. Business-type Activities: Business Type activities were engaged largely in maintenance type activities. Scheduled debt paydowns resulted in a slight increase in net capital assets. Statement of Activities A condensed statement of activities is shown below. Condensed Compantrve Slahment of ActMties, 2007 and 2008 Governmental Adtvities 2 007 2008 Program Revenues' Charges for SeMces $ 10,490 $ 10,703 Operating Grantsand Contributrons $ 3,381 $ 3,752 Capltal Grants and Contributions $ - Property Taxes $ 9.978 $ 10.467 Sales Taxes $ 13,955 $ 14.575 Othe r Taxe s $ 5,445 $ 5.747 Investment Revenue $ 1,255 8 805 Other Miscellaneous $ 890 $ 812 Total Revenues. $ 45,394 $ 46,861 EveIlSes. General Government $ 6,732 $ 6.791 Public Safety S 16,877 $ 18,440 Publtc Works $ 9,258 $ 9,706 Public Health and Sanlation $ 1,281 $ 1.310 Culture and Recreation $ 5.658 $ 5,582 Planning and Development $ 2,814 $ 3.480 Solid Waste Dsposal Waterand Sewer Sanilabon Golfcourse Interest on Long Term Debt $ 1,295 8 1,454 Total Expenses $ 43,915 $ 46.763 Increase in net assets before transfers $ 1.479 $ 98 Transferr and other extraordinary ttems $ 672 $ 60 Increase v) Net Assets $ 2.150 $ (46) Net Assets. January 1 $ 126,594 $ 127.994 Pnor Perlod Adjustment $ (750) $ (26) Net Assets, January 1, restated $ 125.845 $ 127.968 Net Assets December31 $ 127,994 $ 127,922 General Revenues. (In 8000's) Business-Type Activities 2007 2CQ8 $ 19.678 $ 19.744 $ 641 $ 300 $ 201 $ 118 $ 20,520 $ 20,162 2,088 12,227 2.038 884 17.237 3.283 (672 ) 2,612 53,933 453 54,386 56.998 2,008 13,284 2,194 884 18.370 1,792 (6 0) 1,752 59.998 (41 1) 58,587 58,33 9 Tolal Primary Government 2007 % 2008 % 2007-2008 $ 30,168 $ 3,381 $- $ 9.978 $ 13,955 $ 5,445 $ 1,896 $ 1,091 $ 65,914 $ 6.732 $ 16.877 $ 9258 $ 1281 $ 5,658 $ 2.814 $ 2.088 $ 12227 $ 2.038 $ 884 $ 1295 $ 61.152 $ 4,762 $- $ 4,762 $ 180.527 $ (297) $ 180231 $ 184.992 46Yo $ 30,447 5% $ 3,752 0% $ - 15% $ 10.467 21% $ 14.575 8% $ 5.747 3%$ 1,105 2% $ 930 100% $ 67,023 11% $ 6,791 28% $ 18,440 15% $ 9,706 2% $ 1,310 9% $ 5.582 5% $ 3.480 3% $ 2.008 20% $ 13.284 3% $ 2.194 1% $ 884 2% $ 1,454 100% $ 65,133 - $- $ 1,890 $- $ 1,706 $ 187,992 $ (437) $ 186,555 $ 186,261 Change 45% $ 279 6% $ 371 0% $ - 16% $ 489 22% $ 620 9% $ 302 2% $ (791) 1% $ (161) - 100% $ 1,109 10% $ 59 28% 8 1,563 15% $ 448 2% 8 29 % $ (76) 5% $ 666 3% $ (80) 20% $ 1,057 3% $ 156 1% $ - 2% $ 159 100% $ 3.981 $ (2.872) $- 0 (3,056) $ 7,465 $ (140) $ 6,324 0 1,269 Governmental Activities. Total expenses for Governmental Activities for the year ending December 31, 2008 were $46,861,000 compared to $45,394,000 in 2007. Governmental activities represent 70% of the City's total expenses. The largest element of Governmental Activity expense was Public Safety, at 28% of the City total, followed by Public Works at 15% of the total. 17 Charges for service attributable to Governmental Activities totaled $1 0,703,000 and operating grants for those purposes were $3,752,000. The balance of $32,406,000 was funded by general revenues. Sales taxes accounted for $14,575,000 of the general revenues, with property taxes providing $10,467,000. Net assets decreased by $46,000 as a result of Governmental Activities. Business Type Activities. Total expenses for Business-type Activities for the year were $18,370,000, or 30% of the City’s total expense. The majority of this expense ($13,284,000) is attributable to Water and Sewer operations, with the other activities (Solid Waste Disposal, Sanitation, and Golf Course) costing a combined total of $5,086,000. These activities are primarily supported by user charges, with only $418,000 coming from general revenues, representing largely the interest earned on fund balances held by the City. Net assets increased by $1,752,000 as a result of Business-type Activity operations. Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds for the years ended December 31, 2007 and December 31,2008. Fund G ener al Employee Benefits Flood and Drainage Tourism and Convention Special Gas Bicentennia I Center Debt Service Capital Projects Other Governmental Funds Total 20 07 7,330,631 845,846 548,952 278,921 1,785,911 226,930 12 10,457 . (3,6 07,071) 4,451,923 13,072,500 2008 6,029,523 $ 789,647 $ 507,183 $ 274,668 $ 1,793,378 $ 135,931 $ 792,744 $ (3,666,332) $ 5,166,176 11,822,918 $ Change (1,301,108) (56,199) (41,769) (4,253) 7,467 (90,999) (417,713) (59,261 ) 7 14,253 (1,249,582) Total Governmental Fund balances decreased by $1,249,582. The reasons for these changes are varied. The most significant change is in the General Fund. This is due to multiple issue, including pay plan impacts, disaster recovery impacts, and anemic revenue growth. 18 Revenues and Expenditures: The following table shows a comparison of revenues and expenditures (including other sources and uses) for major funds for the years ending December 31,2007 and 2008. Fund 20 07 Revenues (Including Other Financing Sources) Genera I $ 25,597,011 Employee Benefits $ 5,902,024 Flood and Drainage improvement $ 207,235 Tourism and Convention $ 1,000,624 Special Gas $ 1,653,747 Bicentennial Center $ 1,703,115 Debt Service $ 3,932,905 Capital Projects $ 7,632,226 Other Governm ental Funds' $ 4,520,206 Total Revenues $ 52,149,093 Less Other Sources $ 8,984,951 Revenues, net of other sources $ 43,164,142 Expenditures (I nclud ing Other Financing Uses) Genera I $ 26,491.109 Flood and Drainage Improvement $ 44.40 8 Tourism and Convention $ 954,077 Bicentennial Center $ 1,586,717 Debt Service $ 3,457.680 Capital Projects $ 6,898,471 Other Governm ental Funds' $ 3,567,333 Employee Benefits 8 5,774,011 Special Gas $ 993.593 200 8 $ 27,730,274 $ 6,033,103 $ 209,926 $ 1,062,276 $ 1,667,515 $ 1,570,828 $ 3,483.312 $ 4,243.108 $ 8,405,750 $ 54,406,092 $ 10,147,955 $ 44,258,137 29,031,382 6,089,312 251,695 1,066,529 1,660,048 1,661,827 3,901,025 4,302,369 7,691.497 Change $ 2,133,263 131.079 $ $ 2,691 s 61,652 $ 13,768 $ (1 32,287) $ (449,593) $ (3,389,116) $ 3,885,544 $ 2,256,999 $ 1,163,004 $ ' 1,093,995 $ 2,540.273 3 15.301 $ $ 207,287 8 112,452 $ 666,455 $ 75.110 0 443.345 $ (2.596.102) $ 4,124,164 Total Expenditures 8 49,767.399 $ 55,655,684 $ 5,888.285 Less Other Uses $ 2,054,924 $ 2,763,222 $ 708,298 Expenditures, net of other uses $ 47,712,475 $ 52,892.462 $ 5,179,987 Total revenues and other sources increased by $2,256,999 from 2007 to 2008. The largest component of this change was in Other'Governmental fund, resulting from the impacts of accounting for the settlement of the Tax Increment financing project.. Other changes include an increased General supplement for the Bi-Centennial Center, changes in temporary note activity, and reimbursements received from FEMA. A noticeable decline was also apparent in the capital projects funds, and is due to changes in financing activities for those Expenditure changes reflect transfers from the General Fund to the Bi-Centennial Center Fund as well as the Special Sales Tax Transfer (included in "Other Funds"). Implementation of the new pay plan at mid-year in 2007 had significant effects on the General and Employee Benefits fund expenditures for 2008. Special Gas Tax fund expenditures reflect an aggressive street maintenance program. 19 Proprietary Funds The City of Salina operates four Enterprise Funds as well as fwe Internal Service Funds. A summarized comparative Statement of Net Assets follows for each Enterprise Fund: C ur rent As se ts Cap ita I A ssets Total Assets Current Liabilities N on cu rren t Liab ilitie s Total Liabilities Assets Invested in Capital, net of related debt Restricted Net Assets Unrestricted Net Assets Total Net Assets Current Assets as a percentage of current liabilities C ur rent Asse ts Cap ita I Assets Total Assets C ur ren t Liab [lit ies N on cu rren t Liab ilitie s Total Liabilities Assets Invested in Capital, net of related debt Restricted Net Assets Unrestricted Net Assets Total Net Assets Current Assets as a percentage of current liab ilities Summary Statement of Net Assets (in $000'~) Solid Waste Disposal 20 07 20 08 Change 3,486 $ 3,369 $ (117: 3,439 S 3.225 S (214: 6,925 $ 6,595 $ (330: 628 S 506 S (122: 2,957 $ 2,485 $ (472: 3,585 $ 2,991 16 (594: 1,823 $ 1,982 $ 159 1,517 $ 1,621 B 104 3,340 $ 3,603 $ 263 s 55 5% 66 6% Sanitation 20 07 20 08 Change 865 f 647 $ 471 $ 613 S 1,336 $ 1,260 $ 158 8 64 $ 71 $ 115 8 229 $ 179 S 471 $ 613 8 636 $ 488 $ 1.106 3 1.081 $ 54 7% 101 1% (218: 142 (76; (94 : 44 (501 142 (148: (25 1 Water and Sewer 2007 $ 10.307 $ $ 55.459 $ 8 65.766 $ $ 2.442 $ $ 11.184 $ 8 13,626 $ 42.690 $ f 1.151 S $ 8,300 $ $ 52.141 $ 422 % 2008 Change 11.435 $ 1,128 53,905 $ (1.554 65,340 $ (426 2,116 5 (326 9.973 $ (1.211 $ (13.626 42,909 $ 219 1,211 8 60 9.131 $ 83 1 53.251 $ 1,110 540% Golf Course 16 51 $ 95 $ 44 $ 503 $ . 522 $ 19 200 7 2008 Change 0 452 $ 427 B (2 5 45 .5 45 16 92 S 118 S $ $ (5 27 26 47 b 74 6 8 452 15 427 $ (25 113% 211% The Golf Course Fund shows declines in total net assets, due primarily to a reduction in current assets, however, capital assets also decline. Unrestricted net assets in this fund reflect a $23,000 deficit balance, which is an improvement over the prior year. The other enterprise funds all show modest improvement in net assets. Revenues, Expenses, and Changes in Net Assets The Solid Waste and Water and Wastewater Funds, showed healthy results from operations, with net assets increasing in both of those funds. The Golf Course, however, experienced significant losses on the year. Operating Revenues were down, while operating expenses continued to grow Operating losses for the course was $1 04,000, compared to a $132,000 loss in 2007. The Sanitation Fund is stable 20 Summary of Revenues, Expenses and Changes in Net Assets (In $OOOk) Operating Revenues Operating Expenses 0 pera bn g Income Non-ope rating revenues (expenses) . Income (Loss) before Transfers Transfers in (out) Capital Contibutions Change in Net Assets Net Assets, January 1 Restatement Net Assets, January 1, restated Net Assets, December 31 Operating Revenues Operating Expenses Operating Income Non-operating revenues (expenses) Income (Loss) before Transfers Transkrs in (out) Change in Net Assets Net Assets. January 1 Restatement Net Assets. January 1, restated Net Assets, December 31 Budgetary Highlights Solid Waste Disposal 200 7 200 8 Change 2,819 $ 2,760 $ (591 2,033 $ 1,972 $ (61 I 786 $ 788 $ 2 911 $ 826 $ (851 (692) $ (180) $ 512 219 $ 646 $ 427 3,170 $ 3,340 $ 170 (48) $ (383) $ (3351 3,121 $ 2.957 $ (164) 3,340 $ 3,603 $ 263 Sanitation 200 7 2008 Change 2,112 $ 2,172 $ 60 1,999 $ 2,209 $ 210 114 $ (37) $ (151) (3) $ 31 $ 34 996 $ 1,106 $ 110 $ (20) $ (20) 996 $ 1,086 $ 90 1,106 $ 1,081 $ (25) Water and Sewer 2 007 $ 14,198 $ $ 11,546 $ $ 2,652 $ $ (259) $ $ 2,394 $ $ (30) $ $ 2,364 $ $ 49.275 $ $ 501 $ $ 49,777 $ $ 52,141 $ 2008 Change 14,151 $ 12,754 $ 1,397 $ (301) $ 1.096 $ 38 5 1,134 $ 52,141 $ (23) $ 52,l 17 $ 53,251 $ Golf Course 2 007 2008 Change 749 $ 779 $ 883 S 884 $ (133) $ (105) $ 2s I$ (132) $ (104) $ 50 $ 82 $ (82) $ (21) s 492 $ 410 $ $ 15 $ 492 $ 425 $ 410 $ 404 $ The objective of budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the Fund level, in accordance with State Statutes. Management control is maintained at the departmental level. Within the departments, considerable discretion is permitted. The City uses an encumbrance accounting system, in which estimated purchase orders are recorded prior to the release of purchase orders to vendors. Open purchase orders are reported as reservations of budgetary basis fund balances at December 31,2008 Formal budgetary amendments are limited to those circumstances in which the need is perceived to alter the total fund budget. Re- allocation among departments or line items are not typically recorded as budgetary amendments However, in addition to formal amendments, departments within the City are allowed to transfer budget between line items within a department. Budgets may also be transferred from department to department within each fund. As a 21 result of these transfers, the original budget and the final budgets may not be the same for departments within a fund. The General Fund budget was formally amended during the year to accommodate a change in contingencies. The Crty experienced a number of significant variances from budgeted items in the General Fund, however, the total fund was well with budget. Most revenue classes fell short of budget. This was offset by increased an increased level of transfers from other funds, in particular the Special Sales Tax fund Several expenditure items were also significantly over or under budget. Several Departments exceeded budgeted expenditures, most notably the Public Safety Departments, which exceeded budgeted levels by an aggregate of $422,000. The budget variations are due to two factors. First, the pay plan had much more significant effects on pay levels in Public Safety. Second, the revised pay schedules placed the City in a more competitive position with respect to the market, and as a result vacancy levels were much lower than anticipated. Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31, 2008 was $202,708,000 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2008: Capital Asset Balances Net of Depreciation, 12/31/2007 and 12/31ROO8 (In 000's) Governmental Activity 200 7 2008 Equipment, Furniture and Fixtures $ 1,142 $ 1,397 Vehicles $ 2.082 $ 1,614 Buildings and Improvements $ 13,255 $ 12,630 Land .$ 22,689 $ 22,477 I nf ras tructure $ 80,413 $ 77,889 Construction in Progress $ 22,686 $ 32,531 Total $ 142,267 $148,538 Net of Accumulated Depreciation Changes to capital assets may be summarized as follows: Bus iness-type Activity 20 07 20 08 $ 1.554 $ 2,065 $ 1,085 $ 973 $ 13,647 $13,218 $ 1,542 $ 1,541 $ 41,953 $40,173 $ 40 $ 200 $ 59,821 $58,170 Additions Retirements Adjustments Net Additions Govemm ental Business-Type Acbvity Activity $ 10,820 $ 161 $ 258 $ 44 1 f 580 $ 19 s 11,658 f 621 Depreciation Expense Applied $ 3,973 f 2,310 Total $ 2,696 $ $ 3,167 $ $ 26,902 $ $ 24,231 $ $ 122,366 $ $ 22.726 $ $ 202,088 $ 20 07 Total f 10,981 f 6 99 f 5 99 f 12.279 9 6.2 83 2008 3,462 2,587 25,848 24,018 118,062 32,73 1 206,708 Additional information on the City's capital assets can be found in Note 4,D. of the notes to the basic financial statements. 22 Debt Management The City's general policy for General Obligation Bonds is to issue them for no more than 10 years for the City at Large portion, with some exceptions permitted for extraordinary projects. On special assessment bonds, the maturity may extend to 15 years. The outstanding General Obligation Bonds at 12/31/2008 totaled $32,649,999. Temporary notes outstanding total $5,005,000 Total General Debt is thus $37,654,999. In addition, Business-type activities had $3,030,000 in Revenue Bonds outstanding, as well as $6,428,759 in loans provided through the Kansas Development Finance Authority. Revenues generated by user fees are pledged to retire all of the Bonds issued by Business-type activities. The City engaged in several debt transactions during 2008. One General Obligation Bond issues, Series 2008A was sold in the total principal amount of $3,720,000. A second issue, 2008-8 was issued in the amount of $3,525,000 for the purposes of financing an economic development project. While this is a General Obligation issue, property and sales tax increments from the project are pledged to repay the debt, and are anticipated to be sufficient to do so. Moody's rating service extended a rating of Aa-3 to both issues Additional information on the City's debt can be found in Note 4, E. of the notes to the basic financial statements. Requests for Information This financial report is intended to give the reader a general overview of the City's finances. Questions about information in this report or requests for additional information should be directed to the Director of Finance, Room 206, 300 West Ash Street, Salina, Kansas, 67401. 23 BASIC FINANCIAL STATEMENTS 25 I CITY OF SAUNA, KANSAS STATEMENT OF NEF ASSETS December 31,2008 ASSETS Current assets: Cash and investments Receivables (net of allowance for unwllectibks) Accounts Taxes Interest Notes Inventory Restrltted cash and investments PrepaM expenses Net investment m financing leases Deferred charges Total current assets Noncurrent assets: Notes receivable Capital assets, nondepreciable Construchon in progress Land Capital assets. depredable Less: Accumulated depreciation Total noncurrent assets Total assets Liabllltles: Current liabilities: Accounts payable Retainage payable Accrued fiabilihes Matured bond prim'pal and interest Accrued mterest payable Deposits payable Unearned revenue Due to olher governments Can1 portlon of compensated absences Current portion of temporary notes payable Current pottion of loans payable Current portion of revenue bonds payable Cmt portion of financing leases payable Current portion of special assessment debt payable Current portion of general obligation bonds payable Total current liabillbes Noncurrent Ilabihlles: Accrued Iiabilibes Compensated absences Net OPE9 obligation Temporary notes payable Loans payable Revenue bonds payable Financing leases payable Specrat assessment deb1 payable General obligation bonds payable Landfill postclosure care liabllrlies Total noncurrent liabrlies Total liabiliies Net Assets Invested in capital assets. net of related debt Restrltted for: Permanent funds Expendable Debt smce Unrestricted Total net assets Pnmary Government Componenf Units Total Total Total Salina Salina Governmental Business-type Primary Housing Airport Activdies Aclivittes Government Authority Authority $ 16.500.373 $ 12.265.626 $ 28,765.999 $1.348,109 $ 1.871.999 2,031,150 10,658.825 159.657 276,130 341,445 29,967,580 1.1 95.203 659.946 1,211,221 214.241 15.546.237 3.226.353 43,646 69.326 10.658.825 - 1.281.413 159,657 2.293 936,076 15.330 1.21 1.221 363,044 52.874 5.247 443,123 555.686 81.888 45,513.81 7 1.825.296 3.752.996 10.895 32,531 277 200.461 32,731.738 346,606 8.821.320 22.477.191 1,541.002 24,018.193 1.481891 9,675,910 168584,152 95,611,282 264.295.434 6,844.553 44202.916 74.856.692 39.182.522 114.039.214 2.529.452 20.137.366 148.835.928 58,170,223 207.006.151 6.154.493 42,562,780 S 178.803.508 $ 73.716,460 $ 252,519.968 $7.979.789 $46,315.776 $ 489.084 12,706 501,050 10.145 297.679 10.3% 16 1 1,331.007 5.005.000 2,866.701 20.867.533 305,284 1.895.284 687.608 27.003.229 29.891.405 $ 475.864 168.482 102,497 276.789 373.962 710.000 623.299 2.730.893 394.133 126,138 6,054,797 2.320.000 2.156,770 1.566.636 12.618.474 $ 964.948 12,706 501,050 10,145 466.161 102,497 10,354.161 1.607.796 5.005.000 373,962 710,000 3.490.000 23.598.426 305.284 2.289.417 813.746 6,054.797 2.320.000 29.159.999 1.566.636 42.509.879 E 21.933 40.254 73.347 177,495 26,614 2.269 341.912 9.475 20,421 $ 603.249 114,129 320.591 1.410.104 35.331 24.106 755.000 3,262,510 10,975,000 323.500 207,948 5.770.000 29.896 17.276.448 $ 50.758.938 S 15.349.367 $ 66.108.305 $ 371.808 $20,538.958 $ 118.965.998 S 45.931.395 $ 164.897.393 $6,143,598 $24.471.896 418.585 418.585 280.222 792.744 1.21 1.221 2,003,965 7,867,243 11.224.477 19,091,720 1.184.161 1.304.922 8 128.044.570 $ 58.367.093 $ 186.41 1.663 S 7.607.981 $25.776.818 The notes to the basic financial statements are an integral part of tho statement. 27 ClN OF SAUNA. KANSAS STATEMENT OF ACTIVITIES FortheYearEndedkember31.2008 Net [Expenses] Revem and Changes m Ne! Assets Program Revem prcmary Govsmenl component urns Operahng Captal TClbI Total TW SallW SallM Chargesfw Grantsand Grantsand Govermentat Business-type Prunary Housmg Auport Auvlaity AdlviIles Governmenl Authaw Expenses SeMces Contribulbns ContriMlcm Act~ltie~ S 6.669.3x) J 4.580.529 S 1.179.162 5 - $ [909.629] S - 8 1909.6291 b -$ 18,439.889 3.586.107 702,313 - 114,151.4691 - 114.151.46q 9,705.916 120.280 1.435.739 - 18.149.897j - 18,149.897l 1.310.109 36.817 162,593 - [1.110.6991 - [1.110.699] 5.582.100 2.139.W6 162.593 - [3.280.501] - I3.m.5011 3.480.799 239.978 109.100 - [3.131.721] - [3.131.?21] 1.453 793 - 11.453.7931 - 11,453.7931 - -- Governmental activities: General goverrrmenl Wbk safety Putdr waks Public health and sanltaton Culture and recreation Planning and development Iderest 017 long-term debt T&l governmental actrvltles 46.641.926 10.702.717 3.751.500 - (32.187.709J - [32187.709] - Buslness-type activities: Water and Sewer 13,247,432 14.072.513 825.081 825,081 [129.617] - Golf Ccuse 880,869 751.252 - (129,613 To(albusiness-typead~ha 18.322.376 19.744.222 - - - 1.421.846 1.421.846 - - [32.187.709] 1,421,846 [30.765.863] - Total plmary government $64.964302 530.446.939 8 3.751.500 $ Component units. Solid Waste Disposal 2.005.070 2.748.519 743.449 743.449 Santatan 2.189.005 2.171.938 I1 7.063 117.0671 SanMHousmg Autharity I 2,235215 $ 470.777 S 1.697,736 $ 137,892 - 71,190 -mAumaay 4.874.650 2.OW.458 - 1,650.041 - [1.138.151] Total compnefd Unas $ 7,109,865 $ 2.559.235 $ 1.697.736 $ 1.787.933 - 71.1W [1.136.151] General Revenues: Propertylaxeslevledlor 7.817.834 1.528.594 1.119.504 1 1.985.856 2.588.731 5.747.176 604.934 811.610 59,696 32.263.935 289.888 118.142 159,6961 358.334 7.817a34 1.528.594 1.1 19.504 1 1.985.858 2.588.731 5.747.176 eo4.822 929,752 32.622.269 52.879 52.879 1.256.816 185.215 16,321 47.591 1.505.943 76.226 1.780.180 1.856.406 124.069 369.792 127.994.368 56.997.724 180.527.280 7,483.912 25.407.M6 1436.8351 - 126.024] 1410.81 11 Ne! assets - begrmi~. restated Net assets - endmg 127.968.344 56.586.913 184.555.257 7.483.912 25.407.026 S 128.044.570 $ 58.367.093 $186.411.663 57.607.981 125,776,818 The roles to the has^ fmncgl statem- are an vdegral part of thrs statement. 28 CrrY OF SALINA, KANSAS ASSETS Cash and investments Receivables (net) Accounts Taxes Interest Inventory Due from other funds Cash with fiscal agent Total assets LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Retainage payable Defmed revenue Due to other funds Matured principal and interest Temporary notes payable Total liabilities Fund balance: Reserved for encumbrances Reserved-for debt service Unreserved. undesignated General fund Special revenue funds Permanent funds Capital project funds Total fund balances Total liabilities and fund balance BALANCE SHEET GOVERNMENTAL FUNDS December 31,2008 flood L? Tourism Employee Drainage and General Benefits lmorovement Convention $ 3,926.341 $ 789,647 $ 507,183 $ 1,572 I ,643,142 - '. 3,495,907 5,203.488 159.657 - 126,429 - 460.667 - $ 9,812,143 $ 5.993.135 $ 507,183 $ 274,668 3,782.620 5,203.488 - - 273.594 - 4,029 5,755,929 - - - - 789,647 503.1 54 274.668 .- - - 6,029,523 789,647 507.1 83 274,668 $ 9,812,143 - $ 5,993,135 $ 507,183 $ 274,668 30 Other Total - Gas Center Service Proiects Funds Funds Special Bicentennial Debt Capital Governmen tal Governmen tal $ 1,498,635 $ 96.904 $ 792,744 $ - $ 5,190,678 $ 12,803,704 - 62.354 - - 52,558 2,031 ,I 50 304,664 - 1,654,766 - - 10,658.825 - - - - - 159,657 - - - - - 126.429 - - - - - 460,667 - - 10,145 - - 10.145 $ 1,803,299 $ 159.258 $ 2,457,655 $ - $ 5,243.236 $ 26,250,577 - 9.921 $ 23.327 $ - $ 52,521 $ 12,498 $ 384,980 - - 12,706 12,706 - - 1,654.766 - - 10,354,161 - - - 396,105 64,562 460,667 - - 10,145 - - 10,145 - - - 3,205,000 - 3.205.000 $ 9,921 23,327 1,664.91 1 3,666,332 77,060 14,427.659 301,063 ’ - - 1,876.469 1,769,860 4,225.01 5 - 792,744 - 694,887 1,487,631 - - - - - 5,755,929 1,492.31 5 135,931 - - 2,282,844 5,478,559 - - - 418,585 418,585 - - - [5,542,801] - [5,542.801 J 1,793,378 135.931 792,744 [3,666,332] 5,166,176 11,822,918 $ 1,803,299 $ 159,258 $ 2,457,655 $ - $ 5,243.236 $ 26,250,577 - The notes to the basic financial statements are an integral part of this statement. 31 CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET ASSETS OF GOVERNMENTAL ACTIVITIES December 31.2008 Total Governmental Fund Balances $ 11,822,918 Amounts reported for governmental activities in the statement of net assets are different because _I Bond issuance costs are shown as current year expenditures in the funds. Bond issuance costs Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds The cost of capital assets is Accumulated depreciation is An internal service fund is used by the City's management to charge the costs of the worker's compensation program. The assets and liabilities of the internal service fund are included with governmental activities. The following liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. These liabilities at year end consist of: Compensated absences Net OPEB obligation Temporary notes payable Bonds payable Accrued interest on the bonds Net Assets of Governmental Activities 341,445 222,831,746 74,101,264 148,730,482 2,943,808 3.1 38,866 687,608 1,800,000 29,869,930 297,679 [35,794,083] $ 128,044,570 -- The notes to the basic financial statements are an integral part of this statement. 33 CITY OF SALINA. KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31,2008 REVENUES: Taxes Real estate taxes Delinquent taxes Motor vehicle taxes General sales taxes Selective sales taxes Other taxes Intergovernmental Special assessments Licenses and permits Charges for services Investment revenue Reimbursements Miscellaneous Total revenues EXPENDITURES: Current General government Public safety Public works Public health and sanitation Culture and recreation Planning and development Miscellaneous Capital outlay Debt service Principal retirement Interest and other charges Total expenditures Excess [deficiency] of revenue and other sources OTHER FINANCING SOURCES [USES] over [under] expenditures and other [uses] Issuance of bonds Bond premium Temporary note premium Transfers in Transfers [out] Total other financing sources [uses] Net change in fund balance Fund balance - Beginning of year Fund balance - End of year Tourism Flood & Employee Drainage and General Benefits Improvement Convention $ 2,240.701 $ 5,177,657 $ 181,056 $ 64,306 148,538 5,576 241,931 668,205 23,294 11,985,856 4,685.1 05 - 1,062,071 91 1,305 5,793,253 244,769 205 496,742 - 38,703 , 26,663,968 6,033,103 209,926 1,062,276 3,336,261 14,070,189 5,239,844 1,109,794 2,297.431 2,087,685 630.1 78 263,444 3,874.688 1,000,874 33.1 91 585,935 331,180 - 5.21 4 246.481 I 639,917 28.771.382 6,089,312 251,695 639,917 [2.107.414] [56.209 J [41,769] 422,359 - - 1,066,306 - - [426,6 1 2 J [260,000] 806,306 [426.612] [1,301,108] [56,209] [41,769] r4,2531 7,330,631 845,856 548,952 278,921 $ 6,029.523 $ 789,647 $ 507,183 $ 274,668 34 Special - Gas $ 1,425,090 - - 37,257 25,168 1,487,515 - 346,786 - - - 1,313,262 - - 1,660,048 Other Bicentennial Debt Capital Governmental Center Service Proiects Funds $ 1,484,503 44,091 186,074 1,178,122 54,017 39,574 2 934,216 2,946,807 39,576 2,588,731 1,404,956 10,149 687,804 11 3,994 75,116 4,880,750 - - - - - 132,851 1,649,483 608,734 - - 318,524 45 12,344 - 3,889,829 4,489,253 - 2,786,702 - 25,000 - 1,114,323 412,540 40,480 1,661,827 3,901,025 4,302.369 5,614,887 Total Governmental Funds $ 9,083,917 262,511 1,119,504 11,985,856 2,588,731 5,747,176 3,741,351 1,178.1 22 10,149 7,415.273 489,816 38,705 597,026 44.258.1 37 3,599.705 17,944,877 6,592,718 1,275,836 5,141,583 3,377,306 45 10,581,347 2,811,702 1,567,343 52,892,462 [172,533] r27.6111 [9%,218] [4,262,793] p34.1371 [8,634,325] - 3,720,000 3,525,000 7,245,000 - - 43.532 43,532 - 36,505 - 36.505 180,000 636,612 500,000 440,000 - 2,822.918 - - - [2,076.610] [2.763,222] 180,000 636,612 536.505 4,203,532 1,448,390 7,384,733 7,467 [90,999] [417,713] [59,261] 714,253 [1,249,592] 1.785.91 1 226,930 1,210,457 [3,607,071] 4,451,923 13,072,510 - $ 1,793,378 $ 135.931 $ 792,744 $ [3,69 $ 5,166,176 $ 11,822,918 The notes to the basic financial statements are an integral part of this statement. 35 CITY OF SALINA, KANSAS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, For the Year Ended December 31,2008 AND CHANGES IN FUND BALANCE WITH THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES Total Net Change In Fund Balances - Governmental Funds Amounts reported for governmental activities in the statement of activities are different because Capital outlays to purchase or build assets are reported in governmental funds as expenditures. However, for governmental activities those costs are shown in the statement of net assets and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the amount by which capital outlays exceeds depreciation in the period. Gain on sale of assets Proceeds from sale of assets Capital outlays Depreciation expense Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This is the amount by which interest increased. An internal service fund is used by the city's management to charge the costs of certain activities to the individual funds. The revenues and expenses of certain internal service fund is reported with governmental activities. Some expenses reported in the statement of activities, such as compensated absences and other post employment benefits, do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Bond and temporary note proceeds are other financing sources in the governmental funds, but they increase long-term liabilities in the statement of net assets and do not affect the statement of activities. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. Repayment of bond principal and bond issuance costs is an expenditure in the governmental funds, but it reduces long-term liabilities in the statement of net assets and does not affect the statement of activities. Changes In Net Assets of Governmental Activities $ [1,249,592] I 1,756 (29.6951 10,587,951 [3.957,053] 6,612,959 14,100 77,120 [957,609] 2,811,702 $ 76,226 The notes to the basic financial statements are an integral part of this statement. 37 CITY OF SALINA. KANSAS STATEMENTOFNETASSETS December 31,2008 , PROPRIETARY FUNDS ASSETS Current assets: Cash and investments Receivables (net of allowance for uncollecbbles) Inventory and prepaid supplies Restricted cash and investments Deferred charges Total current assets Accounts Capital assets: Nondepreciable capital assets: Construction in progress Land Depreciable capital assets: Capital assets Less accumulated depreciation Total capital assets Total assets Lia biws: Current IiibiIiies Accounts payable Interest payable Meter deposits payable Current portion of compensated absences payable Current portion of accrued daims payable Current portion of loans payable Current portion of general obligation bonds payable Current portion of revenue bonds payable Total current liabilities Noncurrent liabilities: Compensated absences payable Accrued dams payable -Net OPE9 Obligation Payable from restricted assets Loans payable General obligatron bonds payable Revenue bonds payable Landml postclosure care liabilities Total noncurrent liabiliies Total liabilities ' Net Assets Invested in capital assets, net of related debt Restricted Unrestricted Total net assets Restricted for bond retirement Business-Type Activities: Enterpnse Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds $3.091.303 $ 8,577,929 $ 519.520 $ 76,874 $ 12.265.626 $3.686.524 266,293 801.892 127,018 - 1,195,203 - 1,211.221 11.715 202,526 21 4.241 - 641,538 - 18.408 659,946 149.701 - 1,211,221 3,369.31 1 11.435.106 646.538 95282 15,546237 3,836.225 - 200.461 200.4.61 682.000 844,002 - 15.000 1,541,002 6.510.833 86.756.884 1.351.466 992,099 95.61 1.282 860,874 3.967.500 33,896.667 738.305 580.050 39.1 82.522 755,428 3,225,333 53,904,680 613.161 427.049 58,170,223 105.446 $6.594.644 $65.339.786 $ 1.259.699 $ 522,331 $73.716.460 $3.941.671 $ 99,009 10.587 23.147 373.000 505.743 $ 368,964 $ 3.351 157.895 102.497 152,670 60,913 373.962 250.299 710,000 2,116,287 64,264 $ 4,540 $ 475.864 168.482 102.497 40,059 276.789 373.962 - 623,299 - 710,000 44.599 2,730,893 $ 104.104 36.067 501,050 641.221 32.960 217.395 86.737 57,041 394.1 33 51.358 12.988 ' 76.913 22.666 13.571 126,138 - 305284 - 6.054.797 - 6.054.797 - 2,156.770 - 2,320,000 - 2,320.000 1.566.636 - 1,566.636 870.000 1.286.770 2.482.584 9.955.875 109.403 70.612 12.618.474 356.642 $2,988,327 $12.072.162 $ 173,667 $ 115,211 $15.349.367 $ 997.863 $1,982.333 $42,908,852 $ 613.161 $ 427,049 $45.931.395 $ 105.446 - 1.211.221 - 1.211.221 1.623.984 9.147.551 472,871 [19.929] 11,224.477 2.838.362 $3.606.317 $53.267.624 $1.086.032 $ 407,120 $58,367.093 $2.943.808 The notes to the basic finandal statements are an integral part of this statement. 38 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31,2008 Operating revenues Charges for services Reimbursed revenues Miscellaneous Total operating revenues Operating expenses General government Public works Recreation Depreciation Total operating expenses Operating income [loss] Nonoperating revenues [expenses] Investment revenue Debt service Gaifloss] on disposal of futed assets Amortization of bond issuance costs Total nonoperating revenues [expenses] Income [loss] before transfers Transfers from [to] other funds Transfers in Transfers [out] Total transfers Change in net assets Net assets. January 1 Restatement Net assets, January 1, restated Net assets, December 31 Business-Type Activities: Enterpnse Funds Total Internal Solid Waste Water and Enterpnse Service Disposal Sewer Sanitation Golf Course Funds Funds $2,748,519 $14,072,513 $2,171,938 $ 751,252 $19,744.222 $9.379.116 1 1,430 69.803 492 27,747 109.472 205,574 2,759.949 14,150,986 2,172,430 778.999 19.862.364 9.584.690 8,670 8,670 - 9,570.649 1.599.591 10,943.488 2,097,557 - 14,640,636 - 841,004 841.004 369,940 1,793.908 106,448 39,865 2.310.161 16.184 1,969,531 12,737,396 2,204,005 880,869 17,791,801 9,586.833 790,418 1,413.590 [31.575] [101.870] 2,070,563 [2.143] 74.118 208,641 15,935 1.194 299,888 78.613 14,840 2.500 15,000 32,340 650 [5,859] [19.731] [25,590] 38.579 (301,3951 30.935 1,194 [230,687] 79.263 [44,520] [492,805] - [537,32q 828.997 1,112.195 16401 [100,676] 1,839,876 77.120 38.179 82,125 120,304 [l 80,000] [180,000] [180.000] 38.1 79 82,125 [59,696] 648,997 1,150,374 16401 [18,551] 1,780.180 77,120 3.340.342 52.140.537 1,106,441 410.404 56,997,724 2,887.333 [383,022] (23,2871 [19,769] 15,267 [410.811] (20,6451 2.957.320 52,117,250 1,086,672 425.671 56.586.91 3 2,866,688 $3,606,317 $53,267.624 $1.086.032 $ 407,120 $58,367,093 $2,943,808 The notes to the basic financial statements are an integral part of this statement. 39 CITY OF SALINA. KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31.2008 Business-Type Actcvities. Enterprise Funds Total Internal Solid Waste Water and Enterpnse Service Disposal Sewer Sanitation Golf Course Funds Funds Cash flows from operahng achvities Cash received from customers and users 82,677,896 814,046,652 $2,165,515 $ 751.251 $19.641.314 $9.468,137 Cash paid to suppliers of goods or services [1,360.476] p.879,527] [1.390,660] [400,942] [11,031,605] [8,971.083] Cash paid to employees [459.73q [2,846.766] p62.435) [410,650] [4.479,586] [638.861] Other operating receipts 11,430 78.473 492 27.747 118.142 205,574 Net cash provided by [used in] operatmg actlvities 869,115 3.398.832 12,912 (32.5941 4,248.265 63,767 Cash flows from capital and related financing activities Purchase and construction of capital assets [630.000] [262.742] (268,5961 - [1,161,338] Proceeds from sale of capital assets 105,600 2.500 15.000 123.100 650 Principal payments -general obligation bonds [373,000] [735,299] - [1,108.299] Principal payments - revenue bonds - [680,000] - [680.000] Interest paid [47,587] (515.4591 - [563,046] Principal payments - loans payable 1358.3441 r358.3441 Net cash provided by [used in] capital and related financing activities 1944,9871 [2.549,344] 1253,5961 - [3.747,927] 650 Cash flows from investing actnrlties Interest received 74.1 18 208.642 15.935 1.195 299.890 78.612 Cash Rows from noncapital financing activtties 120.304 Net cash provided by [used in] noncapital financing activities [180,000] 38,179 - 82.125 [59,696] Net increase [decrease] in cash and cash equivalents [181.754] 1.096.309 [224.749] 50,726 740.532 143.029 Cash and cash equivalents, January 1 3,273,057 8.692.841 744.269 26.148 12,736,315 3.543.495 Transfers in 38,179 - 82.125 Transfers [out] [180.000] [180.000] Cash and cash equivalents, December 31 83.091.303 8 9,789,150 8 519.520 S 76,874 813.476.847 83.686,524 Cash and investments Restricted cash and investments $3,091,303~ 8 8,577.929 8 519,520 8 76,874 812.265.626 $3,686,524 - 1211.221 - 1.211.221 Total cash and cash equivalents $3.091.303 8 9.789.150 0 519.520 8 76.874 $13.476.847 83.636.524 The notes to the basic financial statements are an integral part of this statement. 41 CITY OF SALINA, KANSAS Reconciliation of operating [loss] income to net cash Operating income [loss] provided by [used in] operating activibes STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Conbnued) For the Year Ended December 31.2008 Business-Type Activitres: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golfcourse Funds __ Funds Adjustments to reconale operating income [loss] to net cash provided by [used in] operating activities Depreciation expense flncrease] decrease in accounts receivable [Inaease] decrease in inventory Increase [decrease] In accounts payable lncrease [decrease] in accrued compensated absences Increase [decrease] in claims payable Increase [decrease] in landfill postdosure liabilities Increase [decrease] in net OBEB obligation Increase [decrease] in meter deposits payable Net cash provided by [used in] operating activities $ 790.418 $1,413,590 $[31.575] $ [101,870] $2.070.563 $ j2.1431 369.940 I70.6231 [l 22,7291 1 1.837 [122,716] . 12.988 1.793.908 [28.319] [22.=6l 138.569 24,568 76,913 2,459 106.448 [6.4231 [96,21 T] 18.013 22.666 39.865 6,606 [7431 9,977 13.571 2,310.161 [lo53651 [16,250] 64.395 j122.7161 126,138 2.459 [81 ,1201 16.184 (23.1 321 [16,772] 609 89.021 $ 869,115 $3.398.832 $ 12.912 8 (32.5941 $4,248,265 $ 63,767 The notes to the basic finanaal statements are an integral part of this statement. 42 CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS December 31,2008 ASSETS Cash and investments Total assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Total liabilities $ 496,887 $ 496,887 $ 496,887 $ 496,887 - The notes to the basic financial statements are an integral part of this Statement. 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Salina, Kansas (the City) is a municipal corporation governed by a mayor and a fwe-member commission. These financial statements present the City and its component units, entities for which the government is considered to be financially accountable. Each discretely presented component unit is reported in a separate column in the government wide statements to emphasize that it is legally separated from the government. Discretely Presented Component Units City of Salina Airport Authority - The Salina Airport Authority was created for the purpose of accepting as surplus property portions of the former Schilling AF.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 has a December 31 fiscal year end. Housing Authoriiy 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 Mayor of the City of Salina appoints the governing board. The City Commission may remove commissioners of the Housing Authority. The City must issue revenue bonds for the Housing Authority. The financial liability of the Housing Authority is essentially supported by the operating and debt service subsidies received under contract kom the Federal government. The Housing Authority has a June 30 fiscal year end. Information in the accompanying financial statements covers the fiscal year ended June 30, 2008. Complete financial statements for each of the individual component units may be obtained at the entity’s administrative offices. The Clty of Salina also participates with Saline County in two joint ventures. The Salina-Saline County Board of Healfh was organized by the City and County to promote public health. The City and County organized the Salina County-City Building Authority 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 financial statements are available from the governing boards of each joint venture. _.“I_- - - - -- -- - ..--- .- _. -- . ---. -I Board of , Building ‘ , Health ; Authority , (Unaudited) f ‘(A-udxed) --’ $1,468,266! $3,083,977 1 35.8287 . 214,145 I 4; 72,794’ 7- 826,564 ! 988,390 I -- 290.359 f ---.. - - -, -. . - -_ -- ----. -- -_ -.- . -- - .-. - - . - __-_ __ __ ! Total net assets, December 31, 2008 :Total change in net assets, December 31, 2008 I--- .1-. . -_ ^ * :Total rewnues, year ended December 31, 2008 ,Total rewnues from City of Salina -- _- .-_- --.- --“I-,------.-..-y ,. - i-_ ,- ----,. __.^_. ~. __ __.._.. -- I“ ------- --_ - - -__ , . ~ __-.-__I _-_ , -- .. -. ~ -_ - 2 -. -.I-- - 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Reporting Entity (Continued) Joint Ventures (Continued) Complete financial statements for each of the joint ventures may be obtained at the entity's administrative offices. -c -__ I -_ -_ -_ _- - ;Salina Ciiunty-city- ;306 West ti!% Sket ; Salina, KS' --- Salina-Saline County Board of Health I125 West Elm Street I_ Building Authority 1 I -__ - -_--- !-- -- - (Salina, KS I - - - _- - - - - - - "__ - - __ -_ __ i _- -." - i-- I -- _-- - t ?--- --- I .-.+.. - ~ -- i- --- --_ - -- I - _- -- - - -_- _.. __ B. Government-wide and fund financial statements The statement of net assets and the statement of activities report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Exceptions to this general rule are charges between the City's governmental and business-type activities. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function are offket by program revenues. Direct expenses are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational requirements of a particular program. Taxes and other items, which are not classified as program revenues, are presented as general revenues of the city. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and presented in a single column in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation . The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to certain compensated absences and claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expendituredriven grants are recognized as revenue when the qualdying expenditures have been incurred and all other grant requirements have been met. The City applies all applicable Governmental Accounting Standards Board (GASB) pronouncements as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: FASB Statements and Interpretations, APB Opinions, and ARBS. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net total assets. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing goods and services in connection with a proprietary fund’s ongoing operations. The principal operating revenues of the City‘s proprietary funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenues and expenses. The internal service funds account for risk management, worker’s compensation, health insurance, central garage and information services that are provided to other.departments or agencies of the government, or to other governments, on a cost-reimbursement basis. Agency funds are custodial in nature and do not measure results of operations or have a measurement focus. Agency funds do however use the accrual basis of accounting. Agency funds are used to account for assets held as an agent for individuals, other governmental units, private organizations andlor other funds. The City reports the following major governmental funds: The general fund is used to account for resources traditionally associated with government, which are not required legally, or by sound financial management to be accounted for in another fund. Employee benefits fund -To account for the costs of various benefds provided to governmental employees. Flood and drainage improvement fund - To account for property tax revenues to be used for capital improvements to the flood control and stormwater drainage systems. Tourism and convention fund - To account for transient guest tax revenues, which are specifically restricted to promotion and tourism activities. Special gas fund - To account for the City’s share of motor fuel tax revenues, which are legally restricted to the maintenance, or improvement of streets within the City. Bicentennial Center fund - To account for the activities of the City’s convention center. The debt service fund is used to account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources and special assessment bond principal and interest from special assessment levies when the City is obligated in some manner for the payment. 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) The capital projects fund is used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. The City reports the following major proprietary funds: Sanitation fund - To account for the operations of the City's refuse collection service. Solid waste disposal fund - To account for the activities of the Ci's landfill. Golf course fund - To account for the operations of the municipal golf course. Water and sewer fund - To account for the activities of the City's water and sewer operations. D. Assets, Liabilities and Equity I. 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 in the financial statements as "Cash and Investments." The city's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term 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. 2. Receivables and Pavables Transactions between funds that are representative of lendinghorrowing arrangements outstanding at the end of the year are referred to as either "interfund receivableslpayables" (Le., 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 Receivab/e. The City records revenues when services are provided. All receivables are shown net of an allowance for doubtful accounts. Property taxes receivable. Collection of current year property tax by the County Treasurer is not completed, apportioned or 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 and, therefore, are not susceptible to accrual. Accruals of uncollected current year property taxes are offset by deferred revenue and are identical to the adopted budget for 2009. It is not practicable to apportion delinquent taxes held by the County Treasurer at the end of the accounting period, and further, the amounts thereof are not material in relationship to the financial statements taken as a whole. 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 2. Receivables and Payables (Continued) The determination of assessed valuations and the collection of property taxes for all polnical subdivisions in the State of Kansas are the responsibility of the various counties. The County Appraiser annually determines assessed valuations on January 1 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 finance the budget of the ensuing year. Property taxes are levied and liens against property are placed on November 1 of the year prior to the fiscal year for which they are budgeted. Payments are due November 1, becoming delinquent, with penalty, December 21. Payments of 50% are accepted through December 20, with the second 50% then being due on or before May 10 of the following year. This procedure eliminates the need to issue tax anticipation notes since funds will be on hand prior to the beginning of each fiscal year. The City Treasurer draws down all available funds from the County Treasurer's office in two-month intervals. Taxes remaining due and unpaid at February 15 and July 1 are subject to collection procedures prescribed in state statutes. 3. Inventories and Prepaid Items Inventones are valued at cost using the first-inlfirstaut (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 4. Restricted Assets Certain proceeds of the City's business-type fund revenue 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." 5. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets. ace reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Capital assets used in governmental fund types of the City are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their estimated fair value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets lives are not capitalized. 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Equity (Continued) 5. Capital Assets (Continued) Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type is included in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Property, plant and equipment of the primary government, are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Other equipment Vehicles Infrastructure Years 50 5 -15 6 -10 30 -50 6. ComDensated 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 11 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 fwe 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. In 2001, a limited buy back policy was instituted. 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 financial resources is reported as an expenditure and a fund liability in the government fund financial statements that will pay it. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Vested or accumulated vacation leave of the business-type funds and government wide financial statements are recorded as an expense and liability of those funds as the benefits accrue to employees. A liability is recorded for accumulated rights to receive sick pay benefits that are payable upon termination of employment. The General Fund, Bicentennial Center Fund, Central Garage Fund, Information Systems Fund, Sanitation Fund, Solid Waste Fund, Golf Course Fund, and Water and Sewer Fund have been used in prior years to liquidate the liability for compensated absences. 7. Temporary Notes Upon authorization for the issuance of general obligation bonds for certain improvements, Kansas law permits the temporary financing of such improvements by the issuance 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. CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 8. Longterm Obliciations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental acthities, business-type activities, or proprietary fund type statement of net assets. 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. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 9. FundEauity In the fund financial statements, governmental funds report reseivations of fund balance amounts that are not appropriable or are legally segregated for a specific purpose. Reservations of business-type net assets are limited to outside third-party restrictions. Designations of fund balance represent tentative management plans that are subject to change. 10. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 11. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Note 2. 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 fund, and enterprise funds. 51 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budgetary Information (Continued) The statutes provide for the following sequence and timetable in the adoption of the legal annual operating budget: 1. Preparation of the budget for the succeeding year on or before August 1. 2. Publication in local newspaper of the proposed budget and notice of public hearing on the budget on or before August 5. 3. Public hearing on or before August 15, but at least ten days after publication of notice of hearing. 4. Adoption of the final budget on or before August 25. The statutes allow the governing body to increase the onginally 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. The 2008 budget was amended for the General Fund, Tourism and Convention Fund, Bicentennial Fund, Business Improvement District Fund, and the Central Garage 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 compared to legally budgeted receipts and expenditures. All legal annual operating budgets are prepared using the statutory basis of accounting, in which, revenues are recognized when cash is received, and 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 cqntract. 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, CDBG-ED. HOME V, Special Law Enforcement, Police Grants, Dare Donations, War Memorial Maintenance and Disaster Recovery. 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. A legal operating budget is also not required for the Internal Service funds. Actual to budget comparisons for these funds that present budgets to the Commissioners are shown strictly for informational 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. 52 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) B. Statutory Violations Actual exceeded budgeted expenditures at December 31,2008 in the Business Improvement City Fund and in the Special Alcohol Fund, which violates KSA 79-2935. C. Compliance With Bond Reserve Requirements Water & Sever Bond Reserve Requirements The bond reserve requirement is to establish and maintain a reserve account. The Water i3 Sewer fund met this requirement for 2008. , .. Resew requirement $1,655,531 Actual resews- - Bond resek account Total actual reseT\Rs .. .- j--1;211,221 $1,211,221 ,, .- . - .. I I- The City was in compliance with the reserve account balance requirements at December 31,2008. D. Legal Debt Margin The City is subject to the municipal finance law of the state of Kansas which limits the bonded debt (exclusive of revenue bonds and special assessment bonds) the city may haveputstanding 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, 2008, the statutory limit for the City was $132,983,158, providing a debt margin of $98,900,971. . Note 3. RESTATEMENT OF EQUITY Following the close of the previous fiscal year, it was discovered that several capital assets were misdassified or recorded incorrectly. Accordingly, the beginning net assets balances were restated, the effects of which are as follows: .- . -- Solid .. Waste - W%rand - - . . _. f - - Golf central .lnformatioiI ._ Go~mnktal Disposal- _. Sewer - Sanitation -Gur;i- ~mge 1 -Systems - Fund 4- _Fund - Fund I_ - ._ . Actiuties Fund I I 53 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments The City's cash is considered to be active funds by management and is invested according to KSA 9-1401. The statute requires that banks eligible to hold active funds have a main or branch bank in the county in which the City is located or in a county adjacent to the City and the banks provide an acceptable rate for active funds. Various City investments are considered to be idle funds by management and are invested according to KSA 12-1675. The statute requires that the City invest its idle funds in only temporary notes of the City, bank certificates of deposit, repurchase agreements, and if eligible banks do not offer an acceptable rate for the funds: US. Treasury bills or notes or the Municipal Investment Pool (KMIP). Maturities of the above investments may not exceed two years by statute. Some of the City's investments are of bond proceeds invested pursuant to KSA 10-131. This statute allows additional investment authority beyond that of KSA 12-1675. Investments of bond proceeds may follow KSA 12-1675 or include other investments such as the KMIP, direct obligations of the US. government or any agency thereof, investment agreements with a financial institution the obligattons of which at the time of investment are rated in either of the three highest rating categories by Moody's investors service or Standard and Poor's corporation, and various other investments as specified in KSA 10-1 31. December 31, 2008, the City has the following investments: , $24,636,622iS&P AhffSl+i ._-- I._.- b -- , ---. . - -- I ,'Kansas mnicipal inkstment Pool 'Total fair value L ...I -- ._ - - - I , -. . ---- - "_ . -._- _._---- - I , -, -.___ I_ I * -..--.--! $24,636,622 . - ---I- ^... -. . --- - .--- - -.- 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 U.S. government or any agency thereof, with maturities up to four years. No more than 10 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 policy provides direction on concentration risk. The City policy states that funds shall be diversified to reduce the extent of losses due to having an unbalanced portfolio in terms of maturities, instrument type, and issuers. Therefore, portfolio maturities shall be staggered to avoid undue concentration of assets in a specific maturity sector. Liquidity, free of market risk, shall be assured through practices insuring that the next disbursement date and payroll date are covered through maturing investments, marketable U.S. Treasury Bills, the Municipal Investment Pool, or money market accounts. Default risk shall be minimized by requiring that all security purchases occur on a delivery vs. payment basis, and that all securities are adequately collateralized. Risk of market price volatility shall be controlled through the adoption of a "buy and hold" strategy whereby the Cdy holds each investment to maturity, coupled wth maintenance of an adequate liquidity position to insure the ability to meet normal anticipated cash flow needs. 54 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A. Deposits and Investments (Continued) When advantageous, it is allowable to sei1 investments to realize a gain due to price fluctuations; however, such transactions shall not be a part of the normal course of business. The City recognizes that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Portfolio diversification is employed as a way to control risk due to issuer default. In the event of a default by a specific issuer, the Director of Finance and Administration shall review, and, if appropriate, proceed to liquidate securities having comparable credit risks. Custodial credit risk is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The Cis deposit policy for custodial credit risk require that the depository banks will maintain 100% securtty in the form of FDIC coverage and pledged collateral according to KSA 9-1402. B. Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: _. 55 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) C. lnterfund Receivables and Payables The composition of interfund balances as of December 31, 2008, is as follows: Fund Types General Fund Capital Projects Fund Other Goernment Funds " Due From DueTo $ 460,667 $ - - 64,562 - 396,?05 __ -- $ 460,667 'i $ 460,66?-' The City uses interfind receivables and payables as needed when pooled cash is negative within a fund until investments mature or grant proceeds are received. All payables are cleared in less than one year. 56 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31,2008, was as follows: - .r ^. - Balance Adj. Bal CitygovernmentaIactivrti=~.- __ Gouernmental actiwties- ,.- Capital assets, not beingdepkeated Construibon in progress Land 'nfras@?!! -. 1 . ..-- Capital assets; -_ being depreciated -. BIJJ%%~_S and improvements - Vehid_e_s_ Equipment, fumituieand fixtuk . _--I- - .-,- -..I - ~- - "_-- Total capital assets 12/31R007 Adjustments 12/31R007 *$ 22,685,858 $ [1,697'j $ 22,684,161 22.688.817 pii,6261 22,477,191 132.967.790 366.816 133,334,606 . 23,548,952 - 23,548,955 8 6.f78.742 [393,529] 6,385,213 4,100,746 80b.576 4,901,322 212,770,905 560.540 213.331.445 ' 52,555.1 14 ' 206.348 52,761,462 10293,9ia [blozs] 10,287,889 Balance Additions Retirements 12/31/2008 ., $ 9.879.150- $ 32,034 ~ $ 32,531,277 - 22,477.191 ,- .- - 133,334,606 - 23,sZa,952 272,700 , 171,379 6,486,534 468,135 55,397 5,314,060 _. -.. . 10,619,985 256810 223.692.620 I. .",__.. -- - -, , ,- - I- _I_ -..I" . -.- .. - . - - - -- -_ _- ..-. 96,612.978 1 19.056-31'- 96,632,034 ' 1.161.338 440.627 97,352745- I i. __- ,Total capital assets - - - - _- - - - - - - -- .--- -.- -- ,__-_ .~ -.... Business-type activities capital assets, net 1'0 592f6j%4 $ [410,81 I]. $ 59,409,806 _._ - -- 57 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. E. Capital Assets (Continued) The City's depreciation expense was charged to governmental f'unctions as follows: Goemmental Activities: General gouemment Pubiic'safety Public works .Public health Culture and recreation Planning and deelopment Total beireciation __ -- - _- ,- $ 62,440 31 9,069 3,037,172 __ 41 6,790 34,273 ' f03,493'! $3.973.237 B usiness-ty pe Activities : Solid Waste Disposal . $ 369,940 I Sanitation 106,448 ,Golf'Course Division 39,865 \iv%erand Sewer i ,793,908 -- Total depreciation . $2.31O.16lJ ..- - _- _ Long-Term Debt Following is a summary of changes in long-term debt for fscal year 2008: Batance ------E January 1, 2008 - - 1- - - -- , Balance ~ Amounts . Deceniber 31.1 he Wthin Additions Deletions 2008 -- Oneyear - - -, - - - - -_ - - -- - . - - . - - - - - -_ -- - _- ~ -- .. ~ _-- _-~ - .-- ---._ -.__..._ I _- - - _-_-_.--" --.. ._ A- -. - Governmental activities: , t General obligation bonds ! $25.436.632 $ j,245,& $ 2.81~,702w $29869,930 ' $ 2,866.701 I 'Accrued corrpensation i 2,955,682 1 60Y 615 1,331.006 3,226,291 1331,007 , - - ---------, , .- --- - *..-I-1-. , -..- ---.- .- -- Terrporary notes 7,625.000 I 3,205,000 ' 5,825.000 5.005,000 ' 5,005.00b- 'Total $36,017,314 $12,051,615 : $ 9,967,708 $38,101,221 , $ 9,202,708 ' . Business-type activities: 'Generalobligationbonds -- : $ - 3,888,368 $ Loans payable ! 6,78?lb3 Accrued compensation , 606.525 341,186 ' 276,789 670,922 , 276,789 - - - - - - - - I .. __ - -c-. -. . - - *. - - - -- - . . . ._ __- - -1 I- -_- _-_. - .- " - , ,, __ -._ - - ," -+ -.. ._- - -- __ I i - --. .---- ,^ .- ~ ,, - I .( - - ,- - I $ 1,108,299 $ 2,780,069 :-$ 623.269 ' - - -- r-_. -_-- --__I - 358,-&1' 6.428.759 ; 373,962 , - 680,kO , 3:030,000 710,Ooo ' 1- &Gnuebonds , ---.------ - .-.-, __ 3,710,000-4 -- - , .+ -I .- ._.--.__ .,- - . I- __-_ -.- r., "-.I- - .-- - , ,-- .- .^.__ - - .--. . - .I-. . - -_ , -_ - . - r-.. L--- - . ,_ .! -. - ^_,^_ ._ -. I. .. I , _._ , - Total $14,991,996 , $ 341,186 i $ 2,423.432 I $12,906.750 :-$ 1.984.050 - . I- .-: Generalobligationbonds ' $ 7,490,000 $ - _. .__-. - ! $ - 965.06 I..--- .L. ' $ -1. 65% -L- 000 -f $ -r -755,000 ~ -. - : )- Fmancing lease ! 391,932 , - -- 33.101 i. 358,831 ! 13,900,000 8 Temporary notes--- - - L"-- -.-..-\- -.-- ~.--I_-_ -- * - ' .- ,,.I-. ! -. ---. ,, ._-- _-__ - ~. ._.-- -,-- _---c -"- -: -,.. I . , . 35.331 j -- - - ___ - -. __ _- . - - ' 2,925,000 , 10,975,000 , ~ ~ __ . - - - - - - i_ - -- --- - Special &&ssrnent debt . 255,270 -I 23,216 232,054 ' 24,106 ' Total corrponent units ' $22,037,202 $ - - - . - - - - -- - - __ - - -- . -_ - ___ - __ __ - - -- -. - ! $ 3,946,317 , $18,090,885 $ 814,437 ' .-_ -I .-. . , I - ,- -- ,"- CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) The following is a detailed listing of the city's long-term debt including general obligation bonds, revenue bonds, temporary notes and loans payable: Pnmary Government General Obligation Bonds lntemal Irnprowments 2000, due 10/1/2015 lntemal Improwmkts 2001, ,. .-.. due - 10M/2016- 'Waier/sewer re&-nding 20024, due l%h/20?3 Intgmal Improwments 20028, due 10/1/2017 lntemal Improwments 2003A, due 10/1/2018 Internal Improvements 2064j46;, due 10/1/2019 lntemal lmpr6kments 2065A, 'due 10/1~2020 , Internal lmprokments -. 2006A. - - - - due - - - - 10/172026 - - t Internal lmbwments 20066. due l0/1/2021 f lntemal I%pro\Rments 2007A, due 10/1/2027 __ i lntemal Imp&ments 2008A, due 10/1/2023-' iintemal Irnp6wments 2008B, due 7/1/2028 . Refunding 2004A, due 8/1/2015 - ,,- ,- - 1- - 3.- .--. _- __ - _--I_ - *.".. - - . .. . __ __ Toi& general obligation bonds Rem-iue Bonds ;--1i?e\Rnue-Refunding ZOOM, due9/1/2012 ,Total rewnue bonds Loans Payable I. IKansas Public Water Supply, due 2/1/2020 i ;Kansas Public Water Supply, due 2/1/2023 Total loans payable *I +&- I ~ . _I*, .._ c- Temporary -- Notes ' 'Sen&-2006-1, due 8/1/2009 1 Senes2doK1, du&8/1/2009- ?;tal temgraj not& 1 - " ~ 1 < ,.I_----.- - . ,-- -. - ~ --. .- _.- . - . -.A -_-- -._ ..--- _._"_ - ,--- I - --_ - __ - Tr .-I- ..__I: *, , - -. __.-.* - - --- - . , -, , " _--- _- .^_ - . - --.- ___ _. , - ,-- --- - .I_ .I ... ... - - .- ~. . 1 - .-. - _-._ - .- _.I_ I- ,I Original Interest Bonds Issue Rates Outstanding 3,885,000 4.625070°t0 6.50% $ 330,000 5,350,000 4.00% to 4.90% 2,840,000 1,980,000 2.707O-i6-4.50./0 985,000 ' 4,350,000 2.13% to 3.85% * 2,725,000 5,585,000 2.10% to 4.00% 2,880,000 4,053,000 ~ 3.00% to 4.50% * - 2,530,000 4,210,600 2.955Kto 425% 3,205,000 2,200,000 ' 3.55% -- __ io 5.50% 1,980,000 885,000 ' 4.00% to 4.50% 6;G5,000 4.25% to 4.625% : 6,180,000 2.04<000 3.00%-to 4.50% i,ci&,ooo 745,000 ' LI_I~_ - ..,. 3,720,000 3.25% to 4.00oid . 3,720,000 3,5%,000 . 3.65% to 5.00% I $ 32,650,000- -7 -- ----- 3,525,000 , ._ -,, _- -, - - -_ - __ -- -- " 3,600,000 4.29% '$ 2,430,462' -5;OOO.OOO ' $ 6,428,760 . 4.13% 3,998,298 - ..-. - - I._- .---I- ..,_- .. __ , I...-_ 1 ~,. . , - - .. .- #. 1,800,000 3.49% ...f i $ .,. 1;i300,000 I 1 3,205,000 j $ 5,003~00 - 3,205,000 2.75% I_-.- . - .._.- I ~ 59 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) _.- _- _- Original In t e resi Issue Component Unit Salina Airpod Authority General Obligation Bonds -.- I. -.-,.- , - General Obligation 19998. due 201 0 $ -555,Qih- - General Obiigation 2001A, due 2012 11385.000 - -"-. ,. 2,635,6&- 3,635,000 --- - - , General Obligation 2002A, due 2012 General Oblig%on 2005A, due 2020 . . .-.- ?--"----- 1,005,000 -. . -~__ ___ -- ; Geneby Obligation 2007A, due 2022 'Total generat obligation bonds - - --- ,-, . I *% - Temporary Notes Total temporary notes 10,975,000 - . __ __ - -1 Series 2007-1, due 201 0 - --- -- - ---- . - -- ..-. I -----__ . Special Assessment Debt ..-_ - _.--, - Airport Industrial Center, d"ue 201 6 Hangar 600 Sanitary Sewer, due 2021 " . - -._,r_--, ---_ ~ _______ - -- __ - ,Total special assessment debt jhancing Lease, due 2015 - ,Total -.-._^-.-...---- ,-,_ ___ -I--I_ _.. -- .... -. .. - _- . ~ -- . , _I.._.- - _-. , ,- _.._ _-__ .--.-"-. . - .. - - Rates _- Bonds Outstanding 3.90% to5.2d% $ I%,OOO ' - 4.45% to 5.66?!0 650,000 4.75% to 5.25% 31635,000 2.457; to 3.70% i,iso,oOo 4.60% to 6.00%. 945,000 6,525,000 ~,~. -1 ~ .. --. 5.600% _- 10,975,000 I - 0,975; ~ 000 --..I - --. i 207,177 24,877 , 232,054': 35c831 $18,090,885 -. .__.?. , ~ 1- - -_ . .,* . ._-_- -I Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: _- - --~ .-- " ..- . --_- - t - General Obligation - Primary Goemme; -- 1 I_ nterest : -_ 4 4,349,384 Total : Bonds I --I I -, I .--v I Year - .-.+-:7 Outstandin ---- -- a--.I --. _T Due 2009- - :$ 3,49O,b00 r$ - - . . - 1,256.003 - - . $ 4,746,003: 201 0 - _- 1,169,384 3,180,060-i - -_- - -- - 4 201 1 ~075~000 3,085;~ 1 ;.--I-- 1,052,710: --.-. 4,127,7110 ; ' 1 2013 2,990,000 821,063 , 3,811,063 ; 1 - 2014-2018 --~.-._.-L 1 .Q.935~ooo.~~.. 9,295,000 2,6700881 ---_- -I '1 ._._-_- 1,965,088.~ - . 20142023 1 1.196 816 ' 6 131 Slzi 938,351 , t --I 4,023,351 ...- , I._,. --.- ._.". --I.._-- i" 2012 ,-. - . . . --. -- 1- -. . _- 60 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) General Obligation - Component Units Bonds Interest Y* i Outstanding Due 2009 $ 755.000 $ 316,316 . $ 282.148 201 1 755,000 244,799 2012 795.000 209,501 201 3 330,000 ."_I- - 201 0 800,000 ' i71,878 ! - -. - ._. . .--_ 2014-201 8 . 1,955.000 587.057 &I ___ - 1,071,316 1,082,148 ' I -. 999,799 ' 501,878 ' ~ __ -- 1,004,501 _- ' 2,542,-0571 _--..--I - __-. 201 92022 1,135,000 107,025 . 1,242,025-' J- Total $ 6,525,000 ' $- 1,91g,724 -$ 8,443;724 Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: -- --_ , Revenue Bonds - Primary Goernment -1 ! Bonds Interest . . --- I Year - 61 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Annual debt service requirements to maturity for financing lease - to be paid from rental revenue: Financing Lease - Component Units Due Lease Interest Year Outstanding __ - 2009 $ 35,331 $ 23,141 $ 58,472 201 0 37,705 I 20,767 58,472 201 1 2012 2013 .. Total 201 4201 6 .^ 68,472 18,2&- 40,238 : 42,941 15,531 58,472' 45.826 12,646 58,472 175,415 ' $ 3581,831 $ 108,944 I $ 467.775 ,I *- __ 1 56,790 18.625 . --- - . ,- The City has engaged in loans with the Kansas Public Water Supply Fund. The following displays annual debt service requirements to maturity for loans payable to be paid from service revenues. for the full proceeds amount: . Loans - Primary Go=mment I ,~ Interest Due -- -I -_ i Loans ,- - - +... -- - -4 i -- Year i Outstanding - ' -- - ?$- 373:962-i$ 243,52i 9 $---- __ 617,483 I 61 8.806 *' . 38g,840--:- - ~ 2009 -..- 20-l-l .--- . I - ._ - 4b6T392 .. -- I 213,795 I 620,187-! 1- Toial : _---- . - ......_- %?8;966 ' 201 0 423,646 i97,976 621-,62. : 201 2 2013 441,634 ; . 623,119 ; ?d:g-\ 3,1403s J 8,290,433 I 1- ~ - -. ._- _.I - I -.-- ---- .-. .- , 201&2018- -!t-- 21505,896 I J- 2019-2023 __ '' 16-1 -427- : - 2,&,817 - 8 _- ~ i ,887,390' -- -- - I.____ - - - - - - - ' ' $' 6,428,760 ;'$ .- *-1:8g7;673 :-$ I_ **_ _. Toiai -- r- I - Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: ,--- -I---. -_- .--.--_ ,-- -- - --- i Special Assessment Debt - Component Units -; "-_ - - - -. : Assessment Interest ! - - m- -, 2010 25.029 8.041 33.070 . -1 Due '. $ 24,106 :-$ 8,964 I $ 33,070 j Year- . I : -Outstanding -- i -.- -. _.I. -- ._. .. - ,. t - ..- - --c - - - -- - --L 2009 - - ___ ~ -_ - - - . ~ - i- --J-- .__- -- -- -_ 33,070 201 1 201 3 .I 28,018 5,052 I 33,070 - 94,876 T. 9,463 ' 104,339 :- 20192021 7.053 : 639 7.692 -. 25,988 . 7,082- -.-+ _-__ -- ^.. I. -- c..- 26,984' - ~ 67086 . 333i7iiJ , . !L -. --r . -., -I-. . , --, -_ . 2012- - -- ---- 1 ~ . L - - __ I f 2014-2018 ' 62 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Special assessments. As provided by Kansas statutes, projects financed in part by special assessments are financed 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 finance current year operations. The special assessment debt is a contingent obligation of the Ctty to the extent of property owner defaults, which have historically been immaterial. Conduit debt. The Ctty has entered into several conduit debt arrangements wherein the Ctty 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 Ci 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 terms 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 payments schedule related to the original debt. At December 31, 2008, total outstanding conduit debt was $106,413,033. Defeased debt. In prior years the Ci has defeased certain other 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 financial statements. At December 31,2008, the total outstanding defeased debt for all issues was $905,000. ,- I 63 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) F. Reconciliation of Transfers A reconciliation of interfund transfers follows: Transfer In Transfer Out Major Funds: General fund $1,066,306 $ 260,000 ‘ Special gas fund 180,000 Bicentennial center fund 636,612 Tourism and conwntion L- fund - 426,612 - --I Debt senice- * -500:OOO - 440,000 . Capital project fund ,- . . Solid waste disposal fund - - 180,000 ’ Other gobemmenti funds . - 2,076;61$ Water and sewer fund ’ Golf course fund- 38,179 i - 82,125 - - - .. I- L. Total Transfers - $2,943,222 , $2,943,222 I .- ,” The City uses interfund transfers to share administrative costs between funds. Note 5. OTHER INFORMATION 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 (KPBF). Both are cost-sharing multiple-employer defined benefit pension plans as provided by Kansas statutes (KSA 74-4901 et seq). KPERS and KP8F provide retirement benefits, life insurance, disability income benefits and death benefits. Kansas law established and amends benefit provisions. KPERS and KP&F issue a publicly available financial report that includes financial statements and required supplementary information. Those reports may be obtained by writing to 61 1 South Kansas, Suite 100; Topeka, Kansas 66603 or by calling 1-888-275-5737. Funding Po/icy. K.S.A. 744919 establishes the KPERS memberemployee contribution rate at 4% of covered salary. K.S.A. 744975 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 was 6.09% from January 1 to December 31, 2008. The City employer contributions to KPERS for the years ending December 31, 2008, 2007, and 2006 were $789,277, $647,231 and $530,939, respectively, equal to the required contributions for each year. The KP&F employer rate established for fscal years beginning in 2008 is 17.01%. Employers participating in KP8F 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, 2008, 2007, and 2006 were $1,722,988, $1,474,558 and $1,229,837, 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. 64 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 5. OTHER INFORMATION (Continued) C. Flexible Benefit Plan (I.R.C. 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. Benef& offered through the Plan include various insurance and disability benefits. D. 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; natural disasters and other events for which the City carries commercial insurance. No significant reductions in,insurance coverage from that of the prior year have occurred. Settlements have not exceeded insurance coverage for each of the past three years. The City has established a limited risk management program for workers' compensation. 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 financial resources. Of the liability, $125,335 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are __ as follows: - >- i2&8:= $ 238,229 $ 196,285 , .* ,-.-.--I- Unpaid claims, January 1 {Incurred claims (including ,..-.,..---- - ..-_ - --. -, __. . I I "........ *." - . . 1.1 - .. __. . 399,042i- - '24G3 . I--L-_-_. ;- - -_ - __ IBNRs) - __ - ._. . - __. Claim payments 1 [206,652]~ [206,652] Unpaid claims, December 31 . $ 430,619 I $ 238,229 . -- -. - - -- .--I _- .._I_ . - ~ - . .- The City established a limited risk management program for employee heatth 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 in the Health Insurance Fund because it is expected to be liquidated with expendable available financial resources. Therefore, all of the liability is considered to be due within one year. Changes in the balances of claims liabilities during the past . -- two - years are as follows: -_- .- - -_ CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2008 Note 5. OTHER INFORMATION (Continued) E. 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 31,2008. Project Authorization Expenditures South Ohio Corridor ' 1,250,000 1,206,370 North Broadway Corridor 2,260500 2,209,606 1 .- Fire Station #2 Reioition -_ 1,200,005;. 1,303,069 , Pacific Aenue 300,000 ' ~ 71,6= Library _,__I Addition - . Sewer 570,584' -- 467,674 Lakeside Addition 860, a59 646,820 West Diamond Drie Infrastructure ' 825,000 731,058 334,465 . 237,629 Quail Meadows Phase Ill Golden Eagii-No 4, Ph. 111 530,046'. - 357,138' Magnolia-Hiils --__ Subdiwsion ___ Phase __ - II . 566,346 530,150 599,208 - 561,007 Eaglecrest Twinhomes Quail Meadows,Phase N __ -984,433-i 856,277 6,500[60 !- . 1 ,=;053-! South 9th Corridor, Phase N S.041 . 632,643-' 587,369 ,Glenn Ae Sewer 440,193 . 800 Stone Creek Addition griergy Impmement Project N Ohio Grade Separation i $ 6,200,ooo $ 6,099,814 Downtown Signals - 692,042 816,664 Libkrty Addition Infrastructure. II 868,059 i 646,820 . .C-._-l . - .. _"_. .- - - - - - - - - - - - -- - -.. .._ ~ ----, .."I . ,- -,.,- --- 1.- . .-_. -, . I _-- -I . -- 66,648 i I-, _. -- -. __ 6 Red Foxkidition * __ ._-_ .--. -- ,_.-__._ -- .-_ ^___ , i 1,358,187 i i,346,i% - --. -- - i ----_ . --I-- - -- - ---. . . . - Project overages in the Fire State #E Renovation and Downtown Signals projects will be reimbursed by special sales tax proceeds. F. Contingent Liabilities The City receives significant financial assistance frm numerous federal and state governmental agencies in the form of grants and state pass-through aid. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit. Any disallowed claims resulting from such audits could become a liabillty 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 financial statements of the City at December 31, 2008. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, 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 Clty. G. 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 $1,566,636 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 28.2% of the estimated capacity of the landfill. 66 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 5. OTHER INFORMATION (Continued) G. Municipal Solid Waste Landfill (Continued) The City's solid waste fund yill recognize the remaining estimate cost of closure and postclosure care of $3,985,998 as the remaining estimated capacity is filled over the remaining life expectancy of 73.7 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2008. 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(f)) and the Kansas Department of Health and Environment to provide these assurances. Any future closure or postclosure care costs will be provided through the normal budgeting and rate setting process, including the issuance of general obligation bonds, if necessary. H. Environmental Matters 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 proactive 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 undetermined cost to the City's Water and Sewer Fund. The U.S. Government Department of Defense transferred property located at the former Schilling Air Force Base to the Authority September 9, 1966. .The property is now known to contain areas of extensive soil and groundwater contamination, primarily from the use and disposal of chlorinated solvents and petroleum products caused by activities at the former base during its period of active military duty from 1942 to 1965. The U.S. Government Department of Defense is responsible for the investigation and remediation of contamination caused by military activities at current and former military bases. The US. Army Corps of Engineers (USACE) is the lead agency for the Department at formerly used defense sites. The Corps has completed investigation of soil and groundwater contamination at the former base under the regulatory oversight of the US. Environmental Protection Agency and the Kansas Department of Health and Environment. The former base is not designated as a National Priority List Superfund site, but investigation and remediation is required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act. Potential liability for contamination under the Act extends broadly to parties associated with the release or presence of hazardous substances, including not only those entities involved with contaminant use and disposal, but in some cases other current and former owners and operators of contaminated sites. As a current owner of extensive amounts of property at the former base, the Authority is potentially liable under the act. The Authority has determined that while a possible liability exists, it is not probable and at this time no reasonable estimate of the possible liability can be made. Therefore, no liability relating to that matter has been recorded. The Authority is under no administrative orders from the U.S. Environmental Protection Agency or the Kansas Department of Health and Environment. The Authority is considered to be a Potentially Responsible Party for the former base site, primarily due to its status as a property owner. The Salina Airport Authority, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University at Salina) collectively own over 90% of the nearly 4,000 acres of the former Schilling Air Force Base property. 67 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Beginning in August 2007, the four local public entities including the Salina Airport Authority, the City of Salina, the Salina School District and Kansas State University at Salina initiated negotiations with the US. Federal Government. The negotiation objectives include transferring the responsibility for completing the cleanup from the USACE to the Salina public entities. The local objective is to reach a settlement agreement with the U.S. Federal Government that provides the Salina public entities sufficient funds to complete cleanup operations over a 30-year period. During calendar year 2008, the Salina public entities prepared a detailed Cost to Complete Estimate (CTC). The CTC preparation included consultation with the EPA and KDHE. The Salina public entities' CTC was completed in June of 2008 and submitted to,the USACE. Subsequently, on January 23, 2009, the Salina public entities delivered a demand letter to the USACE. The letter demands that settlement negotiations begin immediately with the U.S. Dept. of Justice. On May 14, 2009, the Authority was notified that the USACE referred the former SAFB demand letter to the U.S. Department of Justice on May 12, 2009. It is expected that the negotiations will result in a settlement Consent Decree that will specify terms, conditions and funding enabling the Salina public entities to complete site clean-up. I. Postemployment Health Care Plan Plan Description. The City operates a single employer defined benefit healthcare plan administered by the City. The Employee Benefd Plan (the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KSA 12-5040 requires all local governmental entities in the state that provide a group health care plan to make participation. available to all retirees and dependents until the retiree reaches the age of 65 years. No separate financial report is issued for the Plan. Funding Policy. The contribution requirements of plan participants and the City are established and amended by the City. The required contribution is based on projected pay-as-you-go financing requirements. Plan participants contributed approximately $96,672 to the Plan (approximately 100% of total premiums) through their required contribution of $41 6 per month for retiree-only coverage and $702 for spouse coverage. Annual OPEB Cost and Net OPEB Obligation. The City's annual other postemployrnent benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the Plan for the year, the amount actually contributed to the plan, and the changes in the City's net OPEB obligation to the Plan: Annual required contribution i s 910,418- L- -_ - ------ - ...- - ...-.-. --..-I_- ' 910,418 Annual OPEB cost (expense) Benefit payments . 96,672 _*-- Change --._1_ in net ,__-. OPEB ---_- obligation ---- Net OPEB obligation - beginning of year ' - - . _^I--- _-_. I. - -- --- --_ __ . ----- - I___ ,I--^-+II --^ 813,746 ---_ , ' ,.- __ - - _... I- ,.---__ _.._,,_ . I- ----....-- . Net OPEB obligation - end of year $ 813,746 ; . - - - - -. -. . - ____ 68 CllY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 5. OTHER INFORMATION (Continued) 1. Postemployment Health Care Plan (Continued) The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan. and the net OPEB obligation for the year ended December 31, 2008 was as follows: Annual Fiscal Annual OPE6 Ended Cost Contributed ! December 31,-2008 $ 910,418 $ ., 96,672 .. i - Year OPEB cost _- .. The information for the two preceding years was not available. Net OPEB Obliiat ion $ 813,746 _- Funding Status and Funding Progress. As of the year ended December 31, 2008, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $8,917,346 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $8,917,346. The covered payroll (annual payroll of active employees covered by the plan) was $21,874,112, and the ratio of the UAAL to the covered payroll was 40.8%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions aboii the probability of occurrence of evenis far into the fiiure. Examples inciude assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statement, presents multiyear trend information about whether the actuarial value of plan assets (if any) are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan participants) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan participants to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the year ended December 31, 2008, actuanal valuation, the projected unit aedit actuarial cost method was used. The actuarial assumptions include a 4.50% investment rate of return, which is the rate of the employer's own investments as there are no plan assets and an initial annual healthcare cost trend of 6.80% for medical and 5.67% for dental, reduced by decrements to ultimate rates of 4.50% and 4.00% after eighty and thirteen years, respectively. The UAAL is being amortized as a level dollar over an open thirty-year period. J. Related Party Transactions The City paid $851 during the year ended December 31, 2008. to a travel agency owned by a City Commissioner. 69 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2008 Note 5. OTHER INFORMATION (Continued) K. Subsequent Events In July, 2009, the City issued Series 2009-A general obligation internal improvement bonds in the amount of $23,695,000. The bond proceeds will be used to fund various capital projects. The City will make the first payment on bonds on April 1, 2010 and the last payment on October 1, 2029. The interest rate on the bonds ranges from 2.00 to 5.00%. 70 APPENDIX B Form of Continuing Disclosure Instructions for the Bonds and the Notes EXHIBIT B FORM OF CONTINUING DISCLOSURE INSTRUCTIONS $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROWMENT AND REFUNDING BONDS DATED MAY 1,2010 SERIES 2010-A THESE CONTINUING DISCLOSURE INSTRUCTIONS (the “Disclosure Instructions”) are executed and delivered by the Issuer in connection with the issuance of the above-described bonds (the “Bonds”) which are being issued simultaneously herewith as of May 5, 2010, pursuant to the Bond Resolution, in which the Issuer covenants to enter into this undertaking to provide certain financial and other information with respect to the Bonds in order to assist the Participating Underwriter in complying with the provisions of the SEC Rule. The Issuer is the only “obligated person” with responsibility for continuing disclosure with respect to the Bonds. Section 1. Definitions. In addition to the definitions set forth in the Bond Resolution, which apply to any capitalized term used in these Disclosure Instructions, unless otherwise defined herein, the following capitalized terms shall have the following meanings: “Annual Report” means any Annual Report provided by the Issuer pursuant to, and as described in, Section 2 of these Disclosure Instructions. “Beneficial Owner” means any registered owner of any Bonds and any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. “Bond Resolution” means jointly the ordinance and the resolution of the governing body of the Issuer authorizing the issuance’of the Bonds. “CAFR” means the Issuer’s Comprehensive Annual Financial Report. “Designated Agent” means Gilmore & Bell, P.C. or one or more other entities designated in writing by the Issuer to serve as a designated agent of the Issuer for purposes of these Disclosure Instructions. “Dissemination Agent” means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to these Disclosure Instructions and which has filed with the Issuer a written acceptance of such designation substantially in the form attached hereto as Exhibit B. “EMMA” means the Electronic Municipal Market Access system for municipal securities disclosures (www.emma.msrb.org). “Financial Information” means the financial information of the Issuer described in Section 2(a)(l) hereof. “Fiscal Year” means the one year period ending December 31, or such other date or dates as may be adopted by the Issuer for its general accounting purposes. B-1 “GAAP” means generally accepted accounting principles, as applied to governmental units, as in effect at the time of the preparation of the Financial Information. “Issuer” means the City and any successors or assigns. “Material Eyents” means any of the events listed in Section 3(u) hereof. “MSRB” means the Municipal Securities Rulemaking Board. ‘‘OBcial Statement” means the Issuer’s Official Statement for the Bonds. “Operating Data” means the operating data of the Issuer described in Section 2(a)(2) hereof. “Participating Underwriter” means any of the original underwriters of the Bonds required to comply with the SEC Rule in connection with offering of the Bonds. “Repository” means the MSRB via EMMA. “SEC” means the Securities and Exchange Commission of the United States. “SEC Rule” means Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 2. Provision of Annual Reports. (a) The Issuer shall, or shall cause the Dissemination Agent to, not later than 180 days after the end of the Issuer’s Fiscal Year, commencing with the Fiscal Year ended in 2009, provide to the Repository, the Issuer’s CAFR, which will contain the Financial Information and Operating Data (jointly, the “Annual Report”), as follows: (1) The financial statements of the Issuer for such prior Fiscal Year, accompanied by an audit report resulting from an audit conducted by an Independent Accountant in conformity with generally accepted auditing standards. Such financial statements will be prepared on a modified accrual basis of accounting other than GAAP for all governmental funds, expendable trust and agency funds. The accrual basis of accounting is used for proprietary and nonexpendable trust funds. A more detailed explanation of the accounting basis is contained in Appendix A to the Official Statement. If such audit report is not available by the time the Annual Report is required to be filed pursuant to this Section, the Annual Report shall contain unaudited financial statements and the audit report and accompanying financial statements shall be filed in the same manner as the Annual Report promptly after they become available. The method of preparation and basis of accounting of the Financial Information may not be changed to a basis less comprehensive than contained in the Official Statement, unless the Issuer provides notice of such change in the same manner as for a Material Event under Section 3(6) hereof. Finunciul Infomution. (2) Operuting Datu. Updates as of the end of the Fiscal Year of substantially all of the information and data contained in those sections of the Official Statement entitled: (i) Debt Summary (ii) Tax Levies (iii) Assessed Valuation (iv) Estimated Actual Valuation (v) Tax Collections (vi) Largest Taxpayers. B -2 Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Issuer is an “obligated person” (as defined by the SEC Rule), which have been filed with the Repository, the MSRB or the SEC. If the document included by reference is a final official statement, it must be available fiom the MSRB via EMMA. The lssuer shall clearly identifL each such other document so included by reference. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in this Section; provided that the audit report and accompanying financial statements may be submitted separately from the balance‘of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Issuer’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Material Event under Section 3(b). (b) If no Dissemination Agent has been appointed, the Issuer shall file the Annual Report as specified by Section 2(a) hereof; or if the Annual Report is not filed within the time period specified in Section 2(u) hereof, the Issuer shall send a notice to each Repository in substantially the form attached as ExhibitA. Section 3. Reporting of Material Events. (a) Pursuant to the provisions of this Section, the Issuer shall give, or cause the Dissemination Agent, if any, to give, notice of the occurrence of any of the following events with respect to the Bonds, if the Issuer deems such events to be material: principal and interest payment delinquencies; non-payment related defaults; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; adverse tax opinions or events affecting the tax-exempt status of the Bonds; modifications to rights of bondowners; optional, contingent or unscheduled bond calls; defeasances; release, substitution or sale of property securing repayment of the Bonds; or rating changes. (b) Such notice shall be given by promptly filing a notice of such occurrence with the Repository. Notwithstanding the foregoing, notice of Material Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Bonds pursuant to the Bond Resolution. Section 4. Dissemination Agent. (a) Ceneruf. The Issuer may, fiom time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under these Disclosure Instructions, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. (b) Annual Reports. If a Dissemination Agent is appointed, not later than 15 Business Days prior to the date specified in Section 2(a) for providing the Annual Report to the Repository, the Issuer shall provide the Annual Report to the Dissemination Agent or the Repository. The Dissemination Agent shall file a report with the Issuer certifying that the Annual Report has been provided pursuant to these Disclosure Instructions, stating the date it was provided, or that the Issuer has certified to the Dissemination Agent that the Issuer has provided the Annual Report to the Repository. If the Dissemination Agent has not received an Annual Report or has not received a written notice fiom the Issuer that it has provided an Annual Report to the Repository, by the date required in Section 2(u), the Dissemination Agent shall send a notice to the Repository in substantially the form attached as Exhibit A. B -3 (c) Material Event Notices. (1) The Dissemination Agent shall, promptly after obtaining actual knowledge of the occurrence of any event that it believes may constitute a Material Event, contact the chief financial officer of the Issuer or his or her designee, or such other person as the Issuer shall designate in writing to the Dissemination Agent from time to time, inform such person of the event, and request that the Issuer promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to Section 4(c)(3). (2) The Issuer will promptly respond in writing to any such request. Whenever the Issuer obtains knowledge of the occurrence of a Material Event, because of a notice from the Dissemination Agent pursuant to this subsection (c) or otherwise, the Issuer shall promptly determine if such event would be material under applicable federal securities law. If the Issuer has determined that knowledge of the occurrence of a Material Event would be material under applicable federal securities law, the Issuer shall promptly so notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to Section 4(c)(3). If the Issuer has determined that knowledge of a Material Event would not be material under federal securities law, the Issuer shall promptly so notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent.not to report the occurrence pursuant to Section 4(c)(3). (3) If the Dissemination Agent has been given written instructions by the Issuer to report the occurrence of a Material Event, the Dissemination Agent shall promptly file a notice of such occurrence with the Repository, with copies to the Issuer. Notwithstanding the foregoing, notice of Material Events described in Sections 3(u)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Bonds pursuant to the Bond Resolution. (d) Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in these Disclosure Instructions, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to these Disclosure Instructions. (e) Other Designated Agents. The Issuer may, from time to time, appoint or designate a Designated Agent to submit Annual Reports, Material Event notices, and other notices or reports pursuant to these Disclosure Instructions. The Issuer hereby appoints the Dissemination Agent and the Designated Agent(s) solely for the purpose of submitting Issuer-approved Annual Reports, Material Event notices, and other notices or reports pursuant to these Disclosure Instructions. The Issuer may revoke this designation at any time upon written notice to the Designated Agent. Section 5. Termination of Reporting Obligation. The Issuer’s obligations under these Disclosure Instructions shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If the Issuer’s obligations hereunder are assumed in full by some other entity as permitted in the Bond Resolution, such person shall be responsible for compliance with under these Disclosure Instructions in the same manner as if it were the Issuer, and the Issuer shall have no further responsibility hereunder. If such termination or substitution occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination or substitution in the same manner as for a Material Event under Section 3(b). B-4 Section 6. Amendment; Waiver. Notwithstanding any other provision of these Disclosure Instructions, the Issuer and the Dissemination Agent, if any, may amend of these Disclosure Instructions (and the Dissemination Agent shall not unreasonably refuse to execute any amendment so requested by the Issuer) and any provision of these Disclosure Instructions may be waived, provided that: (a) Bond Counsel or other counsel experienced in federal securities law matters provides the Issuer and the Dissemination Agent, if any, with its opinion that the undertaking of the Issuer contained herein, as so amended or after giving effect to such waiver, is in compliance with the SEC Rule and all current amendments thereto and interpretations thereof that are applicable to these Disclosure Instructions; (b) if the amendment or waiver relates to Sections 2(4 or 3(a), it may only be made in connection with a change ‘in circumstances that arises from a change in law or legal requirements, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; and (c) the amendment or waiver is either (1) approved by the Owners of the Bonds in the same manner as provided in the Bond Resolution with consent of the Owners, or (2) does not in the opinion of Bond Counsel materially impair the interests of the Owners or Beneficial Owners of the Bonds. If there is an amendment or waiver of a provision of these Disclosure Instructions, the Issuer shall describe such amendment in the next Annual Report, and shall include, as applicable, a nanative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of Financial Information or Operating Data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements: (a) notice of such change shall be given in the same manner as for a Material Event under Section 3(b), and (b) the Annual Report for the year. in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 7. Additional Information. Nothing in these Disclosure Instructions shall be deemed to prevent the Issuer fiom disseminating any other information, using the means of dissemination set forth in these Disclosure Instructions or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by these Disclosure Instructions. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is specifically required by these Disclosure Instructions, the Issuer shall have no obligation under these Disclosure Instructions to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 8. Noncompliance. In the event of a failure of the Issuer or the Dissemination Agent, if any, to comply with any provision of these Disclosure Instructions, the Participating Underwriter or any Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer or the Dissemination Agent, if any, as the case may be, to comply with its obligations under these Disclosure Instructions. Noncompliance with the provisions of these Disclosure Instructions shall not be deemed an Event of Default under the Bond Resolution, and the sole remedy under these Disclosure Instructions in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with these Disclosure Instructions shall be an action to compel performance. Section 9. Notices. Any notices or communications to or among any of the parties referenced in these Disclosure Instructions may be given as follows: (a) To the Issuer at: 300 West Ash Salina, Kansas 67402 Attention: Clerk (b) To the Participating Underwriter at the address set forth in the Bond Resolution or such other address as is furnished in writing to the other parties referenced herein. B-5 (c) To the Dissemination Agent at the address set forth on Exhibit B attached hereto. Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent. Section 10. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Section 11. Beneficiaries. These Disclosure Instructions shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, the Participating Underwriter and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Section 12. Severability. If any provision in these Disclosure Instructions, the Bond Resolution or the Bonds relating hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 13. Governing Law. These Disclosure Instructions shall be governed by and construed in accordance with the laws of the State of Kansas. CITY OF SALINA, KANSAS B-6 FORM OF CONTINUING DISCLOSURE INSTRUCTIONS $2,500,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES DATED MAY 1,2010 SERIES 2010-1 THESE CONTINUING DISCLOSURE INSTRUCTIONS (the “Disclosure Instructions”) are executed and delivered by the Issuer in connection with the issuance of the above-described notes (the “Notes”) which are being issued simultaneously herewith pursuant to the Note Resolution, in which the Issuer covenants to enter into this undertaking to provide notice of certain material events with respect to the Notes in order to assist the Participating Underwriter in complying with the provisions of the SEC Rule. The Issuer is the only “obligated person” with responsibility for continuing disclosure with respect to the Notes. Section 1. Definitions. In addition to the definitions set forth in the Note Resolution, which apply to any capitalized term used in these Disclosure Instructions, unless otherwise defined herein, the following capitalized terms shall have the following meanings: “Beneficial Owner” means any registered owner of any Notes and any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Notes (including persons holding Notes through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Notes for federal income tax purposes. “Designated Agent” means Gilmore & Bell, P.C. or one or more other entities designated in writing by the Issuer to serve as a designated agent of the Issuer for purposes of these Disclosure Instructions. “Dissemination Agent” means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to these Disclosure Instructions and which has filed with the Issuer a written acceptance of such designation substantially in the form attached hereto as Mibit A. “EMMA” means the Electronic Municipal Market Access system for municipal securities disclosures (www.emma.msrb.org). “Fiscal Year” means the one year period ending December 31, or such other date or dates as may be adopted by the Issuer for its general accounting purposes. “Issuer” means the City and any successors or assigns. “Material Events” means any of the events listed in Sectwn 2(a) hereof. “MSRB” means the Municipal Securities Rulemaking Board. “Note Resolution” means the resolution of the governing body of the Issuer authorizing the issuance of the Notes. ‘‘Official Statement” means the Issuer’s Official Statement for the Notes dated April 19,2010. “Participating Underwriter” means any of the original underwriters of the Notes required to comply with the SEC Rule in connection with offering of the Notes. “Repository” means the MSRB via EMMA. B-7 “SEC” means the Securities and Exchange Commission of the United States. “SEC Rule” means Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 2. Reporting of Material Events. (a) Pursuant to the provisions of this Section, the Issuer shall give, or cause the Dissemination Agent, if any, to give, notice of the occurrence of any of the following events with respect to the Notes, if the Issuer deems such events to be material: principal and interest payment delinquencies; non-payment related defaults; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; adverse tax opinions or events affecting the tax-exempt status of the Notes; modifications to rights of Noteowners; optional, contingent or unscheduled note calls; defeasances; release, substitution or sale of property securing repayment of the Notes; or rating changes. (b) Such notice shall be given by promptly filing a notice of such occurrence with the Repository. Notwithstanding the foregoing, notice of Material Events described in subsections (a)@) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Notes pursuant to the Note Resolution. Section 3. Dissemination Agent. (a) GeneraZ. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under these Disclosure Instructions, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. (b) Material Event Notices. (1) The Dissemination Agent shall, promptly after obtaining actual knowledge of the occurrence of any event that it believes may constitute a Material Event, contact the chief financial officer of the Issuer or his or her designee, or such other person as the Issuer shall designate in writing to the Dissemination Agent from time to time, inform such person of the event, and request that the Issuer promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to Section 3(b)(3). (2) The Issuer will promptly respond in writing to any such request. Whenever the Issuer obtains knowledge of the occurrence of a Material Event, because of a notice from the Dissemination Agent pursuant to this subsection (c) or otherwise, the Issuer shall promptly determine if such event would be material under applicable federal securities law. If the Issuer has determined that knowledge of the occurrence of a Material Event would be material under applicable federal securities law, the Issuer shall promptly so notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to Section 3(b)(3). If the Issuer has determined that knowledge of a Material Event would not be material under federal securities law, the Issuer shall promptly so notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent not to report the occurrence pursuant to Section 3(b)(3). B-8 (3) If the Dissemination Agent has been given written instructions by the Issuer to report the occurrence of a Material Event, the Dissemination Agent shall promptly file a notice of such occurrence with the Repository, with copies to the Issuer. Notwithstanding the foregoing, notice of Material Events described in Sections 2(a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Notes pursuant to the Note Resolution. (c) Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in these Disclosure Instructions, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Notes. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to these Disclosure Instructions. ,(d) Other Designated Agents. The Issuer may, from time to time, appoint or designate a Designated Agent to submit Material Event notices, and other notices or reports pursuant to these Disclosure Instructions. The Issuer hereby appoints the Dissemination Agent and the Designated Agent(s) solely for the purpose of submitting Issuer-approved Material Event notices, and other notices or reports pursuant to these Disclosure Instructions. The Issuer may revoke this designation at any time upon written notice to the Designated Agent. Section 4. Termination of Reporting Obligation. The Issuer’s obligations under these Disclosure Instructions shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Notes. If the Issuer’s obligations hereunder are assumed in full by some other entity as permitted in the Note Resolution, such person shall be responsible for compliance with under these Disclosure Instructions in the same manner as if it were the Issuer, and the Issuer shall have no further responsibility hereunder. If such termination or substitution occurs prior to the final maturity of the Notes, the Issuer shall give notice of such termination or substitution in the same manner as for a Material Event under Section 2(b). Section 5. Amendment; Waiver. Notwithstanding any other provision of these Disclosure Instructions, the Issuer and the Dissemination Agent, if any, may amend of these Disclosure Instructions (and the Dissemination Agent shall not unreasonably refuse to execute any amendment so requested by the Issuer) and any provision of these Disclosure Instructions may be waived, provided that: (a) Bond Counsel or other counsel experienced in federal securities law matters provides the Issuer and the Dissemination Agent, if any, with its opinion that the undertaking of the Issuer contained herein, as so amended or after giving effect to such waiver, is in compliance with the SEC Rule and all current amendments thereto and interpretations thereof that are applicable to these Disclosure Instructions; (b) if the amendment or waiver relates to Sections 2(u), it may only be made in connection with a change in circumstances that arises from a change in law or legal requirements, or change in the identity, nature or status of an obligated person with respect to the Notes, or the type of business conducted; and (c) the amendment or waiver is either (1) approved by the Owners of the Notes in the same manner as provided in the Note Resolution with consent of the Owners, or (2) does not in the opinion of Bond Counsel materially impair the interests of the Owners or Beneficial Owners of the Notes. In the event of any amendment or waiver of a provision of these Disclosure Instructions, the Issuer shall be given in the same manner as for a Material Event. Section 6. Additional Information. Nothing in these Disclosure Instructions shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in these Disclosure Instructions or any other means of communication, or including any other information in any notice of occurrence of a Material Event, in addition to that which is required by these Disclosure Instructions. If the Issuer chooses to include any information in any notice of occurrence of a Material Event, in addition to that which is B-9 specifically required by these Disclosure Instructions, the Issuer shall have no obligation under these Disclosure Instructions to update such information or include it in any future notice of occurrence of a Material Event. Section 7. Noncompliance. In the event of a failure of the Issuer or the Dissemination Agent, if any, to comply with any provision of these Disclosure Instructions, the Participating Underwriter or any Beneficial Owner of the Notes may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer or the Dissemination Agent, if any, as the case may be, to comply with its obligations under these Disclosure Instructions. Noncompliance with the provisions of these Disclosure Instructions shall not be deemed an Event of Default under the Note Resolution, and the sole remedy hder these Disclosure Instructions in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with these Disclosure Instructions shall be an action to compel performance. Section 8. Notices. Any notices or communications to or among any of the parties referenced in these Disclosure Instructions may be given as follows: (a) To the Issuer at: 300 West Ash Salina, Kansas 67402 Attention: Clerk (b) To the Participating Underwriter at the address set forth in the Note Resolution or such other address as is furnished in writing to the other parties referenced herein. (c) To the Dissemination Agent at the address set forth on Exhibit A attached hereto. Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent. . Section 9. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Section 10. Beneficiaries. These Disclosure Instructions shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, the Participating Underwriter and Beneficial Owners from time to time of the Notes, and shall create no rights in any other person or entity. Section 11. Severability. If any provision in these Disclosure Instructions, the Note Resolution or the Notes relating hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. . Section 12. Governing Law. These Disclosure Instructions shall be governed by and construed in accordance with the laws of the State of Kansas. CITY OF SALINA, KANSAS B-IO EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON APRIL 19,2010 The governing body met in regular session at the usual meeting place in the City, at 4:OO p.m., the following members being present and participating, to-wit: Luci M. Larson, Mayor and Aaron Peck, Samantha Angell, Norman Jennings and Tom Arpke, Commissioners. Absent: None. The Mayor declared that a quorum was present and called the meeting to order. ************** (Other Proceedings) The Finance Director reported that pursuant to the Notice of Bond Sale heretofore duly given, bids for the purchase of $6,875,000 principal amount of General Obligation Internal Improvement and Refunding Bonds, Series 20 1 O-A, dated May 1, 201 0, of the City had been received. A tabulation of said bids is set forth as EXHIBITA hereto. Thereupon, the governing body reviewed and considered the bids and it was found and determined that the bid of Country Club Bank, Prairie Village, Kansas, was the best bid for the Bonds, a copy of which is attached hereto as EXHIBIT B. Thereupon, there was presented an Ordinance entitled: AN ORDINANCE AUTHORIZING AND PROVIDING FOR TEE ISSUANCE OF $6,875,000 PRINCIPAL AMOUNT OF GENERAL OBLIGATION INTERNAL OF SALINA, KANSAS; PROVIDING FOR THE LEVY AND COLLECTION OF AN ANNUAL TAX FOR THE PURPOSE OF PAYING THE PRINCIPAL OF AND INTEREST ON SAID BONDS AS THEY BECOME DUE; AUTHORIZING CERTAIN OTHER DOCUMENTS AND ACTIONS IN CONNECTION THEREWITH; AND MAKING CERTAIN COVENANTS WITH RESPECT THERETO. IMPROVEMENT AND REFUNDING BONDS, SERIES 2010-A, OF THE CITY Thereupon, Commissioner Peck moved that said Ordinance be passed. The motion was seconded by Commissioner Arpke. Said Ordinance, having been approved by a first reading on March 22,20 10, was duly read and considered, and upon being put, the motion for the passage of said Ordinance was carned by the vote of the governing body, the vote being as follows: Yea: Larson, Peck, Angell, Jennings and Arpke. Nay: None. Thereupon, the Mayor declared said Ordinance duly passed and the Ordinance was then duly numbered Ordinance No. 10-10540, was signed and approved by the Mayor and attested by the Clerk and was directed to be published one time in the official newspaper of the City. Thereupon, there was presented a Resolution entitled: A RESOLUTION PRESCRIBING THE FORM AND DETAILS OF AND AUTHORIZING AND DIRECTING THE SALE AND DELIVERY OF $6,875,000 PRINCIPAL AMOUNT OF GENERAL OBLIGATION INTERNAL JMPROVEMENT AND REFUNDING BONDS, SERIES 2010-4 OF THE CITY OF SALINA, KANSAS, PREVIOUSLY AUTHORIZED BY ORDINANCE NO. 1O- 10540 OF THE ISSUER; MAKING CERTAIN COVENANTS AND AGREEMENTS TO PROVIDE FOR THE PAYMENT AND SECURITY THEREOF; AND AUTHORIZING CERTAIN OTHER DOCUMENTS AND ACTIONS CONNECTED THEREWITH. Thereupon, Commissioner Peck moved that said Resolution be adopted. The motion was seconded by Commissioner Arpke. Said Resolution was duly read and considered, and upon being put, the motion for the adoption of said Resolution was carried by the vote of the governing body, the vote being as follows: Yea: Larson, Peck, hgell, Jennings and Arpke. Nay: None. Thereupon, the Mayor declared said Resolution duly adopted and the Resolution was then duly numbered Resolution No. 10-6726 and was signed by the Mayor and attested by the Clerk. ************** (Other Proceedings) [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 On motion duly made, seconded and carried, the meeting thereupon adjourned. \ CERTIFICATE JT:., that the foregoing Excerpt of Mmutes is a true and correct excerpt of the governing body of the City of Salina, Kansas, held on the date stated therein, and that the such proceedings are on file in my office. >I ' \ ,.- . -- ,*' . . 5 : (SEAQ i' -5- .'."*j ~ .. -' : 'Y 6 '* *.........* *\ u .L I, *. 0 I. ._. (Signature Page to Excerpt of Minutes) EXHIBITA BID TABULATION A- 1 PARITY Result Screen Page 1 of 1 llll_-- c_ 112:21:57 p.m. CDST f-- Upcoming Calendar 11 Overview C,ompare 11 Summaly I Bid Results Salina $6,915,000 General Obligation Internal lmprovment and Refunding Bonds, Series 201 0-A The following bids were submitted using PAR/# and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bidder Name Countrv Club Bank 2.941858 2.995067 2.996940 p[:;:;;:r~; Co.. Inc. 13 024921 E Wells Farqo Advisors 3.052794 3.083122 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields. 0 1981-2002 i-Deal LLC. All rights reserved, Trademarks https://www.newissuehonie.i-deal.com/Pari... 4/22/2010 EXHIBIT B BID OF PURCHASER B-1 Apr-19-2010 02:33pm From- YAlu I Y Blct i-om Country Club BanK - Prairie Villagm , r<s% Bid Salina $6,91Sn00$General Obligation Internal Irnprovment and Refunding Bonds, Series 20104 of ISSIB to um date 01 4/19/2010 209 PM ORDINANCE NO. 10-10540 OF THE CITY OF SALINA, KANSAS PASSED APRIL 19,2010 $6,875,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A (PUBLISHED IN THE SALINA JOURNAL ON APRIL, 26,2010) ORDINANCE NO. 10-10540 AN ORDINANCE AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF $6,875,000 PRINCIPAL AMOUNT OF GENERAL, OBLIGATION INTERNAL OF SALINA, KANSAS; PROVIDING FOR THE LEVY AND COLLECTION OF AN ANNUAL TAX FOR THE PURPOSE OF PAYING THE PRINCIPAL OF AND INTEREST ON SAID BONDS AS THEY BECOME DUE; AUTHORIZING CERTAIN OTHER DOCUMENTS AND ACTIONS IN CONNECTION THEREWITH; AND MAKING CERTAIN COVENANTS WITH RESPECT THERETO. IMPROVEMENT AND REFUNDING BONDS, SERIES 2010-A, OF THE CITY WHEREAS, the City is a city of the first class, duly created, organized and existing under the Constitution and laws of the State; and WHEREAS, pursuant to K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., K.S.A. 12-2101 et seq., as amended, and other provisions of the laws of the State of Kansas applicable thereto, by proceedings duly had, the governing body of the City has authorized the following improvements (the “Improvements”) to be made in the City, to-wit: Proiect Description Resolution No. Authoritv Amount Landfill, Cell 5 Construction 09-6648 K.S.A. 12-2101 et seq. $1,600,000.00 Bicentennial Center Renovation 09-6653 K.S.A. 12-1736 et seq. 2,500,000.00 Fire Station #1 Renovation 09-6681. K.S.A. 12-1736 et seq. 1,787,000.00 Scoular Addition 09-2764 K.S.A. 12-6a01 et seq. 52,500.00 Stone Creek Addition 08-2714 K.S.A. 12-6aO1 et seq. 354.100.00 Total: $6,293,600.00 ; and WHEREAS, the governing body of the City is authonzed by law to issue general obligation bonds of the City to pay the costs of the Improvements; and WHEREAS, the City heretofore issued and has outstanding the Refunded Bonds and is authorized by K.S.A. 10-427 et seq. to issue general obligation refunding bonds of the City for the purpose of refunding the Refunded Bonds; and WHEREAS, in order to achieve interest cost savings through early redemption of the Refunded Bonds, and to provide an orderly plan of finance for the City, it has become desirable and in the best interest of the City and its inhabitants to refund the Refunded Bonds; and WHEREAS, the governing body of the City has advertxed the sale of the Bonds in accordance with the law and at a meeting held in the City on April 19, 2010 this date, awarded the sale of such Bonds to the best bidder. NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: Section 1. Defintions of Words and Terms. In addition to words and terms defined elsewhere herein, the following words and terms in this Ordinance shall have the meanings hereinafter set forth. Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa, and words importing persons shall include firms, associations and corporations, including public bodies, as well as persons. “Act” means the Constitution and statutes of the State including K.S.A. 10-101 to 10-125, inclusive, K.S.A. 10-427 et seq., K.S.A. 10-620 et seq. and K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., K.S.A. 12-2101 et seq., all as amended and supplemented fiom time to time. “Bond and Interest Fund” means the Bond and Interest Fund of the City for its general obligation bonds. “Bond Resolution” means the resolution to be adopted by the governing body of the City prescribing the terms and details of the Bonds and making covenants with respect thereto. “Bonds” means the City’s General Obligation Internal Improvement and Refunding Bonds, Series 2010-A, in the aggregate principal amount of $6,875,000, and dated May 1, 2010, authorized by this Ordinance. “City” means the City of Salina, Kansas. “Clerk” means the duly appointed and acting Clerk of the City or, in the Clerk’s absence, the duly appointed Deputy Clerk or Acting Clerk. “Improvements” means the improvements referred to in the preamble to this Ordinance and any Substitute Improvements. “Mayor” means the duly elected and acting Mayor or, in the Mayor’s absence, the duly appointed andor elected Vice Mayor or Acting Mayor of the City. “Ordinance” means this Ordinance authorizing the issuance of the Bonds. “Refunded Bonds” means the Series 2002-A Bonds maturing in the years 2010 to 2013, inclusive, in the aggregate principal amount of $820,000. “Refunded Bonds Redemption Date” means May 15,201 0. “Refunded Bonds Resolution” means the ordinance and the resolution which authorized the Refunded Bonds. “Series 2002-A Bonds” means the City’s General Obligation Water and Sewage System Refunding Bonds, Series 2002-4 dated January 15,2002. “State” means the State of Kansas. “Substitute Improvements” means the substitute or additional improvements of the City authorized in the manner set forth in the Bond Resolution. 2 Section 2. Authorization of the Bonds. There shall be issued and hereby are authorized and directed to be issued the General Obligation Internal Improvement and Refunding Bonds, Series 2010-A, of the City in the principal amount of $6,875,000, for the purpose of providing funds to: (a) pay the costs of the Improvements; (b) pay Costs of Issuance of the Bonds; (c) refund the Refunded Bonds; and (d) retire interim financing issued to finance the Improvements. Section 3. Security for the Bonds. The Bonds shall be general obligations of the City payable as to both principal and interest in part from special assessments levied upon the property benefited by the construction of the 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 principal and interest on the Bonds is payable 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 full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Bonds as the same become due. Section 4. Terms, Details and Conditions of the Bonds. The Bonds shall be dated and bear interest, shall mature and be payable at such times, shall be in such forms, shall be subject to redemption and payment prior to the maturity thereof, and shall be issued and delivered in the manner prescribed and subject to the provisions, covenants and agreements set forth in the Bond Resolution hereafter adopted by the governing body of the City. Section 5. Levy and Collection of Annual Tax. The governing body of the City shall annually make provision for the payment of principal of, premium, if any, and interest on the Bonds as the same become due by levying and collecting the necessary taxes and/or assessments upon all of the taxable tangible property within the City in the manner provided by law. The taxes and/or assessments above referred to shall be extended upon the tax rolls in each of the several years, respectively, and shall be levied and collected at the same time and in the same manner as the general ad valorem taxes of the City are levied and collected, shall be used solely for the payment of the principal of and intered on the Bonds as and when the same become due and the fees and expenses of the Paying Agent. The proceeds derived from said taxes and/or assessments shall be deposited in the Bond and Interest Fund. If at any time said taxes and/or assessments are not collected in time to pay the principal of or interest on the Bonds when due, the Treasurer is hereby authorized and directed to pay said principal or interest out of the general funds of the City and to reimburse said general funds for money so expended when said taxes and/or assessments are collected. Section 6. Further Authority. The Mayor, Clerk and other City officials are hereby further authorized and directed to execute any and all documents and take such actions as they may deem necessary or advisable in order to cany out and perform the purposes of the Ordinance, and to make alterations, changes or additions in the foregoing agreements, statements, instruments and other documents herein approved, authorized and confirmed which they may approve, and the execution or taking of such action shall be conclusive evidence of such necessity or advisability. Section 7. Governing Law. This Ordinance and the Bonds shall be governed exclusively by and construed in accordance with the applicable laws of the State. 3 Section 8. Effective Date. This Ordinance shall take effect and be in full force from and after its passage by the governing body of the City, approval by the Mayor and publication in the official City newspaper. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 4 i (Signature Page to Bond Ordinance) Publisher's Affidavit I, Tiffaiw Modlin , bemg duly SWOrIl declare that I ain thc of 'I-I-IE SALINA JOURNAL, a daily newspaper pciblisliccl at Salina, Saline County, Kansas, and of gencral circulation ti1 said county, which newspaper has been admitted to the inatls as second class mattcr in said coLttitp, ,ind continuously and utiinterrupb.xily published for five consecutivc years prior to first publication of attaclicd notice, and that the Ordinance 10-10540 Notice lias Li(m coricxtly pitdished in the entire issues of said newspaper otic ti iiie, publication being given in the tssuc of April 26, 201 0 -, - -- day of &p,-' / AD 20 /c\ PI tntet's Fee 5663.00 f A NOTARY PUBLIC - Sate o~ mas I Sectlon 7. Governing Law. This Ordinance and the Bonds shall be gOV erned exclusively by and construed in accordance with the applicable laws 01 the State Section 8 Effective Date. This Ordinance shall take eflect and be in lull lorce lrom and aher its pge by the governin ody ot the City. approv3 by the Mayor and ublea- tion in the otlic& Cily "'P"8% by the govern- ! ing body 01 the City on April 19. 2010 and AP- I PROVED AND SIGNED 1 by the Mayor M Luci Larson. Mayor (SEAL) Al-rEST. Lieu Ann Elsev. CMC. I (Published m the Salina JbUrM Aoril26.2010) OROINANCE N'O. 10-10540 ._ .__ .~ AN ORDINANCE AUTHORIZING AND PROVIDING FOR THE IS- SUANCE OF S6.875.000 - -. . . . - - PRINCIPAL AkOUlsr OF INTERNAL IMPROVE. MEN1 AND REFUNDING GENERAL OeLicanoN DOCUMENTS AND AC. TIONS IN CONNECTION THEREWITH AND MAK- NANTS WITH RESPECT THERETO. ING CERTAIN COVE. WHEREAS, the City IS a city ot the first class, duly created, organized and existing under Ihe Consli- lutlon and laws 01 the Stale. and WHEREAS, pursuant to K S A. 12-6a01 'dl seq , KSA 12-1736 el seq. K S A 12-2101 el seq , as amended and other provl- sions of 'the laws 01 the Slate 01 Kansas applica ble thereto. by proceed mgs duly had. the govern- ing body 01 the City has authorized the lollowing improvements (the Im provements-) to be made in the City. to-wit project Descriotlon &solution No. Authority Landfill. Cell 5 Construction Bmplbnt 09-6648 K S A 12-2101 et SW 51,600,000 00 Bicentennial Cenler Renovation 09-6653 K S A 12-1736 else 2,5OO,O&l 00 Fire Station #1 Renova tion 09-6681 KSA 12-1736etseq 1.787.000 00 Scouhr Addition 09-2764 K SA 12-6a01 et SW 52.500 00 Slone Creek Addition K SA. 12SaOt et seq 54.1 00.00 Total: &~.60~.~0 08-2714 . and WHEREAS, the govern- ing body of the City is authorized by law to issue general obligation bonds ot the City to pay Ihe costs of WHERE)AS. the Im rovemenls Ihe Citi and heretotore ssued and has outstanding the Refunded Bonds and is authorued by K S.A 10-427 et seq to issue general obli alion refunding bonds oq the City lor the purpose 01 re- funding the Refunded Bonds. and WHEREAS, in order to achieve interest cost sav- ings through early re demptlon 01 the Refunded Bonds. and lo provide an orderly plan ot finance tor the City, it has become destrable and in the best interest of the City and its inhabitants Refunded Bonds. to refund and the WHEREAS, the ovem- ing body 01 the dlny has advertised the sale of the Bonds in accordance with the law and at a meetin held in the City on Apr! 19 2010 this date awkrded the sale 01 suci Bonds to the best bidder NOW, THEREFORE. BE _.._ ... GOVERNING BODY OF THE PURPOSE OF PAY- THE CITY OF SALINA, ING THE PRINCIPAL OF UNSAS, AS FOLLOWS. AND INTERESTON SAID Section 1. Definitions BONDS AS THEY BE. Of Words and Terms. In COME DUE. AUTHORIZ- IT ORDAINED ev THE ING CERTXIN OTHER addition to words and terms delined elsewhere herein. the tollowing words and terms in this Ordinance shall have the meanings hereinalter set lorth Unless the context shall otherwise indicate. words importing the smgu- tar number shall include the plural and vice versa. and words imDortlno oer- sons shall inilude ?irks. associations and corpora- tions including public bod- ies. ds well as natural persons "Act" means the Consti- tution and statutes ot the State includlng K S A 10-101 to 10-125. inch sive. K S A 10.427 et seq, K SA 10-620 et seq and K.SA 12-6a01 el seq , K SA 12-1736 et seq, K SA 12-2101 et seq , all as amended and supplemented lrom time toutime Bond and Interest Fund" means the Bond and Interest Fund 01 Ihe City lor its general obliga- tion bonds "Bond Resolution" means the resolution to be adopted by the governing body of the City prescrib- ing the terms and details ot the Bands and making covenanls wllh respecl thereto "Bonds" means the Ci- ly's General Obligation In. ternal Improvement and Rerunding Bonds. Series 2010-A in Ihe aggregate princip'al amount 01 $6,875,000, and dated May 1. 2010, authorized b)! this Ordinance City'' means the City 01 Saltna. Kansas. "Clerk" means the duly a poinled and actlng Cyet% 01 the City or, in the Clerk's absence, the duly appointed Deputy Clerk or Acting Clerk. "ImDrovements" means Ihe im rovements referred to in It?, preamble to thls OrdlMnCe and any Substi- tute Improvements "Mayor" means the duty elected and acting Mayor or, in the Mayor's ab sence. Ihe duly appointed and/or elecled Vice Ma or or Acting Mayor 01 the C%rdinance** means this Ordinance authorlzing the issuance 01 the Bonds "RBtunded Bonds" means the Series 2002-A Bonds maturin in the years 201 1 lo 2&3. inclu- sive in the ag re ate rin- clpai amount 3 d30,&0 "Relunded Bonds Re- demption Date" means Resolution" means Ihe ordinance and the resotu- lion which authorized the Refunded Bonds "Series 2002-A Bonds" means Ihe City's General Obligation Water and Sewage System Retund- ing Bonds. Senes 2W2-A. dated January 15,2002 "State" means the Slate of Kansas "Substitute Improve- ments" means the substi- tute or addilional Improve. ments 01 the City author- ized in the manner set lorth in the Bond Resolu- tion. Section 2. Authorizat- Ion of the Bonds There shall be issued and M? 15,2010. &funded Bonds hereby are autnorized and directed to be issued Ihe General Obligation Inlcr- nal lmprovemenl and Re- lunding Bonds. Series 2010-A, ot the City m the rinci al amount of 6.87 ,000, tor the pur. pose of prowding lunds to (a) pay the costs of the Improvements (b) pay Costs 01 Issuince of the Bonds c) retund the Re- funded bonds. and (d) re- tire interim linancing is sued to tinance the Im provements. Sectton 3. Security lor the Bonds. The Bonds shall be general obliga lions ot the City ayable as to both principayand m- terest in part lrom speclal assessments levied upon the properiy benelited by the construction 01 the Im- provements and. it not so paid. trom ad valorem taxes which may be levied without limitalion as to 8s rale or amount upon all the taxable langible prop- erl real and personal, with the territorial limits of the City The balance 01 the principal and inter- est on the Bonds is pay able lrom ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible prop- ert real and personal witk the ternlorial limit; of the City me full tailh credlt and resources ot the Cily are hereb irrevo- cably pledged yor the prompt payment 01 the principal ot and interest on the Bonds ag Ihe same become due Section 4 Terms, De- tails and Conditions of the Bonds. The Bonds shall be dated and bear in- terest shall mature and be paiabie at such times. shall be in such torms shall be subject to re' demption and paymenl prior to the maturity thereol. and shall be is sued and delivered in the manner prescribed and sublect to the provisions. covenants and agree ments set torth in the Bond ResoluUon hereallei adopled by Ihe governing body 01 the City Seclion 5. Levy and Collection ot Annual Tax. The governing bod) of the City shalt annually make provision tor Ihe payment 01 principal 01 premium. 11 any. and inte; est on the Bonds as the same become due by levying and collecting the necessaw taxes and/ol assessmints upon all oi the taxable langible prop erly within the City In the manner prowded by law The taxes and/or assess ments above reterred IC shall be extended upor the lax rolls in each 01 thc several ears respec lively. and shali be leviec and collected at the samf time and in the same man ner as the general ad va lorem taxes ot the City arc levied and collected shal be used solely lor thb pay men1 01 the princi al o and hteresl on the Eondr as and when the same be come due and the leet and expenses 01 the Pa ing Agent The pmcee& derived trom said taxet andlor assessments shal be deposited in the Bonc and Interest Fund If at any time said taxer andlor assessments art not collected in lime IC pay the pnncipal 01 or in terest on the Bonds wher due, Ihe Treasurer i! hereb authorized and di rected to pay sald princl pal or interest out 01 tht general funds 01 the Cit) and to reimburse saic general lunds lor mone) so expended when sair taxes andlor assessment: are collected Section 6 Furthe- Aulhorit The Mayor Clerk and)'other City 0111 CialS are hereby lurthe authorized and directed ti execute any and all docu ments and take such ac lions as they may deen necessary or advisable ti order to carry out and per torm the purposes of thi Ordinance. and to maki alleralions changes or ad dltions in the foregoinc agreements, statements instruments and othe documents herein ap proved, authorized an1 confirmed which they ma approve. and the cxecu tion or taking ot such ac lion shall be concIusiv+ evidonce 01 such neces sity or advisability RESOLUTION NO. 10-6726 OF THE CITY OF SALINA, KANSAS ADOPTED APRIL 19,2010 $6,875,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A TABLE OF CONTENTS ARTICLE I DEFLNITIONS Section 101 . Definitions ofwords and Terms ................................................................................... 1 ARTICLE II AUTHORIZATION AND DETAILS OF THE BONDS Section 201 . Section 202 . Section 203 . Section 204 . Section 205 . Section 206 . Section 207 . Section 208 . Section 209 . Section 210 . Section 211 . Section 212 . Section 213 . Authorization of the Bonds ........................................................................................... 8 Description ofthe Bonds ............................................................................................... 9 Designation of Paying Agent and Bond Registrar ......................................................... 9 Method and Place of Payment ofthe Bonds ................................................................ 10 Payments Due on Saturdays, Sundays and Holidays .................................................. 10 Registration, Transfer and Exchange of Bonds ........................................................... 10 Execution, Registration, Authentication and Delivery of Bonds ................................ 11 Mutilated, Lost, Stolen or Destroyed Bonds ............................................................... 12 Cancellation and Destruction of Bonds Upon Payment .............................................. 12 Book-Entry Bonds; Securities Depository .................................................................. 12 Nonpresentment of Bonds ........................................................................................... 14 Prelimin aj. and Final Official Statement .................................................................... 14 Sale ofthe Bonds ......................................................................................................... 14 ARTICLE IU REDEMPTION OF BONDS Section 301 . Section 302 . Section 303 . Redemption by Issuer .................................................................................................. 15 Selection of Bonds to be Redeemed ............................................................................ 16 Notice and Effect of Call for Redemption ................................................................... 16 ARTICLE IV SECURITY FOR BONDS Section 401 . Section 402 . Security for the Bonds ................................................................................................. 18 Levy and Collection of Annual Tax ............................................................................ 18 ARTICLE V ESTABLISHMENT OF FUNDS AND ACCOUNTS DEPOSIT AND APPLICATION OF BOND PROCEEDS Section 501 . Section 502 . Section 503 . Section 504 . Section 505 . Creation of Funds and Accounts ................................................................................. 19 Deposit of Bond Proceeds ........................................................................................... 19 Application of Moneys in the Improvement Fund ...................................................... 19 Substitution of Improvements; Reallocation of Proceeds ........................................... 19 Application of Moneys in the Redemption Fund ........................................................ 20 1 Section 506 . Section 507 . Section 508 . Section 509 . Section 601 . Section 602 . Section 603 . Section 701 . Section 801 . Section 802 . Section 901 . Section 902 . Section 1001 . Section 1002 . Section 1003 . Section 1004 . Section 1005 . Section 1006 . Section 1007 . Section 1008 . Section 1009 . Application of Moneys in Debt Service Account ........................................................ 20 Application of Moneys in the Rebate Fund ................................................................. 20 Deposits and Investment of Moneys ............................................................................ 21 Redemption of Refunded Bonds ................................................................................. 21 ARTICLE VI DEFAULT AND REMEDIES Remedies ..................................................................................................................... 21 Limitation on Rights of Owners .................................................................................. 22 Remedies Cumulative .................................................................................................. 22 ARTICLE VII DEFEASANCE Defeasance .................................................................................................................. -22 ARTICLE VIII TAX COVENANTS General Covenants ...................................................................................................... 23 Survival of Covenants ................................................................................................ -23 ARTICLE M CONTINUING DISCLOSURE REQUIREMENTS Disclosure Requirements ............................................................................................. 23 Failure to Comply with Continuing Disclosure Requirements ................................... 24 ARTICLE X MISCELLANEOUS PROVISIONS Annual Audit ............................................................................................................... 24 Amendments ................................................................................................................ 24 Notices, Consents and Other Instruments by Owners ................................................. 25 Notices ......................................................................................................................... 26 Electronic Transactions ............................................................................................... 26 Further Authority ......................................................................................................... 26 Severability .................................................................................................................. 26 Governing Law. ........................................................................................................... 26 Effective Date .............................................................................................................. 26 EXMBITA -FORM OF BONDS .............................................................................................................. A-1 [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] .. 11 RESOLUTION NO. 10-6726 A RESOLUTION PRESCRIBING THE FORM AND DETAILS OF AND AUTHORIZING AND DIRECTING THE SALE AND DELIVERY OF $6,875,000 PRINCIPAL AMOUNT OF GENERAL OBLIGATION INTERNAL, OF SALINA, KANSAS, PREVIOUSLY AUTHORIZED BY ORDINANCE NO. 10- 10540 OF THE ISSUER; MAKING CERTAIN COVENANTS AND AGREEMENTS TO PROVIDE FOR THE PAYMENT AND SECURITY THEREOF; AND AUTHORIZING CERTAIN OTHER DOCUMENTS AND ACTIONS CONNECTED THEREWITH. IMPROVEMENT AND REFUNDING BONDS, SERIES 2010-4 OF TBE CITY WHEREAS, the Issuer has heretofore adopted the Ordinance authorizing the issuance of the Bonds; and WHEREAS, the Ordinance authorized the governing body of the Issuer to adopt a resolution prescribing certain details and conditions and to make certain covenants with respect to the issuance of the Bonds. NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: ARTICLE I DEFINITIONS Section 101. In addition to words and terms defined elsewhere herein, the following words and terms as used in this Bond Resolution shall have the meanings hereinafter set forth. Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa, and words importing persons shall include firms, associations and corporations, including public bodies, as well as natural persons. Definitions of Words and Terms. “Act” means the Constitution and statutes of the State including K.S.A. 10-101 to 10-125, inclusive, K.S.A. 10427 et seq., K.S.A. 10-620 et seq. and K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., K.S.A. 12-2101 et seq., as amended and supplemented from time to time. “Authorized Denomination” means $5,000 or any integral multiples thereof. “Beneficial Owner” of the Bonds includes any Owner of the Bonds and any other Person who, directly or indirectly has the investment power with respect to such Bonds. “Bond and Interest Fund” means the Bond and Interest Fund of the Issuer for its general obligation bonds. “Bond Counsel” means the fm of Gilmore & Bell, P.C., or any other attorney or firm of attorneys whose expertise in matters relating to the issuance of obligations by states and their political subdivisions is nationally recognized and acceptable to the Issuer. “Bond Payment Date” means any date on which principal of or interest on any Bond is payable. “Bond Register” means the books for the registration, transfer and exchange of Bonds kept at the ofice of the Bond Registrar. “Bond Registrar” means the State Treasurer, and any successors and assigns. “Bond Resolution” means this resolution relating to the Bonds. “Bonds” means the General Obligation Internal Improvement and Refunding Bonds, Series 201 0-A, authorized and issued by the Issuer pursuant to the Ordinance and this Bond Resolution. “Business Day” means a day other than a Saturday, Sunday or any day designated as a holiday by the Congress of the United States or by the Legislature of the State and on which the Paying Agent is scheduled in the normal course of its operations to be open to the public for conduct of its operations. “Cede & Co.” means Cede & Co., as nominee of DTC and any successor nominee of DTC. “City” means the City of Salina, Kansas. “Clerk” means the duly appointed andor elected Clerk or, in the Clerk’s absence, the duly appointed Deputy Clerk or Acting Clerk of the Issuer. “Code” means the Internal Revenue Code of 1986, as amended, and the applicable regulations promulgated thereunder by the United States Department of the Treasury. “Costs of Issuance” means all costs of issuing the Bonds, including but not limited to all publication, printing, signing and mailing expenses in connection therewith, registration fees, financial advisory fees, all legal fees and expenses of Bond Counsel and other legal counsel, expenses incurred in connection with compliance with the Code, all expenses incurred in connection with receiving ratings on the Bonds, and any premiums or expenses incurred in obtaining municipal bond insurance on the Bonds. “Dated Date” means May 1 , 20 10. “Debt Service Account” means the Debt Service Account for General Obligation Internal Improvement and Refunding Bonds, Series 2010-A (within the Bond and Interest Fund) created pursuant to Section 501 hereof. “Debt Service Requirements” means the aggregate principal payments (whether at maturity or pursuant to scheduled mandatory sinking fund redemption requirements) and interest payments on the Bonds for the period of time for which calculated; provided, however, that for purposes of calculating such amount, principal and interest shall be excluded from the determination of Debt Service Requirements to the extent that such principal or interest is payable from amounts deposited in trust, escrowed or otherwise set aside for the payment thereof with the Paying Agent or other commercial bank or trust company located in the State and having full trust powers. “Defaulted Interest” means interest on any Bond which is payable but not paid on any Interest Payment Date. “Defeasance Obligations” means any of the following obligations: 2 (a) United States Government Obligations that are not subject to redemption in advance of their maturity dates; or (b) evidences of ownership of proportionate interests in future interest and principal payments on United States Government Obligations held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying United States Government Obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated; or (c) obligations of any state or political subdivision of any state, the interest on which is excluded from gross income for federal income tax purposes and which meet the following conditions: (1) the obligations are (i) not subject to redemption prior to maturity or (ii) the trustee for such obligations has been given irrevocable instructions concerning their calling and redemption and the issuer of such obligations has covenanted not to redeem such obligations other than as set forth in such instructions; (2) the obligations are secured by cash or United States Government Obligations that may be applied only to principal of, premium, if any, and interest payments on such obligations; (3) such cash and the principal of and interest on such United States Government Obligations (plus any cash in the escrow fund) are sufficient to meet the liabilities of the obligations; (4) such cash and United States Government Obligations serving as security for the obligations are held in an escrow fund by an escrow agent or a trustee irrevocably in trust; (5) such cash and United States Government Obligations are not available to satisfy any other claims, including those against the trustee or escrow agent; and (6) the obligations are rated in the highest rating category by Moody’s (presently “Aaa”) or Standard & Poor’s (presently “AAA”). “Derivative” means any investment instrument whose market price is derived from the fluctuating value of an underlying asset, index, currency, futures contract, including futures, options and collateralized mortgage obligations. “Disclosure Instructions” means the Continuing Disclosure Instructions dated as of the Issue Date, attached to the Issuer’s Closing Certificate, relating to certain obligations contained in the SEC Rule. “DTC” means The Depository Trust Company, a limited-purpose trust company 0rganm.d under the laws of the State of New York, and its successors and assigns, including any successor securities depository duly appointed. . “DTC Representation Letter” means the Blanket Letter of Representation from the Issuer and the Paying Agent to DTC which provides for a bookentry system, or any agreement between the Issuer and Paying Agent and a successor securities depository duly appointed. ”Event of Default” means each of the following occurrences or events: 3 (a) Payment of the principal and of the redemption premium, if any, of any of the Bonds shall not be made when the same shall become due and payable, either at Stated Maturity or by proceedings for redemption or otherwise; or (b) Payment of any installment of interest on any of the Bonds shall not be made when the same shall become due; or (c) The Issuer shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in this Bond Resolution (other than the covenants relating to continuing disclosure requirements contained herein and in the Disclosure Instructions) on the part of the Issuer to be performed, and such default shall continue for tlurty (30) days after written notice specifjmg such default and requiring same to be remedied shall have been given to the Issuer by the Owner of any of the Bonds then Outstanding. “Federal Tax Certificate” means the Issuer’s Federal Tax Certificate dated as of the Issue Date, as the same may be amended or supplemented in accordance with the provisions thereof. “Financeable Costs” means the amount of expenditure for an Improvement which has been duly authorized by action of the governing body of the Issuer to be financed by general obligation bonds, less: (a) the amount of any temporary notes or general obligation bonds of the Issuer which are currently Outstanding and available to pay such Financeable Costs; and (b) any amount of Financeable Costs which has been previously paid by the Issuer or by any eligible source of funds unless such amounts are entitled to be reimbursed to the Issuer under State or federal law. “Fiscal Year’’ means the twelve month period ending on December 3 1. “Funds and Accounts” means funds and accounts created pursuant to or referred to in Section 501 hereof “Improvement Fund” means the Improvement Fund for General Obligation Internal Improvement and Refunding Bonds, Series 201 0-A created pursuant to Section 501 hereof. “Improvements” means the improvements referred to in the preamble to the Ordinance and any Substitute Improvements. “Interest Payment Date(s)” means the Stated Maturity of an installment of interest on any Bond which shall be April 1 and October 1 of each year, commencing April 1,201 1. ”Issue Date” means the date when the Issuer delivers the Bonds to the Purchaser in exchange for the Purchase Price. “Issuer” means the City and any successors or assigns. “Maturity” when used with respect to any Bond means the date on which the principal of such Bond becomes due and payable as therein and herein provided, whether at the Stated Maturity thereof or call for redemption or otherwise. “Mayor” means the duly elected and acting Mayor, or in the Mayor’s absence, the duly appointed andlor elected Vice Mayor or Acting Mayor of the Issuer. 4 “Moody’s’’ means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, and its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’~’~ shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer. “Notice Address” means with respect to the following entities: (a) To the Issuer at: 300 West Ash Salina, Kansas 67402 Fax: (785)309-5738 (b) To the Paying Agent at: State Treasurer of the State of Kansas Landon Office Building 900 Southwest Jackson, Suite 201 Topeka, Kansas 66612-1235 Fax: (785) 296-6976 (c) To the Purchaser: Country Club Bank 9400 Mission Road Prairie Village, Kansas 66206 Fax: 913-385-0105 (d) To the Rating Agency(ies): Moody’s Municipal Rating Desk 7 World Trade Center 250 Greenwich Street 23rd Floor New York, New York 10007 Standard & Poor’s, a division of The McGraw-Hill Companies 55 Water Street, 38th Floor New York, New York 10004 or such other address as is furnished in writing to the other parties referenced herein. “Notice Representative” means: (a) With respect to the Issuer, the Clerk. (b) With respect to the Bond Registrar and Paying Agent, the Director of Bond Services. (c) With respect to any Purchaser, the manager of its Municipal Bond Department. 5 (d) With respect to any Rating Agency, any Vice President thereof. “Official Statement” means Issuer’s Official Statement, dated April 19, 2010, relating to the Bonds. “Ordinance” means Ordinance No. 10-10540 of the Issuer authorizing the issuance of the Bonds, as amended from time to time. “Outstanding” means, when used with reference to the Bonds, as of a particular. date of determination, all Bonds theretofore authenticated and delivered, except the following Bonds: (a) Bonds theretofore canceled by the Paying -Agent or delivered to the Paying Agent for cancellation; (b) Bonds deemed to be paid in accordance with the provisions of Section 701 hereof; and (c) delivered hereunder. Bonds in exchange for or in lieu of which other Bonds have been authenticated and “Owner” when used with respect to any Bond means the Person in whose name such Bond is registered on the Bond Register. Whenever consent of the Owners is required pursuant to the terms of this Bond Resolution, and the Owner of the Bonds, as set forth on the Bond Register, is Cede & Co., the term Owner shall be deemed to be the Beneficial Owner of the Bonds. “Participants” means those financial institutions for whom the Securities Depository effects book-entry transfers and pledges of securities deposited with the Securities Depository, as such listing of Participants exists at the time of such reference. “Paying Agent” means the State Treasurer, and any successors and assigns. “Permitted Investments” shd mean the investments hereinafler described, provided, however, no moneys or funds shall be invested in a Derivative: (a) investments authorized by K.S.A. 12-1675 and amendments thereto; (b) the municipal investment pool established pursuant to K.S.A. 12-1677aY and amendments thereto; (c) direct obligations of the United States Government or any agency thereof; (d) the Issuer’s temporary notes issued pursuant to K.S.A. 10-123 and amendments thereto; (e) interest-bearing time deposits in commercial banks or trust companies located in the county or counties in which the Issuer is located City which are insured by the Federal Deposit Insurance Corporation or collateralized by securities described in (c); (f) obligations of the federal national mortgage association, federal home loan banks or the federal home loan mortgage corporation; (g) repurchase agreements for securities described in (c) or (f); (h) investment agreements or other obligations of a financial institution the obligations of which at the time of investment are rated in either of the three highest rating categories by Moody’s or Standard & Poor’s; (i) investments and shares or units of a money market fund or trust, the portfolio of which is comprised entirely of securities described in (c) or (0; (j) receipts evidencing ownership interests in securities or portions thereof described in (c) or (f); (k) municipal bonds or other obligations issued by any municipality of the State as defined in K.S.A. 10-1101 which are general obligations of the municipality issuing the same; or (1) bonds of any municipality of the State as defined in K.S.A. 10-1 101 which have been refunded in advance of their maturity and are fully secured as to payment of principal and interest thereon by deposit in trust, under escrow agreement with a bank, of securities described in (c) or (f), all as may be Mer restricted or modified by amendments to applicable State law. 6 “Person” means any natural person, corporahon, partnership, joint venture, association, firm, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof or other public body. “Purchase Price” means the principal amount of the Bonds plus accrued interest to the date of delivery, plus a premium of $9 1,324.05, less an underwriting discount of $49,73 1.68. “Purchaser” means Country Club Bank, Prairie Village, Kansas, the original purchaser of the Bonds, and any successor and assigns. “Rating Agency” means any company, agency or entity that provldes financial ratings for the Bonds. “Rebate Fund” means the Rebate Fund for General Obligation Internal Improvement and Refunding Bonds, Series 201 0-A created pursuant to Section 502 hereof. “Record Dates” for the interest payable on any Interest Payment Date means the fifteenth day (whether or not a Business Day) of the calendar month next preceding such Interest Payment Date. “Redemption Date” when used with respect to any Bond to be redeemed means the date fixed for the redemption of such Bond pursuant to the terms of this Bond Resolution. “Redemption Fund” means the Redemption Fund for Refunded Bonds created pursuant to Section 501 hereof. “Redemption Price” when used with respect to any Bond to be redeemed means the price at which such Bond is to be redeemed pursuant to the terms of this Bond Resolution, including the applicable redemption premium, if any, but excluding installments of interest whose Stated Maturity is on or before the Redemption Date. “Refunded Bonds” means the Series 2002-A Bonds maturing in the years 2010 to 2013, inclusive, in the aggregate pnncipal amount of $820,000. “Refunded Bonds Paying Agent” means the paying agent for the Refimded Bonds as designated in the Refunded Bonds Resolution, and any successor or successors at the time acting as paying agent for the Refunded Bonds. “Refunded Bonds Redemption Date” means May 15,2010 for the Series 2002-A Bonds. “Refunded Bonds Resolution” means the ordinance and the resolution which authonzed the Refunded Bonds. “Replacement Bonds” means Bonds issued to the Beneficial Owners of the Bonds in accordance with Section 210 hereof. “SEC Rule” means Rule 15~2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as may be amended from time to time. “Securities Depository” means, initially, DTC, and its successors and assigns. 7 “Series 2002-A Bonds” means the Issuer’s General Obligation Water and Sewage System Refunding Bonds Bonds, Series 2002-4 dated January 15,2002. “Series 2002-A Principal and Interest Account” means the Principal and Interest Account for the Series 2002-A Bonds. “Special Record Date” means the date fixed by the Paying Agent pursuant to Section 204 hereof for the payment of Defaulted Interest. “Standard & Poor’s’’ means Standard & Poor’s Ratings Services, a Division of the McGraw- Hill Companies, Inc., a corporation organized and existing under the laws of the State of New Yo& and its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, Standard & Poor’s shall be deemed to refer to any other ~tio~lly recognized securities rating agency designated by the Issuer. “State” means the state of Kansas. “State Treasurer” means the duly elected Treasurer or, in the Treasurer’s absence, the duly appointed Deputy Treasurer or acting Treasurer of the State. “Stated Maturity” when used with respect to any Bond or any installment of interest thereon means the date specified in such Bond and this Bond Resolution as the fixed date on which the principal of such Bond or such installment of interest is due and payable. “Substitute Improvements” means the substitute or additional improvements of the Issuer described in Section 504(a) hereof. “Term Bonds” means the Bonds scheduled to mature in the year 2025. “Treasurer” means the duly appointed andor elected Treasurer or, in the Treasurer’s absence, the duly appointed Deputy Treasurer or acting Treasurer of the Issuer. “United States Government Obligations” means bonds, notes, certificates of indebtedness, treasury bills or other securities constituting direct obligations of, or obligations the principal of and interest on which are fully and unconditionally guaranteed as to 111 and timely payment by, the United States of America, including evidences of a direct ownership interest in future interest or principal payment on obligations issued by the United States of America (including the interest component of obligations of the Resolution Funding Corporation), or securities which represent an undivided interest in such obligations, which obligations are rated in the highest rating category by a nationally recognized rating service and such obligations are held in a custodial account for the benefit of the Issuer. ARTICLE I1 AUTHORIZATION AND DETAILS OF THE BONDS Section 201. Authorization of the Bonds. The Bonds have been heretofore authorized and directed to be issued pursuant to the Ordinance in the principal amount of $6,875,000, for the purpose of providing a portion of the funds to: (a) refund the Refunded Bonds; (b) pay a portion of the costs of the Improvements and (c) pay Costs of Issuance. 8 Section 202. Description of the Bonds. The Bonds shall consist of fully registered bonds in an Authorized Denomination, and shall be numbered in such manner as the Bond Registrar shall determine. All of the Bonds shall be dated as of the Dated Date, shall become due in the amounts, on the Stated Maturities, subject to redemption and payment prior to their Stated Maturities as provided in Article 111 hereof, and shall bear interest at the rates per annum as follows: SERIAL BONDS Stated Maturity October 1 201 1 2012 2013 2014 2015 2016 Principal Amount $775,000 865,000 880,000 695,000 285,000 290,000 Annual Rate Stated Maturity Principal Annual Rate of Interest October 1 Amount of Interest 2.000% 201 7 $300,000 2.600% 2.000% 201 8 3 10,000 2.850% 2.000% . 2019 320,000 3.000% 2.000% 2020 330,000 3.150% 2.000% 202 1 340,000 3.300% 2.300% 2022 350,000 3.400% TERM BONDS Stated Maturity Principal Annual Rate October 1 Amount of Interest 2025 $1,135,000 . 3.875% The Bonds shall bear interest at the above specified rates (computed on the basis of a 360-day year of twelve 30-day months) from the later of the Dated Date or the most recent Interest Payment Date to which interest has been paid on the Interest Payment Dates in the manner set forth in Section 204 hereof. Each of the Bonds, as originally issued or issued upon transfer, exchange or substitution, shalI be printed in accordance with the format required by the Attorney General of the State and shall be substantially in the form attached hereto as EXUBITA or as may be required by the Attorney General pursknt to the Notice of Systems of Registration for Kansas Municipal Bonds, 2 Kan. Reg. 921 (1983), in accordance with the Kansas Bond Registration Law, K.S.A. 10-620 et seq. Section203. Designation of Paying Agent and Bond Registrar. The State Treasurer is hereby designated as the Paying Agent for the payment of principal of and interest on the Bonds and Bond Registrar with respect to the registration, transfer and exchange of Bonds. The Mayor of the Issuer is hereby authorized and empowered to execute on behalf of the Issuer an agreement with the Bond Registrar and Paying Agent for the Bonds. The Issuer will at all times maintain a Paying Agent and Bond Registrar meeting the qualifications herein described for the performance of the duties hereunder. The Issuer reserves the right to appoint a successor Paying Agent or Bond Registrar by (a) filing with the Paying Agent or Bond Registrar then pedorming such function a certified copy of the proceedings giving notice of the termination of such Paying Agent or Bond Registrar and appointing a successor, and (b) causing notice of appointment of the successor Paying Agent and Bond Registrar to be given by first class mail to each Owner. No resignation or removal of the Paying Agent or Bond Registrar shall become effective until a successor has been appointed and has accepted the duties of Paying Agent or Bond Registrar. Every Paying Agent or Bond Registrar appointed hereunder shall at all times meet the requirements of K.S.A. 10-501 et seq. and K.S.A. 10-620 et seq., respectively. 9 Section 204. Method and Place of Payment of the Bonds. The principal of, or Redemption Price, and interest on the Bonds shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Bond shall be paid at Maturity to the Person in whose name such Bond is registered on the Bond Register at the Maturity thereof, upon presentation and surrender of such Bond at the principal office of the Paying Agent. The interest payable on each Bond on any Interest Payment Date shall be paid to the Owner of such Bond as shown on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Paying Agent to the address of such Owner shown on the Bond Register or at such other address as is furnished to the Paying Agent in writing by such Owner; or (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Owner upon written notice given to the Bond Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank ABA routing number and account number to which such Owner wishes to have such transfer directed. Notwithstanding the foregoing provisions of this Section, any Defaulted Interest with respect to any Bond shall cease to be payable to the Owner of such Bond on the relevant Record Date and shall be payable to the Owner in whose name such Bond is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fmed as hereinafter specified in this paragraph. The Issuer shall not@ the Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Paying Agent) and shall deposit with the Paying Agent at the time of such notice an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Paying Agent for such deposit prior to the date of the proposed payment. Following receipt of such funds the Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Paying Agent shall promptly notify the Issuer of such Special Record Date and, in the name and at the expense of the Issuer, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefore to be mailed, by first class mail, postage prepaid, to each Owner of a Bond entitled to such notice at the address of such Owner as it appears on the Bond Register not less than 10 days prior to such Special Record Date. , The Paying Agent shall keep a record of payment of principal and Redemption Price of and interest on all Bonds and at least annually shall forward a copy or summary of such records to the Issuer. Section 205. Payments Due on Saturdays, Sundays and Holidays. In any case where a Bond Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Bond Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Bond Payment Date, and no interest shall accrue for the period after such Bond Payment Date. Section 206. Registration, 'kansfer and Exchange of Bonds. The Issuer covenants that, as long as any of the Bonds remain Outstanding, it will cause the Bond Register to be kept at the office of the Bond Registrar as herein provided. Each Bond when issued shall be registered in the name of the Owner thereof on the Bond Register. 10 Bonds may be transferred and exchanged only on the Bond Register as provided in this Section. Upon surrender of any Bond at the principal office of the Bond Registrar, the Bond Registrar shall transfer or exchange such Bond for a new Bond or Bonds in any Authorized Denomination of the Same Stated Maturity and in the Same aggregate principal amount as the Bond that was presented for transfer or exchange. Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Bond Registrar, duly executed by the Owner thereof or by the Owner’s duly authorized agent. In all cases in which the privilege of transferring or exchanging Bonds is exercised, the Bond Registrar shall authenticate and deliver Bonds in accordance,with the provisions of this Bond Resolution. The Issuer shall pay the fees and expenses of the Bond Registrar for the registration, transfer and exchange of Bonds provided for by this Bond Resolution and the cost of printing a reasonable supply of registered bond blanks. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners of the Bonds. In the event any Owner fails to provide a correct taxpayer identification number to the Paying Agent, the Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. In compliance with Code 6 3406, such imount may be deducted by the Paying Agent from amounts otherwise payable to such Owner hereunder or under the Bonds. The Issuer and the Bond Registrar shall not be required (a) to register the transfer or exchange of any Bond that has been called for redemption after notice of such redemption has been mailed by the Paying Agent pursuant to Section 303 hereof and during the period of 15 days next preceding the date of mailing of such notice of redemption; or (b) to register the transfer or exchange of any Bond during a period beginning at the opening of business on the day after receiving written notice from the Issuer of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest pursuant to Section 204 hereof. The Issuer and the Paying Agent may deem and treat the Person in whose name any Bond is registered on the Bond Register as the absolute Owner of such Bond, whether such Bond is overdue or not, for the purpose of receiving payment of, or on account of, the principal or Redemption Price of and interest on said Bond and for all other purposes. All payments so made to any such Owner or upon the Owner’s order shall be valid and effective to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the Issuer nor the Paying Agent shall be affected by any notice to the contrary. At reasonable times and under reasonable regulations established by the Bond Registrar, the Bond Register may be inspected and copied by the Owners (or a designated representative thereof) of 10% or more in principal amount of the Bonds then Outstanding or any designated representative of such Owners whose authority is evidenced to the satisfaction of the Bond Registrar. Section 207. Execution, Registration, Authentication and Delivery of Bonds. Each of the Bonds, including any Bonds issued in exchange or as substitutions for the Bonds initially delivered, shall be executed for and on behalf of the Issuer by the manual or facsimile signature of the Mayor, attested by the manual or facsimile signature of the Clerk and the seal of the Issuer shall be affixed thereto or imprinted thereon. The Mayor and Clerk are hereby authorized and directed to prepare and execute the Bonds in the manner herein specified, and to cause the Bonds to be registered in the office of the Clerk, which registration shall be evidenced by the manual or facsimile signature of the Clerk with the seal of the Issuer affixed thereto or imprinted thereon. The Bonds shall also be registered in the office of the 11 State Treasurer, which registration shall be evidenced by the manual or facsimile signature of the State Treasurer with the seal of the State Treasurer a&ed thereto or imprinted thereon. In case any officer whose signature appears on any Bonds ceases to be such officer before the delivery of such Bonds, such signature shall nevertheless be valid and sufficient for all purposes, as if such person had remained in office until delivery. Any Bond may be signed by such persons who at the actual time of the execution of such Bond are the proper officers to sign such Bond although at the date of such Bond such persons may not have been such officers. The Mayor and Clerk are hereby authorized and directed to prepare and execute the Bonds as herein specified, and when duly executed, to deliver the Bonds to the Bond Registrar for authentication. The Bonds shall have endorsed thereon a certificate of authentication substantially in the form attached hereto as EXHZBITA hereof, which shall be manually executed by an authorized officer or employee of the Bond Registrar, but it shall not be necessary that the same officer or employee sign the certificate of authentication on all of the Bonds that may be issued hereunder at any one time. No Bond shall be entitled to any security or benefit under this Bond Resolution or be valid or obligatory for any purpose unless and until such certificate of authentication has been duly executed by the Bond Registrar. Such executed certificate of authentication upon any Bond shall be conclusive evidence that such Bond has been duly authenticated and delivered under this Bond Resolution. Upon authentication, the Bond Registrar shall deliver the Bonds to the Purchaser upon instructions of the Issuer or its representative. Section 208. Mutilated, Lost, Stolen or Destroyed Bonds. If (a) any mutilated Bond is surrendered to the Bond Registrar or the Bond Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Bond, and (b) there is delivered to the Issuer and the Bond Registrar such security or indemnity as may be required by each of them, then, in the absence of notice to the Issuer or the Bond Registrar that such Bond has been acquired by a bona fide purchaser, the Issuer shall execute and, upon the Issuer’s request, the Bond Registrar shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Bond, a new Bond of the same Stated Maturity and of like . tenor and principal amount. If any such mutilated, destroyed, lost or stolen Bond has become or is about to become due and payable, the Issuer, in its discretion, may pay such Bond instead of issuing a new Bond. Upon the issuance of any new Bond under this Section, the Issuer and the Paying Agent may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Paying Agent) connected therewith. Every new Bond issued pursuant to this Section shall constitute a replacement of the prior obligation of the Issuer, and shall be entitled to all the benefits of this Bond Resolution equally and ratably with all other Outstanding Bonds. Section 209. Cancellation and Destruction of Bonds Upon Payment. All Bonds that have been paid or redeemed or that otherwise have been surrendered to the Paying Agent, either at or before Maturity, shall be cancelled by the Paying Agent immediately upon the payment, redemption and surrender thereof to the Paying Agent and subsequently destroyed in accordance with the customary practices of the Paying Agent. The Paying Agent shall execute a certificate in duplicate describing the Bonds so cancelled and destroyed and shall file an executed counterpart of such certificate with the Issuer. Section 210. Book-Entry Bonds; Securities Depository. The Issuer and Paying Agent have entered into a DTC Representation Letter with DTC. The Bonds shall initially be registered to Cede & 12 Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds as provided in this Section. It is anticipated that during the term of the Bonds, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Bond Registrar authenticates and delivers Replacement Bonds to the Beneficial Owners as described in the following paragraph, The Issuer may decide, subject to the requirements of the Operational Arrangements of DTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the Issuer determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds; or (b) if the Bond Registrar receives written notice fiom Participants having interests in not less than 50% of the Bonds Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners ofthe Bonds, then the Bond Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to Owners requesting the same, and the Bond Registrar shall register in the name of and authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (a)(2) of this paragraph, the Issuer, with the consent of the Bond Registrar, may select a successor securities depository in accordance with the following paragraph to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Bond. Upon the issuance of Replacement Bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Bond Registrar, to the extent applicable with respect to such Replacement Bonds. If the Securities Depository resigns and the Issuer, the Bond Registrar or Owners are unable to locate a qualified successor of the Securities Depository in accordance with the following paragraph, then the Bond Registrar shall authenticate and cause delivery of Replacement Bonds to Owners, as provided herein. The Bond Registrar may rely on information from the Securities Depository and its Participants as to the names of the Beneficial Owners of the Bonds. The cost of printing, registration, authentication, and delivery of Replacement Bonds shall be paid for by the Issuer. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the Issuer may appoint a successor Securifies Depository provided the Bond Registrar receives written evidence satisfactory to the Bond Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Bond Registrar upon its 13 receipt of a Bond or Bonds for cancellation shall cause the delivery of Bonds to the successor Securities Depository in an Authorized Denominations and form as provided herein. Section 211. Nonpresentment of Bonds. If any Bond is not presented for payment when the principal thereof becomes due at Maturity, if funds sufficient to pay such Bond have been made available to the Paying Agent all liability of the Issuer to the Owner thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Paying Agent to hold such funds, without liability for interest thereon, for the benefit of the Owner of such Bond, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part under this Bond Resolution or on, or with respect to, said Bond. If any Bond is not presented for payment within four (4) years following the date when such Bond becomes due at Maturity, the Paying Agent shall repay, without liability for interest thereon, to the Issuer the funds theretofore held by it for payment of such Bond, and such Bond shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the Issuer, and the Owner thereof shall be entitled to look only to the Issuer for payment, and then only to the extent of the amount so repaid to it by the Paying Agent, and the Issuer shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Section 212. Preliminary and Final Official Statement. For the purpose of enabling the Purchaser to comply with the requirements of Rule 15c2-12@)(1) of the Securities and Exchange Commission, the Issuer hereby deems the information regarding the Issuer contained in the Preliminary Official Statement to be “final” as of its date, except for the omission of such information as is permitted by Rule 15c2- 12(b)( 1 ), and the appropriate officers of the Issuer are hereby authorized, if requested, to provide the Purchaser a letter or certification to such effect and to take such other actions or execute such other documents as such officers in their reasonable judgment deem necessary to enable the Purchaser to comply with the requirement of such Rule. The Official Statement is hereby authorized to be prepared by supplementing, amending and completing the Preliminary Offcial Statement, with such changes and additions thereto as are necessary to conform to and describe the transaction. The Mayor or chief financial officer of the Issuer are hereby authorized to execute the Official Statement as so supplemented, amended and completed, and the use and public distribution of the Official Statement by the Purchaser in connection with the reoffering of the Bonds is hereby authorized. The proper officials of the Issuer are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the Issue Date. 1 The Issuer agrees to provide to the Purchaser within seven business days of the date of the sale of Bonds sufficient copies of the Official Statement to enable the Purchaser to comply. with the requirements of Rule 15c2-12(3) and (4) of the Securities and Exchange Commission and with the requirements of Rule G-32 of the Municipal Securities Rulemaking Board. Section 213. Sale of the Bonds. The sale of the Bonds to the Purchaser is hereby ratified and confirmed. The Mayor and Clerk are hereby authorized to execute the official bid form submitted by the Purchaser. Delivery of the Bonds shall be made to the Purchaser on the Issue Date (which shall be as soon as practicable after the adoption of this Bond Resolution), upon payment of the Purchase Price. 14 ARTICLE III REDEMPTION OF BONDS Section 301. Redemption by Issuer. Optional Redemption. At the option of the Issuer, Bonds or portions thereof maturing on October 1, 2019 and thereafter, may be called for redemption and payment prior to their Stated Maturity on October 1, 2018, and thereafter as a whole or in part (selection of maturities and the amount of Bonds of each maturity to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. Mandatory Redemption. The Term Bonds shall be subject to mandatory redemption and payment prior to Stated Maturity pursuant to the mandatory redemption requirements of this Section at a Redemption Price equal to 100% of the principal amount thereof plus accrued interest to the Redemption Date. The taxes levied in Article ZV hereof which are to be deposited into the Debt Service Account shall be sufficient to redeem, and the Issuer shall redeem on October 1 in each year, the following principal amounts of such Term Bonds: Principal Amount $365,000 380,000 390,000 Year 2023 - 2024 2025* *Final Maturity At its option, to be exercised on or before the 45th day next preceding any mandatory Redemption Date, the Issuer may: (1) deliver to the Paying Agent for cancellation Term Bonds subject to mandatory redemption on said mandatory Redemption Date, in any aggregate principal amount desired; or (2) furnish the Paying Agent funds, together with appropriate instructions, for the purpose of purchasing any Term Bonds subject to mandatory redemption on said mandatory Redemption Date fiom any Owner thereof whereupon the Paying Agent shall expend such funds for such purpose to such extent as may be practical; or (3) receive a credit with respect to the mandatory redemption obligation of the Issuer under this Section for any Term Bonds subject to mandatory redemption on said mandatory Redemption Date which, prior to such date, have been redeemed (other than through the operation'of the mandatory redemption requirements of this subsection) and cancelled by the Paying Agent and not theretofore applied as a credit against any redemption obligation under this subsection. Each Term Bond so delivered or previously purchased or redeemed shall be credited at 100% of the principal amount thereof on the obligation of the Issuer to redeem Term Bonds of the same Stated Maturity on such mandatory Redemption Date, and any excess of such amount shall be credited on future mandatory redemption obligations for Term Bonds of the same Stated Maturity as designated by the Issuer, and the principal amount of Term Bonds to be redeemed by operation of the requirements of this Section shall be accordingly reduced. If the Issuer intends to exercise &y option granted by the provisions of clauses (I), (2) or (3) above, the Issuer will, on or before the 45th day next preceding each mandatory Redemption Date, fhish the Paying Agent a written certificate indicating to what extent the provisions of said clauses (l), (2) and (3) are to be complied with, with respect to such mandatory redemption payment. 15 Section 302. Selection of Bonds to be Redeemed. (a) In the event the Issuer desires to call the Bonds for redemption prior to maturity, written notice of such intent shall be provided to the Bond Registrar in accordance with K.S.A. 10-129, as amended, not less than 45 days prior to the Redemption Date. The Bond Registrar shall call Bonds for redemption and payment and shall give notice of such'redemption as herein provided upon receipt by the Bond Registrar at least 45 days prior to the Redemption Date of written instructions of the Issuer specifjmg the principal amount, Stated Maturities, Redemption Date and Redemption Prices of the Bonds to be called for redemption. If the Bonds are refunded more than 90 days in advance of such Redemption Date, any escrow agreement entered into by the Issuer in connection with such refunding shall provide that such written instructions to the Paying Agent shall be given by the escrow agent on behalf of the Issuer not more than 90 days prior to the Redemption Date. The Paying Agent may in its discretion waive such notice period so long as the notice requirements set forth in Section 303 are met. The foregoing provisions of this paragraph shall not apply in the case of any mandatory redemption of Term Bonds hereunder, and Term Bonds shall be called by the Paying Agent for redemption pursuant to such mandatory redemption requirements without the necessity of any action by the Issuer and whether or not the Paying Agent holds moneys available and sufficient to effect the required redemption. (b) Bonds shall be redeemed only in an Authorized Denomination. When less than all of the Bonds are to be redeemed and paid prior to their Stated Maturity, such Bonds shall be redeemed in such manner as the Issuer shall determine. Bonds of less than a full Stated Maturity shall be selected by the Bond Registrar in a minimum Authorized Denomination of principal amount in such equitable manner as the Bond Registrar may determine. (c) In the case of a partial redemption of Bonds by lot when Bonds of denominations greater than a minimum Authorized Denomination are then Outstanding, then for all purposes in connection with such redemption a minimum Authorized Denomination of face value shall be treated as though it were a separate Bond of the denomination of a minimum Authorized Denomination. If it is determined that one or more, but not all, of a minimum Authorized Denomination of face value represented by any Bond is selected for redemption, then upon notice of intention to redeem a minimum Authorized Denomination, the Owner or the Owner's duly authorized agent shall forthwith present and surrender such Bond to the Bond Registrar: (1) for payment of the Redemption Price and interest to the Redemption Date of a minimum Authorized Denomination of face value called for redemption, and (2) for exchange, without charge to the Owner thereof, for a new Bond or Bonds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Owner of any such Bond fails to present such Bond to the Paying Agent for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of a minimum Authorized Denomination of face value called for redemption (and to that extent only). Section303. Notice and Effect of Call for Redemption. Unless waived by any Owner of Bonds to be redeemed, if the Issuer shall call any Bonds for redemption and payment prior to the Stated. Maturity thereof, the Issuer shall give written notice of its intention to call and pay said Bonds to the State Treasurer, the Bond Registrar and the Purchaser. In addition, the Issuer shall cause the Bond Registrar to give written notice of redemption to the Owners of said Bonds. Each of said written notices shall be deposited in the United States first class mail not less than 30 days prior to the Redemption Date. All official notices of redemption shall be dated and shall contain the following information: (a) the Redemption Date; (b) the Redemption price; 16 (c) if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption of any Bonds, the respective principal amounts) of the Bonds to be redeemed; (d) a statement that on the Redemption Date the Redemption Price will become due and payable upon each such Bond or portion thereof called for redemption and that interest thereon shall cease to accrue from and after the Redemption Date; and (e) the place where such Bonds are to be surrendered for payment of the Redemption Price, which shall be the principal office of the Paying Agent. The failure of any Owner to receive notice given as heretofore provided or an immaterial defect therein shall not invalidate any redemption. Prior to any Redemption Date, the Issuer shall deposit with the Paying Agent an amount of money sufficient to pay the Redemption Price of all the Bonds or portions of Bonds that are to be redeemed on such Redemption Date. For so long as the Securities Depository is effecting bookentry transfers of the Bonds, the Bond Registrar shall provide the notices specified in this Section to the Securities Depository. It is expected that the Securities Depository shall, in tum, notify its Participants and that the Participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of the Securities Depository or a Participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice from the Bond Registrar, the Securities Depository, a Participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall become due and payable on the Redemption Date, at the Redemption Price therein specified, and f?om and after the Redemption Date (unless the Issuer defaults in the payment of the Redemption Price) such Bonds or portion of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with such notice, the Redemption Price of such Bonds shall be paid by the Paying Agent. Installments of interest due on or prior to the Redemption Date shall be payable as herein provided for payment of interest. Upon surrender for any partial redemption of any Bond, there shall be prepared for the Owner a new Bond or Bonds of the same Stated Maturity in the amount of the unpaid principal as provided herein. All Bonds that have been surrendered for redemption shall be cancelled and destroyed by the Paying Agent as provided herein and shall not be reissued. In addition to the foregoing notice, the Issuer shall provide such notices of redemption as are required by the Disclosure Instructions. Further notice may be given by the Issuer or the Bond Registrar on behalf of the Issuer as set out below, but no defect in said fiuther notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if official notice thereof is given as above prescribed. (a) Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (1) the CUSP numbers of all Bonds being redeemed; (2) the date of issue of the Bonds as originally issued; (3) the rate of interest borne by each Bond being redeemed; (4) the maturity date of each Bond being redeemed; and (5) any other descriptive information needed to identify accurately the Bonds being redeemed. (b) Each further notice of redemption shall be sent at least one day before the mailing of notice to Owners by first class, registered or certified mail or overnight delivery, as determined by the I 17 Bond Registrar, to all registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds and to one or more national information services that disseminate notices of redemption of obligations such as the Bonds. (c) Each check or other transfer of fimds issued for the payment of the Redemption Price of Bonds being redeemed shall bear or have enclosed the CUSP number of the Bonds being redeemed with the proceeds of such check or other transfer. The Paying Agent is also directed to comply with any mandatory standards then in effect for processing redemptions of municipal securities established by the State or the Securities and Exchange Commission. Failure to comply with such standards shall not affect or invalidate the redemption of any Bond. ARTICLE IV SECURITY FOR BONDS Section 401. Security for the Bonds. The Bonds shall be general obligations of the Issuer payable as to both principal and interest in part from special assessments levied upon the pfoperty benefited by the construction of the 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 Issuer. The balance of the principal and interest on the Bonds is payable 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 Issuer. The full faith, credit and resources of the Issuer are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Bonds as the same become due. Section 402. Levy and Collection of Annual Tax. The governing body of the Issuer shall annually make provision for the payment of principal of, premium, if any, and interest on the Bonds as the same become due by, to the extent necessary, levying and collecting the necessary taxes and/or assessments upon all of the taxable tangible property within the Issuer in the manner provided by law. The taxes and/or assessments referred to above shall be extended upon the tax rolls in each of the several years, respectively, and shall be levied and collected at the same time and in the same manner as the other ad valorem taxes of the Issuer are levied and collected. The proceeds derived from said taxes shall be deposited in the Bond and Interest Fund, shall be kept separate and apart fiom all other fimds of the Issuer shall thereafter be deposited in the Debt Service Account and shall be used solely for the payment of the principal of and interest on the Bonds as and when the same become due, taking into account any scheduled mandatory redemptions, and the fees and expenses of the Paying Agent. If at any time said taxes and/or assessments are not collected in time to pay the principal of or interest on the Bonds when due, the Treasurer is hereby authorized and directed to pay said principal or interest out of the general hds of the Issuer and to reimburse said general fimds for money so expended when said taxes are collected. 18 ARTICLE V ESTABLISHMENT OF FUNDS AND ACCOUNTS DEPOSIT AND APPLICATION OF BOND PROCEEDS Section 501. Creation of Funds and Accounts. Simultaneously with the issuance of the Bonds, there shall be created within the Treasury of the Issuer the following Funds and Accounts: (a) Improvement Fund for General Obligation Internal Improvement and Refunding Bonds, Series 20 10-A; (b) Redemption Fund for Refunded Bonds. (c) Debt Service Account for General Obligation Internal Improvement and Refunding Bonds, Series 2010-A; and (d) Rebate Fund for General Obligation Internal Improvement and Rehding Bonds, Series 20 10-A. The Funds and Accounts established herein shall be administered in accordance with the provisions of this Bond Resolution so long as the Bonds are Outstanding. Section502. Deposit of Bond Proceeds. The net proceeds received from the sale of the Bonds shall be deposited simultaneously with the delivery of the Bonds as follows: (a) All accrued interest received from the sale of the Bonds shall be deposited in the Debt Service Account. (b) The sum of $616,583.22 shall be deposited into the Redemption Fund. (c) The remaining balance of the proceeds derived from the sale of the Bonds shall be deposited in the Improvement Fund. Section503. Application of Moneys in the Improvement Fund. Moneys in the Improvement Fund shall be used for the sole purpose of (a) paying the costs of the Improvements, in accordance with the plans and specifications therefor approved by the governing body of the Issuer and on file in the office of the Clerk, including any alterations in or amendments to said plans and specifications deemed advisable and approved by the governing body of the Issuer; (b) paying interest on a portion of the Bonds during construction of the Improvements; (c) paying Costs of Issuance; and (d) transfening any amounts to the Rebate Fund required by Section 507 hereof. Upon completion of the Improvements, any surplus remaining in the hprovement Fund shall be deposited in the Debt Service Account. Section 504. (a) Substitution of Improvements; Reallocation of Proceeds. The Issuer may elect for any reason to substitute or add other public improvements to be financed with proceeds of the Bonds provided the following conditions are met: (1) the Substitute Improvement and the issuance of general obligation bonds to pay the cost of the Substitute Improvement has been duly authorized by the governing body of the Issuer in accordance with the laws of the State; (2) a resolution authorizing the use of the proceeds of the Bonds to pay the Financeable Costs of the 19 Substitute Improvement has been duly adopted by the governing body of the Issuer pursuant to this Section, (3) the Attorney General of the State has approved the amendment made by such resolution to the transcript of proceedings for the Bonds to include the Substitute Improvements; and (4) the use of the proceeds of the Bonds to pay the Financeable Cost of the Substitute Improvement will not adversely affect the tax-exempt status of the Bonds under State or federal law. (b) The Issuer may reallocate expenditure of Bond proceeds among all Improvements financed by the Bonds; provided the following conditions are met: (1) the reallocation is approved by the governing body of the Issuer; (2) the reallocation shall not cause the proceeds of the Bonds allocated to any Improvement to exceed the Financeable Costs of the Improvement; and (3) the reallocation will not adversely affect the tax-exempt status of the Bonds under State or federal law. Section 505. Application of Moneys in the Redemption Fund. Moneys in the Redemption Fund shall be paid and transferred to the Refunded Bonds Paying Agent, with irrevocable instructions to apply such amount to the payment of the Refunded Bonds on the Refunded Bonds Redemption Date. The Clerk is authorized and instructed to provide appropriate notice of redemption in accordance with the Refimded Bonds Resolution authorizing the issuanceof such Refunded Bonds. Any moneys remaining in the Redemption Fund not needed to retire the Refunded Bonds shall be transferred to the Debt Service Account. Section506. Application of Moneys in Debt Service Account. All amounts paid and credited to the Debt Service Account shall be expended and used by the Issuer for the sole purpose of paying the principal or Redemption Price of and interest on the Bonds as and when the same become due and the usual and customary fees and expenses of the Bond Registrar and Paying Agent. The Treasurer is authorized and directed to withdraw from the Debt Service Account sums sufficient to pay both principal or Redemption Price of and interest on the Bonds and the fees and expenses of the Bond Registrar and Paying Agent as and when the same become due, and to forward such sums to the Paying Agent in a manner which ensures that the Paying Agent will receive immediately available funds in such amounts on or before the Business Day immediately preceding the dates. when such principal, interest and fees of the Bond Registrar and Paying Agent will become due. If, through the lapse of time or otherwise, the Owners of Bonds are no longer entitled to enforce payment of the Bonds or the interest thereon, the Paying Agent shall return said funds to the Issuer. All moneys deposited with the Paying Agent shall be deemed to be deposited in accordance with and subject to all of the provisions contained in this Bond Resolution and shall be held in trust by the Paying Agent for the benefit of the Owners of the Bonds entitled to payment from such moneys. Any moneys or investments remaining in the Debt Service Account after the retirement of the indebtedness for which the Bonds were issued shall be transferred and paid into the Bond and Interest Fund. Section 507. Application of Moneys in the Rebate Fund. (a) There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Federal Tax Certificate. All money at any time deposited in the Rebate Fund shall be held in trust, to the extent required to satisfy the Rebate Amount (as defined in the Federal Tax Certificate), for payment to the United States of America, and neither the Issuer nor the Owner of any Bonds shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section and the Federal Tax Certificate. (b) The Issuer shall periodically determine the arbitrage rebate, if any, under Code 6 148(f) in accordance with the Federal Tax Certificate, and the Issuer shall make payments to the United States of 20 America at the times and in the amounts determined under the Federal Tax Certificate. Any moneys remaining in the Rebate Fund after redemption and payment of all of the Bonds and payment and satisfaction of any Rebate Amount, or provision made therefor, shall be deposited into the Bond and Interest Fund. (c) Notwithstandmg any other provision of this Bond Resolution, including in particular Article VI1 hereof, the obligation to pay arbitrage rebate to the United States of America and to comply with all other requirements of this Section and the Federal Tax Certificate shall survive the defeasance or payment in full of the Bonds Section508. Deposits and Investment of Moneys. Moneys in each of the Funds and Accounts shall be deposited in accordance with laws of the State, in a bank, savings and loan association or savings bank organized under the laws of the State, any other state or the United States: (a) which has a main or branch office located in the Issuer; or @) if no such entity has a main or branch office located in the Issuer, with such an entity that has a main or branch office located in the county or counties in which the lssuer is located. All such depositaries shall be members of the Federal Deposit Insurance Corporation, or otherwise as permitted by State law. All such deposits shall be invested in Permitted Investments as set forth in this Article or shall be adequately secured as provided by the laws of the State. All moneys held in the Funds and Accounts shall be kept separate and apart from all other funds of the Issuer so that there shall be no comminglmg with any other funds of the Issuer. Moneys held m any Fund or Account other than the Redemption Fund may be invested in accordance with this Bond Resolution and the Federal Tax Certificate in Permitted Investments; provided, however, that no such investment shall be made for a period extending longer than to the date when the moneys invested may be needed for the purpose for which such fund was created. All eammgs on any investments held 111 any Fund or Account shall accrue to and become a part of such Fund or Account; provided that, during the penod of construction of the Improvements, earnings on the investment of such funds may be credited to the Debt Service Account. Section 509. Redemption of Refunded Bonds. The Outstanding Series 2002-A Bonds, becoming due on May 15 and thereafter, in the aggregate the principal amount of $820,000, are hereby called for redemption and payment prior to maturity on the Refunded Bonds Redemption Date. Said Series 2002-A Bonds shall be redeemed in accordance with the Refunded Bonds Resolution by the payment of the principal thereof, together with the redemption prermum and accrued interest thereon to such Refunded Bonds Redemption Date. The Clerk is hereby directed to cause notice of the call for redemption and payment of said Series 2002-A Bonds to be given in the manner provided 111 the Refunded Bonds Resolution. The officers of the Issuer and the Refunded Bonds Paying Agent are hereby authorized and directed to take such other action as may be necessary in order to effect the redemption and payment of said Senes 2002-A Bonds as herein provided. ARTICLE VI DEFAULT AND REMEDIES Section 601. Remedies. The provisions of the Bond Resolution, including the covenants and agreements herein contained, shall constitute a contract between the Issuer and the Owners of the Bonds. If an Event of Default occurs and shall be continuing, the Owner or Owners of not less than 10% in principal amount of the Bonds at the time Outstanding shall have the right for the equal benefit and protection of all Owners of Bonds similarly situated: 21 (a) by mandamus or other suit, action or proceedings at law or in equity to enforce the rights of such Owner or Owners against the Issuer and its officers, agents and employees, and to require and compel duties and obligations required by the provisions of the Bond Resolution or by the Constitution and laws of the State; (b) by suit, action or other proceedings in equity or at law to require the Issuer, its officers, agents and employees to account as if they were the trustees of an express trust; and (c) by suit, action or other proceedings in equity or at law to enjoin any acts or things which may be unlawful or in violation of the rights of the Owners of the Bonds. Section 602. Limitation on Rights of Owners. The covenants and agreements of the Issuer contained herein and in the Bonds shall be for the equal benefit, protection, and security of the Owners of any or all of the Bonds, all of which Bonds shall be of equal rank and without preference or priority of one Bond over any other Bond in the application of the funds herein pledged to the payment of the principal of and the interest on the Bonds, or otherwise, except as to rate of interest, date of maturity and right of prior redemption as provided in this Bond Resolution. No one or more Owners secured hereby shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security granted and provided for herein, or to enforce any right hereunder, except in the manner herein provided, and all proceedings at law or in equity shall be instituted, had and maintained for the equal benefit of all Outstanding Bonds. Section603. Remedies Cumulative. No remedy conferred herein upon the Owners is intended to be exclusive of any other remedy, but each such remedy shall be cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred herein. No waiver of any default or breach of duty or contract by the Owner of any Bond shall extend to or affect any subsequent default or breach of duty or contract or shall impair any rights or remedies thereon. No delay or omission of any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein. Every substantive right and every remedy conferred upon the Owners of the Bonds by this Bond Resolution may be enforced and exercised from time to time and as often as may be deemed expedient. If action or proceedings taken by any Owner on account of any default or to enforce any right or exercise any remedy has been discontinued or abandoned for any reason, or shall have been determined adversely to such Owner, then, and in every such case, the Issuer and the Owners of the Bonds shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies, powers and duties of the Owners shall continue as if no such suit, action or other proceedings had been brought or taken. . ARTICLE VII DEFEASANCE Section 701. Defeasance. When any or all of the Bonds, redemption premium, if any, or scheduled interest payments thereon have been paid and discharged, then the requirements contained in this Bond Resolution and the pledge of the Issuer’s faith and credit hereunder and all other rights granted hereby shall terminate with respect to the Bonds or scheduled interest payments thereon so paid and discharged. Bonds, redemption premium, if any, or scheduled interest payments thereon shall be deemed to have been paid and discharged within the meaning of this Bond Resolution if there has been deposited 22 with the Paying Agent, or other commercial bank or trust company located in the State and having full trust powers, at or prior to the Stated Maturity or Redemption Date of said Bonds or the interest payments thereon, in trust for and irrevocably appropriated thereto, moneys andlor Defeasance Obligations which, together with the interest to be earned on any such Defeasance Obligations, will be sufficient for the payment of the principal of or Redemption Price of said Bonds and/or interest accrued to the Stated Maturity or Redemption Date, or if default in such payment has occurred on such date, then to the date of the tender of such payments. If the amount to be so deposited is based on the Redemption Price of any Bonds, no such satisfaction shall occur until (a) the Issuer has elected to redeem such Bonds, and (b) either notice of such redemption has been given, or the Issuer has given irrevocable instructions, or shall have provided for an escrow agent to give irrevocable instructions, to the Bond Registrar to give such notice of redemption in compliance with Section 302(u) of this Bond Resolution. Any money and Defeasance Obligations that at any time shall be deposited with the Paying Agent or other commercial bank or trust company by or on behalf of the Issuer, for the purpose of paying and discharging any of the Bonds, shall be and are hereby assigned, transferred and set over to the Paying Agent or other bank or trust company in trust for the respective Owners of the Bonds, and such moneys shall be and are hereby irrevocably appropriated to the payment and discharge thereof. All money and Defeasance Obligations deposited with the Paying Agent or such bank or trust company shall be deemed to be deposited in accordance with and subject to all of the provisions of this Bond Resolution. ARTICLE VIII TAX COVENANTS Section 801. General Covenants. The Issuer covenants and agrees that it will comply with: (a) all applicable provisions of the Code necessary to maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds; and (b) all provisions and requirements of the Federal Tax Certificate. The Mayor and Clerk are hereby authorized and directed to execute the Federal Tax Certificate in a form approved by Bond Counsel, for and on behalf of and as the act and deed of the Issuer. The Issuer will, in addition, adopt such other ordinances or resolutions and take such other actions as may be necessary to comply with the Code and with all other applicable hture laws, regulations, published rulings and judicial decisions, in order to ensure that the interest on the Bonds will remain excluded from federal gross income, to the extent any such actions can be taken by the Issuer. Section802. Survival of Covenants. The covenants contained in this Article and in the Federal Tax Certificate shall remain in ill force and effect notwithstanding the defeasance of the Bonds pursuant to Article VII hereof or any other provision of this Bond Resolution until such time as is set forth in the Federal Tax Certificate. ARTICLE IX CONTINUING DISCLOSURE REQUIREMENTS Section901. Disclosure Requirements. The Mayor and Clerk are hereby authorized and directed to execute the Disclosure Instructions in a form approved by Bond Counsel, for and on behalf of and as the act and deed of the Issuer. The Issuer hereby covenants with the Purchaser and the Beneficial Owners to provide and disseminate such information as is required by the SEC Rule and as further set forth in the Disclosure Instructions, which are incorporated herein by reference. Such covenant shall be for the benefit of and enforceable by the Purchaser and the Beneficial Owners. 23 Section 902. Failure to Comply with Continuing Disclosure Requirements. In the event the Issuer fails to comply in a timely manner with its covenants contained in the preceding section, the Purchaser and/or any Beneficial Owner may make demand for such compliance by written notice to the Issuer. In the event the Issuer does not remedy such noncompliance within 10 days of receipt of such written notice, the Purchaser or any Beneficial Owner may in its discretion, without notice or demand, proceed to enforce compliance by a suit or suits in equity for the specific performance of such covenant or agreement contained in the preceding section or for the enforcement of any other appropriate legal or equitable remedy, as the Purchaser and/or any Beneficial Owner shall deem effectual to protect and enforce any of the duties of the Issuer under such preceding section. ARTICLE X MISCELLANEOUS PROVISIONS Section 1001. Annual Audit. Annually, promptly after the end of the Fiscal Year, the Issuer will cause an audit to be made of the financial statements of the Issuer for the preceding Fiscal Year by an Independent Accountant. Within 30 days aRer the completion of each such audit, a copy thereof shall be filed in the office of the Clerk. Such audit shall at all times during the usual business hours be open to the examination and inspection by any taxpayer, any Owner of any of the Bonds, or by anyone acting for or on behalf of such taxpayer or Owner. Upon payment of the reasonable cost of preparing and mailing the same, a copy of any annual audit will, upon request, be sent to any Owner or prospective Owner. As soon as possible after the completion of the annual audit, the governing body of the Issuer shall review such audit, and if the audit discloses that proper provision has not been made for all of the requirements of this Bond Resolution, the Issuer shall promptly cure such deficiency. Section 1002. Amendments. The rights and duties of the Issuer and the Owners, and the terms and provisions of the Bonds or of this Bond Resolution, may be amended or modified at any time in any respect by resolution of the Issuer with the written consent of the Owners of not less than a majority in principal amount of the Bonds then Outstanding, such consent to be evidenced by an instrument or instruments executed by such Owners and duly acknowledged or proved in the manner of a deed to be recorded, and such instrument or instruments shall be filed with the Clerk, but no such modification or alteration shall: (a) extend the maturity of any payment of principal or interest due upon any Bond; (5) effect a reduction in the amount which the Issuer is required to pay as principal of or interest on any Bond; (c) permit preference or priority of any Bond over any other Bond; or (d) reduce the percentage in principal amount of Bonds required for the written consent to any modification or alteration of the provisions of this Bond Resolution. Any provision of the Bonds or of this Bond Resolution may, however, be amended or modified by resolution duly adopted by the governing body of the Issuer at any time in any legal respect with the written consent of the Owners of all of the Bonds at the time Outstanding. 24 Without notice to or the consent of any Owners, the Issuer may amend or supplement this Bond Resolution for the purpose of curing any formal defect, omission, inconsistency or ambiguity herein, to grant to or coder upon the Owners any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Owners, to more precisely identify the Improvements, to reallocate proceeds of the Bonds among Improvements, to provide for Substitute Improvements, to conform this Bond Resolution to the Code or future applicable federal law concerning tax-exempt obligations, or in connection with any other change therein which is not materially adverse to the interests of the Owners. Every amendment or modification of the provisions of the Bonds or of this Bond Resolution, to which the written consent of the Owners is given, as above provided, shall be expressed in a resolution adopted by the governing body of the Issuer amending or supplementing the provisions of this Bond Resolution and shall be deemed to be a part of this Bond Resolution. A certified copy of every such amendatory or supplemental resolution, if any, and a certified copy of this Bond Resolution shall always be kept on file in the office of the Clerk, and shall be made available for inspection by the Owner of any Bond or a prospective purchaser or owner of any Bond authorized by this Bond Resolution, and upon payment of the reasonable cost of preparing the same, a certified copy of any such amendatory or supplemental resolution or of this Bond Resolution will be sent by the Clerk to any such Owner or prospective Owner. Any and all modifications made in the manner hereinabove provided shall not become effective until there has been filed with the Clerk a copy of the resolution of the Issuer hereinabove provided for, duly certified, as well as proof of any required consent to such modification by the Owners of the Bonds then Outstanding. It shall not be necessary to note on any of the Outstanding Bonds any reference to such amendment or modification. The Issuer shall furnish to the Paying Agent a copy of any amendment to the Bonds or this Bond Resolution which affects the duties or obligations of the Paying Agent under this Bond Resolution. Section 1003. Notices, Consents and Other Instruments by Owners. Any notice, consent, request, direction, approval or other instrument to be signed and executed by the Owners may be in any number of concurrent writings of similar tenor and may be signed or executed by such Owners in person or by agent appointed in writing. Proof of the execution of any such instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Bond Resolution, and shall be conclusive in favor of the Issuer and the Paying Agent with regard to any action taken, suffered or omitted under any such instrument, namely: (a) The fact and date of the execution by any person of any such instrument may be proved by a certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such instrument acknowledged before such officer the execution thereof, or by affidavit of any witness to such execution. (b) The fact of ownership of Bonds, the amount or amounts, numbers and other identification of Bonds, and the date of holding the same shall be proved by the Bond Register. In determining whether the Owners of the requisite principal amount of Bonds Outstanding have given any request, demand, authorization, direction, notice, consent or waiver under this Bond Resolution, Bonds owned by the Issuer shall be disregarded and deemed not to be Outstanding under this Bond Resolution, except that, in determining whether the Owners shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds which the Owners know to be so owned shall be so disregarded. Notwithstanding the foregoing, Bonds so owned which 25 have been pledged in good faith shall not be disregarded as aforesaid if the pledgee establishes to the satisfaction of the Owners the pledgee’s right so to act with respect to such Bonds and that the pledgee is not the Issuer. Section 1004. Notices. Any notice, request, complaint, demand or other communication required or desired to be given or filed under this Bond Resolution shall be in writing, given to the Notice Representative at the Notice Address and shall be deemed duly given or filed if the same shall be: (a) duly mailed by registered or certified mail, postage prepaid; or (b) communicated via fax, with electronic or telephonic confirmation of receipt. Copies of such notices shall also be given to the Paying Agent. The Issuer, the Paying Agent and the Purchaser may fiom time to time designate, by notice given hereunder to the others of such parties, such other address to which subsequent notices, certificates or other communications shall be sent. Ail notices given by: (a) certified or registered mail as aforesaid shall be deemed duly given as of the date they are so mailed; (b) fax as aforesaid shall be deemed duly given as of the date of confirmation of receipt. If, because of the temporary or permanent suspension of regular mail service or for any other reason, it is impossible or impractical to mail any notice in the manner herein provided, then such other form of notice as shall be made with the approval of the Paying Agent shall constitute a sufficient notice. Section 1005. Electronic Transactions. The issuance of the Bonds and the transactions related thereto and described herein may be conducted and documents may be stored by electronic means. Section 1006. Further Authority. The officers and officials of the Issuer, including the Mayor and Clerk, are hereby authorized and directed to execute all documents and take such actions as they may deem necessary or advisable in order to carry out and perform the purposes of this Bond Resolution and to make ministerial alterations, changes or additions in the foregoing agreements, statements, instruments and other documents herein approved, authorized and confirmed which they may approve, and the execution or taking of such action shall be conclusive evidence of such necessity or advisability. Section 1007. Severability. If any section or other part of this Bond Resolution, whether large or small, is for any reason held invalid, the invalidity thereof shall not affect the validity of the other provisions of this Bond Resolution. Section 1008. Governing Law. This Bond Resolution shall be governed exclusively by and construed in accordance with the applicable laws of the State. Section 1009. Effective Date. This Bond Resolution shall take effect and be in full force fiom and after its adoption by the governing body of the Issuer. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 26 Clerk CERTIFICATE I hereby certify that the above and foregoing is a true and correct copy of the Bond Resolution of the Issuer adopted by the governing body on Apnl 19,201 0 as the same appears of record in my office. DATED: April 19,2010. Clerk U [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] (Signature Page to Bond Resoluhon) EXHIBTA (FORM OF BONDS) REGISTERED NUMBER - REGISTERED $ Unless this certificate is presented by an authorized representative of The Depository ’kust Company, a New York Corporation (“DTC”), to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. UNITED STATES OF AMERICA CITY OF SALINA GENERAL OBLIGATION IMPROVEMENT AND REFUNDING BONDS BOND STATE OF KANSAS ’ SERIES 2010-A Interest Maturity Rate: Date: Dated Date: May 1,2010 CUSIP: REGISTERED OWNER: PRINCIPALAMOUNT: KNOW ALL PERSONS BY THESE PRESENTS: That the City of Salina, in the County of Saline, State of Kansas (the “Issuer”), for value received, hereby acknowledges itself to be indebted and promises to pay to the Registered Owner shown above, or registered assigns, but solely fiom the source and in the manner herein specified, the Principal Amount shown above on the Maturity Date shown above, unless called for redemption prior to said Maturity Date, and to pay interest thereon at the Interest Rate per annum shown above (computed on the basis of a 360-day year of twelve 30-day months), fiom the Dated Date shown above, or fiom the most recent date to which interest has been paid or duly provided for, payable semiannually on April 1 and October 1 of each year, commencing April 1 , 201 1 (the “Interest Payment Dates”), until the Principal Amount has been paid. Method and Place of Payment. The principal or redemption price of this Bond shall be paid at maturity or upon earlier redemption to the person in whose name this Bond is registered at the maturity or redemption date thereof, upon presentation and surrender of this Bond at the principal office of the Treasurer of the State of Kansas, Topeka, Kansas (the “Paying Agent” and “Bond Registrar7,). The interest payable on this Bond on any Interest Payment Date shall be paid to the person in whose name this Bond is registered on the registration books maintained by the Bond Registrar at the close of business on the Record Date(s) for such interest, which shall be the 15th day (whether or not a business day) of the A- 1 calendar month next preceding the Interest Payment Date. Such interest shall be payable (a) by check or draft mailed by the Paying Agent to the address of such Registered Owner shown on the Bond Register or at such other address as is furnished to the Paying Agent in writing by such Registered Owner; or, (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate p-+cipal amount of Bonds, by electronic transfer to such Owner upon written notice given to the Bond Registrar by such Registered Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Registered Owner wishes to have such transfer directed. The principal or redemption price of and interest on the Bonds shall be payable in any coin or currency that, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. Interest not punctually paid will be paid in the manner established in the within defined Bond Resolution. Definitions. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the hereinafter defined Bond Resolution. Authorization of Bonds. This Bond is one of an authorized series of Bonds of the Issuer designated “General Obligation Internal Improvement and Refunding Bonds, Series 20 1 0-A,” aggregating the principal amount of $6,875,000 (the “Bonds”) issued for the purposes set forth in the Ordinance of the Issuer authorizing the issuance of the Bonds and the Resolution of the Issuer prescribing the form and details of the Bonds (jointly the “Bond Resolution”). The Bonds are issued by.the authority of and in full compIiance with the provisions, restrictions and limitations of the Constitution and laws of the State of Kansas, including K.S.A. 10-427 et seq., K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., K.S.A. 12-2101 et seq., as amended, and all other provisions of the laws of the State of Kansas applicable thereto. General Obligations. The Bonds constitute general obligations of the Issuer payable as to both principal and interest in part fiom special assessments levied upon the property benefited by the construction of certain Improvements (as said term is described in the Bond Resolution) 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 temtorial limits of the Issuer, the balance being payable fiom 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 temtorial limits of the Issuer. The full faith, credit and resources of the Issuer are hereby pledged for the payment of the principal of and interest on this Bond and the issue of which it is a part as the same respectively become due. Redemption Prior to Maturity. The Bonds are subject to redemption prior to maturity, as follows: Optional Redemption. At the option of the Issuer, Bonds maturing on October 1, 2019 and thereafter, may be called for redemption and payment prior to maturity on October 1 , 201 8 or thereafter, as a whole or in part (selection of maturities and the amount of Bonds of each maturity to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the date of redemption. Mandatory Redemption. Each of the Bonds maturing on October 1,2025 shall also be subject to mandatory redemption and payment prior to maturity on October 1, 2023, and on any October 1 thereafter, pursuant to the redemption schedule set forth in the Bond Resolution at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. A-2 Redemption Denominations. Whenever the Bond Registrar is to select Bonds for the purpose of redemption, it shall, in the case of Bonds in denominations greater than a minimum Authorized Denomination, if less than all of the Bonds then Outstanding are to be called for redemption, treat each minimum Authorized Denomination of face value of each such Bond as though it were a separate Bond in the denomination of a minimum Authorized Denomination. Notice of Redemption. Notice of redemption, unless waived, shall be given by the Issuer to the State Treasurer of Kansas, to the Purchaser of the Bonds and to the Bond Registrar in accordance with the Bond Resolution. The Issuer shall cause the Bond Registrar to not@ each Registered Owner at the address maintained on the Bond Register, such notice to be given by mailing an official notice of redemption by first class mail at least 30 days prior to the redemption date. Notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the Issuer defaults in the payment of the redemption price), such Bonds or portions of Bonds shall cease to bear interest. Book-Entry System. The Bonds are being issued by means of a bookentry system with no physical distribution of bond certificates to be made except as provided in the Bond Resolution. One Bond certificate with respect to each date on which the Bonds are stated to mature or with respect to each form of Bonds, registered in the nominee name of the Securities Depository, is being issued and required to be deposited with the Securities Depository and immobilized in its custody. The bookenby system will evidence positions held in the Bonds by the Securities Depository’s participants, beneficial ownership of the Bonds in authorized denominations being evidenced in the records of such participants. Transfers of ownership shall be effected on the records of the Securities Depository and its participants pursuant to rules and procedures established by the Securities Depository and its participants. The Issuer and the Bond Registrar will recognize the Securities Depository nominee, while the Registered Owner of this Bond, as the owner of this Bond for all purposes, including (i) payments of principal of, and redemption premium, if any, and interest on, this Bond, (ii) notices and (iii) voting. Transfer of principal, interest and any redemption premium payments to participants of the Securities Depository, and transfer of principal, interest and any redemption premium payments to beneficial owners of the Bonds by participants of the Securities Depository will be the responsibility of such participants and other nominees of such beneficial owners. The Issuer and the Bond Registrar will not be responsible or liable for such transfers of payments or for maintaining, supervising or reviewing the records maintained by the Securities Depository, the Securities Depository nominee, its participants or persons acting through such participants. While the Securities Depository nominee is the owner of this Bond, notwithstanding the provision hereinabove contained, payments of principal of, redemption premium, if any, and interest on this Bond shall be made in accordance with existing arrangements among the Issuer, the Bond Registrar and the Securities Depository. Ikansfer and Exchange, EXCEPT AS OTHERWISE PROVIDED IN THE BOND RESOLUTION, THIS GLOBAL BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. This Bond may be transferred or exchanged, as provided in the Bond Resolution, only on the Bond Register kept for that purpose at the principal office of the Bond Registrar, upon surrender of this Bond, together with a written instrument of transfer or authorization for exchange satisfactory to the Bond Registrar duly executed by the Registered Owner or the Registered Owner’s duly authorized agent, and thereupon a new Bond or Bonds in any Authorized Denomination of the same maturity and in the same aggregate principal amount shall be issued to the transferee in exchange therefor as provided in the Bond Resolution and upon payment of the charges therein prescribed. The Issuer shall pay all costs incurred in connection with the issuance, payment and initial registration of the Bonds and ’ , A-3 the cost of a reasonable supply of bond blanks. The Issuer and the Paying Agent may deem and treat the person in whose name this Bond is registered on the Bond Register as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal or redemption price hereof and interest due hereon and for all other purposes. The Bonds are issued in fully registered form in Authorized Denominations. Authentication. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the hereinafter defined Bond Resolution until the Certificate of Authentication and Registration hereon shall have been lawfully executed by the Bond Registrar. IT IS HEREBY DECLARED AND CERTIFIED that all acts, conditions, and things required to be done and to exist precedent to and in the issuance of this Bond have been properly done and performed and do exist in due and regular form and manner as required by the Constitution and laws of the State of Kansas, and that the total indebtedness of the Issuer, including this series of bonds, does not exceed any constitutional or statutory limitation. IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed by the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of its Clerk, and its seal to be affixed hereto or imprinted hereon. CITY OF SALINA, KANSAS (Facsimile Seal) AlTEST By: (facsimile) Mayor By: (facsimile) Clerk CERTIFICATE OF AUTHENTICATION AND REGISTRATION This Bond is one of-a series of General Obligation Internal Improvement and Refunding Bonds, Series 2010-A, of the City of Salina, Kansas, described in the within-mentioned Bond Resolution. Registration Date Office of the State Treasurer, as Bond Registrar and Paying Agent Topeka, Kansas, Registration Number CERTIFICATE OF CLERK STATE OF KANSAS 1 ) ss. COUNTY OF SALINE ) The undersigned, Clerk of the City of Salina, Kansas, does hereby certlfy that the within Bond has been duly registered in my office according to law as of May 1,2010. WITNESS my hand and official seal. (Facsimile Seal) By: (facsimile) * Clerk CERTIFICATE OF STATE TREASURER OFFICE OF THE TREASURER, STATE OF KANSAS DENNIS MCKINN'EY, Treasurer.of the State of Kansas, does hereby certify that a transcript of the proceedings leading up to the issuance of this Bond has been filed in the office of the State Treasurer, and that this Bond was registered in such office according to law on WITNESS my hand and official seal. By: Treasurer of the State of Kansas A-5 BOND ASSIGNMENT FOR VALUE RECEIVED, the undersigned do(es) hereby sell, assign and transfer to (Name and Address) (Social Security or Taxpayer Identification No.) the Bond to which this assignment is affixed in the outstanding principal amount of $ 7 standing in the name of the undersigned on the books of the Bond Registrar. The undersigned do(es) hereby irrevocably constitute and appoint as agent to transfer said Bond on the books of said Bond Registrar with full power of substitution in the premises. Dated Name Social Security or Taxpayer Identification No. Signature (Sign here exactly as name(s) appear on the face of Certificate) Signature guarantee: A-6 LEGAL OPINION The following is a true and correct copy of the approving legal opinion of Gilmore & Bell, P.C., Bond Counsel, which was dated and issued as of the date of original issuance and delivery of such Bonds: GILMORE & BELL, P.C. Attorneys at Law 2405 Grand Boulevard Suite 1100 Kansas City, Missouri 64 108 (PRINTED LEGAL OPINION) A-7 Gilniore & Bell, P.C. Document No. K105675\0rd2 ORDINANCE NO. 02- IoObS AN ORDWANCE AUTHORIZING THE ISSUANCE AND DELIVERY OF $2,045,000 PRINCIPAL AMOUNT OF GENERAL OBLIGATION WATER AND SEWAGE KANSAS, FOR THE PURPOSE OF REFUNDING CERTAIN OUTSTANDING COMBINED WATER AND SEWAGE SYSTEM IMPROVEMENT REVENUE BONDS OF THE CITY; PROVIDING FOR THE LEVY AND COLLECTION OF AN ANNUAL TAX FOR THE PURPOSE OF PAYING THE PRINCIPAL OF AND INTEREST ON THE BONDS AS THEY BECOME DUE; AND MAKING CERTAIN COVENANTS SYSTEM REFUNDING BONDS, SERIES 2002-A, OF THE CITY OF SALINA, ' WITH RESPECT THERETO. WHEREAS, the City of Salina, Kansas (the "City") is a City of the first class, created, organized and existing under the laws of the State; and WHEREAS, the City has previously issued pursuant to K.S.A. 12-856 et seq. its Combined Water and Sewage System Improvement Revenue Bonds, Series 1993-A, currently outstanding in the principal amount of $2,295,000 (the "Refunded Bonds"), and WHEREAS, pursuant to Charter Ordinance No. 28, the city has exempted itself from the provisions of K.S.A. 12-868 and provided substitute and additional provisions on the same subject, including provisions authorizing the issuance of the City's general obligation bonds to refund the City's revenue bonds previously issued under the K.S.A. 12-856 et sey., which include the Refunded Bonds; and WHEREAS, the City desires to refund the Refunded Bonds, and the City is authorized pursuant to the provisions of Charter Ordinance No. 28 and K.S.A. 10427 et seq. to issue the general obligation bonds herein authonzed to refund the Refunded Bonds; and WHEREAS, all legal requirements pertaining to the refunding of the Refunded Bonds have been satisfied; and WHEREAS, the governing body of the City hereby finds and determines it is necessary for the City to authorize the issuance and delivery of its general obligation bonds to refund the Refunded Bonds; NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNTNG BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: "Act" means the Constitution and all applicable statutes of the State including but not limited to K.S.A. 10-101 et seq. and 10-427 et seq., Article 12, 5 5 of the Constitution of the State of Kansas and Charter Ordinance No. 28 of the City, all as amended and supplemented. ! "Bond and Interest Fund" means the Bond and Interest Fund of the City for its general obligation bonds. "Bonds" means the General Obligation Water and Sewage System Refunding Bonds, Series 2002-A authorized by this Ordinance in the aggregate pnncipal amount of $2,045,000. "City" means the City of Salina, Kansas. "City Clerk" means the appointed and acting City Clerk or, in the City Clerk's absence, the appointed and/or elected Deputy or Acting City Clerk of the City. "Code" means the Internal Revenue Code of 1986, as amended, and the applicable regulations proposed or promulgated thereunder of the United States Department of the Treasury. "Mayor" means the elected and acting Mayor of the City or, in the Mayor's absence, the appointed and/or elected Vice or Acting Mayor of the City. "Ordinance" means this Ordinance authorizing the issuance of the Bonds. "Refunded Bonds" means the combined 'water and sewage system improvement revenue bonds referred to in the preamble of this Ordinance. "State" means the state of Kansas. "Treasurer" means the appointed and acting Treasurer of the City or, in the Treasurer's absence, the appointed and/or elected Deputy or Acting Treasurer of the City. tion of andruLkcurttv for the Rnnds. These Bonds shall be issued for the purpose of providing funds to refunded the Refunded Bonds and to pay the costs of issuance of the Bonds. The Bonds shall be general obligations of the City 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. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Bonds as the same become due. Sectron. ckdltmls of - . The Bonds shall be dated and bear interest, shall mature and be payable at such times, shall be in such forms, shall be subject to redemption and payment prior to the maturity thereof, and shall be issued and delivered in the manner prescribed and subject to the provisions, covenants and agreements set forth in a resolution hereinafter adopted by the governing body of the City. Siw.md. 1 A-W and Cnllemm of AnnmLGx The governing body of the City shall annually make provision for the payment of principal of, premium, if any, and interest on the Bonds as the same become due by levying and collecting the necessary taxes upon all of the taxable tangible property within the City in the manner provided by law. \ -7- The taxes referred to above shall be spread upon the tax rolls and shall be levied and collected at the same time and in the same manner as the gencral ad valorem taxes of the City are levied and collected, and the proceeds derived from the taxes shall be deposited in the Bond and Interest Fund. If at any time the taxes are not collected in time to pay the principal of or interest on the Bonds when due, the Treasurer is hereby authorized and directed to pay the principal or interest out of the general funds of the City and to reimburse the general funds for money so expended when the taxes are collected. ,'kh115. Tax Covenants. The City covenants and agrees that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes. The City covenants and agrees that it will use the proceeds of the Bonds as soon as practicable and with all reasonable dispatch for the purpose for which the Bonds are issued as previously set forth, and that it will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the City, or take or omit to take any action that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 14S(a) of the Code. To that end, the City will comply with all requirements of Section 148 of the Code to the extent applicable to the Bonds. The Bonds are deemed designated under Section 265(b)(3)(D)(ii) of the Code. In addition, the City hereby represents that: (1) the aggregate face amount of all tax-exempt obligations (other than private activity bonds which are not "qualified 50 1 (c)(3) bonds") which will be issued by the City (and all subordinate entities thereof) during calendar year 2002 is not reasonably expected to exceed $10,000,000; and (2) the City (including all subordinate entities thereof) will not issue an aggregate principal amount of obligations designated by the City to be "qualified tax-exempt obligations" during the calendar year in which the Bonds are issued, including the Bonds, in excess of $10,000,000, without first obtaining an opinion of bond counsel that the designation of the Bonds as "qualified tax-exempt obligations" will not be adversely affected. The City covenants and agrees that it will not use any portion of the proceeds of the Bonds, including any investment income earned on such proceeds, directly or indirectly, in a manner that would cause any Bond to be a "private activity bond" within the meaning of Section 141(a) of the Code. Sectlon. Further. The Mayor, City Clerk and other City officials are authonzed and directed to execute such documents and take such actions as they may deem necessary or advisable in order to carry out the purposes of this Ordinance. Sectmd. &ummgL~ The Ordinance and the Bonds shall be governed by and construed in accordance with the applicable laws of the State. Sectlon. Effective. This Ordinance shall take effect and be in full force from and after its passage by the governing body of the City and publication in the official City newspaper. (SEAL) , ATAEST PASSED by the governing body of the City on January 14,2002. L City Clerk -4- i Gilmore & Bell, P.C. Document No. 105675Res2 RESOLUTION NO. 02- 5%00 OF CITY OF SALINA, KANSAS ADOPTED JANUARY 14,2002 $2,045,000 GENERAL OBLIGATION WATER AND SEWAGE SYSTEM REFUNDING BONDS SERIES 2002-A TABLE OF CONTENTS Eage Title ..................................................................................................................... 1 Recitals ............................................................................................................... 1 DEFINITIONS Section 101. Definitions of Words and Terms ......................................................................... 1 DETAILS OF THE BONDS Section 20 1. Section 202. Section 203. Section 204. Section 205. Section 206. Section 207. Section 208. Section 209. Section 210. Section 2 1 1. Section 212. Authorization of the Bonds ................................................................................. Description of the Bonds .................................................................................... Designation of Paying Agent and Bond Registrar .............................................. Method and Place of Payment ofthe Bonds ....................................................... Method of Execution and Authentication of the Bonds ..................................... Registration, Transfer and Exchange of Bonds .................................................. Surrender and Cancellation of Bonds ................................................................. Temporary Bonds.. .............................................................................................. Mutilated, Lost, Stolen or Destroyed Bonds ...................................................... Delivery of the Bonds ......................................................................................... Book-Entry Bonds; Securities Depository .......................................................... Sale of Bonds - Bond Purchase Agreement ........................................................ 4 4 4 4 5 5 6 6 6 7 7 8 REDEMPTION OF THE BONDS Section 30 1. Redemption ......................................................................................................... 8 ESTABLISHMENT OF FUNDS AND ACCOUNTS Section 401. Creation of Funds and Accounts ......................................................................... 8 Section 402. Administration of Funds and Accounts .............................................................. 9 -1- APPLICATION OF BOND PROCEEDS Section 501. Section 502. Section 503. Disposition of Bond Proceeds ............................................................................ Withdrawals from the Improvement Fund .......................................................... Surplus in the Improvement Fund ....................................................................... . Section 506. Redemption of Refunded Bonds ........................................................................ PAYMENT OF THE BONDS Section 60 1. Section 602. Section 603. Application of Moneys in the Principal and Interest Account ............................ Transfer of Funds to Paying Agent ..................................................................... Surplus in Principal and Interest Account .......................................................... AmcLEMI DEPOSITS AND INVESTMENT OF FUNDS Section 701. Deposits .............................................................................................................. Section 702. Investments ......................................................................................................... Section 703. Deposits into and Application of Moneys in the Rebate Fund .......................... 9 9 9 10 10 10 10 11 11 11 DEFAULT AND REMEDIES Section 80 1. Remedies ............................................................................................................. 11 Section 803. Remedies Cumulative ......................................................................................... 12 Section 802. Limitation on Rights of Bondowners ................................................................. 12 A.ImcmB AMENDMENTS Section 90 1. Amendments ....................................................................................................... 12 Section 902. Written Evidence of Amendments ...................................................................... 13 A€mcIEx DEFEASANCE .. -11- i Section 1001 . Defeasance .......................................................................................................... Section 1 10 1 . Disclosure Requirements .................................................................................... . MISCELLANEOUS PROVISIONS Section 120 1 . Section 1202 . Section 1204 . Section I205 . Section 1206 . Preliminary Official Statement and Official Statement ...................................... Rebate Covenants ............................................................................................... Further Authority ................................................................................................ Governing Law ................................................................................................... Effective Date ..................................................................................................... Section 1203 . Severability ......................................................................................................... Adoption ............................................................................................................. Signatures and Seal ............................................................................................. 13 14 14 14 15 15 15 15 15 15 Exhibit A . Bond Form Exhibit B . Continuing Disclosure Instructions -111- RESOLUTION NO. 02-- A RESOLUTION PRESCRIBING THE FORM AND DETAILS OF AND AUTHORIZING THE DELIVERY OF $2,045,000 PRINCIPAL AMOUNT OF GENERAL OBLIGATION WATER AND SEWAGE SYSTEM REFUNDING BONDS, AUTHORIZED BY ORDINANCE NO. 02-- OF THE CITY AND MAKING CERTAIN COVENANTS WITH RESPECT THERETO. SERIES 2002-A, OF THE CITY OF SALINA, KANSAS, PREVIOUSLY WHEREAS, the City has adopted the Ordinance authorizing the issuance of the Bonds; and WHEREAS, pursuant to the terms of the Ordinance it is necessary for the governing body of the City to adopt a resolution prescribing certain details and conditions and to make certain covenants with respect to the issuance of the Bonds; NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: ARTxmu DEFINITIONS "Act" means the Constitution and all applicable statutes of the State including but not limited to K.S.A. 10-101 et seq. and 10-427 et seq., Article 12, Q 5 of the Conshtution of the State of Kansas and Charter Ordinance No. 28 of the City, all as amended and supplemented. "Arbitrage Instructions" means the Arbitrage Instructions (dated as of the date of issuance of the Bonds) relahng to certain matters within the scope of Section 148 of the Code, as the same may be amended or supplemented in accordance with its terms. "Authorized Investments" means investments authorized by K.S.A. 10-1 31, as amended from time to time, or as otherwise permitted under the laws of the State. "Bond and Interest Fund" means the Bond and Interest Fund of the City for its general obligation bonds. "Bond Counsel" means the fm of Gilmore & Bell, P.C., or any other attorney or fm of attorneys whose expertise in matters relating to the issuance of obligations by states and their political subdivisions is nationally recognized and acceptable to the City. "Bondowner" shall have the same meaning as the term Owner. "Bond Purchase Agreement'' means the Bond Purchase Agreement dated as of January 14, 2002 between the City and the Purchaser. "Bond Registrar" means the Treasurer of the State, Topeka, Kansas, and its successors and assigns. I "Bonds" means the City's General Obligation Water and Sewage System Refunding Bonds, Series 2002-A Bonds in the aggregate principal amount of $2,045,000. "Cede & Co." means Cede & Co., as nominee name of The Depository Trust Company, New York, New York. "City" means the City of Salina, Kansas. "City Clerk" means the duly appointed and acting City Clerk of the City or, in the City Clerk's absence, the duly appointed and/or elected Deputy or Acting City Clerk of the City. "Code" means the Internal Revenue Code of 1986, as amended, and the applicable regulations proposed or promulgated thereunder of the United States Department of the Treasury. "Continuing Disclosure Instructions" means the Continuing Disclosure Instructions dated May 6, 1996 and attached as ExbkEi to Resolution No. 96-5007 of the City (pertaining to General Obligation Internal Improvement Bonds, Series 1996-A of the City), as from time to time amended and attached hereto as ExhdxLR. .. "Costs of Issuance" shall mean all costs of issuing the Bonds, including all publication, printing, signing and mailing expenses but not limted to, registration fees, all fees and expenses of legal counsel, and any expenses incurred in connection with receiving ratings on the Bonds, any financial advisory fees and all other related expenses. "Costs of Issuance Fund" means the fund by that name referred to in Sectinn 40 L hereof. "Interest Payment Dates" means April 1 and October 1 of each year, commencing October 1, 2002, and ending on the maturity date of the Bonds, or such other time as the Bonds are paid. ''Mayortt means the duly elected and acting Mayor of the City or, in the Mayor's absence, the duly appointed andor elected Mayor or acting Mayor of the City. tOrdinancett means Ordinance No. 02-- of the City authorizing the issuance of the Bonds. "Original Purchaser" means George K. Baum & Company, Kansas City, Missouri. "Outstanding" means as of a particular date, all Bonds heretofore issued, authenticated and delivered under the provisions of this Resolution, except: (a) Bonds cancelled by the Paying Agent or delivered to the Paying Agent for cancellation pursuant to this Resolution; (b) Bonds for the payment or redemption of which monies or investments have been deposited in accordance with this Resolution; and (c) Bonds in exchange for or in lieu of which other Bonds have been authenticated and delivered pursuant to this Resolution. -2- "Owner" or "Registered Owner" when used with respect to any Bond means the person in whose name such Bond is registered on the registration books of the City as maintained by the Bond Registrar. "Participants" means those financial institutions for whom the Securities Depository effects bookentry transfers and pledges of securities deposited with the Securities Depository, as such listing of Participants exists at the time of such reference. "Paying Agent" means the Treasurer of the State, Topeka, Kansas, and any successors and assigns. "Principal and Interest Account" means the Principal and Interest Account for Salina, Kansas, General Obligation Water and Sewage System Rehnding Bonds, Series 2002-A, created in the City's Bond and Interest Fund. "Principal Payment Dates'' means October 1 of the years as set forth in Sectinn 303. of this Resolution, or until such time as the aggregate principal amount of the Bonds has been paid or prowsion is made for the payment of the Bonds. "Purchase Price" means 100% of the principal amount of the Bonds plus accrued interest to the date of delivery to be paid by the Original Purchaser, less an underwriter's discount of $20,450 and less an original issue discount of $2,743.45. "Rebate Fund" means the Rebate Fund for Salina, Kansas, General Obligation Water and Sewage System Refunding Bonds, Series 2002-A, created herein. "Record Dates" means the fifteenth day of each month preceding the Interest Payment Dates of each year the Bonds are Outstanding. "Refunded Bonds" means the combined water and sewage system revenue bonds referred to in the preamble of the Ordinance. "Representation Letter" means the Representation Letter, if any is required, from the City to the Securities Depository with respect to the Bonds. "Resolution" means this resolution relating to the Bonds. "Securities Depository" means, initially, The Depository Trust Company, New York, New York, and its successors and assigns. "State" means the state of Kansas. "Treasurer1' means the duly appointed and acting Treasurer of the City or, in the Treasurer's absence, the duly appointed Deputy or acting Treasurer of the City. -3 - DETAILS OF THE BONDS of the. The Bonds have been issued pursuant to the Ordinance for the purpose of providing funds to refind the Refunded Bonds and to pay the costs of issuance of the Bonds. of the Ronds. The Bonds shall consist of fully registered bonds in the denomination of $5,000 or any integral multiple thereof, shall be numbered in such manner as the Bond Registrar shall determine, shall be in substantially the form set forth in Exhhhl to this Resolution and may be in typewritten form and shall be dated January 15, 2002. All of the Bonds shall become due on the Principal Payment Dates and shall bear interest fiom the date thereof as follows: 0 MATURITY PRINCIPAL, INTEREST QcmEmu AI!dQmx RATE 2002 2003 2004 2005 2006 2007 2008 2009 2010 201 1 2012 2013 $90,000 150,000 150,000 155,000 160,000 165,000 170,000 185,000 190,000 200,000 2 10,000 220,000 3 .OO% 3.00% 3.00% 3.20% 3.40% 3.70% 3 .go% 4.10% 4.20% 4.25% 4.35% 4.50% Interest on the Bonds at the rates stated above (computed on the basis of a 360-day year of twelve 30-day months) from the date thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for, shall be payable on the Interest Payment Dates to the Owners whose names appear on the books maintained by the Bond Registrar at the close of business on the Record Dates. of Pa R-. The Treasurer of the State, Topeka, Kansas, is hereby designated as the Paying Agent and Bond Registrar for the Bonds. The Mayor and City Clerk of the City are hereby authorized and empowered to execute on behalf of the City an agreement with the Bond Registrar and Paying Agent for the Bonds. of Pay The principal of, premium, if any, and interest on the Bonds shall be payable in any coin or currency which, on the respectwe dates of payment, is legal tender for the payment of debts due the United States of Amenca. The principal of and any premium on the Bonds shall be paid to the Registered Owner of each Bond upon presentation of the Bond at the maturity or redemption date to the Paying Agent for cancellation. The interest payable on each Bond on any Interest Payment Date shall be paid to the Registered Owner of such Bond as shown on the Bond Register at the close of business on the Record -4- Date for such interest (a) by check or draft mailed by the Paying Agent to such Registered Owner at the address shown on the Bond Register or (b) in the case of an interest payment to any Registered Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Registered Owner upon written notice given to the Paying Agent by such Registered Owner not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank (which shall be in the continental United States), address, ABA routing number and account number to which such Registered Owner wishes to have such transfer directed. The Paying Agent shall keep in its offices a record of payment of principal of, premium, if any, and interest on all Bonds. .. of Auhnhcahnn of the Rands. The Bonds shall be executed for and on behalf of the City by the manual or facsimile signature of the Mayor, attested by the manual or facsimile signature of the City Clerk and the seal of the City'shall be affixed thereto or imprinted on the Bonds. The Bonds shall be registered in the office of the City Clerk, and evidenced by the manual or facsimile signature of the City Clerk with the seal of the City affixed to or imprinted on the Bonds. The Bonds shall also be registered in the office of the State Treasurer, evidenced by the manual or facsimile signature of the State Treasurer with the seal of the State Treasurer affixed to or imprinted on the Bonds. In the event that any of the officers shall cease to hold such offices before the Bonds are issued and delivered, the Bonds may be issued and transferred to other Owners as though the officers had not ceased to hold office, and such signatures appearing on the Bonds shall be valid and sufficient for all purposes as if they had remained in ofice until such issuance or transfer. The Bonds shall not be valid obligations under the provisions of this Resolution until the Certificate of Authentication appearing on each bond is executed by the Bond Registrar or a duly authorized representative of the Bond Registrar. It is not necessary that the same representative of the Bond Registrar execute the certificate of authentication on all of the Bonds. e. of RondR. As long as the Bonds remain Outstanding, the City shall cause the Bond Registrar to keep the books for the registration and transfer of the Bonds. Upon presentahon of the necessary documents the Bond Regstrar shall transfer or exchange any Bond(s) for new Bond(s) in an authonzed denomination of the same maturity and for the same aggregate principal amount as the Bond(s) which was presented for transfer or exchange. All Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Bond Registrar, duly executed by the Registered Owner thereof or by the Registered Owner's duly authorized agent. In addition, all Bonds presented for transfer or exchange shall be surrendered to the Bond Registrar for cancellation. Prior to delivery of the new Bond(s) to the transferee, the Bond Reptrar shall register the same in the registration books kept by the Bond Registrar for such purpose and shall authenticate each Bond. The City shall pay the fees of the Bond Registrar for regstration and transfer of the Bonds and the cost of printing a reasonable supply of registered bond blanks. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners. -5- I The City and the Bond Registrar shall not be required to issue, register, transfer or exchange any Bonds during a period beginning on the day following the Record Date preceding any Interest Payment Date and ending at the close of business on the Interest Payment Date or any Bonds which have been called for redemption in accordance with AhddU of this Resolution. New Bonds delivered upon any transfer or exchange shall be valid obligations of the City, evidencing the same debt as the Bonds surrendered, shall be secured by the Resolution and shall be entitled to all of the security and benefits hereof to the same extent as the Bonds surrendered. The City, Bond Registrar and Paying Agent may deem and treat the person in whose name any Bond is registered as the absolute Owner thereof, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of, redemption premium, if any, and interest on such Bond and for all other purposes, and neither the City, Bond Registrar and Paying Agent shall be affected by any notxe to the contrary. b. Whenever any Outstanding Bonds are delivered to the Bond Registrar for cancellation such Bond shall be canceled by the Bond Registrar upon payment of the principal amount of the Bond and interest thereon or replacement pursuant to the Resolution, and the canceled Bond shall be returned to the City. SecmdQ8. Mutilated.T,ost.StolenestmDeRtroyed Rands . In the event Bond is mutilated, lost, stolen or destroyed, the City may execute and the Bond Registrar may authenticate a new Bond of the same date, maturity, denomination and interest rate, as the mutilated, lost, stolen or destroyed Bond; provided, that in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the City or the Bond Registrar, and, in the case of any lost, stolen or destroyed Bond there shall be first furnished to the Bond Registrar and the City evidence of such loss, theft or destruction satisfactory to them, together with an indemnity satisfactory to the City and the Bond Registrar. In the event any such Bond shall have matured, instead of issuing a duplicate Bond, the City and Bond Registrar may pay the same without surrender thereof. The City and Bond Registrar may charge to the Registered Owner of such Bond their reasonable fees and expenses in connection with replacing any Bond or Bonds mutilated, stolen, lost or destroyed. Sectinn. ~~€3. Until definitive Bonds are prepared, the City may execute, in the same manner_ as is prowded in the Resolution and upon the request of the City, the Bond Registrar shall authenticate and deliver, in lieu of definitive Bonds but subject to the same promions, limitations and conditions as the definitive Bonds, one or more temporary Bonds substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, in denominations authonzed herein, authonzed by the City and with such omissions, insertions and variations as may be appropriate to temporary Bonds. The City at its own expense shall prepare and execute and, upon the surrender of such temporary Bonds for exchange and upon the cancellation of such surrendered temporary Bonds, the Bond Registrar shall authenticate and, without charge to the Owner thereof, deliver in exchange therefor definitive Bonds of the same aggregate principal amount and maturity as the temporary Bonds surrendered. If the City shall authorize the issuance of temporary Bonds in more than one denomination, the Registered Owner of any temporary Bond or Bonds may, at such Registered Owner's option, surrender the same to the Bond Registrar in exchange for another temporary Bond or Bonds of like aggregate principal amount and maturity of any other authorized denomination or denominations, and thereupon the -6- City shall execute and the Bond Registrar shall authenticate and, upon payment of any applicable taxes, fees and charges, shall deliver a temporary Bond or Bonds of like aggregate pnncipal amount and maturity in such other authorized denomination or denominations as shall be requested by such Owner. All temporary*Bonds surrendered in exchange either for another temporary Bond or Bonds or for a definitive Bond or Bonds shall be canceled by the Bond Registrar. Delivery of the Rands. The Mayor and City Clerk are hereby authorized and directed to cause the Bonds to be registered in the ofices of the City Clerk and the State Treasurer as provided by law, and, when duly executed and registered, to deliver the Bonds to the Original Purchaser, upon receipt by the City of the Purchase Price. (a) The Bonds shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no beneficial owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds as provided in subsection (b) hereof. It is anticipated that during the term of the Bonds, the Securities Depository will make book- entry transfers among its Participants and receive and transmt payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Bond Registrar authenticates and delivers Replacement Bonds to the beneficial owners as described in subsection (b). (b) (1) If the City determines (A) that the Securities Depository is unable to properly discharge its responsibilities, or @) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (C) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the beneficial owners of the Bonds, or (2) if the Bond Registrar receives written notice from Participants havlng interests in not less than 50% of the Bonds Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the beneficial owners of the Bonds, then the Bond Registrar shall notify the Owners of such detemation or such notice and of the availability of certificates to Owners requesting the same, and the Bond Registrar shall register in the name of and authenticate and deliver Replacement Bonds to the beneficial owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (l)(A) or (l)(B) of this subsection (b), the City, with the consent of the hereof to Bond Registrar, may select a successor securities depository in accordance with Sectinn 21 1 (c) effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Bond. Upon the issuance of Replacement Bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Bond Registrar, to the extent applicable with respect to such Replacement Bonds. If the Secmties Depository resigns and the City, the Bond Registrar or Owners are unable to locate a qualified successor of the Securities Depository in accordance with Samn 3.1 1 (c) hereof, then the Bond Registrar shall authenticate and cause delivery of Replacement Bonds to Owners, as provided herein. The Bond Registrar may rely on information from the Securities Depository and its Participants as to the names of the beneficial owners of the Bonds. The cost of printing, registration, authentication and delivery of Replacement Bonds shall be paid for by the City. -7- (c) In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securihes depository and registered clearing agency under the Securities Exchange Act of 1934, as amended, the City may appoint a successor Securities Depository provided the Bond Registrar receives written evidence satisfactory to the Bond Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Bond Registrar upon its receipt of a Bond or Bonds for cancellation shall cause the delivery of Bonds to the successor Securities Depository in appropriate denominations and form as provided herein. (d) The execution and delivery of a Representation Letter to DTC by the Mayor is hereby authorized and approved. i. The Mayor is hereby authorized to enter into the Bond Purchase Agreement between the City and the Original Purchaser in substantially the form submitted to the governing body concurrently with the adoption of the Resolution, under which the City agrees to sell the Bonds to the Original Purchaser upon the terms and conditions set forth therein and with such changes therein as shall be approved by the Mayor, and the Mayor is hereby authorized to execute the Bond Purchase Agreement for and on behalf of the City, the Mayor's signature thereon being conclusive evidence of his or her approval thereof. REDEMPTION OF THE BONDS TI 301. -. At the option of the City, Bonds maturing on October 1,2010 and thereafter may be called for redemption and payment prior to maturity on October 1, 2009, and thereafter in whole at any time or in part (the matunties and principal amounts of Bonds of each maturity to be redeemed will be determined by the City) on any interest payment date, at the redemption price of 100% (expressed as a percentage of the pnncipal amount), plus accrued interest thereon to the date of redemption. 303. Selection of Rmdq to he Tbxkmml. The Bonds shall be redeemed only in the principal amount of $5,000 or any integral multiple thereof. Bonds of less than a full maturity to be redeemed and paid prior to maturity shall be selected in such manner as the Bond Registrar acting on behalf of the City shall determine. In the case of a partial redemption of Bonds by lot when Bonds of denominations greater than $5,000 are then Outstanding, then for all purposes in connection with such redemption each $5,000 of face value shall be treated as though it were a separate Bond of the denomination of $5,000. If it is determined that one or more, but not all, of the $5,000 units of face value represented by any Bond is selected for redemption, then upon notice of intention to redeem such $5,000 unit or units, the Owner or the Owner's duly authorized agent shall forthwith present and surrender such Bond to the Bond Registrar: (i) for payment of the redemption price (including the redemption, if any, and interest to the date fixed for redemption) of the $5,000 unit or units of face value called for redemption; and (ii) for exchange, without charge to the Owner thereof, for a new Bond(s) of the aggregate principal amount of the -8- f unredeemed portion of the principal amount of such Bond. If the Owner of any Bond of a denomination greater than $5,000 shall fail to present such Bond as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of the amount called for redemption. on 701. Notice of Tidem@n. In the event the City desires to call the Bonds for redemption prior to maturity, written notice of such intent shall be provlded in accordance with K.S.A. 10-129, as amended. Unless waived by any Owner of Bonds to be redeemed, if the City shall call any Bonds for redemption and payment pnor to the maturity thereof, the City or the Bond Registrar and Paying Agent on behalf of the City shall give written notice of its intention to call and pay said Bonds on a specified date, the same being described by maturity, said nohce to be mailed by United States first class mail addressed to the Owners of said Bonds, such notice to be mailed not less than 30 days prior to the date fixed for redemption. The City and Bond Registrar shall also give such additional notice as may be required by State law in effect as of the date of such notice. All official notices of redemption shall be dated and shall state (1) the redemption date, (2) the redemption price, (3) if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed, (4) that on the redemption date the redemption price will become due and payable upon each such Bond or portion -thereof called for redemption, and that interest thereon shall cease to accrue fiom and after said date, and (5) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal office of the Paying Agent. hor to any redemption date, the City shall deposit with the Payng Agent an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. Upon surrender of such Bonds for redemption in accordance mth said notice, such Bonds shall be paid by the Paying Agent at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. Upon surrender for any partial redemphon of any Bond, there shall be prepared for the Registered Owner a new Bond or Bonds of the same matunty in the amount of the unpaid principal. All Bonds which have been redeemed shall be cancelled and destroyed by the Paying Agent and shall not be reissued. For so long as the Securities Depository is effecting book-entry transfers of the Bonds, the Bond Registrar shall prowde the notices specified in this Section to the Secunties Depository. It is expected that the Securities Depository shall, in turn, notify its Participants and that the Participants, in turn, will nohfy or cause to be notified the beneficial owners. Any failure on the part of the Securities Depository or a Participant, or failure on the part of a nominee of a beneficial owner of a Bond (hawng been mailed notice from the Bond Registrar, the Securities Depository, a Participant or otherwise) to notify the beneficial owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. Sectlnn. fnr Rdemphm . Whenever any Bond is called for redemption and payment as provided in this Article, all interest on such Bond shall cease fiom and after the date for which such call is made, provided funds are available for its payment at the pnce specified above. - ESTABLISHMENT OF FUNDS AND ACCOUNTS -9- i of Funds-. Simultaneously with the issuance of the Bonds, there shall be created within the Treasury of the City the following finds and accounts: (a) Principal and Interest Account for Salina, Kansas, General Obligation Water and Sewage System Refunding Bonds, Series 2002-A; and (b) Cost of Issuance Account for Salina, Kansas, General Obligation Water and Sewage System Refunding Bonds, Series 2002-A; and (c) Rebate Fund for Salina, Kansas, General Obligahon Water and Sewage System Refunding Bonds, Series 2002-A. of F-. The funds and accounts established herein shall be administered in accordance with the provisions of the Resolution so long as the Bonds are outstanding. APPLICATION OF BOND PROCEEDS d Prod. The proceeds of the Bonds, upon issuance and delivery thereof, shall be deposited as follows: (a) In the Principal and Interest Account, a sum equal to the accrued interest on the Bonds. (b) In the Costs of Issuance Fund, a sum from the proceeds of the Bonds sufficient to pay Costs of Issuance. (c) To the paying agent for the Refimded Bonds, the remaining proceeds of the Bonds, a sum from the City's Principal and Interest Account for Combined Water and Sewage System Improvement Revenue Bonds, Series 1993-A and a sum from the Reserve Account for Combined Water and Sewage System Improvement Revenue Bonds, Series 1993-A which, together with the earnings to accrue on such moneys, will be sufficient for the payment of the principal of and interest on the Refunded Bonds. Pursuant to instructions to be given to the paying agent for the Refunded Bonds, all or a portion of such funds will be used to purchase United States government obligations becoming due on or before April 1, 2002, the date on whch all remaining principal and interest on the Refunded Bonds w11 become due and payable. 5LxhmxQ. L . Moneys in the Costs of Issuance Account shall be used to pay the Costs of Issuance. Any funds remaining in the Costs of Issuance Account after payment of all Costs of Issuance, but not later than 90 days after the issuance of the Bonds, shall be transferred to the Principal and Interest Account and used to pay a portion of the first principal and interest due on the Bonds. n of RefundebBnnds. The followmg portions of the Refunded Bonds are hereby called for redemption and payment prior to maturity as follows: -10- Principal Redemption Price Redemption Amount Maturities (“A of Principal Series Date Redeemed Redeemed AmnunO 1993-A 04/1/02 $2,295,000 * 10/1/02 through 10/1/13 100% In accordance with the requirements of the resolution of the City authorizing the issuance of the Refunded Bonds, the Mayor, City Clerk and other officials of the City are hereby directed to cause notice of the call for redemption and payment of the Refunded Bonds to be gwen in the manner provided in such resolution and the Act. The Mayor, City Clerk and other officials of the City are hereby authorized and directed to take such other action as may be necessary in order to effect the redemption and payment of the Refunded Bonds as herein provided. PAYMENT OF THE BONDS 601. .. .. of Mays in the 7 . All amounts paid and credited to the Principal and Interest Account shall be expended and used by the City for the sole purpose of paying the principal of, premium, if any, and interest on the Bonds as and when the same become due and paying the usual and customary fees and expenses of the Paying Agent. m. The Treasurer is hereby authorized and directed to withdraw from the Principal and Interest Account and forward to the Paying Agent sums sufficient to pay both principal of and premium, if any, and interest on the Bonds as and when the same become due, and also to pay the charges made by the Paying Agent for acting in such capacity in the payment of principal and interest on the Bonds, and said charges shall be forwarded to the Paying Agent over and above the amount of the principal of, premium, if any, and interest on the Bonds. If, through the lapse of time, or otherwise, the Owners of Bonds shall no longer be entitled to enforce payment of their obligations, it shall be the duty of the Paying Agent forthwith to return said funds to the City. All moneys deposited with the Paying Agent shall be deemed to be deposited in accordance with and subject to all of the prowsions contained in the Resolution. .. in -. Any moneys or investments remaining in the Principal and Interest Account after the retirement of the indebtedness for which the Bonds were issued shall be transferred and paid into the Bond and Interest Fund of the City. DEPOSITS AND INVESTMENT OF FUNDS 70L. R~DSLLS. Cash moneys in each of the funds and accounts created by this Resolution shall be deposited in a bank or banks or federal or state chartered savings and loan association(s), as permitted by Kansas law, and all such deposits shall be adequately secured by the bank or banks or sawngs and loan associations holding such deposits in accordance with State law. -1 1- nn 703. Tnvestment8. Moneys held in the hnds and accounts herein created by this Resolution in conjunction with the issuance of the Bonds may be invested by the City in Authorized Investments, or in other investments allowed by State law in the amounts and maturing at such times as shall reasonably provide for moneys to be available when required in said accounts or funds; provided, however, that no such investment shall be made for a period extending longer than to the date when the moneys invested may be needed for the purpose for which the fund or account was created. All interest on any Authorized Investment held in any fimd or account shall (except amounts required to be deposited into the Rebate Fund in accordance with the Arbitrage Instructions) accrue to and become a part of such fund or account. In determining the amount held in any fund or account under the provlsions of the Resolution, Authorized Investments shall be valued at their principal par value or at their then market value, whichever is lower. (a) There shall be deposited in the Rebate Fund such amounts as are requlred to be deposited therein pursuant to the Arbitrage Instructions. Subject to the payment provisions provided in subsection (b) below, all money in the Rebate Fund shall be held in trust, to the extent required to pay arbitrage rebate to the United States, and neither the City nor the Owner of any Bond shall have any rights in or claim to such money. All amounts in the Rebate Fund shall be governed by this Section and by the Arbitrage Instructions (which are incorporated herein by reference). (b) Pursuant to the Arbitrage Instructions, the City shall pay rebate installments and the final rebate payments to the United States. Any moneys remaining in the Rebate Fund after redemption and payment of all of the Bonds and payment and satisfaction of any rebate amounts, or provision made therefor, shall be withdrawn and released to the City. (c) Notwithstanding any other prowsion of the Resolution, including in particular this Article, the obligation to remit rebatable arbitrage to the United States and to comply with all other requirements of this Section, the preceding Section and the Arbitrage Instructions shall survive the defeasance or payment in full of the Bonds. DEFAULT AND REMEDIES ROC. Remedies. The prowsions of the Resoluhon, including the covenants and agreements herein contained, shall constitute a contract between the City and the Owners of the Bonds. The Owner or Owners of any of the Bonds at the time Outstanding shall have the right for the equal benefit and protection of all Owners of Bonds similarly situated: (a) by mandamus or other suit, action or proceedings at law or in equity to enforce the rights of such Owner or Owners against the City and its officers, agents and employees, and to require and compel duties and obligations required by the provisions of the Resolution or by the Constitution and laws of the State; (b) by suit, action or other proceedings in equity or at law to require the City, its officers, agents and employees to account as if they were the trustees of an express trust; and -12- (c) by suit, action or other proceedings in equity or at law to enjoin any acts or things which may be unlawful or in violahon of the rights of the Owners of the Bonds. on m. The covenants and agreements of the City contained herein and in the Bonds shall be for the equal benefit, protection, and security of the Owners of any or all of the Bonds, all of which Bonds shall be of equal rank and without preference or priority of one Bond over any other Bond in the application of the funds herein pledged to the payment of the principal of and the interest on the Bonds, or otherwise, except as to rate of interest, date of maturity and right of prior redemption as provided in the Resolution. No one or more Bondowners secured hereby shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security granted and provided for herein, or to enforce any right hereunder, except in the manner herein provided, and all proceedings at law or in equity shall be instituted, had and maintained for the equal benefit of all Owners of such Outstanding Bonds. -.v . No remedy conferred herein upon the Bondowners is intended to be exclusive of any other remedy, but each such remedy shall be cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred herein. No waiver of any default or breach of duty or contract by the Owner of any Bond shall extend to or affect any subsequent default or breach of duty or contract or shall impair any rights or remedies thereon. No delay or omission of any Bondowner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein. Every substantive right and every remedy conferred upon the Owners of the Bonds by the Resolution may be enforced and exercised from time to time and as often as may be deemed expedient. In case any suit, action or proceedings taken by any Bondowner on account of any default or to enforce any right or exercise any remedy shall have been discontinued or abandoned for any reason, or shall have been determined adversely to such Bondowner, then, and in every such case, the City and the Owners of the Bonds shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies, powers and duties of the Bondowners shall continue as if no such suit, action or other proceedings had been brought or taken. AMENDMENTS n 90L. Amendments. Except as set forth herein, the provlsions of the Bonds and the provisions of the Resolution may be modified or amended at any time by the City with the written consent of the Owners of not less than seventy-five per cent (75%) in aggregate principal amount of the Bonds herein authorized at the time Outstanding; provided, however, that no such modification or amendment shall permit or be construed as permitting: (a) the extension of the maturity of the principal of any of the Bonds, or the extension of the maturity of any interest on any of the Bonds, or (b) a reduction in the principal amount of any of the Bonds or the rate of interest thereon, or (c) a reduction in the aggregate pnncipal amount of the Bonds; the consent of 100% of the Owners of which is required for any such amendment or modification. The City may from time to time, without the consent of or notice to any of the Owners, provide for amendment to the Bonds or the Resolution, for any one or more of the following purposes: -13- / (a) To cure any ambiguity or formal defect or omission in the Resolution or to make any other change not prejudicial to the Owners; (b) To grant to or confer upon the Owners any additional nghts, remedies, powers or authority that may lawfully be granted to or conferred upon the Owners; (c) To more precisely identify the Improvements. (d) To conform the Resolution to the Code or future applicable federal law concerning tax-exempt obligations. 907.. ’ nts- Every amendment or modification of a provision of the Bonds or of the Resolution to which the written consent of the Owners is given as above provided shall be expressed in a resolution of the City amending or supplementing the provisions of the Resolution and shall be deemed to be a part of the Resolution. It shall not be necessary to note on any of the Outstanding Bonds any reference to such amendment or modification, if any. A certified copy of every such amendatory or supplemental resolution, if any, and a certified copy of the Resolution shall always be kept on file in the Office of the City Clerk and shall be made available for inspection by the Owners of any Bond or prospective purchaser or Owners of any Bond authorized by the Resolution, and upon payment of the reasonable cost of preparing the same, a certified copy of any such amendatory or supplemental resoluhon or of the Resolution will be sent by the City Clerk to any such Owner or prospective Owner. DEFEASANCE 1OOL. lkkasmx. When all or any part of the Bonds or scheduled interest payments thereon shall have been paid and discharged, then the requirements contained herein and the pledge of revenues made hereunder and all other rights granted hereby shall ternate with respect to the Bonds or scheduled interest payments thereon so paid and discharged. Bonds or scheduled interest payments thereon shall be deemed to have been paid and discharged within the meaning of the Resolution if there shall have been deposited with the Paying Agent or a bank located in the State and having full trust powers, at or prior to the maturity or redemption date of the Bonds or the interest payments thereon, in trust for and irrevocably appropriated thereto, moneys andor direct obligations of, or obligations the principal of and interest on which are guaranteed by, the United States of America, which, together with the interest to be earned on such investments, will be sufficient for the payment of the principal of the Bonds, the redemption premium thereon, if any there be, andor interest to accrue to the date of maturity or redemption, as the case may be, or if default in such payment shall have occurred on such date, then to the date of the tender of such payments, provided always that if any such Bonds shall be redeemed prior to the matunty thereof, the City shall have elected to redeem such Bonds and notice of such redemption shall have been given or the City shall have given irrevocable instructions, or shall have provided for an escrow agent to give irrevocable instructions, to the Paying Agent to redeem such Bonds. Any moneys and/or investments which at any time shall be deposited with the Paying Agent or said bank in the State by or on behalf of the City, for the purpose of paying and dischargmg any of the Bonds shall be and are hereby assigned, transferred and set over to the Paying Agent or such bank in the State in trust for the respective Owners of the Bonds, and such moneys shall be and are hereby irrevocably appropriated to the payment and discharge thereof. All moneys and/or investments deposited with the Payng Agent or said -14- bank in the State shall be deemed to be deposited in accordance with and subject to all of the provisions contained in the Resolution. CONTINUING DISCLOSURE REQUIREMENTS ion 1101. -re . The City hereby elects that the Continuing Disclosure Instructions shall apply to the Bonds. The City hereby covenants with the Original Purchaser and the Beneficial Owners (as defined 111 the Continuing Disclosure Instructions) to provide and disseminate such information as is required by Rule 15c2-12 (as defined in the Continuing Disclosure Instructions) and as Mer set forth in the Continuing Disclosure Instructions. Such covenant shall be for the benefit of and enforceable by the Original Purchaser and such Beneficial Owners. In the event the City fails to comply in a timely manner with its covenants contained in the preceding sentences, the Original Purchaser andor any such Beneficial Owner may make demand for such compliance by written notice to the City. In the event the City does not remedy such noncompliance within 10 days of receipt of such written notice, the Original Purchaser or any such Beneficial Owner may in its discretion, without notice or demand, proceed to enforce compliance by a suit or suits in equity for the specific performance of such covenant or agreement contained in the preceding section or for the enforcement of any other appropriate legal or equitable remedy as the Original Purchaser and/or any such Beneficial Owner shall deem effectual to protect and enforce any of the duties of the City under such preceding section, but such noncompliance shall not constitute a default or event of default under this Resolution. MISCELLANEOUS PROVISIONS Offifi. The City hereby approves the form and content of the Preliminary Official Statement prepared in the initial offering and sale of the Bonds. The Preliminary Official Statement is "deemed final" by the City except for the omission of certain information as provided in Securities and Exchange Commission Rule 15~2-12. The City hereby approves the form and content of any addenda, supplement, or amendment thereto utilized to prepare a final Official Statement. The Official Statement is "deemed final" by the City in accordance with the provisions of Securities and Exchange Commission Rule 15c2-12. The use of such Official Statement in the reoffering of the Bonds by the Original Purchaser is hereby approved and authorized. The proper officials of the City are hereby authonzed to execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. 1707. Rehate. The City agrees to pay from time to time all amounts required to be rebated to the United States pursuant to Section 148(f) of the Code and any applicable Treasury Regulations. This covenant shall sumve payment in full or defeasance of the Bonds from time to time. Sever;lhllltv. In case any one or more of the provisions of the Resolution or of the Bonds issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of the Resolution, or of the Bonds appertaining thereto, but the Resolution and the Bonds shall be construed and enforced as if such illegal or invalid provision had not been contained herein. In case any covenant, stipulation, obligation or agreement contained in the Bonds -15- or in the Resolution shall for any reason be held to be in violation of law, then such covenant, stipulation, obligation or agreement shall be deemed to be the covenant, stipulation, obligation or agreement of the City to the full extent permitted by law. 1304. mr A1ithm.Q. The Mayor, City Clerk and other officials of the City are authorized and directed to execute any and all documents and take such actions as they may deem necessary or advisable in order to carry out and perform the purposes of the Resolution to make alterations, changes or additions in the foregoing agreements, statements, instruments and other documents herein approved, authorized and confinned which they may approve and the execution or taking of such action shall be conclusive evidence of such necessity or advisability. Gmmmghx The Resolution and the Bonds shall be governed exclusively by and construed in accordance with the applicable laws of the State. we Date. This Resolution shall take effect and be in full force from and after its adoption by the governing body of the City. ADOPTED by the governing body of the City on January 14,2002. City Clerk -16- (Form of Bond) EXCEPT AS OTHERWISE PROVIDED IN THE RESOLUTION (DESCRIBED HEREIN), THIS GLOBAL BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY (DESCRIBED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. REGISTERED NUMBER REGISTERED .g UNITED STATES OF AMERICA STATE OF KANSAS COUNTY OF SALINE CITY OF SALINA GENEFL4L OBLIGATION WATER AND SEWAGE SYSTEM REFUNDING BOND SERIES 2002-A Interest Maturity Rate: -% Date: - Dated Date: January 15,2002 CUSP: REGISTERED OWNER: PRINCIPA1;AMOuNT: KNOW ALL PERSONS BY THESE PRESENTS: That the City of Salina, in the County of Saline, State of Kansas (the "City"), for value received, hereby acknowledges itself to be indebted and promises to pay to the registered owner identified above, or registered assigns, as of the Record Dates as hereinafter provided on the Maturity Date identified above, the Principal Amount identified above, and in like manner to pay interest on such Principal Amount from the Dated Date shown above or from the most recent interest payment date to whch interest has been paid or duly provided for at the rate of interest per annum set forth above (computed on the basis of a 360-day year of twelve 30-day months), semiannually on April 1 and October 1 of each year, commencing October 1,2002 (the "Interest Payment Dates"), until the Principal Amount is paid, unless this Bond shall have been previously called for redemption and payment as hereinafter set forth. The principal of, premium, if any, and interest on this Bond shall be payable by the Treasurer of the state of Kansas, Topeka, Kansas (the "Paying Agent" and "Bond Registrar"). The principal of and any premium on this Bond shall be payable to the registered owner hereof upon presentation of this Bond at the maturity or redemption date to the Paying Agent for payment and cancellation. The interest payable on this Bond on any interest payment date shall be paid to the person in whose name this Bond is registered on the Bond Register at the close of business on the fifteenth day of the month preceding the interest payment date (the "Record Date") for such interest (a) by check or draft mailed by the Paying Agent to such Registered Owner at the address shown on the Bond Register or at such other address as is R- 1 i' \ furnished to the Paying Agent in writing by such Registered Owner or (b) in the case of an interest payment to any Registered Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Registered Owner upon written notice given to the Paying Agent by such Registered Owner not less than 15 days pnor to the Record Date for such interest, containing the electronic transfer instructions including the bank (which shall be in the continental United States), address, ABA routing number and account number to which such Registered Owner wishes to have such transfer directed. The principal, premium, if any, and interest on the Bonds shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of debts due the United States of America. The Bonds constitute general obligations of the City 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 limts of the City. The full faith, credit and resources of the City are irrevocably pledged for the payment of the principal of and interest on this Bond and the issue of which it is a part as the same respectively become due. This Bond is one of an authorized series of Bonds of the City designated "General Obligation Water and Sewage System Refunding Bonds, Series 2002-A," in an aggregate principal amount of $2,045,000 (the "Bonds") issued for the purposes set forth in the Ordinance of the City authonzing the issuance of the Bonds and the Resolution of the City prescribing the form and details of the Bonds (jointly, the "Resolution"). The Bonds are issued by the authority of and in full compliance with the provisions, restrictions and limitations of the Constitution and laws of the state of Kansas, including, without limitation, K.S.A. 10-101 et seq. and 10427 et seq., Article 12, 5 5 of the Constitution of the State of Kansas and Charter Ordinance No. 28 of the City. At the option of the City, Bonds maturing on October 1, 2010 and thereafter, may be called for redemption and payment prior to maturity on October 1, 2009, and thereafter in whole at any time or in part (the maturities and principal amounts of Bonds of each maturity to be redeemed will be determined by the City) on any interest payment date, at the redemption price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the date of redemption. Unless waived by any owner of the Bonds to be redeemed, if the City elects to call any Bonds for redemption and payment prior to maturity, the City or the Bond Registrar and Paying Agent on behalf of the City shall give written notice of its intention to call and pay such Bonds on a specified date, the same being descnbed by maturity, such notice to be mailed by United States first class mail addressed to the Owners of the Bonds not less than 30 days prior to the date fmed for redemption. All Bonds so called for redemption and payment shall cease to bear interest from the date for whrch such call is made, provided funds are available for the payment of such Bonds at the price specified above. The Bonds are being issued by means of a book-enby system wth no physical distribution of bond certificates to be made except as provided in the Resolution. One Bond certificate with respect to each date on which the Bonds are stated to mature, registered in the nominee name of the Securities Depository, is being issued and required to be deposited with the Securities Depository and immobilized in its custody. The book-entry system will evidence positions held in the Bonds by the Securities Depository's participants, beneficial ownership of the Bonds in authorized denominations being evidenced in the records of such participants. Trzhsfers of ownership shall be effected on the records of the Securities Depository and its participants pursuant to rules and procedures established by the Securities Depository and its parhcipants. The City, the Bond Regstrar and the Paying Agent will recognize the Securities Depository nominee, while the registered owner of this Bond, as the owner of this Bond for all purposes, including (i) payments of principal of, and redemption premium, if any, and interest on, this Bond, (ii) notices and (iii) voting. Transfers of principal, interest and any redemption i premium payments to participants of the Securities Depository, and transfers of principal, interest and any redemption premium payments to beneficial owners of the Bonds by participants of the Securities Depository will be the responsibility of such participants and other nominees of such beneficial owners. The City, the Bond Registrar and the Paying Agent will not be responsible or liable for such transfers of payments or for maintaining, supervising or reviewing the records maintained by the Securities Depository, the Securities Depository nominee, its participants or persons achng through such participants. While the Securities Depository nominee is the owner of this Bond, notwithstanding the provlsion hereinabove contained, payments of principal of and interest on this Bond shall be made in accordance with existing arrangements among the City, the Bond Registrar and the Securities Depository. EXCEPT AS OTHERWISE PROVIDED IN THE RESOLUTION, THIS GLOBAL BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. The Bonds are issued in fully registered form in the denomination of $5,000 or any integral multiple thereof. This Bond may be exchanged at the ofice of the Bond Registrar for a like aggregate principal amount of Bonds of the same maturity of other authorized denominations upon the terms provided in the Resolution. The City and the Bond Registrar may deem and treat the registered owner hereof as the absolute owner hereof for purposes of receiving payment of or on account of principal hereof and interest due hereon and for all other purposes and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. This Bond is transferable by the registered owner hereof in person or by the registered owner's agent duly authonzed in writmg, at the office of the Bond Registrar, but only in the manner, subject to the limitations and upon payment of the charges provided in the Resolution and upon surrender and cancellation of this Bond. The City shall pay all costs incurred in connection with the issuance, payment and initial registration of the Bonds and the cost of a reasonable supply of bond blanks. The City and the Bond Registrar shall not be required to issue, register, transfer or exchange any Bonds during a period beginning on the day following the Record Date preceding any Interest Payment Date and ending at the close of business on the Interest Payment Date or Bonds which have been called for redemption in accordance with Article lII of the Resolution. IT IS HEREBY DECLARED AND CERTIFIED that all acts, conditions, and things required to be done and to exist precedent to and in the issuance of this Bond have been properly done and performed and do exist in due and regular form and manner as required by the Constitution and laws of the state of Kansas, and that the total indebtedness of the City, including this series of bonds, does not exceed any constitutional or statutory limitation. This Bond shall not be valid or become obligatory for any purpose until the Certificate of Authentication and Registration hereon shall have been lawfully executed by the Bond Registrar. IN WITNESS WHEREOF, the City has caused this Bond to be executed by the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of its City Clerk, and its corporate seal to be affixed hereto or imprinted hereon, and this Bond to be dated the Dated Date shown above. (Facsimile Seal) A'ITEST: (faxmile) .. BY City Clerk CITY OF SALINA, KANSAS (fwile) Mayor .. Rd CERTIFICATE OF AUTHENTICATION AND REGISTRATION This Bond is one of a series of General Obligation Water and Sewage System Refunding Bonds, Series 2002-A, of the City of Salina, Kansas, described in the within-mentioned Resolution. Registration Date Office of the State Treasurer, as Bond Registrar and Paying Agent Topeka, Kansas By: Registration Number: 0322-085-01 1502-307 R-5 FOR VALUE RECEIVED, the undersigned do(es) hereby sell, assign and transfer to (Name and Address) (Social Security or Taxpayer Identification No.) the Bond to which this assignment is affixed in the outstanding principal amount of $ > standing in the name of the undersigned on the books of the Bond Regstrar. The undersigned do(es) hereby irrevocably constitute and appoint as agent to transfer said Bond on the books of said Bond Registrar with full power of substitution in the premises. Dated Name Social Security or Taxpayer Identification No. Signature (Sign here exactly as name(s) appear on the face of Certificate) Signature guarantee: BY [Name of Eligble Guarantor Institution as defined by SEC Rule 17ad-15 (12CFR 240.17 Ad-15) or any similar rule which the Bond Registrar deems applicable] STATE OF KANSAS 1 COUNTY OF SALINE 1 ) ss. I, the undersigned, City Clerk of Salina, Kansas, hereby certify that the withm Bond has been duly registered in my office according to law as of August 3, 1998. WITNESS my hand and official seal. (Facsimile Seal) (facsimile) City Clerk TCATE OF STATE TREASlJRFE OFFICE OF THE TREASURER, STATE OF KANSAS I, TIM SHALLENBURGER, Treasurer of the State of Kansas, do hereby certify that a transcript of the proceedings leading up to the issuance of this Bond has been filed in my office, and that this Bond was registered in my office according to law on WITNESS my hand and official seal. (Facsimile Seal) (facstmllP) .. Treasurer of the State of Kansas R-7 LEGAL OPINION I, the undersigned, City Clerk of the City of Salina, Kansas, hereby certify that the following is a true and correct copy of the approving legal opinion of Gilmore & Bell, a Professional Corporation, Attorneys at Law, Kansas City, Missouri, on the within Bond and the series of which it is a part, except that it omits the date of such opinion; that the opinion was manually executed and was dated and issued as of the date of delivery of and payment for the Bonds and is on file in my office. (facslmlle’l City Clerk .. BY (PRINTED LEGAL OPINION) R-R EXHIBIT B CONTINUING DISCLOSURE INSTRUCTIONS .. sEfxKNL. 1 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 15~2-12 (defined below). These Instructions are to govern the continuing disclosure obligations of the City with respect to the City’s General Obligation Internal Improvement Bonds, series 1996-A dated as of June 1, 1996 (the “1996 Bonds”) and any additional series of Bonds that the City hereafter elects to make subject to these Instructions. .. sEcmQFu- Unless otherwise defined in the Instructions, the following capitalized terms shall have the following meanings for purposes of the Instructions: “Beneficial owner” means any regstered 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 firm of Gilmore & Bell, P.C., or any other attorney or fm of attorneys with a nationally recognized standing in the field of municipal bond financing selected by the City. “Bonds” means the 1996 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 the Instructions for the purpose of constituting the undertaking of the City to provide continuing disclosure pursuant to Rule 15~2-12. “City” means the City of Salina, Kansas. “MSRB” means the Municipal Securities Rulemaking Board. “NRMSIR” means any information repository recognized by the Secunties 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 1996 Bonds and any future series of Bonds required to comply with Rule 15~2-12 in connection with the offering of any series of Bonds. “Rule 15c2-12” means Rule 15~2-12 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 15~2-12. (a) Within 180 days after the close of each fiscal year, the City shall furnish to each NRMSIR 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 R- 1 as of such date, the unaudited financial statements of the City and as soon thereafter as available such audited financial 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, with respect to the 1996 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 Sechn3 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 MSFU3. 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. (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; Any modifications to rights of security holders; (vii) (viii) Any calls (other than mandatory sinking find 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. R-3 (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 financial information or operating data required by Sccthn3 on or before the date specified. .. .. SClXNL ZxmmahmofR- The City’s obligations under the 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. SHXQWi Amendment; WaiveL (a) The provisions of the Instructions may be amended only by a written instrument executed by the Mayor of the City if the City receives an opinion fiom Bond Counsel to the effect that the Instructions, as so amended, are in compliance with Rule 15~2-12 and all current amendments thereto and interpretations thereof that are applicable to the Instructions. (b) If an amendment is made to the Instructions, the City shall describe in the next annual financial report submitted to the NRMSIRs pursuant to Sechn-3 the substance of the amendment, the reasons for such amendment and the impact of such amendment on the type of operating data or financial information required to be provided under the Instructions. .. sEcnmu- . Nothing in the 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 the 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 the Instructions, the City shall have no obligation hereunder to update such information or include it in any future report or notice. sEcXmA- The provisions of the Instructions shall be subject to specific enforcement or action in mandamus in a court of equity by any beneficial owner of any senes of the Bonds. A breach of the provisions of this Section shall not constitute a default or event of default under the proceedings adopted by the City authorizing any series of the Bonds. .. tmmQwL- The 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. .. SECKNXL Ap&ddiiy to F- of Rands . These Instructions shall apply to any future senes 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 15~2-12. Nothing contained herein shall obligate the City to adopt these Instructions with respect to any future bonds or municipal obligations issued by the City. Dated: May 6, 1996 CITY OF SALINA, KANSAS March 22, 2010 VIA CERTIFIED MAIL: 'l'reasurer of the State of Kansas Landon State Office Bldg 900 Southwcst Jackson. Suite 201 Topeka, Kansas 666 12- 1 235 Depository Trust Company Ncw York, New York VIA FIRST CIAASS MAIL: George K. Baum R: Co Atin. Municipal Trading 4801 Main Strcet Kansas City, MO 64 1 12-255 1 RE: CONDITIONAL CALL FOR REDEMPTION CITY OF SALINA, KANSAS GENERALOBLIGATION WATEHANI) SEWAGE SYSTEM REFUNDING BONDS OCTOBER 1,2010 THROUGH 2013 MATURITIES SEKIES 2002-A, DATED JANUARY IS, 2002 Notice IS hereby given pursuant to K.S.A. 10-129, as amended, and pursuant IO the provisions of Article 111 of Bond Resolution No. 02-5800 (the "Bond Resolution") of City of Salina, Kansas (the "Issuer"), that the above mentioned bonds described in the attached Notice of Conditional Call for Redemption (the "Called Bonds"), have been called for redemption and payment on May 15, 2010 (the "Rcdemption Date") subject to thc Issucr's issuance of general obligation refunding bonds on or before the liedemption Date. The Paying Agent is hereby requested to disseminate the attached Notice of Conditional Call for Redemption in accordance with K.S.A. 10-129 and the Bond Resolution. After redemption of the Called Bonds the Paying Agent is requested to complete the attached Paying Agent's Certification and forward a copy of same IO the undcrsigned. ;ALIM, KANSAS / Rc dFr!kz, Finance Director 'I I L I I .. . . *. . . .. . item 4 if Restricted Delivery is desired: so that we can return the9& to you. or on the front if space permits. Print your name and address an the reverse rn Attach this card to the back of the mailpiece, , . __ -7oob- c 2. ArttcleNumber PS Form 381 1, February 2004 IrransferM sem.c.9 labeg Domestic Ret 1 U ~~ ~ D. Is delivery address different from Item 17 0 Yes If YES, enter delivery add- below: m Receipt :ms9502M1540 ! - . -_ NOTICE OF CONDITIONAL CALL FOR REDEMPTION ci-ry OF SALINA, KANSAS GENERAL OBLIGA’I’ION WATEH AND SEWAGE SYSTEM REFUNDING BONDS OCTOBER I, 2010 THROUGH 2013 MATUHITIES SERIES 2002-A, DATED JANUARY 15,2002 Notice is hereby given to the registered owners of the above-captioned bonds (the “Bonds”) that pursuant to the provisions of Article 111 of Bond Resolution No. 02-5800 (the “Bond Resolution”) of City of Salina, Kansas (the “Issuer”). that the Bonds maturing October 1, 2010, and thereafter (the “Called Bonds”), have been called for redemption and payment on May 15, 2010 (the “Redemption Date“), at the principal office of the ‘Treasurer of the State of Kansas, Topeka, Kansas (the “Bond Registrar and Paying Agent”). The Called Bonds are further described as follows: SERIAL BONDS Maturity Rate Par Amount CUSlP October I, 201 I 4.25 200,000 794743 Y L2 October I, 20 IO 4.20% S I90,OOO 794743 YK4 October I, 20 12 4.35 210,000 794743 YMO October I, 201 3 4.50 220,000 794743 YN8 On the Redemption Date there shall become due and payable, upon the presentation and surrender of each such Called Bond, the redemption price thereof equal to 100% of the principal amount thereof together with interest accrued to the Redemption Date. Interest shall cease to accrue on the Called Bonds so called for redemption from and after the Redemption Date provided such funds for redcinption are on deposit with the Paying Agent. The call for redemption of the Called Bonds is subject to the City’s sale and issuance of its General Obligation Refunding Bonds to provide funds to redeem and pay the Called Bonds on or before the Hcdcrnption Date. If the City does not issue its General Obligation Refunding Bonds on or before the Redemption Date, this notice will be void, thc City shall have no obligation to redeem and pay the Callcd Bonds as dcscribcd herein and the City shall not be liable for any damages or losscs resulting from the Called Bonds not being redeemed and paid as described hercin. Ncither the Issuer nor the Paying Agent shall be responsible for the selection or use of the Said CUSlP CUSIP identification numbers shown above or printed on any of the Called Bonds. identification numbers are included solely for the convenience of the owners of the Bonds. Under the provisions of the Interest and Dividend -Tax Compliance Act of 1983, as amended and codified at Section 3406(a)(l) of the Internal Revenue Code of 1986, paying agents making payments of interest or principal on corporate sccurities or making payments of principal on municipal securities may be obligated to withhold a 3 1 percent tax from remittances to individuals who have failcd to furnish the Paying Agent with a valid taxpayer identification number. Registered Owners of the Bonds who wish to avoid the imposition of the tas should submit certified taxpayer identification numbers when presenting the Called Bonds for payment. I CITY OF SALINA, KANSAS . This Noticc of Redemption shall bc mailed by certified mail to the 'Treasurer of the State of Kansas, Topeka, Kansas, not less than 45 days prior to the Redemption Date and to George K. Bauin & Co., the original purchaser of the Series 2002 Bonds, not less than 30 days prior to the Redemption Date. Notice shall also be given to certain repositories in ordcr to comply with the provisions of Rule 15~2-12 of the Securities and Exchange Commission. Noticc may also be given in accordance with guidelines set forth in Sccuritics and Exchange Commission Release No. 34-23856, but such notice is not required by law. The Paying Agcnt shall notify the registered owners of the Called Bonds as provided in K.S.A. 10- 129 as amended, and the Bond Resolution. 2 Page 1 of 1 .CUSIP-C 794743 Submission ID:EA354783 04/15/2010 12:07:26 State Issuer Name KS SALINA, KS CONTINUING DISCLOSURE (Submission Status: Published) EVENT FILING (CUSIP-9 Based) Voluntary Disclosure Other event-based disclosures: Conditional Call for Redemption Notice, dated 0411 5/2010 DOCUMENTS 13 Event Filing dated 04/15/2010 . .- '-a GO Water and Sewage System Refunding Bonds Series 2002-A 4-15-10.pdf posted 04/15/2010 The following Issuers are associated with this Continuing Disclosure submission: The following 4 securities have been published with this Continuing Disclosure submission: I 794743YN8 I 10/01/2013 I Submitter's Contact Information Company: Gilmore & Bell, P.C. Name: JEFFREY CATON Address: 2405 GRAND BLVD. City, State Zip: Phone Number: 8162211000 Email: jcaton@gilrnorebell.com KANSAS CITY, MO 64108 0 2009 Municipal Securities Rulemaking Board (MSRB) http://dataport.emma.msrb.org/Submissio~SubmissionPreviewPnnt.aspx?submissionId=EA3547S3&sub ... 4/15/2010 EVENT NOTICE PURSUANT TO SEC RULE 15C2-12(B)(S)(C) Issuer/Obligated Person: City of Salina, Kansas (the “Obligated Person”) Issue(s) to which this Report Relates and CUSlP Base Numbers for said Issues: - Base Description - Series Dated Date Maturities CUSlP No. 2002-A January 15,2002 201 0-20 13 794 74 3 General Obligation Water and Sewage System Refunding Bonds Event Reported: Conditional Redemption of above-referenced Bonds on May 15, 20 IO; see attached Notice. The information contained in this Notice has been submitted by the Obligated Person pursuant to contractual undertakings the Obligated Person made in accordance.with SEC Kule 15~2-12. Nothing contained in the undertaking or this Notice is, or should be construed as, a represcntation’ by the Obligated Person that the information included in this Notice constitutes all of the information that may be material to a decision to invest in, hold or dispose of any of the securities listed above, or any other securities of the Obligated Person. For additional information, contact: City of Salina, Kansas 300 West Ash Salina, Kansas 67402 Attention: Clerk Phone No. (785) 309-5735 Fax NO. (785) 309-5738 CITY OF SALINA, KANSAS TRANSCRIPT CERTIFICATE $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS DATED MAY 1,2010 SERIES 2010-A The undersigned Mayorand Clerk of the City of Salina, Kansas (the “Issuer”), do hereby make this certificate for inclusion in the transcript of ad as a part of the proceedings authorizing and providing for the issuance of the above described bonds (the “Bonds”); and do hereby certify as of April 19,2010, as follows: 1. Meaning. of Words and Terms. Capitalized words and terms used herein, unless otherwise defined herein or the context requires otherwise, shall have the same meanings ascribed to such words and terms in the hereinafter defined Resolution authorizing the Bonds. 2. Organization. The Issuer is a legally constituted city of the first class organized and existing under the laws of the State of Kansas. 3. Transcript of Proceedings. The transcript of proceedings (the “Transcript”) relating to the authorization and issuance of the Bonds is to the best of our knowledge, information and belief full and complete; none of such proceedings have been modified, amended or repealed, except as might be shown in the Transcript, and the facts stated in the Transcript still exist. In each and every instance where copies appear in the Transcript, such copies are true and correct duplicates of the original instruments now on file with the Clerk. 4. Newspaper. The Salina Journal was the official newspaper of the Issuer at all times during these proceedings. . 5. Meetings. All of the meetings of the governing body of the Issuer at which action was taken as shown in the Transcript were either regular meetings or duly adjourned regular meetings or special meetings duly called and held in accordance with law and the ordinances and rules of the Issuer. 6. Incumbency of Officers. The following named persons were and are the duly qualified and acting officers of the Issuer at and during all the times when action was taken as indicated in the Transcript as follows: Mayor Aaron Peck (April 19,2010 to Present) Luci Larson (April 13,2009 to April 19;2010) John K. Vanier, II (April 14,2008 to April 13,2009) Kristin M. Seaton (April 16,2001 to April 14,2003) Vice Mayor Samantha Angel1 (April 19,2010 to Present) Aaron Peck (April 13,2009 to April 19,2010) Luci Larson (April 14,2008 to April 13,2009) Commissioners Luci Larson (April 16,2007 to Present) Aaron Peck (April 16,2007 to Present) Samantha Angel1 (April 13,2009 to Present) Norman Jennings (April 13,2009 to Present) Tom Arpke (April 13,2009 to Present) Alan Jilka (April 16,200 1 to April, 2009) R. Abner Perney (April 19,2005 to April, 2009) John Vanier, II (April 19,2005 to April, 2009) Deborah Divine (April 16,2001 to April 16,2007) Monte Shadwick (April 16,2001 to April 18,2005) Don Heath (April 14,1997 to April 16,2001 and January Lany Mathews (April 16,2001 to December, 2001) Kristin Seaton (April 19, 1999 to April 14,2003) 14,2002 to April 14,2003) City Clerk Lieu Ann (Nicola) Elsey Deputy City Clerk Penny Day Finance Director and City Treasurer Rodney Franz City Manager Jason Gage City Attorney Greg Bengtson 7. Execution of Bonds. The Bonds have been executed with facsimile signatures; and the facsimile signatures appearing on the face of the Bonds are facsimiles of the true and genuine signatures of the Mayor and Clerk of the Issuer in ofice on the date the Bonds are delivered; which facsimiles are ratified as a proper execution of said Bonds. Each signature has been duly filed in the office of the Secretary of State of Kansas pursuant to K.S.A. 75-4001 et seq. A facsimile of the seal of the Issuer is affixed to or imprinted on each of the Bonds and on the reverse side of each of the Bonds at the place where the Clerk has executed by facsimile signature the Certificate of Registration; and each Bond bears a Certificate of Registration evidencing the fact that it has been registered in the ofice of the Clerk. A true impression of the seal is set forth adjacent to the signature of the Clerk below. The specimen bond included in the Transcript is in the form adopted by the governing body of the Issuer for the Bonds. .8. Authorization of Bonds. The Bonds are being issued pursuant to Ordinance No. 10- 10540 and Resolution No. 10-6726 (jointly the ccResolution”) of the Issuer for the purpose of paying a portion of the costs of certain capital improvements (the “Improvements”). The Improvements have been duly authorized by the Issuer pursuant to K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., K.S.A. 12-2101 et seq., as amended, and all other applicable provisions of the laws of the State of Kansas. Estimates of the cost of the Improvements have been presented to and approved by the governing body of the Issuer, and said estimates of cost are on file in the ofice of the Clerk, and the total principal amount of the Bonds does not exceed the cost of the Improvements for which the Bonds are issued. 2 The Bonds are also being issued for the purpose of providing funds to refund the following bonds of the Issuer: Series Dated Date Years Amoutit Redernptioti Date 2002-A January 15,2002 2010 to 2013 $820,000 May 15,2010 The Bonds have been duly authorized by the Issuer pursuant to K.S.A. 10-427 et seq., as amended and supplemented, and all other applicable provisions of the laws of the State of Kansas. The interest rates on the Bonds on the date of the sale of the Bonds were within the maximum legal limit for interest rates under K.S.A. 10-1009, as amended. 9. Bonded Indebtedness. The currently outstanding applicable indebtedness of the Issuer, including the Bonds, does not exceed any applicable constitutional or statutory limitations. A Schedule of Bonded Indebtedness, which sets forth all currently outstanding general obligation indebtedness of the Issuer, is attached hereto as Exhibit A and made a part hereof by reference as though fully set out herein. 10. Valuation. The total assessed valuation of the taxable tangible property within the Issuer for the year 2009 is $447,800,878. 11. Non-litigation. There is no controversy, suit or other proceedings of any kind pending or threatened wherein or whereby any question is raised or may be raised, questioning, disputing or affecting in any way: (a) the legal organization of the Issuer or its boundaries; (b) the right or title of any of its officers to their respective offices; (c) the legality of any official act shown to have been done in the Transcript; (d) the constitutionality or validity of the indebtedness represented by the Bonds shown to be authorized in the Transcript; (e) the validity of the Bonds, or any of the proceedings had in relation to the authorization, issuance or sale thereof; or (f) the levy and collection of a tax to pay the principal of and interest on the Bonds. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 3 WITNESS our true and genuine manual signatures and the seal of the Issuer. (Signature Page to Transcript Certificate) EXHIBIT A SCHEDULE OF OUTSTANDING GENERAL OBLIGATION INDEBTEDNESS (as of May 5,2010) General Obligation Bonds: Date Issued 07- 1 5-0 1 01-15-02 07- 1 5-02 07- 15-03 05-01-04 07- 15-04 07- 1 5-05 03- 15-06 07- 1 5-06 06- 1 5-07 07- 15-08 12- 15-08 07- 15-09 05-01- 10 Purpose Internal Improvements Water and Sewage System Refunding Internal Improvements Internal Improvements Refunding Internal Improvements Internal Improvements Internal 'Improvements Internal Improvements . Internal Improvements Internal Improvements Internal Improvements . Internal Improvements Refunding & Improvement Amount of Issue $ 5,350,000 2,045,000 1,980,000 4,350,000 5,585,000 4,053,000 4,2 10,000 2,200,000 885,000 6,545,000 3,720,000 3,525,000 23,695,000 6,875,000 Final Maturity 10-01 -1 6 10-01 -13 10-01 -1 7 10-01 -1 8 08-01 -1 5 10-01 -1 9 10-0 1-20 10-0 1 -26 10-01-21 10-01-27 10-01 -23 07-0 1-28 10-0 1-29 10-0 1-25 Amount Outstanding $ 2,485,000 820,000 * 820,000 2,405,000 2,225,000 2,150,000 2,870,000 1,870,000 675,000 5,815,000 3,500,000 3,525,000 23,695,000 6.875.000 $58,910,000 *To be refunded with proceeds from the sale of the Bonds. Total Amount Outstanding excludes this amount. Temporary Notes: Date Maturity Note Amount Proiect Series Issued - Date Amount Outstanding Street, Water, and Sewer 2010-1 05-01 -1 0 08-01-1 1 $2,500,000 $2,500,000 CERTIFICATE OF MANUAL SIGNATURE OF THE MAYOR OF THE CITY OF SALINA, KANSAS IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF KANSAS STATE OF KANSAS 1 CO'UNTY OF SALINE 1 ) ss. I, the undersigned, Aaron Peck, being duly sworn on oath certify that I am the duly qualified Mayor of the City of Salina, Kansas, and that the signature appearing below is my signature and I file herewith this certificate pursuant to K.S.A. 75-4001 to 75-4007, inclusive. Subscribed and sworn to before me as of April 22,2010. f My commission expires: 41 b --E3 v Notary Public in and for said Co& and State SECRETARY OF STATE FIRST FLOOR MEMORIAL HALL 120 SW 1 OTH AVE TOPEKA. KS 6661 2-1 590 .. -. APR eistans REGISTERED REGISTERED NUMBER R-1 $775,000.00 Unless this certificate is presented by an authorized representative of ,The authorized representative of DTC (and any payment is mad such other entity as is requested by an authoriz TRANSFER, PLEDGE .OR OTHER USE registered owner hereof, Cede & Co., has an interest GENERAL OBLIGATION INTERNAL ,. Interest Rate: 2.000% 794743 v35 REGISTERED OWNER: CE PRINCIPAL AMOUNT:. IVE THOUSAND DOLLARS Saline, State of Ka promises to pay to and in the manner cknowledges itself to be indebted and ed assigns, but solely from' the source t shown above on the Maturity Date shown mount has been paid. Bond is registered the Record Date(s) rest, which shall be the 15th day (whether or not a business day) of the calendar month next preceding the Interest Payment Date. Such interest shall be payable (a) by check or draft mailed by the Paying Agent to the address of such Registered Owner shown on the Bond Register or at such other address' as is furnished to the Paying Agent in writing by such Registered Owner; or, (b) in the case of an interest payment to 'Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Owner upon written notice given to the Bond Registrar by such Registered Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Registered Owner wishes to have such transfer directed. The principal or redemption price of and ective dates of payment meanings assigned to such terms in the hereinafter defined Bon Authorization of Bonds. This Bond is one s of the State of General Obligations. principal and interest in part paid, from ad valorem taxes w payable from ad valorem t taxable tangible property, and resources of the Issu Bond and the issue of whi Issuer payable as to both operty benefited by’ the s to rate or amount upon all the n as to rate or amount upon all the e subject to redemption prior to maturity, as he Issuer, Bonds maturing on October 1, 2019 and nt prior to maturity on October 1, 20 18 or thereafter, amount of Bonds of each maturity to be redeemed to ntage of the principal amount), plus accrued interest thereon to the h of the Bonds maturing on October 1 , 2025 shall also be subject to prior to maturity ,on October 1, 2023, and on any October 1 schedule set forth in the Bond Resolution at the Redemption Price rcentage of the principal amount), plus accrued interest thereon to the mandatory redemp thereafter, pursuant of 100% (expressed Redemption Date. Redernptio;z Denomiizations. Whenever the Bond Registrar is to select Bonds for the purpose of redemption, it shall, in the case of Bonds in denominations greater than a minimum Authorized Denomination, if less than all of the Bonds then Outstanding are to be called for redemption, treat each 2 minimum Authorized Denomination of face value of each such Bond as though it were a separate Bond in the denomination of a minimum Authorized Denomination. Notice of Redernption. Notice of redemption, unless waived, shall be given by the Issuer to the accordance with the stered Owner at the an official notice of redemption having State Treasurer of Kansas, to the Purchaser of the Bonds and to the Bon address maintained on the Bond Register, such notice to be redemption by first class mail at least 30 days prior to the rede become due and payable at the redemption price therein spe the Issuer defaults in the payment of the redemption price), to bear interest. , will evidence positions held in the Bo ownership of the Bonds in authorized den Transfers of ownership shall be pursuant to rules and procedures this Bond, as the owner of this B interest and any redemption of principal, interest and a participants of the Securiti of such beneficial owners participants, beneficial ds of such participants.. s participants. The Issuer payments of principal of, and Securities Depository, and transfer eneficial owners of the Bonds by inee is the owner of this Bond, notwithstanding the pal of, redemption premium, if any, and interest on arrangements among the Issuer, the Bond Registrar BE TRANSFERRED, IN WHOLE BUT NOT IN F THE SECURITIES DEPOSITORY OR TO A SITORY OR TO A NOMINEE OF A SUCCESSOR authorized agent, and thereupon a new Bond or Bonds in any Authorized Denomination of the same maturity and in the same aggregate principal amount shall be issued to the transferee in exchange therefor as provided in the Bond Resolution and upon payment of the charges therein prescribed. The Issuer shall pay all costs incurred in connection with the issuance, payment and initial registration of the Bonds and the cost of a reasonable supply of bond blanks. The Issuer and the Paying Agent may deem and treat the person in whose name this Bond is registered on the Bond Register as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal or redemption price hereof and interest due hereon and for all other purposes. The Bonds are issued in fully registered form in Authorized Denominations. Authentication. This Bond shall not be valid or become entitled to any security or benefit under the hereinafter defined Bond Authentication and Registration hereon shall have been lawfully execu for any purpose or be until the Certificate of IT IS HEREBY DECLARED AND CERTIFIED tha to be done and to exist precedent to and in the issuance o IN WITNESS WHEREOF, the Issuer has c to be affixed hereto or imprinted hereon. ' 4 CERTIFICATE OF AUTHENTICATION AND REGISTRATION ond Resolution. Registration Number 03 22-085-050 1 10-5 7 1 STATE OF KANSAS .COUNTY OF SALINE ) oes hereby certify that the within Bond has been duly registered ICATE OF STATE TREASURER EOFKANSAS . easurer of the State of Kansas, does hereby certify that a transcript of and that this Bond w d in such ofice according to law on .. WITNESS my hand and official seal. (Seal) By: Treasurer of the State of Kansas 5 FOR VALUE RECEIVED, the undersigned do(es) hereby se the Bond to which this assignment is affixed .. 6 LEGAL OPINION The following is a true and correct copy of the approving legal Bond Counsel, whch was dated and issued as‘of the date of original issua elivery of such Bonds: GILMORE & BELL, P. ’ Suite 1100 Governing Body City of Salina, Kansas Country Club Bank Prairie Village, Kansas Re: $6,875,000 Gen Refunding Bonds, We have acted as B (the “Issuer”), of .the and the certified pro and other certific le as to both principal and interest in part from special assessments y the construction of certain improvements and, if not so paid, from ad valorem taxe d without limitation as to rate or amount upon all the taxable tangible ithin the territorial limits of the Issuer. The balance of the principal and interest on the Bonds is payable 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 Issuer. The Issuer is required by law to include in its annual tax levy the principal and interest coming due on the Bonds to the extent that necessary hnds are not provided from other sources. ’ property, real and pe . 7 3. The interest on the Bonds is excluded from gross income for federal income tax purposes. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The terest on the Bonds comply with all of st on the Bonds Code), a deduction is allowed for 80 percent of that PO allocable to interest on the Bonds. We express no arising with respect to the Bonds: 4. The interest on the Bonds is nsas adjusted gross income. We express no opinion regarding fficiency of the Official ences arising with respect to Statement or other offering material re ability thereof may be limited by similar laws affecting creditors’ rights bankruptcy, insolvency, re generally and by equitable me to our attention or any changes in law that . MORE & BELL, P.C. 8 AGREEMENT BETWEEN ISSUER AND AGENT $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS DATED MAY 1,2010 SERIES 2010-A THIS AGREEMENT, dated as of April 19,2010, between the City of Salina, Kansas, a political subdivision (the “Issuer”), and the State Treasurer of Kansas, as Agent (the “Agent”). WHEREAS, for its lawful purposes, the Issuer has duly authorized the issue of the above- captioned bonds (the “Securities”),’ and the Issuer wishes the Agent to act as its Paying Agent, Bond Registrar, and Transfer Agent for the Securities: Now, therefore, it is hereby agreed as follows: 1. APPOINTMENT Issuer hereby appoints or has heretofore appointed the State Treasurer of Kansas to act as Paying Agent, Bond Registrar and Transfer Agent for the Securities. The State.Treasurer of Kansas hereby accepts its appointment as the Paying Agent, Bond Registrar and Transfer Agent. II. BASIC DUTIES A. Issuer or its duly authorized representative agrees to furnish Agent the name(s) and address(es} of the initial registered owner(s) of the Securities together with such registered owners’ tax identification (social security) number(s), the maturity date(s), denomination(s) and interest rate@) for each Security. Agent shall manually authenticate the originally issued Securities upon the written ordkr of one or more authorized officers of Issuer. Thereafter, Agent shall manually authenticate all Securities resulting from transfer or exchange of Securities. Agent shall maintain an office in the City of Topeka, Kansas, where Securities may be presented for registration, transfer and exchange; and shall also maintain an office in the City of Topeka, Kansas, where Securities may be presented for payment. Agent shall keep a register of the Securities and their transfer and exchange. B. C. D. Agent may rely upon any document believed by it to be genuine and to have been signed or presehted by the proper person. Agent need not investigate any fact or matter stated in the document. Agent undertakes to perform such duties and only such duties set forth in K.S.A. 10-620 et seq., except as specifically provided in this Agreement. Agent shall notify the owners of the Securities upon default in payment of principal or interest on the Securities and the Agent shall have no duties or responsibilities thereafter. III. COMPENSATION Issuer covenants and agrees to pay to Agent, as reasonable compensation for the services provided as Agent, an initial setup fee of $300, a registration fee of $30, plus a fee of $3,750.00, This amount will be due at the time of registration unless such fee is to be paid fiom the proceeds of the bond issue in which case Issuer agrees to pay such fee within two (2) business days of the closing of the bond issue. In addition to the aforementioned fee, Issuer covenants and agrees to pay to Agent the fee as stated and required by K.S.A. 10-505 for performing the duties of paying the principal of the Securities. . N. STANDARD OF PERFORMANCE Issuer shall provide, or shall cause to be provided to Agent, a designation of whether its Securities are to be issued in certificated or uncertificated form, or both. A. STATEMENTS OF OWNERSHIP Agent agrees to provide Statements of Ownership to the owner of uncertificated Securities. Such Statements shall be in accordance with the standards set forth by the Attorney General. All Statements shall be issued in the denominations of $1,000 or $5,000 or integral multiples thereof except for one additional Security in another denomination, which additional Security shall mature in the initial mahirity year of the series of the Securities. Interest is computed on the basis of $1,000 or $5,000 units and in all transactions involving the payment of interest, fractions of a cent equalling or exceeding five mills shall be regarded as one cent; fractions of a cent less than five mills shall be disregarded. Agent shall at all times maintain an adequate supply of Statements of Ownership for any anticipated transfers or exchanges of the Statements. B. CERTIFICATED SECURITES All certificated Securities issued by Issuer under this Agreement shall be in accordance with the standards set forth by the Attorney General and unless otherwise authorized by Agent, the principal thereof shall be payable only upon surrender of the Security to Agent. All certificates shall, be issued in the denomination of $1,000 or $5,000 or integral multiples thereof except one authorized Security in another denomination which additional Security shall mature in the initial maturity year of the series of Securities: Interest is computed on the basis of $1,000 or $5,000 units and in all transactions involving the payment of interest, hetions of a cent equaljng or exceeding five mills shall be regarded as one cent; hctions of a cent less than five mills shall be disregarded. Issuer shall at Issuer’s cost provide Agent with an adequate supply of certificates for any anticipated traqsfers or exchanges of the certificates. Issuer shall be responsible for the payment of the printing or other expenses for such certificates. responsible for obtaining appropriate “CUSP“ number(s) and shall notify Agent of each number(s) prior to the issuance of the applicable Securities. . Issuer shall be , 2 C. INTEREST CALCULATIONS Agent shall calculate interest on the basis of $1,000 and $5,000 units, or in the case of one odd denomination, calculate the unit separately. Each intermediate unit calculation is first determined, then rounded to the sixth decimal position; i.e. whenever the seventh decimal place is equal to or greater than five the sixth decimal place is increased by one. The final per unit calculation is subsequently rounded to two decimal positions. (See Attachment “A” for sample calculation.) D. SURRENDER Securities surrendered for payment, cancellation or partial redemption shall be cancelled by Agent and returned to Issuer in accordance with K.S.A. 10-1 11. E. TMSFERS AND EXCHANGES 1. When Securities are presented to Agent for transfer or exchange, Agent shall so transfer or exchange such Securities if the requirements of Section 8-401(1) of the Uniform Commercial Code are met. 2. In accordance with the authorizing Resolution or Ordinance of the Issuer (the “Resolution”), payments of interest shall be made to the owner of record of each , Security as of the close of business on the fifteenth day of the month preceding each interest payment date. The Agent shall make such payments to the record owner of each Security as set forth on the registration books maintained by Agent. as of such date. 3. Agent shall not be required to transfer or exchange any Security during a period beginning on the day following the fifteenth day of the month preceding any interest payment date for such Securities and ending at the close of business on the interest payment date, or to transfer or exchange any Security selected or called for redemption in whole or in part subsequent to the date notice of such redemption is given in accordance with the Resolution authorizing the Securities. E REGISTRQTION DATES AND FmDS FOR PAYMENTS Date of Registration shall be affied on the initial Securities. Subsequent transfers or exchanges shall bear a Date of Registration as of the date that all the required dociunentation is received at the Agent’s official place of business. Issuer will provide bds to make any interest or principal payments in accordance with K.S.A. 10-130 and amendments thereto. Agent is hereby authorized to effect any semiannual payment of interest or any principal by charging the Issuer’s Fiscal Agency account with Agent. G. REPLACEMENT OF SECURITIES If the owner of a Security claims that a Security has been lost, destroyed or wrongfully taken, Issuer shall issue and Agent shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met. Only Agent ’ shall perform this function. An indemnity bond and affidavit of loss-shall be provided to 3 Agent &d Issuer at the expense of the owner of the Security. Such indemnity bond and affidavit of loss must be sufficient in the judgment of Issuer and Agent to protect Issuer and Agent fiom any loss which any of them may suffer if the Security is replaced. Issuer may charge the Security owner for its expenses in the replacement of a Security. H. , REDEMPTIONS Optional Redemption. If any Securities are to be redeemed pursuant to an optional redemption in accordance with their terms, Issuer agrees to give Agent at least fifteen (15) days written notice thereof prior to the notice to be given the Security owners. If there is no provision for notice to the Security owners, Issuer agrees to give at least thu-ty (30) days written notice to Agent. Mandatory Redemption. If any Securities are subject to mandatory redemption in accordance with their terms and the Ordinance or Resolution authorizing the Securities, no additional notice is required to be given to the Agent to exercise the mandatory redemption. The Agent will provide notice of such redemption utilizing substantially the form of Notice of Mandatory Redemption attached hereto as Appendix I. Notice of Redemption. Agent shall then notify, by ordinary mail, the owner of such Securities to be so redeemed. Agent shall select the Securities to be so redeemed. Agent shall not be required to exchange or register a transfer of any Security for a period of fifteen (1 5) days preceding the date notice is to be provided to the Security owners for the purpose of selecting Securities on a partial redemption. Further, in the event notice is given to Agent for a complete redemption of the Issue according to the terms of the authorizing Resolution or Ordinance, Agent shall not be required to transfer or exchange any Security beginning 'on the day following the 15th day preceding the date set for redemption. I. MISCELLANEOUS Agent hereby acknowledges receipt of numbered Securities of Issuer (in a number equal to one Security for each maturity) for registration and exchange, and shall safeguard any "blank" Securities held for purpose of exchange or transfer. J. REPORTS Agent shall provide Issuer an annual report of the activity with respect to the issuance of Securities upon written request of Issuer. K. CONSTRUCTION This Agreement shall be construed in accordance with the laws of the State of Kansas and also the Resolution authorizing the issuance of the Securities. PALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 4 CITY OF SALINA, KANSAS OFFICE OF THE TREASURER OF THE STATE OF KANSAS DIRECTO~ BOND SERVICES (Signature Page to Agreement Between Issuer & Agent) A TTA CHMENT “A” SAMPLE $5,000.00000 ........................ Bond Unit X .06875 ........................ Interest Rate - - 343.750000 Rounded to six decimal places I 360 ........................ Days per year - - .954861 Rounded to six decimal places X 180 ........................ Day in interest period .. 17 1.874980 (Rounded to second decimal = $17 1 37) - - Unit interest is then multiplied by the number of units in the maturity. A- 1 [APPENDrx I NOTICE OF CALL FOR MANDATORY REDEMPTION TO THE OWNERS OF CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A, DATED MAY 1,2010 Notice is hereby given that pursuant to the provisions of Article LII of Resolution No. (the “Bond Resolution”) of the’ City of Salina, Kansas (the “Issuer”) that a portion of the above-mentioned bonds (the “Bonds“) scheduled to mature on October 1 1 , 2025 (the “Called Bonds”), have’been called for mandatory redemption and payment on October 1 1,’ (the “Redemption Date”), at the principal office of the Treasurer of the State of Kansas (the “Bond Registrai and Paying Agent”). Maturity Date Principal Interest CUSIP JN0s.l {October 1 1) Amount Rate Number 2025 On the Redemption Date there shall become due and payable, upon the presentation and surrender of each such Called Bond, the redemption price thereof equal to 100% of the principal amount thereof together with interest accrued to the Redemption Date. Bonds issued in denominations of greater than $5,000 may be subject to partial redemption. In such event, a new certificate or certificates will be issued to the Owner in the principal amount to remain Outstanding. Interest shall cease to accrue on the Called Bonds so called for redemption from and after the Redemption Date provided such funds for redemption are on deposit with the Paying Agent. CITY OF SALINA, KANSAS BY Treasurer of the State of Kansas, Topeka, Kansas] I- 1 .. Blanket Issuer Letter of Representations ro be Completed by Issuer] CITP OF SALINA, WSB [ Hame of Issuer] Attention: Undenvriting Department - Eligibility The Depository Trust Company 55 Water Street; 50th Floor New York. NY 10041-0099 May 30, .1996 [Date] Ladies and Gentlemen: shall request be made eligible for deposit.by The Depository Trust Company (-DTC"). This letter sets forth our understanding with respect to all issues (the "Securities") that Issuer ' To induce DTC to accept the Securities as eligible for deposit at DTC. and to act in accorda. ce with DTC's Rules with respect to the Securities. Issuer represents to DTC that Issuer will comply with the requirements stated in DTC's Operational Arrangements, as they may be amended from time to time. Note: Schedule A contains statements that DTC believes .accurately describe DTC. the method of effectin book- enq transfers of securities distributed through DfC. and certain related matters. - Received and Accepted: Very truly pun, City of Salina, Kansas (issued 300 W. Ash Street (StRet A&) Salina ICs 67402-0736 CCivl (State) (zp) 913-826-7240 (Phone Number) SCHEDULE A (To Blanket Issuer Letter of Representations) SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE (Prepared by DTC--bracketed material may be applicable only to certain issues) 1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (the “Securities”). The Securities will be issued‘ as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for [each issue of] the Securities, [each] in the aggregate principal amount of such issue, and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.] , DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Conunercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange’Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of US. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement ~ong Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both US. and non-US. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both US. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Cominission. More information about DTC can be found at \vw.dtcc.com and www.dtc.org. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in tiun to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details. of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. . 2. . DTC has Standard & Poor’s highest rating: AAA. . 3. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name‘as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited,-which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. BLOR 03/25/08 SCHEDULE A (To Blanket Issuer Letter of Representations) Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Pdicipants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. [Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be’provided directly to them.] 5. ‘[6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will.be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of fimds and corresponding detail infomiation from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption’proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. [9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [TenderRemarketing] Agent, and shall effect delivery of such Securitiesby causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to [TendedRemarketing] Agent. The requirement for physical delivery ’of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Securities to [TenderRemarketing] Agent’s DTC account.] 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 1 1. Issuer may decide to discontinue use of the.system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 12. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. BLOR 03/25/08 UNDERWRITING SAFEKEEPING AGREEMENT BY AND BETWEEN DEPOSITORY TRUST COMPANY AND THE CITY OF SALINA, KANSAS AND THE OFFICE OF THE KANSAS STATE TREASURER $6,875,000 . CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS DATED MAY 1,2010 SERIES 2010-A In order to induce the Depository Trust Company (the ccDTC") to accept delivery of the above captioned'bonds (the "Bonds") for safekeeping prior to the delivery of the Bonds on May 5, 2010 (the "Closing Date"), the City of Salina, Kansas (the "Issuer"), and the Treasurer of the State of Kansas (the "Agent") hereby agree to place the entire principal amount of the Bonds, in the custody, control and possession of DTC at least one day prior to the Closing Date. The Issuer further agrees that by copy of this letter appropriately executed, it will notify DTC to follow the instructions of Country Club Bank, Prairie Village, Kansas, as the Underwriter (the "Underwriter") in distributing the Bonds. By executing this agreement in the appropriate place DTC acknowledges receipt from the Agent of possession, custody and control of the Bonds, and agrees to safekeep and hold in escrow the Bonds until it shall have received notification from one of the following authorized representatives of the Issuer to release or return the Bonds: Lieu AM Elsey, Clerk or Gilmore & Bell, P.C., Bond Counsel. Notification may be made by telephone or by receipt of an executed notice, delivered or telecopied to DTC; provided, however, that if the notification is made by telephone, written notice must be sent within 24 hours of the original notification. In the event the Issuer executes the release of the Bonds, DTC .will distribute the Bonds pursuant to written instructions provided by the Underwriter; however, in the event a demand for the.return of the Bonds is received, DTC shall return the Bonds as soon as practicable, but in any event, no later than the following business day. DTC agrees to hold the Issuer and the Agent, as their interests may .appear, and any of their officers or employees, harmless from any liability, loss, damage or reasonable expense in connection with the loss, theft, destruction or other disappearance of the Bonds while they are in the possession, custody or control of DTC, prior to concluding the Closing with respect to the Bonds and prior to distributing the Bonds in accordance with the instructions fiunished by the Underwriter. . [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] CITY OF SALINA, KANSAS Dated: April 19,2010 By: Clerk (Signature Page to Underwriting Safekeeping Agreement) OFFICE OFTHETREASURER OF TBE STATE OF KANSAS, As Agent By: Title 3 -3- hI00DY)S INVESTORS SERVICE May 17,2010 I-lenrierta Chmg Vice President Sr. Analyst 100 N. Kiverside Pla-w Siiitc 2220 Chiago, lL 60606 31 2.706.9960 re1 .111.706.9939 hx licnrict ta.chang@rnoodys.com www.moodys.com Mr. Rodney Franz Finance Director City of Salina City Hall 300 West Ash Salina, KS 67402 Dear Mr. Franz: We wish to inform you that on April 16,201 0, Moody's Investors Service reviewed and assigned a rating of Aa3 to the City of Salina, KS General Obligation Internal Improvement and Rehnding Bonds, Series 201 0-A and a rating of rMIG1 to the city's General Obligation Temporary Notes, Series 201 0- 1. In order for us to maintain the currency of our ratings, we request that you provide ongoing disclosure, of current financial and statistical information. Moody's will monitor this rating and reserves the right, at its sole discretion, to revise or withdraw this rating at any time in the hhue. The rating, as well as any revisions or withdrawals thereof, will be publicly disseminated by Moody's through normal print and electronic media and in response to verbal requests to Moody's Rating Desk. Should you have any questions regarding the above, please do not hesitate to contact me or the analyst assigned to this transaction, So0 Yun Chun at 312-706-9983. sincew J Henrietta Ch& cc: Mr. David Arteberry George K. Baurn & Company MOODY)~ INVESTORS SERVICE New Issue: MOODYS ASSIGNS Aa3 RAllNG TO CITY OF SALINA'S (KS) $5.7 MILLION GO $1.6 MILLION GO TEMPORARY NOTES, SERIES 2010-1 iNTERNAL IMPROVEMENT AND REFUNDING BONDS, SERIES 2010-4 AND MIG 1 RATING TO Global Credit Research - 19 Apr 2010 Aa3 WTIW APPUES TO $59.3 MILLION OF LONG TERN GO DEET, MCLUDMO CU-NT BOWS hnicipality KS MWsRatlng ISSUE Geneial Obsgation Temporary Notes, Series 2010-1 Sdekraurt 51.600.000 mded Sale Date Wl SI1 0 RatlngDeSaiptlon General Obligation Unlimited Tax R&llNG MG 1 General Obligation lntemal bnprovement and Refunding Bonds. Sesies 2010-A. Aa3 salekmrmt 165,660,000 Expected Sale Date WlYlO Rating DescrlpUon General Obligation Unlimited Tax Opinion NEW YORK. Apc 19,2010 - ms hvestm- Service has assigned a Aa3 ratlng to the City d Salina's (KS) $5.7 million General Obligation Internal Improvement and Refunding Bonds, Serles 201W and a MG 1 rating to the city's $1.6 million Gened Obsition Temporary Notes, Series 201&1. Concwently. Ws has affirmed them rating on the civs long term general obligation debt Salina has $59.3 mibm of outstanding king term general obligation debt including the current bonds. Proceeds of the Series 2010-1 notes will provide temporq fmancing for streef water and sewer improvements. Pmceeds of the series 201&ABonds will finance the remodeling of a fire station, lad and refund the citfs outstanding Series 2002Abonds for estimated net present value savings. The cuITent issues am secured by Salina's general obligation unlimited tax pledge. Debt service on the notas is to be paid with speclal assessments. Assignment of them rating reflects the ciys moderately sized tax base which serves as a regional economic center. satisfactory financial oparations despite recent deficits and sales tax revenue pressures. and average debt levels with rapid principal amortization. WDERATELY SED TAX BASE SERMS AS REGIONAL ECONOMC CENTER Despite some challenges. MDody's believes thst due to its pition as a regional retail hub. Salina should continue to enjoy relative economic sWi. Located in Saline Camty 95 mUes north of Wichita (& obegatlon rated WsWe wtlook). the City of Salina's medium-sized tax base reached $2.9 billion in 2009. ws notes that the pace oftax base growth has slowed significantly. declining by 0.7% in Mo9 compared to a 7.5% increase in 2006. The decline in 2009 is partially due to overall decline in valuations as well as thi? state's recent exemption of machinery and new equipment As the impact ofthe national ecommic recession is felt laally ws expects the Salina economy to continue to benetit from seveml stabilbi factus. Located at the intersection of C70 and I-135, the city serves as a regional retail, commercial. indusbial. and medical hub for the largely agricultural communities of north central Kansas. The Salina Airport Industrial Center is home to 80 organizations, with an aggregate 4.200 employees. Tenants indude the Kansas Mlitary Board. and a campus of Kansas State University. Hawker Beechcraft Corpomtion recently dosed operations, laying off the remaining 283 employees. Notably, the airport Industrial cent- continues to attract new businesses offsetting some job losses resulting from the closing of Hawker. Resident incane levels appmimate state and national medians with per capita and median family incomes at 90.7% and 91.6% respectively. Despite recent layo%. the city's unemployment rate d 5.6% Continues to trend below those of the state (6.3%) and nation (9.7%) for December 2009. SATEFACTORY FINANCIPLOPERATIONS DESPITE RECENT OECUMS IN RESERVESAND SALES TAXRNENUE PRESSURES bbod)b expects the cws fiMncial health to remain satisfactnry, despite revenue pressures and declines in General Fund balance resetves. HstarcaIly. the city has mamtamed General Fund bahnces equal to approximatdy 30% of revenues and has a formal pcdicy of keepcng an UNES~~V~ General Fund balance of 15% to 20% of annual revenues. h hscal2007, the General Fund balance dedied by neady 9900,ooO and declined an additional $1.3 million in Rscal2008 due to budgetary pressures in a variety of areas, including increased fuel costs and increased salary and benefit costs. Another factor in the General Fund balance dedine is state legislation that increased property tax exemptions for new machinery and equipment- As a result. the ws cash balance declined from $5.1 minion to $3.8 million at the dose of fiscal 2008. Due to one time unexpcted budget variances and declining sales tax revenues, unaudii fiscal 2009 cash balance declii to $3.7 million. Typical of Kansas cities, sales tax receipts represent the citfs primary operating revenue source. comprising 432% of fiscal 2008 General Fund revenues. Seved different sales taxes are cdlected. including a 1% Countywide Local Option Sales Tax and a 0.5% Ciide Local Option Safes Tax and do not sunset. h addition. the city passed a 0.4% bcal sales tax effective &nil 1,2009 replacing a .25% local sales tax that sunsets on June 1,2010. Although sales tax revenues increased through ftscal2008. this bend reversed beginning in fiscal 2009. The city budgeted for a 2% deche in sales tax revenues, but receipts came in 3% less than budgeted. Cdlections are expected to continue to decline and officials have budgeted for an 8% dedine in fiscal 2010. h response to decbning sales tax rwenues. city officials have implemented revenue increases and expenditure reductions. The property tax levy was increased by 2 milis. generating an additional ~0.000 in Bdditional property tax revenues annually and officials have identitied $1.6 minion in possible ewpenditure reductions to help absoib the impact of potential shortfalls in sales tax revenues. As a res& resewes are eqxcted to remain level in kcalM10. Officials have budgeted to maintain resew lev&, with a target cash balance of $3.6 million. ws believes that cws finances will remain stable give^^ recent remue and expenditure adjustments necessary to maintain structudy balanced operations. However, continued declines in reserves, and revenue shortfab and uicreases beyond PrOjectiW dd pressure future credit quality. AMRAGE DEBT LEMLS WITH RAPID PRKIPPLAMORTIZPJK)N ws believes the ws debt levets wi!l remain manageable given rapid principal amortbation and moderete debt needs. AL 2.0% and 4.2% of M value, respectively, the ws direct and overaP debt burdens are slighUy below median debt levels for cities in the state. The cws Overao debt burden is driven in brge part by the significant debt levetS of Saline County Unified Schd District 305 (general digabon rated AI). Principal amortbation of the &#s direct debt is rapid, with 78.9% of general obligath debt retired in ten years. The city generally issues long term and short term debt once or twice per year to fund projects outfined in its Capital bnprovement Plan. The current Capital bnprovement Pian c& for appruximately $28 milUm In general obligation debt thrcugh 2015. KEY STATLsTics 2m census popubtion: 45,679 (8.0% increase from 1990) 2008 EsCimated population: 46,483 (1.8% Increase since 2000) 2008 Full value: $2.9 tiNion 1999 Per capita income: $18,593 (86% of US) 1999 Median family income: $45,433 (91 % of US) 1999 Median home value: $83,900 (70% of US) City of Salina unemployment rate (December 2009): 5.6% Fiscal 2008 General Fund ba!ance: 8 million (21.7% of General Fund revenues) Fiscal 2008 Unreserved General Fund balance: $5.7 malion (20.8% of General Fund revenues) Direct debt burden: 2.0% Overall debt burden: 4.2% Pam (10Ywrs): 78.9% Pet-sale long tenn general obigation debt outstanding: $59.3 million The rating assigned to the Ci of Salina was issued on ws munlcipal rating scale. ms has announced its plans to recalibrate all U.S. municipal ratings to its global scale and therefore, upon implementation of the methodology plblished in conjunction with this initiative, the rating will be recalibrated to a global scale raling comparable to other cradits with a similar risk profile. Market participants should nat View the recalibration of municipal ratings as rating upgrades, but rather as a recaIkation of the ratirp to a different rating scale. Thii reca6bration does not deet an improvement in credit qualii or a change in our credit opinion for rated municipal debt issuers. For further details regarding the recalibration please dsii www.rnoodys.comlgsr. The principal methodology used in rating the current issue was ws "General Obligation Bonds Gsued by U.S. Local Governments,' published in OEtober 2009 and aMaahle on www.moodys.com in the Rating hkmoddogies Subdirectory underthe Research 8 Ratings tab. Other methoddogies and fsctnrs that may have been considered in the process of rating this issuer can also be found in the Rating Mhcdologies sbdirectory m ws website. The last rating action for the City of Safina was on July 9.2009, when the ws Aa3 general &ligation rating was affirmed. kralysts SmYunChlm Analyst Public Finance Gmup ws Investas Service Rachel Cartez BackupAnalyst PuMc Finance Group Mxdfs hvestas Service Contacrs JwWts: (212) 5534376 Research Csents: (212) 553-1653 IWOODYk lNVESTORS SERVICE 0 Cowrim 2010. MxWs lnvestorr Service. hc. dor its licensors including ws Assurance Company. hc. (tosether. 'MOODYS'). All rhhb reserved. CREDIT WINGS ARE MOODYS INMSTORS SERWCE, INC.3 ("MIS") CURRENT OPINIONS OF THE RaPJM FUTURE CREDIT WSK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBTUKE SECUMTIES MIS DEFWES CREMT WAS THE WSK THAT AN ENTITY W NOT MEET ITS CONTRACTU& MCW OBUGNIONSAS THEY COME DUE AND PNY ESllMATED nWCW LOSS IN THE RIM OF DEFMJLT. CREDIT NOT UlldITED TO UQUKIIIY RISK, NWWET WE RISK, OR PRICE M)LAnLlTK CREDIT RAIINGS ME NOT STATEMENTS OF CURRENT OR HlSTORlCAL FPSTT. CREWT RAnNGS DO NOT CONSTITUTE INWSTMENT OR flWcWbD\nCE, AND CREDIT RATINGS PSZE NOT RECOMMENDAnONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES CREDIT RATINGS W NOT COMMENT ON THE SUITABILITY OF AN IN\IESTMENT FORM PARTICULAR INKSTOR MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INKSTOR WU MAKE ITS OW STUDY PND E\ILyuATDN OF EACH SECURITY THAT IS UNDER CONSDWION FOR PURCHASE, HOLDING, OR SALE. DO NOT WDRESSPNY OTHER WSK, INCLUDING BUT N.L INFORMATION COMNNED HEREIN IS PROTECTED 8Y LAW, INCLUDING BUT NOT LWIEU TO. CCJPYRIGHT LAW. AND NONE OF SUCH NFORMATION MAY dE COPIED OR OTHERWISE REPRODUCED. OR STORED FOR SUBSEQUENT L'SE FOR ANY SUCH PURPOSE, IN WrlOLE OK W P'ART. IN ANY FORM OR APNNU'NER OR BY ANY MEANS WHATSOEVER. BY ANY PERSON WITHOIJT FIQOOYS PRIOR WHllTEN CONSENT. Ail information contained herein is obtained by FVOODYS from sources believed by it 10 be accurate and diable. Because or the possibility of human or mecnanical error as well as other factors. however, all intorination contained herein is provided "AS IS' without warranty of any kind. Under no circumslances shall MC)ODYS have any 2di)iiity to any person or eiility for (a) any loss or damage in whole or in part caused by, resulting from, or relatiny to. .ny error (neqligent or otherwise) or other circumstance or coiitingency within or outside the ccntrol of MOODYS or my of its directors. officers. employws or qents in connect:on wilh the procurement. ccllection, compilation. walvsis. irireruretatiori. ccuiini\inication, PublicJtiOtl or delivery of my such information. or ib) any diiecl, indirect. .!:ecinl. consecctiuntial, compensatory or iiici4erital ilamayes whatsoever (irrcludinq without limitstion. lost profits). wen ti ibXlODYS is artwed in advance of the ~xsibility of wch dwwq?s. resultinq from tho use of or inability to 1 ise. my such ii ifornation. The ratings. fiiiariciul reporting analysis. p~~jccl~ans, and other observations, if any, xmtituting part of the information contained herein are, and must be coflshed solely as. statements si opinion and WI statements 01 fact or recommendations to piirchase, sell or hold any securities. Each user of *e intormation .;,.>ntained herein must make ~ts own study and evaluatioii oi each security il way consiaer purchasing. holding cr jzlling. 1.10 ~~VAWANTy. EWPKESS OR LIPLIED. fK5 TO T9E ACCURACY, 'TIFIIEL!PIESS. COWLETENESS, P.<ERCHANT~5lLiTY OR FITP.!ESS FOR MIY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER liEP>.CKAGED, FURTHER TRANSFAiTTED. TRAPJSFERHED. D!SSEb4INATED. REDISTRIBUTED OH RESOLD, :;PINION OR INFORWlTION Is GWEN OH F,'ADE HY PsUODYS IN ANY FORM OR hWNER 'NH/\TSC)EMR. ; !!S. ;J whclly-owned credit iatir:q agency subsidiary of AK)OD'/S thpoiation (":Xc)o"!. herthy discloses ;bat most 'isusrs of tiebt securities i!nt:luL'ing corporate and miinlcipal rmrls. debentuies. niites and commercial paper) and geterred stock ratzd by hllS have, prior to assignment of any rating. 3greed to pay to IUS lor sppraisal and ratirq wwces rericlered by it fees ranging from 91,500 to approximately S2.5OO.OCO. hlcO and MIS niso niwitm policies :;no proccdurcs to address ihe independence of MIS's rabngs and rntinq prwwses. hiormation reg,irdinc; icnain .d8liahons that may exist between direclors of WO and rated enlities. and ber.veeti mikes who hold railngs from blS :no nave also publicly reoorted !o the SEC ;in tmiieishio miersrt in ?KO ut inore kan .%, :s posteu amuaily :A .Wtliation Policy." Nvw.moodm unner i3e haaeing "Shareholcer Rslabons - Corprxrtie Governance - Dirn:ror and ShJrshoiaer '-ny~ptiblicatiGil into Australia of this Cocuinant is by FzGOD'r'S .rliiliate VOODT S bivestcrs Service Pty L!mited .QN 61 U03 399 657. ivhich holds kistralinn Financial Senices License no. 336969. This document is intended lo De !.,rwiided only 10 wholesale clients (within the meaning of section 7611; nflhe Cornorations kt 2001 j. By continwnq to .ICC~~SS this Docun!cnt irom within Australia. ysu represent to hlOODYS aiid its affiliares that you are, or are iccessing the Dxurnail as a representative of. a xhdesale client and that neither you nor the eritity you represent :i ;ne C:orporalffins r4:t 2001 ). ;!ireclly .x iiinirec!ly a liqsminate his Dociment :)r its cirntarits 19 ~crilil c'lirtiils ('&iLh!n the meaning or %%tion 78 IG CLOSING CERTIFICATE $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS DATED MAY 1,2010 SERIES 2010-A The undersigned Mayor and Clerk of the City of Salina, Kansas (the “Issuer”), make this Certificate for inclusion in the transcript of and as a part of the proceedings authorizing and providing for the issuance of the above described bonds (the “Bonds”); and certify as of May 5, 2010 (the “Issue Date”), as follows: 1. Meaning of Words and Terms. Capitalized words and terms used in this Certificate, unless otherwise defined in this Certificate or the context requires otherwise, have the same meanings ascribed to such words and terms in the Bond Resolution (defined below) authorizing the Bonds. . 2. Transcript of Proceedings. The transcript of proceedings relating to the authorization and issuance of the Bonds (the “Transcript”), furnished to the Purchaser of the Bonds, is to the best of our knowledge, information and belief full and complete; none of such proceedings have been modified, amended or repealed, except as might be shown in the Transcript; and the facts stated in the Transcript still exist. In each &tance where copies appear in the Transcript, such copies are true and correct duplicates of the original instruments now on file with the Clerk. All certifications made by the Issuer in the Transcript Certificate dated April 19,2010 are true and correct as of this date and are incorporated in . this Certificate by reference. 3. The Bond Resolution. The Issuer is issuing and delivering the Bonds simultaneously with the delivery of this Certificate, pursuant to and in full compliance with’the Constitution and statutes of the State, including particularly K.S.A. 10427, K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., K.S.A. 12- 2101 et seq., as amended, Ordinance No. 10-10540 and Resolution No. 10-6726 of the Issuer duly adopted by the governing body of the Issuer on April 19,2010 (jointly the “Bond Resolution”). 4. Purpose of the Bonds. The Bonds are being issued for the purpose of providing funds to (a) pay a portion of the costs of certain capital improvements, as described in the Bond Resolution (the “Improvements”) and (b) refund a portion of the outstanding General Obligation Water and Sewage System Refunding Bonds, Series 2002-A of the Issuer, as described in the Bond Resolution. (the “Refunded Bonds”). The purpose of the refunding is to achieve interest cost savings through early redemption of the Refunded Bonds, and to provide an orderly plan of finance for the Issuer. 5. Security for the Bonds. The Bonds are general obligations of the Issuer payable in part from special assessments levied upon the property benefited by the 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 Issuer, with the balance payable, 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 Issuer. The full faith, credit and resources of the Issuer are pledged under the Bond Resolution to the payment of the principal of and interest on the Bonds: In the Bond Resolution, the governing body of the Issuer has covenanted to annually make provision for the payment of principal of; premium, if any, and interest on the Bonds as the same become due by, to the extent necessary, by levying and collecting the necessary taxes and/or assessments upon all of the taxable tangible property within the Issuer in the manner provided by law. 6. Sale of Bonds. The Bonds have been sold at rates not in excess of the limitations set forth in K.S.A. 10-1009. The Notice of Bond Sale dated March 22, 2010 and included in the Transcript constitutes a full true and correct copy thereof. A copy of such Notice of Bond Sale and Preliminary Official Statement was sent to prospective purchasers of the Bonds, and to all other persons and firms requesting copies of such Notice of Bond Sale and Preliminary Official Statement. 7. Official Statement. The Official Statement contained in the Transcript constitutes a full, true and correct copy of the Oficial Statement relating to the Bonds. To the best of our knowledge, the Official Statement, other than the sections entitled “The Depository Trust Company,” “Bond Ratings,” “Legal Matters,” and Appendix B, about which the Issuer expresses no opinion, is true in all material respects, and does not contain any untrue statement of a material fact or does not omit to state a material fact, necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. As of this date there has been no material adverse change in the financial condition or the financial affairs of the Issuer since the date of the Official Statement. No other event has occurred which is necessary to be disclosed in the OfEcial Statement in order to make the statements therein not misleading in any material respect as of the date of this Certificate. The Issuer has previously caused to be delivered to the Purchaser copies of the Official Statement. 8. Continuing Disclosure Instructions. The Issuer, in the Bond Resolution, has covenanted to disseminate such information as is required in accordance with the provisions of the SEC Rule and the Continuing Disclosure Instructions, which are attached to this Certificate as Exhibit A, and incorporated in this Certificate by reference. 9. Non-Litigation. There i’s no controversy, action, suit, proceeding, or to the best of our knowledge, any inquiry or investigation at law or in equity or before or by any public board or body pending or, to the best or our knowledge, threatened against or affecting the Issuer, its officers or its property, or, to the best of our knowledge, any basis therefor questioning, disputing or affecting in any way: (a) the legal organization of the Issuer or its boundaries; (b) the right or title of any of its officers to their respective offices; (c) the legality of any official act shown to have been done in the Transcript; (d) the constitutionality or validity of the’indebtedness represented by the Bonds shown to be authorized in the Transcript; (e) the validity of the Bonds, or any of the proceedings had in relation to the authorization, issuance or sale thereof; (f) the levy and collection of an ad valorem property tax to pay the principal of and interest on the Bonds; or (g) the federal or state tax-exempt status of the interest on the Bonds; wherein any unfavorable decision, ruling or finding would adversely affect the Issuer, the transactions contemplated by the Bond Resolution or the Official Statement, or the validity or enforceability of the Bonds, which are not disclosed in the final Official Statement. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 WITNESS our hands and the seal of the Issuer. Official Title Mayor Clerk (Signature Page to Closing Certificate) EXHIBIT A CONTINUING DISCLOSURE INSTRUCTIONS $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS DATED MAY 1,2010 SERIES 2010-A THESE CONTINUING DISCLOSURE INSTRUCTIONS (the “Disclosure Instructions”) are executed and delivered by the Issuer in connection with the issuance of the above-described bonds (the “Bonds”) which are being issued simultaneously herewith as of May 5, 2010, pursuant to the Bond Resolution, in which the Issuer covenants to enter into this undertaking to provide certain financial.and other information with respect to the Bonds in order to assist the Participating Underwriter in complying with the provisions of the SEC Rule. The Issuer is the only “obligated‘person” with responsibility for continuing disclosure with respect to the Bonds. Section 1. Definitions. In addition to the definitions set forth in the’Bond Resolution, which apply to any capitalized term used in these Disclosure Instructions, unless otherwise defined herein, the following capitalized terms shall have the following meanings: “Annual Report” means any Annual Report provided by the Issuer pursuant to, and as described in, Section 2 of these Disclosure Instructions. “Beneficial Owner” means any registered owner of any Bonds and any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries),’ or (b) is treated as the owner of any Bonds for federal income tax purposes. “Bond Resolution” means jointly the ordinance and the resolution of the governing body of the Issuer authorizing the issuance of the Bonds. “CAFR” means the Issuer’s Comprehensive Annual Financial Report. “Designated Agent” means Gilmore & Bell, P.C. or one or more other entities designated in writing by the Issuer to serve as a designated.agent of the Issuer for purposes of these Disclosure Instructions. “Dissemination Agent” means any entity designated in writing by. the Issuer to serve as dissemination agent pursuant to these Disclosure Instructions and which has filed with the Issuer a written acceptance of such designation substantially in the form attached hereto as Exhibit B. “EMMA” means the Electronic Municipal Market Access system for municipal securities disclosures (www.emma.msrb.org). “Financial Information“ means the financial information of the Issuer described in Section 2(u) (I) hereof. A- 1 “Fiscal Year” means the one year period ending December 3 1, or such other date or dates as may be adopted by the Issuer for its general accounting purposes. “GAAP” means generally accepted accounting principles, as applied to governmental Units, as in effect at the time of the preparation of the Financial Information. “Issuer” means the City and any successors or assigns. “Material Events” means any of the events listed “MSRB” means the Municipal Securities Rulemaking Board. “Official Statement” means the Issuer’s Official Statement for the Bonds. Section 3(a) hereof. “Operating Data” means the operating data of the Issuer described in Section 2(u)(2) hereof. “Participating Underwriter” means any of the original underwriters of the Bonds required to comply with the SEC Rule in connection with offering of the Bonds. “Repository” means the MSRB via EMMA. “SEC” means the Securities and Exchange Commission of the United States. “SEC Rule” means Rule 15c2-12@)(5) adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 2. (a) Provision of Annual Reports. The Issuer shall, or shall cause the Dissemination Agent to, not later than 180 days after the end of the Issuer’s Fiscal Year, commencing with the Fiscal Year ended in 2009, provide to the Repository, the Issuer’s CAFR, which will contain the Financial Information and Operating Data (jointly, the “Annual Report”), as follows: (1) Financial Infomution. The financial statements of the Issuer for such prior Fiscal Year, accompanied by an audit report resulting from an audit conducted by an Independent Accountant in conformity with generally accepted auditing standards. Such financial statements will be prepared on a modified accrual basis of accounting other than GAAP for all governmental funds, expendable trust and agency funds. The accrual basis of accounting is used for proprietary and nonexpendable trust funds. A more detailed explanation of the accounting basis is contained in Appendix A to the Official Statement. If such audit report is not available by the time the Annual Report is required to be filed pursuant to this Section, the Annual Report shall contain unaudited financial statements and the audit report and accompanying financial statements shall be filed in the same manner as the. Annual Report promptly after they become available. The method of preparation and basis of accounting of the Financial Information may not be changed to a basis less comprehensive than contained in the Oficial Statement, unless the Issuer provides notice of such change in the same manner as for a Material Event under Section 3(6) hereof. (2) Operating Data. Updates as of the end of the Fiscal Year of substantially all of the information and dag contained in those sections of the Official Statement entitled: A-2 (i) Debt Summary (ii). Tax Levies (iii). Assessed Valuation (iv) Estimated Actual Valuation (v) Tax Collections (vi) Largest Taxpayers. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Issuer is an “obligated person” (as defined by the SEC Rule), which have been filed with the Repository, the MSRB or the SEC. If the document included by reference is a final official statement, it must be available from the MSRB via EMMA. The Issuer shall clearly identify each such other document so included by reference. In each case, the Annual. Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in this Section; provided that the audit report and accompanying financial statements may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Issuer’s Fiscal Year changes, it shall give notice’of such change in the same manner as for a Material Event under Section 3@). (b) If no Dissemination Agent has been appointed, the Issuer shall file the Annual Report as specified by Section 2(u) hereof; or if the Annual Report is not filed within the time period specified in Section t(u) hereof, the Issuer shall send a notice to each Repository in substantially the form attached as Exhibit A. Section 3. Reporting of Material Events. (a) Pursuant to the provisions of this Section, the Issuer shall give, or cause the Dissemination Agent, if any, to give, notice of the occurrence of any of the following events with respect to the Bonds, if the Issuer deems such events to be material: principal and interest payment delinquencies; non-payment related defaults; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; adverse tax opinions or events affecting the tax-exempt status of the Bonds; modifications to rights of bondowners; optional, contingent or unscheduled bond calls; defeasances; release, substitution or sale of property securing repayment of the Bonds; or rating changes. (b) Such notice shall be given by promptly filing a notice of such occurrence with the ‘Repository. Notwithstanding the foregoing, notice of Material Events described in subsections (a)@) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Bonds pursuant to the Bond Resolution. A-3 Section 4. I Dissemination Agent. (a) General. The Issuer may, from time to time, appoint or engage a Dissemination Agent to ' assist it in carrying out its obligations under these Disclosure Instructions, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. @) Annual Reports. If a Dissemination Agent is appointed, not later than 15 Business Days prior to the date specified in Section 2(a) for providing the Annual Report to the Repository, the Issuer shall provide the Annual Report to the Dissemination Agent or the Repository. The Dissemination Agent shall file a report with the Issuer certlfyrng that the Annual Report has been provided pursuant to these Disclosure Instructions, stating the date it was provided, or that the Issuer has certified to the Dissemination Agent that the Issuer has provided the Annual Report to the Repository. If the Dissemination Agent has not received an Annual Report or has not received a written notice from the Issuer that it has provided an Annual Report to the Repository, by the date required in Section 2(u), the Dissemination Agent shall send a notice to the Repository in substantially the form attached as Exhibit A. (c) Material Event Notices. (1) The Dissemination Agent shall, promptly after obtaining actual knowledge of the occurrence of any event that it believes may constitute a Material Event, contact the chief financial officer of the Issuer or his or her designee, or such other person as the Issuer shall designate in writing to the Dissemination Agent from time to time, inform such person of the event, and request that the Issuer promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to Section 4(c)(3). (2) The Issuer will promptly respond in writing to any such request. Whenever the Issuer obtains knowledge of the occurrence of a Material Event, because of a notice from the Dissemination Agent pursuant to this subsection (c) or otherwise, the Issuer shall promptly determine if such event would be material under applicable federal securities law. If the Issuer has determined that knowledge of the occurrence of a Material Event would be material under applicable federal securities law, the Issuer shall promptly so notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to Section 4(c)(3). If the Issuer has determined that knowledge of a Material Event would not be material under federal securities law, the Issuer shall promptly so notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent not to report the occurrence pursuant to Section 4(c)(3). (3) If the Dissemination Agent has been given written instructions by the Issuer to report the occurrence of a Material Event, the Dissemination Agent shall promptly file a notice of such occurrence with the Repository, with copies to the Issuer. Notwithstanding the foregoing, notice of Material Events described in Sections 3(a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Bonds pursuant to the Bond Resolution. (d) ' Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in these Disclosure Instructions, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to these Disclosure Instructions. (e) Other Designated Agents. The Issuer may, from time to time, appoint or designate a Designated Agent to submit Annual Reports, Material Event notices, and other notices or reports pursuant to these Disclosure Instructions. The Issuer hereby appoints the Dissemination Agent and the Designated Agent(s) solely for the purpose of submitting Issuer-approved Annual Reports, Material Event notices, and other notices or reports pursuant to these Disclosure Instructions. The Issuer may revoke this designation at any time upon written notice to the Designated Agent. Section 5. Termination of Reporting Obligation. The Issuer’s obligations under these Disclosure Instructions shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If the Issuer’s obligations hereunder are assumed in full by some other entity as permitted in the Bond Resolution, such person shall be responsible for compliance with under these Disclosure Instructions in the same manner as if it were the Issuer, and the Issuer shall have no further responsibility hereunder. If such termination or substitution occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination or substitution in the same manner as for a Material Event under Section 3@). Section 6. Amendment; Waiver. Notwithstanding any other provision of these Disclosure Instructions, the Issuer and the Dissemination Agent, if any, may amend of these Disclosure Instructions (and the Dissemination Agent shall not unreasonably refuse to execute any amendment so requested by the Issuer) and any provision of these Disclosure Instructions may be waived, provided that: (a) Bond Counsel or other counsel experienced in federal securities law matters provides the Issuer and the Dissemination Agent, if any, with its opinion that the undertaking of the Issuer contained herein, as so amended or after giving effect to such waiver, is in compliance with the SEC Rule and all current amendments thereto and interpretations thereof that are applicable to these Disclosure Instructions; (b) if the amendment or waiver relates to Sections 2(a) or .?(a), it may only be made in connection with a change in circumstances that arises from a change in law or legal requirements, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; and (c) the amendment or waiver is either (1) approved by the Owners of the Bonds in the same manner as provided in the Bond Resolution with consent of the Owners, or (2) does not in the opinion of Bond Counsel materially impair the interests of the Owners or Beneficial Owners of the Bonds. . If there is an amendment or waiver of a provision of these Disclosure Instructions, the Issuer shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for theamendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of Financial Information or Operating Data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements: (a) notice of such change shall be given in the same manner as for a Material Event under Section 3@), and (b) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 7. Additional Information. Nothing in these Disclosure Instructions shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in these Disclosure Instructions or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by these Disclosure Instructions. If’ the Issuer chooses to include any information in any Annual A-5 Report or notice of occurrence of a Material Event, in addition to that which is specifically required by these Disclosure Instructions, the Issuer shall have no obligation under these Disclosure Instructions to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 8. Noncompliance. In the event of a failure of the Issuer or the Dissemination Agent, if any, to comply with any provision of these Disclosure Instructions, the Participating Underwriter or any Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer or the Dissemination Agent, if any, as the case may be, to comply with its obligations under these Disclosure Instructions. Noncompliance with the provisions of these Disclosure Instructions shall not be deemed an Event of Default under the Bond Resolution, and the sole remedy under these Disclosure Instructions in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with these Disclosure Instructions shall be an action to compel performance. Section 9. Notices. Any notices or communications to or among any of the parties referenced in these Disclosure Instructions may be given as follows: (a) To the Issuer at: 300 West Ash Salina, Kansas 67402 Attention: Clerk (b) To the Participating Underwriter at the address set forth in the Bond Resolution or such other address as is hished in writing to the other parties referenced herein. (c) To the Dissemination Agent at the address set forth on Exhibit B attached hereto. Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent. 4 Section 10. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Section 11. . Beneficiaries. These Disclosure Instructions shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, the Participating Underwriter and Beneficial Owners fi-om time to time of the Bonds, and shall create no rights in any other person or entity. Section12. Severability. If any provision in these Disclosure Instructions, the Bond Resolution or the Bonds relating hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section13. Governing Law. These Disclosure Instructions shall be govern4 by and construed in accordance with the laws of the State of Kansas. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] A-6 S%NVX ‘VNIWS do AU3 , P s EXHIBIT A NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Salina, Kansas Name of Bond Issue: $6,875,000 General Obligation Internal Improvement and Refunding Bonds, Series 2010-4 dated as of May 1 , 2010 Name of Obligated Person: Date of Issuance: City of Salina, Kansas May 5,20 10 NOTICE IS GIVEN that the City of Salina, Kansas (the “Issuer”) has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Instructions dated as of May 5, 2010. The Issuer anticipates that the Annul Report will be filed by , Dated: CITY OF SALINA, KANSAS BY ,as Dissemination Agent cc: City of Salina, Kansas ? A- 1 EXHLBIT B ACCEPTANCE OF DISSEMINATION AGENT Name of Issuer: City of Salina, Kansas Name of Bond Issue: $6,875,000 General Obligation Internal Improvement and Refunding Bonds, Series 201 0-A, dated as of May 1,20 10 Dissemination Agent: Notice Address of Dissemination Agent: , having been duly appointed by the City of Salina, Kansas to act in the capacity of Dissemination Agent pursuant to the Continuing Disclosure* Instructions to which this acceptance is attached, accepts such duties and responsibilities set forth therein. Dated: B-1 FEDERALTAXCERTIFICATE Dated as of May 5,2010 OF THE CITY OF SALINA, KANSAS $6,875,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS SERIES 2010-A FEDERAL TAX CERTIFICATE TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1-01 Definitions of Words and Terms .................................................................................... 1 ARTICLE 11 GENERAL REPRESENTATIONS AND COVENANTS Section 2.01 Section 2.02 Representations and Covenants of the Issuer ................................................................ 6 Survival of Representations and Covenants .................................................................. 9 ARTICLE III ARBITRAGE CERTIFICATIONS AND COVENANTS Section 3.01 Section 3.02 Section 3.03 Section 3.04 Section 3.05 Section 3.06 Section 3.07 Section 3.08 Section 3.09 Section 3.10 Section 3.11 Section 3.12 Section 3.13 Section 3.14 Section 3.15 General .......................................................................................................................... 9 Reasonable Expectations ............................................................................................... 9 Purpose of Financing ..................................................................................................... 9 Funds and Accounts ....................................................................................................... 9 Amount and Use of Bond Proceeds and Other Money .................................................. 9 Multipurpose Issue ...................................................................................................... 10 No Advance Refunding ............................................................................................... 10 Current Refunding ....................................................................................................... 10 Completion of Financed Improvements; New Money Portion ................................... 10 Sinking Funds .............................................................................................................. 11 Reserve, Replacement and Pledged Funds .................................................................. 11 Purpose Investment Yield ............................................................................................ 11 Offering Prices and Yield on Bonds ............................................................................ 11 Miscellaneous Arbitrage Matters ................................................................................ 11 Conclusion ................................................................................................................... 12 ARTICLE IV ARBITRAGE INVESTMENT AND REBATE INSTRUCTIONS Section 4.01 Section 4.02 Section 4.03 Section 4.04 Section 4.05 Section 4.06 Section 4.07 Section 4.08 Section 5.01 Section 5.02 Section 5.03 Section 5.04 Temporary PeriodsNield Restriction .......................................................................... 12 Fair Market Value ....................................................................................................... 12 Certain Gross Proceeds Exempt from the Rebate Requirement .................................. 15 Computation and Payment of Arbitrage Rebate .......................................................... 17 Successor Rebate Analyst ............................................................................................ 17 Rebate Report Records ................................................................................................ 18 Survival after Defeasance ............................................................................................ 18 Filing Requirements .................................................................................................... 18 ARTICLE V MISCELLANEOUS PROVISIONS Term of Tax Certificate ............................................................................................... 18 Amendments ................................................................................................................ 18 Opinion of Bond Counsel ............................................................................................ 18 Reliance ....................................................................................................................... 18 1 Section 5.05 Severability .................................................................................................................. 19 Section 5.06 Benefit of Certificate. .................................................................................................. 19 Section 5.07 Default; Breach and Enforcement. ...... ........ . . . .. .. . .. .. .. .. .. ... .. ... . .. .. .. ... ... .... .. . .. . .. .. . . . .. .. . .. .19 Section 5.08 Record Keeping Responsibilities. .... ... ... .. . .. . . .. . .. ..... .. ......... .... .. .. ... .. ... .. .. .. ... ... .. ... ..... .. .19 Section 5.09 Execution in Counterparts. .. .. .. .. .. .. ... ... .. . ... .. . . . . ...... .. .. .. ..... .. .... .. .. .. ... ..... .... ... . .. .......... .. .19 Section 5.10 Governing Law ............................................................................................................ 20 Section 5.11 Electronic Transactions. .............................................................................................. 20 LIST OF EXHIBITS TO FEDERAL TAX CERTIFICATE A. LRS FORM 8038-G Evidence of filing B. RECEIPT FOR PURCHASE PRICE C. RECEIPT AND REPRESENTATION D. DESCRIPTION OF PROPERTY COMPRISING THE FINANCED IMPROVEMENTS Schedule 1 Debt Service Schedule and Proof of Yield *** .. 11 FEDERAL TAX CERTIFICATE THIS FEDERAL TAX CERTIFICATE (the “Tax Certificate”), is executed as of May 5,2010 (the “Issue Date”), by the City of Salina, Kansas (the “Issuer”). -. RECITALS 1. This Tax Certificate is being executed and delivered in connection with the issuance by the Issuer of $6,875,000 principal amount of General Obligation Internal Improvement and Refunding Bonds, Series 2010-A (the “Bonds”), under the Bond Resolution (as herein defined), for the purposes described in this Tax Certificate and in the Bond Resolution. 2. The Internal Revenue Code of 1986, as amended (the “Code”), and the applicable Regulations and rulings issued by the U.S. Treasury Department (the “Regulations~’), impose certain limitations on the uses and investment of the Bond proceeds and of certain other money relating to the Bonds and set forth the conditions under which the interest on the Bonds will be excluded from gross income for federal income t& purposes. 3. The Issuer is executing this Tax Certificate in order to set forth certain facts, covenants, representations, and expectations relating to the use of Bond proceeds and the property financed or refinanced with those proceeds and the investment of the Bond proceeds and of certain other related money, in order to establish and maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes and to provide guidance for complying with the arbitrage rebate provisions of Code 5 148(f). NOW, THEREFORE, in consideration of the foregoing and the mutual representations, covenants and agreements set forth in this Tax Certificate, the Issuer represents, covenants and agrees as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions of Words and Terms. Except as otherwise provided in this Tax Certificate or unless the context otherwise requires, capitalized words and terms used in this Tax Certificate have the same meanings as set forth in the Bond Resolution, and certain other words and phrases have the meanings assigned in Code $6 103, 141-150 and the Regulations. The following words and terms used in this Tax Certificate have the following meanings: “Adjusted Gross Proceeds” means the Gross Proceeds of the New Money Portion or the Refunding Portion, as applicable, reduced by amounts (1) in a Bona Fide Debt Service Fund or a reasonably required reserve or replacement fund, (2) that as of the Issue Date are not expected to be Gross Proceeds, but which arise after the end of the applicable spending period, and (3) representing grant repayments or sale or Investment proceeds of any purpose Investment. “Available Construction Proceeds” means the sale proceeds of the New Money Portion, increased by (i) Investment earnings on the sale proceeds, (ii) earnings on amounts in a reasonably required reserve or replacement fund allocable to the New Money Portion but not funded from the Bonds, 1 and (iii) earnings on such earnings, reduced by sale proceeds (A) in any reasonably required reserve fund or (B) used to pay issuance costs of the Bonds. But Available Construction Proceeds do not include Investment earnings on amounts in a reasonably required reserve or replacement fund after the earlier of (a) the second anniversary of the Issue Date; or (b) the date the Financed Improvements are substantially completed. “Bona Fide Debt Service Fund” means a fund, which may include Bond proceeds, that: (a) is used primarily to achieve a proper matching of revenues with principal and interest payments within each Bond Year; and (b) is depleted at least once each Bond Year, except for a reasonable carryover amount not to exceed the greater of (1) the earnings on the fund for the immediately preceding Bond Year, or (2) one- twelfth of the principal and interest payments on the Bonds for the immediately preceding Bond Year. “Bond” or “Bonds” means any bond or bonds described in the recitals, authenticated and delivered under the Bond Resolution. “Bond Counsel” means Gilmore & Bell, P.C., or other fm of nationally recognized bond counsel acceptable to the Issuer. “Bond Resolution” means Ordinance No. 10-10540 and Resolution No. 10-6726 of the Issuer duly adopted by the governing body of the Issuer on April 19,2010, as originally executed by the Issuer, as amended and supplemented in accordance with the provisions of the Bond Resolution. “Bond Year” means each one-year period (or shorter period for the first Bond Year) ending October 1 or another one-year period selected by the Issuer. “Code” means the Internal Revenue Code of 1986, as amended. “Computation Date” means each date on which arbitrage rebate for the Bonds is computed. The Issuer may treat any date as a Computation Date, subject to the following limits: (a) The first rebate installment payment must be made for a Computation Date not later than 5 years after the Issue Date; (b) Each subsequent rebate installment payment must be made for a Computation Date not later than 5 years after the previous Computation Date for which an installment payment was made; and (c) The date the last Bond is discharged is the final Computation Date. The Issuer selects October 1,2014 as the first Computation Date but reserves the right to select a different date consistent with the Regulations. “Financed Improvements” means any of the property financed or refinanced with the proceeds of the Bonds and the Original Obligations as described on Exhibit D. “Gross Proceeds” means (a) sale proceeds (any amounts actually or constructively received by the Issuer fiom the sale of the Bonds, including amounts used to pay underwriting discount or fees, but excluding pre-issuance accrued interest), (b) Investment proceeds (any amounts received from investing 2 sale proceeds or other Investment proceeds, (c) any amounts held in a sinking fund for the Bonds, (d) any amounts held in a pledged fund or reserve fund for the Bonds, and (e) any other replacement proceeds. Specifically, the term Gross Proceeds includes (but is not limited to) amounts held in the following funds and accounts: (1) Improvement Fund; (2) Redemption Fund; (3) Debt Service Account; and (4) Rebate Fund (to the extent funded with sale proceeds or Investment proceeds of the Bonds). “Guaranteed Investment Contract” is any Investment with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate, including any agreement to supply Investments on two or more future dates (e.g., a forward supply contract). “Investment” means any security, obligation, annuity contract or other investment-type property that is purchased directly with, or otherwise allocated to, Gross Proceeds. Such term does not include a tax-exempt bond, except for “specified private activity bonds” as such term is defined in Code Q 57(a)(5)(C), but does include the investment element of most interest rate caps. “IRS” means the United States Internal Revenue Service. “Issue Date” means May 5,20 10. “Issuer” means the City of Salina, Kansas, and its successors and assigns, or any body, agency or instrumentality of the State succeeding to or charged with the powers, duties and functions of the Issuer. “Management Agreement” means a legal agreement defined in Regulations fj 1.141-3(b) as a management, service, or incentive payment contract with an entity that provides services involving all or a portion of any function of the Financed Improvements, such as a contract to manage the entire Financed Improvements or a portion of the Financed Improvements. However, contracts for services that are solely incidental to the primary governmental function of the Financed Improvements (for example, contracts for janitorial, office equipment repair, billing, or similar services) are not treated as Management Agreements. “Measurement Period” means, with respect to each item of property financed as part of the Financed Improvements with proceeds of the New Money Portion, the period beginning on the later of (i) the Issue Date or (ii) the date the property is placed on service and ending on or the earlier of (A) the final maturity date of the Bonds or (B) the expected economic useful life of the property. With respect to each item of property financed as part of the Financed Improvements with proceeds of the Original Obligations, the period beginning on the later of (i) the issue date of the Original Obligations or (ii) the date the property was or will be placed on service, and ending on the earlier of (A) the final maturity date of the Bonds or (B) the expected economic usehl life of the property. “Minor Portion” means the lesser of $100,000 or 5% of the sale proceeds of the Bonds. “Net Proceeds” means the sale proceeds of the Bonds or New Money Portion, as applicable, (excluding pre-issuance accrued interest) less any proceeds deposited in a reasonably required reserve or replacement fund, plus all Investment earnings on such sale proceeds. 3 “New Money Portion” means the portion of the Bonds described in Sectiun 3.06. "Nan-Qualified Use” means use of Bond proceeds or the Financed Improvements in a trade or business carried on by any Non-Qualified User. The rules set out in Regulations 6 1.141-3 determine whether Bond proceeds or the Financed Improvements are “used” in a trade or business. Generally, ownership, a lease, or any other use that grants a Non-Qualified User a special legal right or entitlement with respect to the Financed Improvements, will constitute use under Regulations 6 1.141-3. “Non-Qualified User” means any person or entity other than a Qualified User. “Opinion of Bond Counsel” means the written opinion of Gilmore & Bell, P.C. or other nationally recognized fm of bond counsel. Unless otherwise specifically noted herein an Opinion of Bond Counsel must conclude that the action or proposed action or the failure to act or proposed failure to act for which the opinion is required will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes. “Original Obligations” means the Series 1993-A Bonds, which was the initial issue of tax- exempt governmental obligations that financed a portion of the Financed Improvements. “Output Contract” is defined in Regulations 4 1.141-7 and generally includes any contract with a Non-Qualified User that provides for the purchase of the output of Financed Improvements. “Proposed Regulations” means the proposed arbitrage regulations including Prop. Treas. Reg. $8 1.148-0, 1.148-3, 1.1484, 1.148-5, 1.148-8, and 1.148-11 (published at 72 Fed. Reg. 54606 (Sept. 26, 2007)). “Purchaser” means Country Club Bank, Prairie Village, Kansas, the original purchaser of the Bonds, and any successor and assigns. “Qualified Use Agreement” means any of the following: (a) A lease or other short-term use by members of the general public who occupy the Financed Improvements on a short-term basis in the ordinary course of the Issuer’s governmental purposes. (b) Agreements with Qualified Users or Non-Qualified Users to use all or a portion of the Financed Improvements for a period up to 200 days in length pursuant to an arrangement whereby (1) the use of the Financed Improvements under the same or similar arrangements is predominantly by natural persons who are not engaged in a trade or business and (2) the compensation for the use is determined based on generally applicable, fair market value rates that are in effect at the time the agreement is entered into or renewed. Any Qualified User or Non-Qualified User using all or any portion of the Financed Improvements under this type of arrangement may have a right of first refusal to renew the agreement at rates generally in effect at the time of the renewal. (c) Agreements with Qualified Users or Non-Qualified Users to use all or a portion of the Financed Improvements for a period Up to 100 days in length pursuant to arrangements whereby (1) the use of the property by the person would be general public use but for the fact that generally applicable and uniformly applied rates are not reasonably available to natural persons not engaged in a trade or business, (2) the compensation for the use under the arrangement is determined based on applicable, fair 4 market value rates that are in effect at the time the agreement is entered into or renewed, and (3) the Financed Improvements was not constructed for a principal purpose of providing the property for use by that Qualified User or Non-Qualified User. Any Qualified User or Non-Qualified User using all or any portion of the Financed Improvements under this type of kgement may have a right of first refisal to renew the agreement at rates generally in effect at the time of the renewal. (d) Agreements with Qualified Users or Non-Qualified Users to use all or a portion of the Financed Improvements for a period up to 50 days in length pursuant to a negotiated arm’s-length arrangement at fair market value so long as the Financed Improvements was not constructed for a principal purpose of providing the property for use by that person. “Qualified User” means a state, territory, possession of the United States, the District of Columbia, or any political subdivision thereof, or any instrumentality of such entity, but it does not include the United States or any agency or instrumentality of the United States. “Reasonable Retainage” means Gross Proceeds retained by the Issuer for reasonable business purposes, such as to ensure or promote compliance with a construction contract; provided that such amount may not exceed (a) for purposes of the 18-month spending test,’5% of Net Proceeds of the New Money Portion on the date 18 months after the Issue Date, or (b) for purposes of the 2-year spending test, 5% of the Available Construction Proceeds as of the end of the 2-year spending period. “Rebate Analyst” means Gilmore & Bell, P.C. or any successor rebate analyst selected pursuant to this Tax Certificate. “Refunded Obligations” means the Series 2002-A Bonds maturing in the years 2011 to 2013, inclusive, in the aggregate principal amount of $630,000. “Refunding Portion” means the sale proceeds of the Bonds identified in Section 3.06 together with +e remaining Gross Proceeds of the Bonds properly allocable to the refunding of the Refunded Obligations. “Regulations” means all Regulations issued by the U.S. Treasury Department to implement the provisions of Code 6 6 103 and 14 1 through 150 and applicable to the Bonds. “Series 1993-A Bonds” means the Issuer’s Combined Water and Sewage System Improvement Revenue Bonds, Series 1993-A, dated July 1, 1993, originally issued in the principal amount of $3,200,000. “Series 2002-A Bonds” means the Issuer’s General Obligation Water and Sewage System Refunding Bonds, Series 2002-A, dated January 15,2002. “State” means the State of Kansas. “Tax Certificate” means this Federal Tax Certificate as it may from time to time be amended and supplemented in accordance with its terms. “Transcript” means the Transcript of Proceedings relating to the authorization and issuance of the Bonds. 5 “Yield” means yield on the Bonds, computed under Regulations 6 1.148-4, and Yield on an Investment, computed under Regulations 5 1.148-5. ARTICLE I1 GENERAL REPRESENTATIONS AND COVENANTS Section 2.01 covenants as follows: Representations and Covenants of the Issuer. The Issuer represents and (a) Organization and Authority. The Issuer (1) is a city of the first class, duly created, organized and existing under the Constitution and laws of the State, and (2) has lawful power and authority to issue the Bonds for the purposes set forth in the Bond Resolution, to enter into, execute and deliver the Bond Resolution, the Bonds, and this Tax Certificate and to carry out its obligations under this Tax Certificate and under such documents, and (3) by all necessary action has been duly authorized to execute and deliver the Bond Resolution, the Bonds, and this Tax Certificate, acting by and through its duly authorized officials. (b) Tax-Exempt Status of Bonds-General Representation and Covenants. In order to maintain the exclusion of the interest on the Bonds fiom gross income for federal income tax purposes, the Issuer (1) will take whatever action, and refrain fiom whatever action, necessary to comply with the applicable requirements of the Code; (2) will not use or invest, or permit the use or Investment of, any Bond proceeds, other money held under the Bond Resolution, or other funds of the Issuer, in a manner that would violate applicable provisions of the Code; and (3) will not use, or permit the use of, any portion of the Financed Improvements in a manner that would cause any Bond to become a “private activity bond” as defined in Code 6 141. (c) Governmental Obligations-Use of Proceeds. Throughout the Measurement Period, all of the Financed Improvements are expected to be owned by the Issuer or another Qualified User. Throughout the Measurement Period no portion of the Financed Improvements are expected to be used in a Non-Qualified Use. Throughout the Measurement Period, the Issuer will not permit any Non-Qualified Use of the Financed Improvements without first obtaining an Opinion of Bond Counsel. (d) GovernmentaZ Obligations-Private Security or Payment. As of the Issue Date, the Issuer expects that none of the principal and interest on the Bonds will be (under the terms of the Bonds or any underlying arrangement) directly or indirectly: (1) Secured by (i) any interest in property used or to be used for a private business use, or (ii) any interest in payments in respect of such property; or (2) Derived fiom payments (whether or not such payments are made to the Issuer) in respect of property, or borrowed money, used or to be used for a private business use. , For purposes of the foregoing, taxes of general application, including payments in lieu of taxes, are not treated as private payments or as private security. The Issuer will not permit any private security or payment with respect to the Bonds without first obtaining an Opinion of Bond Counsel. (e) No Private Loan, Special Assessments. Not more than 5% of the proceeds of the Bonds will be loaned directly or indirectly to any Non-Qualified User. The payment of principal and interest on 6 the Bonds will be funded, in whole or in part from mandatory special assessments against the property benefiting from the Financed Improvements. The use of the proceeds of the Bonds andor the Original Obligations is not treated as a loan of such proceeds because (1) the special assessment is an enforced contribution for the purpose of raising revenue for specific capital improvements; (2) the assessment does not include any fee for services; (3) the assessment and collection of the tax is not dependent upon, and does not vary, depending on whether the taxpayer engaged, or the property is used, in a trade or business; (4) the tax is imposed to pay for an essential governmental function; and (5) the owners of property benefitting from the Financed Improvements are eligible or required to make deferred payments of the special assessment giving rise to the use of proceeds on an equal basis. (f) Management Agreements. As of the Issue Date, the Issuer has no Management Agreements with Non-Qualified Users. During the Measurement Period, the Issuer will not enter into or renew any Management Agreement with any Non-Qualified User without frst obtaining an Opinion of Bond Counsel. (g) Leases. As of the Issue Date, the Issuer has not entered into any leases of any portion of the Financed Improvements other than Qualified Use Agreements. During the Measurement Period, the Issuer will not enter into or renew any lease or similar agreement or arrangement other than a Qualified Use Agreement without first obtaining an Opinion of Bond Counsel. (h) Output Contracts, As of the Issue Date the Issuer does not have any Output Contract. During the Measurement Period the Issuer will not enter into any Output Contract without first obtaining an Opinion of Bond Counsel. (i) Limit on Maturity of Bonds. A list of the assets included in the Financed Improvements and a computation of the “average reasonably expected economic life” is attached to this Tax Certificate as Exhibit D. Based on this computation, the “average maturiv of the Bonds of 7.042 years, as computed by Bond Counsel, does not exceed 120% of the average reasonably expected economic life of the Financed Improvements ( years). (i) Reimbursement of Expenditures. The governing body of the Issuer adopted resolutions declaring the intent of the Issuer to finance the New Money Portion of the Financed Improvements with tax-exempt bonds and to reimburse the Issuer for expenditures made for the Financed Improvements prior to the issuance of such bonds. The resolutions are contained in Tabs 1 to 5, inclusive of the Transcript. No portion of the Net Proceeds of the New Money Portion will be used to reimburse an expenditure paid by the Issuer more than 60 days prior to the date the respective resolution was adopted. No reimbursement allocation will be made for an expenditure made more than 3 years prior to the date of the reimbursement allocation. In addition no reimbursement allocation will be made more than 18 months following the later of (1) the date of the expenditure or (2) the date the Financed Improvements (financed with the New Money Portion) were placed in service. (k) Registered Bonds. The Bond Resolution requires that all of the Bonds will be issued and held in registered form within the meaning of Code 6 149(a). (1) Bonds Not Federaffy Guaranteed. The Issuer will not take any action or permit any action to be taken which would cause any Bond to be “federally guaranteed” within the meaning of Code 6 149(b). (m) IRS Form 8038-6. Attached as Exhibit A is a copy of IRS Form 8038-G (Information Return for Tax-Exempt Governmental Obligations) that is being executed by a representative of the Issuer 7 and which is being filed with the Internal Revenue Service in connection with the issuance of the Bonds as required by Code 8 149(e). Bond Counsel prepared Form 8038-G in connection with the issuance of the Bonds. The Issuer knows of no inaccuracies in the Form 8038-G prepared by Bond Counsel. The Issuer is the sole Qualified User of the proceeds of the Bonds listed on Lines 1 1-1 8 of Form 8038-G. (n) Hedge Bonds. At least 85% of the Net Proceeds of the New Money Portion will be used to carry out the governmental purpose of the New Money Portion within 3 years after the Issue Date, and not more than 50% of the proceeds of the New Money Portion will be invested in Investments having a substantially guaranteed Yield for four years or more. At least 85% of the Net Proceeds of the Original Obligations were used to carry out the governmental purpose of the Original Obligations within 3 years after the issue date of the Original Obligations, and not more than 50% of the proceeds of the Original Obligations were invested in Investments having a substantially guaranteed Yield for four years or more. (0) Compliance with Future Tax Requirements. The Issuer understands that the Code and the Regulations may impose new or different restrictions and requirements on the Issuer in the future. The Issuer will comply with such future restrictions that are necessary to maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes. (p) ’ Single Issue; No Other Issues. The Bonds constitute a single “issue” under Regulations 6 1.150-1 (c). No other debt obligations of the Issuer (1) are being sold within 15 days of the sale of the Bonds, (2) are being sold under the same plan of financing as the Bonds, and (3) are expected to be paid from substantially the same source of funds as the Bonds (disregarding guarantees from unrelated parties, such as bond insurance). The Issuer has contemporaneously sold and is issuing its General Obligation Temporary Notes, Series 2010-1 in the principal amount of $2,500,000 (the “Notes”). The Notes were sold under a different plan of financing and are expected to be paid from different sources of funds than the Bonds, and therefore constitute a separate “issue” under Regulations 3 1.150-l(c). (q) Interest Rate Swap. As of the Issue Date the Issuer has not entered into an interest rate swap agreement or any other similar arrangement designed to modify its interest rate risk with respect to the Bonds. The Issuer will not enter into any such arrangement in the future without obtaining an Opinion of Bond Counsel. (r) Guaranteed Investment Contract. As of the Issue Date, the Issuer does not expect to enter into a Guaranteed Investment Contract for any Gross Proceeds of the Bonds. The Issuer will be responsible for complying with Section 4.02(d) hereof if it decides to enter into a Guaranteed Investment Contract at a later date. (s) Bank Qualified Tax-Exempt Obligations. The Issuer designates the Bonds as “qualified tax-exempt obligations” under Code 5 265(b)(3), and with respect to said designation certifies as follows: (1) The reasonably anticipated amount of tax-exempt obligations (other than private activity bonds) that will be issued by or on behalf of the Issuer (and all subordinate entities of the Issuer) during the calendar year that the Bonds are issued, including the Bonds, is not reasonably expected to exceed $30,000,000; and (2) The Issuer (including all subordinate entities of the Issuer) will not issue tax- exempt obligations (other than private activity bonds) during the calendar year that the Bonds are issued, including the Bonds, in an aggregate principal amount or aggregate issue price in excess 8 of $30,000,000, without first obtaining an Opinion of Bond Counsel that the designation of the Bonds as “qualified tax-exempt obligations” will not be adversely affected. Section 2.02 Survival of Representations and Covenants. All representations, covenants and certifications contained in this Tax Certificate or in any certificate or other instrument delivered by the Issuer under this Tax Certificate, will survive the execution and delivery of such documents and the issuance of the Bonds, as representations of facts existing as of the date of execution and delivery of the instruments containing such representations. The foregoing covenants of this Section will remain in full force and effect notwithstanding the defeasance of the Bonds. ARTICLE I11 ARBITRAGE CERTIFICATIONS AND COVENANTS Section 3.01 General. The purpose of this Article is to certify, under Regulations 0 1.148- 2(b), the Issuer’s expectations as to the sources, uses and Investment of Bond proceeds and other money, in order to support the Issuer’s conclusion that the Bonds are not arbitrage bonds. The person executing this Tax Certificate on behalf of the Issuer is an officer of the Issuer responsible for issuing the Bonds. Section 3.02 Reasonable Expectations. The facts, estimates and expectations set forth in this Article are based upon and in reliance upon the Issuer’s understanding of the documents and certificates that comprise the Transcript, and the representations, covenants and certifications of the parties contained therein. To the Issuer’s knowledge, the facts and estimates set forth in this Tax Certificate are accurate, and the expectations of the Issuer set forth in this Tax Certificate are reasonable. The Issuer has no knowledge that would cause it to believe that the representations, warranties and certifications described in this Tax Certificate are unreasonable or inaccurate or may not be relied upon. Section 3.03 Purpose of Financing. The Bonds are being issued for the purpose of providing funds to: (a) pay a portion of the costs of certain capital improvements, as described in the Bond Resolution, which unless otherwise noted herein, shall be referred herein as the Financed Improvements; and (b) pay a portion of the costs of refunding the Refunded Obligations, as described in the Bond Resolution. The purpose of the refinding is to achieve interest cost savings through early redemption of the Refunded Obligations and to provide an orderly plan of finance for the Issuer. Section 3.04 under the Bond Resolution: Funds and Accounts. The following funds and accounts have been established (a) Improvement Fund; (b) Redemption Fund; (c) Debt Service Account; and (d) Rebate Fund. Section 3.05 Amount and Use of Bond Proceeds and Other Money. (a) Amount of Bond Proceeds. The total proceeds to be received by the Issuer fiom the sale of the Bonds are as evidenced in Exhibit B attached to this Tax Certificate. 9 (b) as follows: Use of Bond Proceeds. The Bond proceeds are expected to be allocated to expenditures (1) All accrued interest will be deposited in the Debt Service Account and allocated to pay interest on the Bonds. (2) The sum of $6,300,009.15 will be deposited in the Improvement Fund, of which $51,837.50 will be used to pay costs of issuing the Bonds and $6,248,171.65 will be used to pay costs of the Financed Improvements. ' (3) The remaining Bond proceeds in the amount of $616,583.22, together with bds provided by the Issuer in accordance with section (c) hereof, shall be deposited into the Redemption Fund and paid and transferred to the paying agent for the Refunded Obligations, with irrevocable instructions to apply such amount to the payment of the Refunded Obligations. Any amount not so used on the redemption date will be transferred to the Debt Service Account. (c) Use of Other Moneys. In addition to proceeds of the Bonds, the Issuer will allocate available moneys representing available funds of the Issuer in an amount of $207,757.50 to provide for payment of the Refunded Obligations. Section3.06 Multipurpose Issue. The Issuer is applying the arbitrage rules to separate financing purposes of the issue that have the same initial temporary period as if they constitute a single issue for purposes pursuant to Regulations 0 1.148-9(h)(3)(i). 'Under Regulations 0 1.148-9(h), the Bonds will be treated as two separate issues (a New Money Portion and a Rehnding Portion) for purposes of applying certain of the arbitrage restrictions under Code 6 148. The sale proceeds ofthe Bonds allocable to the Refunding Portion is $625,886. The sale proceeds of the Bonds allocable to the New Money Portion is $6,340,438. Section 3.07 No Advance Refunding. No proceeds of the Bonds will be used more than 90 days following the Issue Date to pay principal or interest on any other debt obligation. Section 3.08 Current Refunding. (a) Proceeds Used For Current Refunding. Proceeds of the Refunding Portion will be used to pay principal and interest on the Refunded Obligations. All such proceeds shall be spent not later than 90 days after the Issue Date. (b) Transferred Proceeds. There are no unspent proceeds (sale proceeds, Investment proceeds or transferred proceeds) of the Refunded Obligations. Therefore there are no transferred proceeds of the Bonds. Upon discharge of any principal amount of the Refunded Obligations with proceeds of the Refinding Portion, a ratable portion of the remaining unspent proceeds of the Refunded Obligations will become proceeds of the Bonds (determined in accordance Regulations 6 1.148-9(b). Section 3.09 Completion of Financed Improvements; New Money Portion. The Issuer has incurred, or will incur within 6 months after the Issue Date, a substantial binding obligation to a third p&y to spend at least 5% of the Net Proceeds of the New Money Portion on the Financed Improvements. The completion of the Financed Improvements and the allocation of the Net Proceeds of the New Money Portion to expenditures will proceed with due diligence. At least 85% of the Net Proceeds of the New Money Portion will be allocated to expenditures on the Financed Improvements within 3 years after the Issue Date. 10 Section 3.10 Sinking Funds. The Issuer is required to make periodic payments in amounts sufficient to pay the principal of and interest on the Bonds. Such payments will be deposited into the Debt Service Account. Except for the Debt Service Account, no sinking fund or other similar fund that is expected to be used to pay principal of or interest on the Bonds has been established or is expected to be established. The Debt Service Account is used primarily to achieve a proper matching of revenues with principal and interest payments on the Bonds within each Bond Year, and the Issuer expects that the Debt Service Account will qualify as a Bona Fide Debt Service Fund. Section 3.11 Reserve, Replacement and Pledged Funds. No reserve fund has been or will be established for the Bonds. None of the Bond proceeds will be used as a substitute for other funds that were intended or earmarked to pay costs of the Financed Improvements, and that instead has been or will be used to acquire higher yielding Investments. Except for the Debt Service Account, there are no other funds pledged or committed in a manner that provides a reasonable assurance that such funds would be available for payment of the principal of or interest on the Bonds if the Issuer encounters financial difficulty. Section3.12 Purpose Investment Yield. The proceeds of the Bonds will not be used to purchase an Investment for the purpose of carrying out the governmental purpose of the financing. Section 3.13 Offering Prices and Yield. on Bonds. (a) Offering Price. On Exhibit C, the Purchaser has certified that (1) all of the Bonds have been the subject of an initial offering to the public at prices no higher than those shown on such Exhibit C, plus accrued interest (the “Offering Prices”); and (2) the Purchaser expects that at least 10% of the Bonds of each maturity will be sold to the public at initial offering prices no higher than said Offering Prices. The aggregate initial offering price of the Bonds is $6,966,324.05, plus accrued interest. (b) Bond yield. Based on the Offering Prices, the Yield on the Bonds is 2.6937907%, as computed by Bond Counsel and shown on Schedule I attached to this Certificate. Costs of Issuance were not taken into account in this computation. The Issuer has not entered into an interest rate swap agreement with respect to any portion of the proceeds of the Bonds. The Bonds maturing on October 1, 2025 are subject to the special rules of Regulations 0 1.148- 4(b)(3) for certain Bonds that are subject to optional redemption and issued at an original issue premium that exceeds the stated redemption price at maturity by more than !4% multiplied by the product of the stated redemption price at maturity and the number of complete years to the first optional redemption date for such Bond. Such maturity was sold to the public at an original issue premium in excess of the formula stated above. Therefore, in computing Yield on the Bonds, such maturity was treated as redeemed at the stated redemption price on the optional redemption date (October 1,2018) that produces the lowest Yield for the Bonds. Section 3.14 Miscellaneous Arbitrage Matters. (a) No Abusive Arbitrage Device. The Bonds are not and will not be part of a transaction or series of transactions that has the effect of (1) enabling the Issuer to exploit the difference between tax- exempt and taxable interest rates to gain a material financial advantage, and (2) overburdening the tax- exempt bond market. 11 (b) No Over-Issuance. The sale proceeds of the Bonds, together with expected Investment earnings thereon and other money contributed by the Issuer, do not exceed the cost of the governmental purpose of the Bonds as described above. Section 3.15 Conclusion. On the basis of the facts, estimates and circumstances set forth in this Tax Certificate, the Issuer does not expect that the Bond proceeds will be used in a manner that would cause any Bond to be an “arbitrage bond” within the meaning of Code 4 148 and the Regulations. ARTICLE IV ARBITRAGE INVESTMENT AND REBATE INSTRUCTIONS Section 4.01 Temporary PeriodsNield Restriction. Except as described below, Gross Proceeds must not be invested at a Yield greater than the Yield on the Bonds: (a) Improvement Fund. Bond proceeds deposited in the Improvement Fund and Investment earnings on those proceeds may be invested without Yield restriction for up to 3 years following the Issue Date. If any unspent proceeds remain in the Improvement Fund after 3 years, those amounts may continue to be invested without Yield restriction so long as the Issuer pays to the IRS all Yield reduction payments in accordance with Regulations 0 1.148-5(c). These payments are required whether or not the Bonds are exempt from the arbitrage rebate requirements of Code 5 148. (b) Redemption Fund. Bond proceeds deposited in the Redemption Fund and Investment earnings on such proceeds may be invested without Yield restriction for ninety days after the Issue Date. (c) Debt Service Account. To the extent that the Debt Service Account qualifies as a BOM Fide Debt Service Fund, money in such account may be invested without Yield restriction for 13 months after the date of deposit. Earnings on such amounts may be invested without Yield restriction for one year after the date of receipt of such earnings. (d) Minor Portion. In addition to the amounts described above, Gross Proceeds not exceeding the Minor Portion may be invested without Yield restriction. Section 4.02 Fair Market Value. (a) General. No Investment may be acquired with Gross Proceeds for an amount (including transaction costs) in excess of the fair market value of such Investment, or sold or otherwise disposed of for an amount (including transaction costs) less than the fair market value of the Investment. The fair market value of any Investment is the price a willing buyer would pay to a willing seller to acquire the Investment in a bona fide, arm’s-length transaction. Fair market value will be determined in accordance with Regulations 5 1.148-5. (b) Established Securities Market. Except for Investments purchased for a Yield-restricted defeasance escrow, if an Investment is purchased or sold in an arm’s-length transaction on an established securities market (within the meaning of Code 5 1273), the purchase or sale price constitutes the fair market value. Where there is no established securities market for an Investment, market value must be established using one of the paragraphs below. The fair market value of Investments purchased for a 12 Yield-restricted defeasance escrow must be determined in a bona fide solicitation for bids that complies with Regulations 6 1.148-5. (c) Certipcates ofDeposit. The purchase price of a certificate of deposit (a “CD) is treated as its fair market value on the purchase date if (1) the CD has a fixed interest rate, a fixed payment schedule, and a substantial penalty for early withdrawal, (2) the Yield on the CD is not less than the Yield on reasonably comparable direct obligations of the United States, and (3) the Yield is not less than the highest Yield published or posted by the CD issuer to be currently available on reasonably comparable CDs offered to the public. (d) Guaranteed Investment Contracts. The Issuer is applying to the Bonds Regulations 6 1.148-5(d)(6)(iii)(A) as amended by the Proposed Regulations (relating to electronic bidding of Guaranteed Investment Contracts). The purchase price of a Guaranteed Investment Contract is treated as its fair market value on the purchase date if all of the following requirements are met: (1) Bona Fide Solicitation for Bids. The Issuer makes a bona fide solicitation for the Guaranteed Investment Contract, using the following procedures: (A) The bid specifications are in writing and are timely forwarded to potential providers, or are made available on an internet website or other similar electronic media that is regularly used to post bid specifications to potential bidders. A writing includes a hard copy, a fax, or an electronic e-mail copy. (B) The bid specifications include all “material” terms of the bid. A term is material if it may directly or indirectly affect the Yield or the cost of the Guaranteed Investment Contract. (C) The bid specifications include a statement notifying potential providers that submission of a bid is a representation (i) that the potential provider did not consult with any other potential provider about its bid, (ii) that the bid was determined without regard to any other formal or informal agreement that the potential provider has with the Issuer or any other person (whether or not in connection with the bond issue), and (iii) that the bid is not being submitted solely as a courtesy to the Issuer or any other person, for purposes of satisfjmg the requirements of the Regulations. (D) The terms of the bid specifications are “commercially reasonable.” A term is commercially reasonable if there is a legitimate business purpose for the term other than to increase the purchase price or reduce the Yield of the Guaranteed Investment Contract. (E) The terms of the solicitation take into account the Issuer’s reasonably expected deposit and draw-down schedule for the amounts to be invested. (F) All potential providers have an equal opportunity to bid. If the bidding process affords any opportunity for a potential provider to review other bids before providing a bid, then providers have an equal opportunity to bid only if all potential providers have an equal opportunity to review other bids. Thus, no potential provider may be given an opportunity to review other bids that is not equally given to all potential providers (that is no exclusive “last look”) before providing a bid. 13 (G) At least 3 “reasonably competitive providers” are solicited for bids. A reasonably competitive provider is a provider that has an established industry reputation as a competitive provider of the type of Investments being purchased. (2) Bids Received. The bids received must meet all of the following requirements: (A) At least 3 bids are received from providers that were solicited as described above and that do not have a “material financial interest” in the issue. For this purpose, (i) a lead underwriter in a negotiated underwriting transaction is deemed to have a material financial interest in the issue until 15 days after the Issue Date of the issue, (ii) any entity acting as a financial advisor with respect to the purchase of the Guaranteed Investment Contract at the time the bid specifications are forwarded to potential providers has a material financial interest in the issue, and (iii) a provider that is a related party to a provider that has a material financial interest in the issue is deemed to have a material financial interest in the issue. (E%) At least one of the 3 bids rkceived is from a reasonably competitive provider, as defined above. (C) If an agent or broker is used to conduct the bidding process, the agent or broker did not bid to provide the Guaranteed Investment Contract. (3) Winning Bid. The winning bid is the highest Yielding bona fide bid (detennined , net of any broker’s fees). (4) Fees Paid. The obligor on the Guaranteed Investment Contract certifies the administrative costs that it pays (or expects to pay, if any) to third parties in connection with supplying the Guaranteed Investment Contract. (5) Records. The Issuer retains the following records with the bond documents until 3 years after the last outstanding Bond is redeemed: (A) A copy of the Guaranteed Investment Contract. (B) The receipt or other record of the amount actually paid for the Guaranteed Investment Contract, including a record of any administrative costs paid by the Issuer, and the certification as to fees paid, described in paragraph (d)(4) above. (C) For each bid that is submitted, the name of the person and entity submitting the bid, the time and date of the bid, and the bid results. (D) The bid solicitation form and, if the terms of Guaranteed Investment Contract deviated fiom the bid solicitation form or a submitted bid is modified, a brief statement explaining the deviation and stating the purpose for the deviation. (e) Other Investments. If an Investment is not described above, the fair market value may be established through a competitive bidding process, as follows: 14 (1) At least 3 bids on the Investment must be received from persons with no financial interest in the Bonds (e.g., as underwriters or brokers); and (2) The Yield on the Investment must be equal to or greater than the Yield offered under the highest bid. Section 4.03 Certain Gross Proceeds Exempt from the Rebate Requirement. (a) General. A portion of the Gross Proceeds of the Bonds may be 'exempt from rebate pursuant to one or more of the following exceptions. The exceptions typically will not apply with respect to all Gross Proceeds of the Bonds and will not otherwise affect the application of the Investment limitations described in Section 4.01. Unless specifically noted, the obligation to compute, and if necessary, to pay rebate as set forth in Section 4.04 applies even if a portion of the Gross Proceeds of the Bonds is exempt from the rebate requirement. To the extent all or a portion of the Bonds is exempt from rebate the Rebate Analyst may account for such fact in connection with its preparation of a rebate report described in Section 4.04. The Issuer may defer the final rebate Computation Date and the payment of rebate for the Bonds to the extent permitted by Regulations $6 1.148-7(b)(l) and 1.148-3(e)(2) but only in accordance with specific written instructions provided by the Rebate Analyst. (b) Applicable Spending Exceptions. (1) The Issuer expects that at least 75% of the Available Construction Proceeds will be used for construction or rehabilitation expenditures for property owned by the Issuer. The Issuer expects to earn Investment earnings on Bond proceeds in the Improvement Fund. (2) The following optional rebate spending exceptions can apply to the New Money Portion and the Refunding Portion: New Money Portion (a) 6-month spending exception (Code 6 148(f)(2)(B) and Regulation (b) (c) 6 1.148-7(~)). 18-month spending exception (Regulation 6 148-7(d)). 2-year spending exception (Code 5 148(f)(4)(C) and Regulation 6 1.148- 7(e)). Refinding Portion (a) 6-month spending exception (Code 6 148(f)(2)(B) and Regulation 6 1.148-7(~)). (c) Special Elections Made with Respect to Spending Exception Elections. No special elections are being made in connection with the application of the spending exceptions. (d) Bona Fide Debt Service Fund To the extent that the Debt Service Account qualifies as a Bona Fide Debt Service Fund, Investment earnings in the Debt Service Account cannot be taken into account in computing arbitrage rebate. (e) Documenting Application of Spending Exception. At any time prior to the first Computation Date, the Issuer may engage the Rebate Analyst to determine whether one or more spending 15 exceptions has been satisfied, and the extent to which the Issuer must continue to comply with Section 4.04 hereof. (f) General Requirements for Spending Exception. The following general requirements apply in determining whether a spending exception is met. (1) Using Adjusted Gross Proceeds or Available Construction Proceeds to pay principal of any Bonds is not taken into account as an expenditure for purposes of meeting any of the spending tests. (2) The six-month spending exception generally is met if all Adjusted Gross Proceeds of the New Money Portion or the Refunding Portion, as applicable are spent within 6 months following the Issue Date. The test may still be satisfied even if up to 5% of the sale proceeds remain at the end of the initial six-month period, so long as this amount is spent within one year of the Issue Date. (3) The 18-month spending exception generally is met if all Adjusted Gross Proceeds of the New Money Portion are spent in accordance with the following schedule: Minimum Time Period Percentage of After the Adjusted Gross Issue Date Proceeds Spent 6 months 15% 12 months 60% 18 months (Final) 100% (4) The 2-year spending exception generally is met if all Available Construction Proceeds are spent in accordance with the following schedule: Minimum Time Period Percentage of After the Available Construction Issue Date Proceeds SDent 6 months 10% 12 months 45% 18 months 75% 24 months (Final) 100% (5) For purposes of applying the 18-month and 2 year spending exceptions only, the failure to satisfy the final spending requirement is disregarded if the Issuer uses due diligence to complete the Financed Improvements and the failure does not exceed the lesser of 3% of the aggregate issue price the New Money Portion or $250,000. No such exception applies for any other spending period. . (6) For purposes of applying the 18-month and 2 year spending exceptions only, the Bonds meet the applicable spending test even if, at the end of the final spending period, proceeds not exceeding a Reasonable Retainage remain unspent, so long as such Reasonable Retainage is spent within 30 months (in the case of the 18-month exception) or 3 years (in the case of the 2 year spending test) after the Issue Date. 16 (7) Spending exceptions may be applied separately to the New Money Portion and the Refunding Portion. Section 4.04 Computation and Payment of Arbitrage Rebate. (a) Rebate Fund. The Issuer will keep the Rebate Fund separate from all other fimds and will administer the Rebate Fund under this Tax Certificate. Any Investment earnings derived from the Rebate Fund will be credited to the Rebate Fund, and any Investment loss will be charged to the Rebate Fund. (b) Computation of Rebate Amount. The Issuer will provide the Rebate Analyst Investment reports relating to each fund held by it that contains Gross Proceeds of the Bonds together with copies of Investment reports for any funds containing Gross Proceeds that are held by a party other than the Issuer annually as of the end of each Bond Year and not later than ten days following each Computation Date. Each Investment report provided to the Rebate Analyst will contain a record of each Investment, including (1) purchase date, (2) purchase price, (3) information establishing the fair market value on the date such Investment was allocated to the Bonds, (4) any accrued interest paid, (5) face amount, (6) coupon rate, (7) fiequency of interest payments, (8) disposition price, (9) any accrued interest received, and (10) disposition date. Such records may be supplied in electronic form. The Rebate Analyst will compute rebate following each Computation Date and deliver a written report to the Issuer together with an opinion or certificate of the Rebate Analyst stating that arbitrage rebate was determined in accordance with the Regulations. Each report and opinion will be provided not later than 45 days following the Computation Date to which it relates. In performing its duties, the Rebate Analyst may rely, in its discretion, on the correctness of financial analysis reports prepared by other professionals. If the sum of the amount on deposit in the Rebate Fund and the value of prior rebate payments is less than the arbitrage rebate due, the Issuer will, within 55 days after such Computation Date, pay the rebate amount or amount of the deficiency for deposit into the Rebate Fund. If the sum of the amount on deposit in the Rebate Fund and the value of prior rebate payments is greater than the Rebate Amount the Issuer will transfer such surplus in the Rebate Fund to the Debt Service Account. After the final Computation Date or at any other time if the Rebate Analyst has advised the Issuer, any money left in the Rebate Fund will be paid to the Issuer and may be used for any purpose not prohibited by law. (c) Rebate Payments. Within 60 days after each Computation Date, the Issuer will pay to the United States the rebate amount then due, determined in accordance with the Regulations. Each payment must be (1) accompanied by IRS Form 8038-T and such other forms, documents or certificates as may be required by the Regulations, and (2) mailed or delivered to the IRS at the address shown below, or to such other location as the IRS may direct: Internal Revenue Service Center Ogden, UT 84201 Section 4.05 Successor Rebate Analyst. E the firm acting as the Rebate Analyst resigns or becomes incapable of acting for any reason, or if the Issuer desires that a different firm act as the Rebate Analyst, then the Issuer by an instrument or concurrent instruments in writing delivered to the fm then serving as the Rebate Analyst and any other party to this Tax Certificate, will engage a successor Rebate Analyst. In each case the successor Rebate Analyst must be a firm of nationally recognized bond counsel or a firm of independent certified public accountants and such firm must expressly agree to undertake the responsibilities assigned to the Rebate Analyst hereunder. 17 Section 4.06 Rebate Report Records. The Issuer will retain copies of each arbitrage rebate report and opinion until 3 years after the final Computation Date. Section 4.07 Su.rvival after Defeasance. Notwithstanding anything in the Bond Resolution to the contkry, the obligation to pay arbitrage rebate to the United States will survive the payment or defeasance of the Bonds. Section 4.08 Filing Requirements. The Issuer will file or cause to be filed with the IRS such reports or other documents as are required by the Code in accordance with an Opinion of Bond Counsel. ARTICLE V MISCELLANEOUS PROVISIONS Section5.01 Term of Tax Certificate. This Tax Certificate will be effective concurrently with the issuance and delivery of the Bonds and will continue in force and effect until the principal of, redemption premium, if any, and interest on all Bonds have been fully paid and all such Bonds are cancelled; provided that the provisions of Article Nof this Tax Certificate regarding payment of arbitrage rebate and all related penalties and interest will remain in effect until all such amounts are paid to the United States and the provisions of Section 5.08 hereof relating to record keeping shall continue in force for the period described therein for records to be retained.. Section 5.02 Amendments. This Tax Certificate may be amended from time to time by the parties to this Tax Certificate without notice to or the consent of any of the owners of the Bonds, but only if such amendment is in writing and is accompanied by an Opinion of Bond Counsel to the effect that, under then existing law, assuming compliance with this Tax Certificate as so amended such amendment will not cause interest on any Bond to be included in gross income for federal income tax purposes. No such amendment will become effective until the Issuer receives this Opinion of Bond Counsel. Section 5.03 Opinion of Bond Counsel. The Issuer may deviate from the provisions of this Tax Certificate if furnished with an Opinion of Bond Counsel to the effect that the proposed deviation will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes.. The Issuer will comply with any further or different instructions provided in an Opinion of Bond Counsel to the effect that the further or different instructions need to be complied with in order to maintain the validity of the Bonds or the exclusion from gross income of interest on the Bonds. Section504 Reliance. In delivering this Tax Certificate the Issuer is making only those certifications, representations and agreements as are specifically attributed to it in this Tax Certificate. The Issuer is not aware of any facts or circumstances which would cause it to question the accuracy of the facts, circumstances, estimates or expectations of any other party providing certifications as part of this Tax Certificate and, to the best of its knowledge, those facts, circumstances, estimates and expectations are reasonable. The parties to this Tax Certificate understand that its certifications will be relied upon by Bond Counsel in rendering its opinion as to the validity of the Bonds and the exclusion from federal gross income of the interest on the Bonds. 18 Section505 Severability. ' If any provision in this Tax Certificate or in the Bonds is determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not be affected or impaired. Section506 Benefit of Certificate. This Tax Certificate is binding upon the Issuer its respective successors and assigns, and inures to the benefit of the parties to this Tax Certificate and the owners of the Bonds. Nothing in this Tax Certificate or in the Bond Resolution or the Bonds, express or implied, gives to any person, other than the parties to this Tax Certificate, their successors and assigns, and the owners of the Bonds, any benefit or any legal or equitable right, remedy or claim under this Tax Certificate. Section 5.07 Default; Breach and Enforcement. Any misrepresentation 'df a party contained herein or any breach of a covenant or agreement contained in this Tax Certificate may be pursued by the owners of the Bonds pursuant to the terms of the Bond Resolution or any other document which references this Tax Certificate and gives remedies for a misrepresentation or breach thereof. Section 5.08 Record Keeping Responsibilities. The Issuer recognizes: (i) that investors purchase the Bonds 'with the expectation that interest on the Bonds is excluded fi-om gross income for federal income tax purposes, (ii) that the tax-exempt status of interest on the Bonds depends on the accuracy of the representations and the satisfaction of the covenants contained herein by the Issuer, many of which relate to matters that will occur after the date the Bonds are issued, and (iii) that as part of its ongoing tax-exempt bond audit program the IRS requires that records be created and maintained with respect to the following matters: (a) Documentation evidencing expenditure of Bond proceeds and the Original Obligation proceeds in sufficient detail to determine the date of the expenditure, the asset acquired or the purpose of the expenditure. (b) Documentation evidencing use of the Financed Improvements by public and private persons (e.g., copies of Management Agreements). (c) Documentation evidencing all sources of payment or security for the Bonds. (d) Documentation pertaining to any Investment of Bond proceeds (including the purchase and sale of securities, SLGs subscriptions, actual Investment income received fi-om the Investment of proceeds, guaranteed Investment contracts, and (if required) rebate calculations). The Issuer has procedures in place or will establish procedures to create and retain these records or to cause these records to be created and retained. Unless otherwise specifically instructed in a written Opinion of Bond Counsel or to the extent otherwise provided in this Tax Certificate, the Issuer shall retain and maintain these records until 3 years following the final maturity of (i) the Bonds or (ii) any obligation issued to refund the Bonds. Any records maintained electronically must comply with Section 4.01 of Revenue Procedure 97-22. Section509 Execution in Counterparts. This Tax Certificate may be executed in any number of counterparts, each of which so executed will be deemed to be an original, but all such counterparts will together constitute the same instrument. 19 Section5.10 Governing Law. This Tax Certificate will be governed by and construed in accordance with the laws of the State. Section 5.11 Electronic Transactions. The transactions described in this Tax Certificate may be conducted, and related documents may be stored, by electronic means. [BNANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 20 THE UNDERSIGNED, Mayor and Finance Director of the Issuer, by their execution of this Tax Certificate hereby make the foregoing certifications, representations, and agreements contained in this Tax Certificate on behalf of the Issuer, as of the Issue Date of the Bonds. By: By: I (Signature Page to Federal Tax Certificate) EXHIBITA IRS FORM 8038-G A- 1 8 16-2 2 1-1000 FA%: BI6-LZl-IOIe WWW.GILH ORE BELL.COM VIA FEDERAL EXPRESS Internal Revenue Service Center Ogden, Utah 8420 1 GILMORE 8c BELL A PROFESSIONAL.CORPORATION AlTORNEYS AT LAW 2405 GRAND BOULEVARD, SUITE I I00 KANSAS CITY, MISSOURI 64108-2521 May 5,2010 5T. LOUIS, MISSOURI WICHITA, KANSAS LINCOLN, NEBRASKA - Ref. 600596.034 GMR Date: 05Mayl0 SHIPPING 9.49 0.66 Wet: 1.0 LBS SPECIFIL : HRNDL ING : 0.00 DV: 0.00 TOTFIL: 10.15 Dep ’ Svcs. ** 2DclY ** <, TRCK: 9318 5063 7596 ,’ ~ Re: City of Salina, Kansas, General Obligation Internal Improvement and Refunding Bonds, Series 2010-A Ladies and Gentlemen: Enclosed for filing pursuant to Section 149(e) of the Internal Revenue Code of 1986 is Form 8038-G, Information Return for Tax-Exempt Governmental Obligations, being filed with respect to the above-captioned transaction. If you have any questions, please do not hesitate to contact me. GMR:jac Enclosure FedEx Express Customer Support Trace 3875 Airways Boulevard Module H, 4th Floor Memphis, TN 381 16 US. Mail: PO Box 727 Memphis, TN 38194-4643 Telephone: 901-369-3600 June 29,201 0 Dear Customer: The following is the proof-ofdelivery for tracking number 931 850637596. Delivery Information: status: Delivered Delivered to: S hipping1Receiving Signed for by: A.WILLAMS Delivery location: 1973 N RULON WHITE BLVD Service type: FedEx 2Day Envelope Delivery date: OGDEN, UT 84201 May 7,201 0 10:02 Shipping Information: Tracking number: 931850637596 Ship date: . May52010 Weight: 0.5 lbs10.2 kg Recipient INTERNAL REVENUE SERVICE CENTER 1973 N. RULON WHITE BLVD. OGDEN, UT 84201 US Reference Invoice number Thank you for choosing FedEx Express. FedEx Worldwide Customer Service 1.800.GoFedEx 1.800.463.3339 Shipper: Gilmore & Bell, P.C. 2405 Grand Blvd. Suite 1100 KANSAS CITY, MO 64108 US 600596.034 GMR 600596.034 GMR b Under Internal Revenue Code section 149(e) . OMB NO. 1545-0720 (Rev. November 2000) 13 0 Transportation ............................ 14 Publicsafety. ........................... 15 0 Environment (including sewage bonds) .................... 16 OHousing. ................ ~. .......... 17 0 Utilities ............................. 18 B Other. Describe b 22 Proceeds used for accrued interest ..................... 23 24 Proceeds used for bond issuance costs (including underwriters' discount) . 25 Proceeds used for credit enhancement ............ 26 Proceeds allocated to reasonably required reserve or replacement fund . . 27 Proceeds used to currently refund prior issues ......... 28 Proceeds used to advance refund prior issues .......... issue price of entire issue (enter amount from line 21, column (b)) .... 31 32 33 Enter the remaining weighted average maturity of the bonds to be currently refunded ... b Enter the remaining weighted average maturity of the bonds to be advance refunded ... b Enterthe lastdateon which therefunded bondswill becalled ........... b . 1- 967 n/a years years 5/15/2010 - 35 36a b 37 . b 38 39 Enter the amouht of the state volume cap allocated to the issue'under section 141(b)(5) ... Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) Enter the final maturity date of the guaranteed investment contract b Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units If this issue is a loan made from the proceeds of another tax-exempt issue, check box b 0 and enter the name of the issuer F n/a and the date of the issue b n/a If the issuer has designated the issue under section 265(b)(3)(B)(i)(llI) (small issuer exception), check box If the issuer has elected to Day a penalty in lieu of arbitraqe rebate, check box ... b a b 0 ............. .< . 40 If the issuer has identified a hedge, check box ... 1 .................... b 0 Under penalties of pejury. I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are tn&,wrrect. and complete. Sign Here Rodney Franz, Finance Director Type or print name and title Form 8038-G (Rev. 11 -2000) 5/5/2010 Date Cat. No. 631735 For Paperwork Reduction Act EXHIBIT B RECEIPT FOR PURCHASE PRICE $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS DATED MAY 1,2010 SERIES 2010-A The undersigned Clerk of the City of Salina, Kansas, this day received from Country Club Bank , Prairie Village, Kansas , the original purchaser of the above-described bonds (the “Bonds”), the full purchase price of the Bonds, said purchase price and net amount received by the Issuer being calculated as follows: Principal Amount ................................... $6,8G5,000.00 Plus Accrued Interest ............................. 2,004.46 Plus Bid Premium .................................. 91,324.05 .- 49,731.68 Less Bid Discount .................................. Total Purchase Price .................. $6,918,596.83 Less Good Faith Deposit ........................ ’ - 138,300.00 $6,780,296.83 Net Amount Received ................ DATED: May 5,2010. CITY OF SALINA, KANSAS Clerk U B-1 EXHIBIT C RECEIPT AND REPRESENTATION $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REF’UNDING BONDS SERIES 2010-A DATED MAY 1,2010 This certificate is being delivered by Country Club Bank, Prairie Village, Kansas (the “Purchaser”) in connection with the issuance of the abovedescribed bonds (the “Bonds”), being issued on the date of this Receipt by the City of Salina, Kansas (the “Issuer”). Based on its records and information available to the undersigned which the undersigned believes to be correct, the Purchaser represents as follows: 1. Authorized Representative. The undersigned is the duly authorized representative of the Purchaser. 2. Receipt for Bonds. The Purchaser aclmowledges receipt by the Depository Trust Company on behalf of the Purchaser on the Issue Date of the Bonds consisting of filly registered “book- entry-only” bonds in Authorized Denominations in a form acceptable to the Purchaser. 3. Public Offering. All of the Bonds have been the subject of an initial offering to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers), at prices no higher than the prices set forth on Schedule I attached to this Certificate, plus accrued interest (the “Offering Prices”). On the basis of information available to us which we believe to be correct, we expect that at least 10 percent of the Bonds of each maturity will be sold to the public at offering prices no higher than said Offering Prices. 4. Reliance. The Issuer may rely on the foregoing representations in executing and delivering its Federal Tax Certificate with respect to its certification as to issue price of the Bonds under the Internal Revenue Code of 1986, as amended (the “Code”), and Gilmore & Bell, P.C., Bond Counsel, may rely on the foregoing representations in rendering its opinion relating to the exclusion fiom federal gross income of the interest on the Bonds under the Code. Dated: May 5, 2010. COUNTRY CLUB BANK, PRAIRIE VILLAGE, KANSAS By: - Title: A. KP. C-1 Type of Maturity Dollar Maturity Bond Coupon Yield Value Prl- Price 10/01/2011 Serial Coupon 2.ooOoh 0.750% 775,000.00 101.744% 10/01/2012 Serial Coupon 2.Wh 1 .OOo% 865,000.00 1 02.3700/0 10/01R014 Serial Coupon 2.000% 1.650% 695,000.00 101.480% 10/01/2013 Serial Coupon 2.W? 1.300% 880,000.00 102.324% 788516.00 885,500.50 900.45 1.20 705,286.00 10/01/2015 Serial Coupon 2.oooOh 2 .W? 285,000.00 100.0000/o 285,000.00 10/01/2016 Serial Coupon 2.3000h 2.300% 290,000.00 100.0000/o 290,000.00 10/01/2017 Serial Coupon 2.W? 2.600% 300.000.00 100.0000/0 300.000.00 10/01/2018 Serial Coupon 2.850% 2.850% 3 10.000.00 100.oooD? 310,000.00 10/0lD019 Serial Coupon 3.Wh 3.000% 320.000.00 100.008? C 320,000.00 10/01/2020 Serial Coupon 3.150% 3.150% 330,000.00 100.000Om C 330.000.00 1 010 11202 1 Serial Coupon 3.300% 3.300"o 340,000.00 100.0000m C 340,000.00 10/01/2022 Serial Coupon 3.W? 3 .wo 350.000.00 100.oo090 C 350,000.00 10/01 DO25 Term 1 Coupon 3.875% 3.550?? 1.135.000.00 102.341% C 1,161,570.35 c-2 EXHIBIT D TO FEDERAL TAX CERTlFICATE Description of Property Comprising the Financed Facility I 1993 Project (Refunded by 2002A) Asset Description Estimated Elapsed Estimated Economic Original Placed in Time Remaining Cost Paid Cost Paid Life x Economic Service from Economic from Bond from Other Financed Life Date Issue Date Life cost Proceeds Sources cost Treatment plant improvements 45 August-93 0.0 1 45.01 14,747,328 1,973,459 12,773,869 88,825,382 Interceptor improvements 45 August-93 0.0 1 ' 45.01 6,895,117 922,691 5,972,426 41,530,330 21,642,445 2,896,150 18,746,295 130,355,712 Less land costs Net costs, excluding land Original Average, Reasonably Expected Economic Life: 45.01 years 120% of Original Economic Life 120% 54.01 years Issue Date of Bonds Issue Date of 2010-A Bonds Less Years elapsed (1 6.77) Remaining permitted weighted average bond maturity 37.24 years 712911 993 5/5/20 10 Salina, KS Series 2010 -Financed Facility Exhibit D- 1 2 1,642,445 2,896, I50 18,746,295 May 5,2010 ~~~~ ~~~~ 2 2010-A Project Estimated Elapsed Estimated Economic Original Placed in Time Remaining Cost Paid Cost Paid Life x Economic Service from Economic from Bond from Other Financed Asset Description Life Date Issue Date Life cost Proceeds Sources cost Land Landfill 5 May-IO 0.00 5.00 1,587,948 1,587,948 7,939,740 Bicentennial Center 50 September-IO 0.32 50.32 2,481,169 2,48 1 ,I 69 124,852,407 9 1 ,O 18,039 Fire Station 50 September-I 1 1.32 5 1.32 1,773,539 1,773,539 Scoular SBD 50 January-IO -0.34 49.66 52,105 52,105 2,587,511 Stone Creek SBD 50 August-09 -0.76 49.24 351,433 351,433 17,304,548 6,246, I93 6,246, I93 243,702,245 Less land costs Net costs, excluding land 6,246,193 6,246,193 Average, Reasonably Expected Economic Life: 39.02 years 120% of Original Economic Life 120% 46.82 years I Determination of Average, Reasonably Expected Economic Life of Financed Facilities Useof 120%of 2010-A Average Proceeds I Description Proceeds Life (yrs) x Life 1 1993 Project (Refunded by 2002A) 616,583 37.24 22,962,792 2 20 IO-A Project 6,246,193 46.82 292,442,694 Total Net Uses: 6,862,776 315,405,487 120% of Expected Economic Life of Facilities Financed: 45.96 Salina, KS Series 2010 - Financed Facility Exhibit D-2 May 5,2010 SCHEDULE I DEBT SERVICE SCHEDULE AND PROOF OF YIELD City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2010A Total Issue Sources And Uses Dated 05/01/2010 I Delivered 05/05/2010 Refunding Issue 2002 New Money Summary Sources Of Funds Par Amount of Bonds $581,400.00 $6,293,600.00 $6,875,000.00 207,757.50 207,757.50 Transfcrs from Prior Issue Debt Service Funds Reoffering Premium 12,508.26 78,815.79 91,324.05 Reoffering Premium of New Money used for Refunding Accrued Interest froin 05/01/2010 to 05/05/2010 129.20 1,875.26 2,004.46 31,264.39 (3 1,264.39) Total Sources $833,059.35 $6,343,026.66 $7,176,086.01 Uses Of Funds Deposit to Project Construction Fund 6,246,193.22 6,246,193.22 Deposit to Escrow Fund 824,340.72 824,340.72 Costs of Issuance 4,383.76 47,453.74 5 1,837.50 Total Underwriter's Discount (0.723%) 4,205.67 45,526.0 I 49,731 68 Deposit to Debt Service Fund 129.20 1,875.26 2,004.46 Rounding Amount - Deposit to Debt Service Fund 1,978.43 1,978.43 Total Uses $833,05935 $6,343,026.66 $7,176,086.01 SeriesPOlOA 1 Issuesummary I 4QOQ010 1 11:37AM Gilmore & Bell, P.C. Tax and Financial Analysis Page 1 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2010A Debt Service Schedule Part 1 of 2 Date Principal Coupon Interest Total P+I Fiscal Total 05/05/2010 0410 1 /20 1 1 165,367.8 1 165,367.81 10/01/2011 775,000.00 2 000% 90,200.63 865,200.63 1,030,568.44 04/01/2012 82,450.63 82,450.63 1010 1/20 12 865,000.00 2.000% 82,450.63 947,450.63 1,029,901.26 I 04/01/2013 73,800.63 73,800.63 lO/O 1/20 I3 880,000.00 2.000% 73,800.63 953,800.63 1,027,601.26 04/01/2014 65,000.63 65,000.63 10/0 1/20 I4 695,000.00 2.000% 65,000.63 760,000.63 825,001.26 0410 1 120 1 5 58,050.63 58,050.63 10/01/2015 285,000.00 2.000% 58,050.63 343,050.63 401,101.26 0410 1 /20 1 6 55,200.63 55,200.63 1010 1/20 I6 290,000.00 2.300% 55,200.63 345,200.63 400,40 I .26 04/01/2017 51,865.63 51,865.63 10/0 1/20 17 300,000.00 2.600% 51,865.63 351,865.63 403,73 1.26 04/01 /2018 47,965.63 47,965.63 IO/O 11201 8 3 10,000.00 2.850% 47,965.63 357,965.63 405,93 1.26 04/01 /2019 43,548.13 43,548.13 IO/O 11201 9 320,000.00 3.000% 43,548.13 363,548.1 3 407,096.26 04/0 1/2020 38,748.1 3 38,748.13 1 o/o I/2020 330,000.00 3.150% 38,748.13 368,748.1 3 407,496.26 04/01 1202 1 33,550.63 33,550.63 1010 11202 1 340,000.00 3.300% 33,550.63 373,550.63 04/0 112022 27,940.63 27,940.63 407,lO 1.26 10/01/2022 350,000.00 3.400% 27,940.63 377,940.63 405,881.26 0410 112023 21,990.63 21,990.63 10/0 112023 365,000.00 3.875% 2 1,990.63 386,990.63 408,981.26 04/01 12024 14,918.75 14,918.75 10/01/2024 380.000.00 3 875% 14,918.75 394,918.75 409,837.50 0410 112025 7,556.25 7,556.25 I o/o 112025 390,000.00 3.875% 7,556.25 397,556.25 405,112.50 Total $6,875,000.00 $1,500,743.56 $8,375,143.56 Series2010A I IssueSummary I4ROi2010 1 11:37AM Gilmore & Bell, P.C. Tax and Financial Analysis Page 2 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 201 OA Debt Service Schedule Part 2 of 2 Yield Statistics Accrued Interest from 05/01/2010 to 05/05/2010 2,004.46 Average Life 7.054 Years Average Coupon 3.0947509% Bond Year Dollars $48,493.19 Net Interest Cost (NIC) 3.0089814% True Interest Cost (TIC) 2.9459566% Bond Yield for Arbih-age Purposes 2.6937907% All Inclusive Cost (AIC) 3.0682907% IRS Form 8038 Net Interest Cost 2.8687736% Weighted Average Maturity 7.042 Years Series 2010A I Issue Summary I 4ROR010 I 11:37 AM Gilmore & Bell, P.C. Tax and Financial Analysis Page 3 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2010A Pricing Summary Maturity Maturity Type of Bond Coupon Yield Value Price Dollar Price 10/01/2011 10/01/2012 I o/o 1/20 I 3 IOIO 1 /2014 10/01/2015 10/01/20 16 1 o/o 1/20 I7 10/01/2018 10/0 1/20 19 Serial Coupon Serial Coupon Serial Coupon Scrial Coupon Serial Coupon Serial Coupon Serial Coupon Serial Coupon Serial Coupon 2.000% 2.000% 2.000% 2.000% 2.000% 2.300% 2.600% 2.850% 3 000% 0.750% 1 .OOO% 1.300% 1.650% 2.000% 2.300% 2.600% 2.850% 3.000% 775,000.00 865,000.00 880,000.00 695,000.00 285,000.00 290,000.00 300,000.00 3 10,000.00 320,000.00 101.744% 102.370% 102.324% IO 1.480% 100.000% IO0 000% 100.000% I00.000% 100.000% 788,516.00 885,500.50 900,451.20 705,286.00 285,000.00 290,000.00 300,000.00 3 10,000.00 C 320,000.00 10/01/2020 Serial Coupon 3.150% 3.150% 330,000.00 100.000% c 330,000.00 10/01/2021 Serial Coupon 3.300% 3.300% 340,000.00 100.000% c 340,000.00 3.400% 350,000.00 100.000% c 350,000.00 10/01/2022 Serial Coupon 3.400% 10/01/2025 Term I Coupon 3.875% 3.550% 1,135,000.00 102.341% c 1,161,570.35 Total $6.875.000.00 $6.966.324.05 Bid Information Par Amount of Bonds $6,875,000.00 Reoffenng Premium or (Discount) 91,324.05 Gross Production $6,966,324.05 Total Underwriter's Discount (0.723%) $(49,731.68) Bid (1 00.605%) 6,916,592.37 Accrued Interest from 05/01/2010 to 05/05/2010 2,004.46 Total Purchase Price $6,918.596.83 Bond Year Dollars $48,493.19 Avenge Life 7.054 Years Avenge Coupon 3.0947509% Net lntcrest Cost (NIC) 3.0089814% True Interest Cost (TIC) 2.9459566% Series 2010A I Issue Summary I 4ROR010 I 11 37 AM Gilrnore & Bell, P.C. Tax and Financial Analysis Page 4 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2010A I Proof of Premium Bond Selection of Call DatedPrices PV at Bond Maturity Call Date Call Price Yield Lowest? 10/01/2025 1,204,577.92 No I 0/0 1 /2025 10/01/2018 100.000% 1,235,508.26 Yes I I Series2010A I Issuesummary I 4ROR010 I 11:37AM Gilmore & Bell, P.C. Tax and Financial Analysis Page 5 Citv of Salina. Kansas General Obligation Internal Improvement Bonds Series 2010A Proof of D/S for Arbitrage Purposes Date Principal ' Interest Total 05/05/20 IO 0410 1 I20 1 1 165,367.8 1 165,367.81 10/01/201 I 775,000.00 90,200.63 865,200.63 0410 1 120 1 2 82,450.63 82,450.63 10/01/2012 865,000.00 82,450.63 947,450.63 04'0 1/20 1 3 73,800.63 13,800.63 1 o/o 11201 3 0410 1/20 1 4 IO/Ol/2014 880,000.00 695,000.00 73,800.63 65,000.63 65,000.63 953,800.63 65,000.63 760,000.63 0410 1 /20 1 5 58,050.63 58,050.63 10/0 I /2015 285,000.00 58,050.63 343,050.63 0410 1 120 1 6 55,200.63 55,200.63 10/0 1/20 I6 290,000 00 55,200.63 345,200.63 0410 1 120 1 7 5 1,865.63 5 1,865.63 1010 I/20I 7 300,000.00 51,865.63 351,865.63 0410 1/20 I 8 47,965.63 47,965.63 10/01/2018 I,445,000.00 41,965.63 1,492,965.63 21,557.50 2 1,557.50 320,000.00 2 1,557.50 341,557.50 04/0 1/20 19 1 010 1 /20 1 9 04/0 1/2020 16,757.50 16,757.50 1010 112020 330,000.00 16,757.50 346,757.50 04/01/2021 1 1,560.00 I 1,560.00 1 o/o 1/202 I 340,000.00 1 1,560.00 351,560.00 04/01/2022 5,950.00 5,950.00 10/0 112022 350,000.00 5,950.00 355,950.00 Total $6,875,000.00 $1,235,887.26 $8,110,887.26 ~ Series 2010A I Issue Summary I 4ROi2010 I 11:37 AM Gilmore & Bell, P.C. Tax and Financial Analysis Page 6 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2010A I Proof Of Bond Yield @ 2.6937907% Date Cumulative Cashflow PV Factor Present Value PV 05/05/2010 1 .ooooooox 0410 1 /20 1 1 165,367.81 0.9760603~ 161,408.95 161,408.95 10/01/201 I 865,200.63 0.9630885~ 833,264.75 994,673.70 0410 1 /20 1 2 82,450.63 0.9502891 x 78,351.93 1,073,025.63 10/0 I /20 12 947,450.63 0.9376598~ 888,386.34 1,961.41 1.97 04/01 1201 3 73,800.63 0.9251983~ 68,280.22 2,029,692.19 10/0 1/20 I3 953,800.63 0.9 129025~ 870,726.96 2,900,4 I 9.1 5 04/01/2014 65,000.63 0.9007700~ 58,550.62 2,958,969.77 10/01/2014 760,000.63 0.8887989~ 675.487.69 3,634,457.46 04/01 l2Ol.5 58,050.63 0.8769868~ 50,909.63 3,685,367.10 1 o/o 1/20] 5 343,050.63 0.8653317~ 296,852.57 3,982,219.66 47,132.03 4,029,351.70 04/0 1 /2016 55,200 63 0.8538314~ 1010 11201 6 345,200.63 0.8424841x 290,826.03 4,320.177.73 0410 1/20 I 7 5 1,865.63 0.83 I2875x 43,115.25 4,363,292.97 I010 1/2017 351,865.63 0.8202397~ 288,614.16 4,651,907.14 04/01 /20l8 47,965.63 0.8093388~ 38,820.44 4,690,727 58 IO10 1/20 18 04/01 1201 9 IO10 1 /20 I9 1,492,965.63 0.7985827~ 21,557.50 0.7879696~ 341,557.50 0.7774975~ 1 ,I 92.2 5 6.52 16,986.65 265,560.10 5,882,984. IO 5,899,970.76 6,165,530.86 04/01/2020 16,757.50 0.767 1646x 12,855.76 6,178,386.62 1010 1/2020 346,757.50 0.7569690~ 262,484.68 6,440,871.30 04/01/2021 1 1,560.00 0.7469089~ 8,634.27 6,449,505.57 I o/o I /202 1 35 1,560.00 0.7369825~ 259,093.58 6,708,599.15 04/0 I /2022 5,950.00 0.727 188 1 x 4,326.77 6,712,925.92 10/01/2022 355,950.00 0.7175238~ 255,402.59 6,968,328.51 Total $8~ 10,887.26 ~6,968,m.si Derivation Of Target Amount Par Amount of Bonds $6,875,000.00 Reoffering Premium or (Discount) 91,324.05 Accrued Interest from 05/01/2010 to 05/05/2010 2,004.46 Original Issue Procecds $6,968,328.5 1 Series2010A I Issuesummary I 4ROR010 I 11.37AM Gilmore & Bell, P.C. Tax and Financial Analysis Page 7 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2010A Derivation Of Form 8038 Yield Statistics Issuance Issuance Maturity Value Price PRICE Exponent Bond Years 05/05/2010 10/01/2011 775,000.00 101.744% 788,516.00 1.4055556~ 1,108,303.04 1010 I /20 12 865,000.00 102.370% 885,500.50 2.4055556~ 2,130,120.65 10/01/20 1 3 880,000.00 102.324% 900,451.20 3.4055556~ 3,066,536.59 10/01/20 14 695,000.00 101.480% 705,286.00 4.4055556~ 3,107,176.66 10/01/2015 285,000.00 100.000% 285,000.00 5.4055556~ I,540,583.33 10/01/20 16 290,000.00 100.000% 10/01/20 17 300,000.00 100.000% lO/O I /20 I8 3 10,000.00 100.000% 10/01/20 19 320,000.00 100.000% 10/01/2020 330,000.00 100.000% 10/01/2021 340,000.00 100.000% 10/01/2022 350,000.00 100.000% I0/01/2023 365,000.00 102.341% 290,000.00 300,000.00 3 10,000.00 320,000.00 330,000.00 340;OOO.OO 350,000.00 373,544.65 6.4055556~ 7.4055556~ 8.4055556~ 9.4055556~ 10.4055556~ 1 1.4055556~ 12.4055556~ 13.4055556~ 1,857,611.1 1 2,22 1,666.67 2,605,722.22 3,009,777.78 3,433,833.33 3,877,888.89 4,341,944.44 5,007,573.56 10/01/2024 380,000.00 102.341% 388,895.80 14.4055556~ 5,602,260.05 10/01/2025 390,000.00 102.341% 399,129.90 15.4055556~ 6,148,81 7.85 Total $6.875.000.00 $6,966.324.05 $49.059.816.1 7 IRS Form 8038 Weighted Avenge Maturity = Bond YeadIssue Price 7.042 Years Total Interest from Debt Service 1,500,743.56 Accrued Interest from 05/01 120 IO to 05/05/20 IO (2,004.46) Keoffering (Premium) or Discount (91,324.05) Total Interest 1,407,415.05 NIC = Interest I (Issue Price * Average Maturity) 2.8687136% Bond Yield for Arbitrage Purposes 2.6937907% Sffles2010A I IssueSurnmary I4ROROlO I 11:37AM Gilmore & Bell, P.C. Tax and Financial Analysis' Page 8 CERTIFICATE OF FINANCIAL ADVISOR $6,875,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS DATED MAY 1,2010 SERIES 2010-A George K. Baum & Co., Kansas City, Missouri, is employed as financial advisor to the City of Salina, Kansas (the “Issuer”) with respect to the above captioned bonds (the “Bonds”). 1. Duties. The Financial Advisor rendered certain professional services to the Issuer, including advising the Issuer with respect to the sale of the Bonds, and assisting the Issuer with the preparation of the Preliminary Official Statement dated March 22, 201 0 and the Official Statement dated April 19, 201 0, (both documents referred to collectively herein as the “Official Statement”). 2. Official Statement. The Financial Advisor has read the Official Statement, but has not, however, independently verified the factual information contained in the Oficial Statement, including the appendices attached thereto, nor have we participated in the drafting for the appendices to the Official Statement . 3. Certification. Based on the foregoing, the Financial Advisor certifies, to the best of our knowledge, information and belief, the information contained in the Oficial Statement (except for Appendices A and B attached to the Official Statement) are, as of its date and as of the date hereof, true and correct in all material respects, and the Oficial Statement does not contain any untrue statement of a material fact or omit to state a material fact where necessary to make a statement not misleading in light of the circumstances under which it was made. Dated May 5,20 10. GEORGE K. BAUM & CO. KANSAS CITY, MISSOURI 8 16-2 2 I- IO00 FAX: 816-Z21-1018 WWW.GILMOREBELL.COM GILMORE & BELL A PROFESSIONAL CORPORATION ATTORNEYS AT LAW 2405 GRAND BOULEVARD. SUITE I100 KANSAS CITY. MISSOURI 64108-2521 May 5,2010 Governing Body City of Salina, Kansas Country Club Bank Prairie Village, Kansas ST. LOUIS, MISSOURI WICHITA, KANSAS LINCOLN, NEERASKA Re: $6,875,000 General Obligation Internal Improvement and Refunding Bonds, Series 2010-A, of the City of Salina, Kansas, Dated May 1,2010 We have acted as Bond Counsel in connection with the issuance by the City of Salina, Kansas (the “Issuer”), of the above-captioned bonds (the “Bonds”). In this capacity, we have examined the law and the certified proceedings, certifications and other documents that we deem necessary to render this opinion. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the resolution adopted by the governing body of the Issuer prescribing the details of the Bonds. Regarding questions of fact ‘material to our opinion, we have relied on the certified proceedings and other certifications of public officials and others furnished to us without undertaking to verify them by independent investigation. . Based upon the foregoing, we are of the opinion, under existing law, as follows: .l. The Bonds have been duly authorized, executed and delivered by the Issuer and are valid and legally binding.genera1 obligations of the Issuer. 2. The Bonds are payable as to both principal and interest in part from special assessments levied upon the property benefited by the construction of certain improvements and, if not so paid, fiom 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 Issuer. The balance of the principal and interest on the Bonds is payable 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 Issuer. The Issuer is required by law to include in its annual tax levy the principal and interest coming due on the Bonds to the extent that necessary funds are not provided from other sources. 3. The interest on the Bonds is excluded from gross income for federal income tax purposes. .Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinions’set forth in this paragraph are subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds in order to preserve the exclusion of the interest on the Bonds from gross income for federal income tax purposes. The Issuer has covenanted to comply with all of these requirements. Failure to comply with certain of these requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The 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 Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 4. The interest on the Bonds is excluded from computation of Kansas adjusted gross income. We express no opinion regarding the accuracy, completeness or suficiency of the Official Statement or other offering material relating to the Bonds (except to the extent, if any, stated in the Official Statement). Further, we express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth’ in this opinion. The rights of the owners of the Bonds and the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally and by .equitable principles, whether considered at law or in equity. This opinion is given as of its date, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may come to our attention or any changes in law that may occur after the date of this opinion. GILMORE 8c BELL, P.C. STATE OF KANSAS OFFICE OF THE ATTORNEY GENERAL STEVE SIX ATTORNEY GENER4L May 3,2010 120 SW 1 OTH AVE , 2ND FLOOR TOPEKA, KS 666 1 2- 1 597 (785) 296-22 15 FAX (785) 296-6296 WWW.KSAG.ORG The Honorable Dennis McKinney State Treasurer Landon State Office Building, Room 201N Topeka, KS 66601 Dear Mr. McKinney: Pursuant to K.S.A. 10-1 08, basic or supplemental transcript material is hereby approved and you may register the following: Municipality: City of Salina, Kansas Description: General Obligation Internal Improvement and Refunding Bonds Series: 20 1 0-A Numbered: Registered Dated: May 1,2010 Aggregate Amount: $6,875,000.00 Date of First Payment: April 1 , 201 1 Fiscal Agent: State Treasurer Sincerely, OFFICE OF THE ATTORNEY GENERAL STEVE SIX SS:RDS:jm cc: Lieu Ann Elsey, City Clerk Gilmore & Bell, Kansas City, Mo. INVESTMENT BANKERS SINCE 1928 April 28,2010 MEMORANDUM TO: SEE DISTRLBUTION LIST FROM: DAVID ARTEBERRY TODD BURRUS RE: BOND ISSUE CLOSING ARRANGEMENTS NAME OF ISSUER AMOUNT, NAME AND DATE OF ISSUE: TME AND DATE OF CLOSING: SETTLEMENT NUMBERS: City of Salina, Kansas $6,875,000 City of Salina, Kansas General Obligation Internal Improvement and Refunding Bonds Series 20 IO-A Dated May 1,20 IO 1O:OO am. Wednesday, May 5,20 10 Via telephone Par Amount of Bonds Plus Accrued Interest (May 1 to May 5) Plus Net Bid Premium Less Good Faith Deposit Net Amount Due at Closing METHOD OF FUNDS TRANSFER: Wire Transfer of Federal Funds $6,875,000.00 2,004.46 41,592.37 (138,300.00) $6,780,296.83 I 4801 Main Street Suite 500 Kansas City, Missouri 64112 816.474.1 100 TRANSFER INSTRUCTIONS: (Country Club Bank) (Country Club Bank) DISPOSlTION OF BOND PROCEEDS: (City,, On Wednesday, May 5, 2010 Country Club Bank will wire transfer an amount of $6,163,713.61 to Sunflower Bank, ABA #loll-0062-1, AC #IO2187275 for credit to the City of Salina Attn: Dennis Zimmerman. On Wednesday, May 5, 2010 Country Club Bank will wire transfer an amount'of $616,583.22 to UMB Bank, ABA #1010-0069-5 Kansas State Treasurer Account #0200 005150, for further credit to City of Salina, Attn: Carmen Klopping On or before Wednesday, May 5, 2010 the City will wire transfer an amount of $207,757.50 to UMB Bank, ABA #IOIO-0069-5 Kansas State Treasurer Account #0200 005150, for further credit to City of Salina, Attn: Carmen Klopping Upon receipt of $6,780,296.83 from Country Club Bank, plus the good faith deposit of $138,300.00, plus funds available f?om the Series 2002-A debt service account in the amount of $207,757.50 ($7,126,354.33 total), the City will deposit the funds as follows: $ 2,004.46 into the Debt Service Account 824,340.72 into the Redemption Fund 6.300.009.15 into the Improvement Fund $7,126,354.33 (State Treasurer) On May 15, 2010, the State Treasurer shall use the $824,340.72 held in the Redemption Fund to redeem all of the City's Series 2002-A Bonds. DELIVERY OF TRANSCRIPT AND LEGAL OPINION: Upon receiving confirmation of receipt of funds, Gilmore & Bell will deliver or email a signed legal opinion to the City, Country Club Bank, and George K. Baum & Company. Original signed legal opinions and hnscripts will be mailed when completed. BOND DELIVERY INSTRUCTIONS: Bonds will be delivered to the offices of the Depository Trust Company, New York, New York at least one day prior to closing. PAYMENT OF COSTS OF ISSUANCE: All reimbursable costs associated with the issuance of the Bonds will be paid after closing by the City upon presentation of the proper invoices. CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES, SERIES 2010-1 GENERAL OBLIGATION INTERNAL IMPROVEMENT AND REFUNDING BONDS, SERIES 2010-A DISTRIBUTION LIST ISSUER City Hall 300 West Ash Salina, Kansas 67402-0736 785-309-5735 785-309-5738 (fa) Jason Gage, City Manager jason.gage@salina.org Mike Schrage mike.schrage@salina.org Rod Franz, Finance Director rod.k@salina.org Lieu Ann Elsey, City Clerk lieuann.elsey@salina.org CITY ATTORNEY Clark, Mize di Linville 129 South 8th P. 0. Box 380 Salina, Kansas 67402-0380 785-823-1 868 (fax) Greg Bengtson gabengtson@cml-1aw.com 785-823-6325 BOND COUNSEL Gilmore & Bell, P.C. 2405 Grand Boulevard - Suite 1100 Kansas City, Missouri 64108-2521 8 16-22 1-1000 8 16-22 1 - 10 18 (fa) Randy hey rirey@gilmorebell.com Gina Riekhof griekhof@gilmorebell.com CITY’S BANK Sunflower Bank, NA. 2090 S. Ohio Salina, Kansas 67402 785-826-2240 (fa) Dennis Zimmerman dennisz@sunflowerbank.com 785-827-5564 RATING AGENCY Moody‘s Investors Service 100 North Riverside Plaza - Suite 2220 Chicago, Illinois 60606 3 12-706-9999 (fax) Rachel Cortez rachel.cortez@moodys.com 3 12-706-9956 PAYING AGENT Ofice of the Kansas State Treasurer 900 S. W. Jackson - Room 201N Topeka, Kansas 66612-1235 785-296-7950 (fa) Carmen J. flopping, Dir. of Bond Services carmen@treasurer.state.ks.us 785-296-4 144 UNDERWRITER Country Club Bank 9400 Mission Road Prairie Village, Kansas 66206 9 13-385-0 105 (fa) Lisa Roberts lroberts@countryclubbank.com 8 16-75 1-1420 FINANCIAL ADVISOR George K. Baum & Company 4801 Main Street - Suite 500 Kansas City, Missouri 641 12 816-283-5326 (fa) David Arteberry arteberry@gkbaum.com 8 16-283-5 13 7 Todd Burms burms@gkbaum.com 816-283-5138 CASSMEYER, JULIE From: Sent: To: cc: Subject: bonds.system.control@treasurer.state.ks.us CASSMEYER, JULIE carmen@treasurer.state. ks.us New Bond Issued Tuesday, April 20,201 0 4:24 PM .. 04/20/2010 16.23:34 A new bond issue has been created in the KST Bond Registration 2.0 System. Below is the information. Registration #: 0322-085-050110-571 Municipality: SALINA Bond Counsel: GILMORE & BELL/ JULIE C Paying Agent: STATE , Principal: 6,875,000.00 Closing Date: 05/05/2010 Purpose & Series: G o INT IMP & REF BDS 2010-A Please consider this notice to be your confirmation of the registration number assigned by this office to the above mentioned bond issue/temp note issue. Notify our of.fice immediately of any correction or revision to.the above information. 1