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TranscriptTRANSCRIPT OF PROCEEDINGS AUTHORIZING THE ISSUANCE OF $4,330,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 Legal Opinion Gilmore & Bell, P.C. Kansas City, Missouri CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 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. Robert W. Baird & Co., Winston - Salem, North Carolina (the "Original Purchaser ") 4. George K. Baum & Company, Kansas City, Missouri (the "Financial Advisor ") 5. Gilmore & Bell, P.C., Kansas City, Missouri ( "Bond Counsel ") Document PROCEEDINGS AUTHORIZING THE IMPROVEMENTS 1. Magnolia Hills Subdivision 2. Fire Station #1 3. East Magnolia Road 4. Bicentennial Center 5. North Ohio Grade Separation PROCEEDINGS AUTHORIZING THE SALE AND ISSUANCE OF THE BONDS 6. Excerpt of Minutes of the governing body meeting evidencing adoption of Resolution No. 13 -7010 7. Resolution No. 13 -7010 authorizing the offering for sale of the Bonds 8. Notice of Sale, Preliminary Official Statement and Certificate Deeming Preliminary Official Statement Final 9. Affidavit of publication of the Summary Notice of Sale in the The Salina Journal 1 10. Affidavit of publication of the Summary Notice of Sale in the Kansas Register 11. Official Statement 12. Omnibus Continuing Disclosure Undertaking 13. Excerpt of Minutes evidencing first reading of Ordinance No. 13 -10701 14. Excerpt of Minutes of the governing body meeting evidencing opening of the bids, acceptance of the best bid of the Original Purchaser, passage of Ordinance No. 13 -10701 and adoption of Resolution No. 13 -7020 15. Ordinance No. 13 -10701 authorizing the issuance of the Bonds 16. Affidavit of publication of summary of Ordinance No. 13- 10701; City Attorney Certificate 17. Resolution No. 13 -7020 prescribing the form and details of the Bonds CLOSING DOCUMENTS 18. Transcript Certificate ExhibitA — Schedule of Outstanding General Obligation Indebtedness 19. Uniform Facsimile of Signature Certificate 20. Specimen Bond 21. Agreement Between Issuer and Agent 22. DTC Documents Blanket Letter of Representations Underwriting Safekeeping Agreement 23. Rating Letter - Moody's 24. Closing Certificate 25. Federal Tax Certificate with attachments as follows: Exhibit A — Internal Revenue Service Form 8038 -G and evidence of filing Exhibit B — Receipt for Purchase Price Exhibit C— Receipt and Representation Exhibit D — Description of Property Comprising the Financed Improvements and List of Reimbursement Expenditures Exhibit E — Sample Annual Compliance Checklist Exhibit F— Sample Final Written Allocation Schedule 1— Debt Service Schedule & Proof of Yield 26. Certificate of Financial Advisor if LEGAL OPINIONS 27. Approving legal opinion of Gilmore & Bell, P.C. 28. Approval letter of Attorney General MISCELLANEOUS DOCUMENTS 29. Closing Letter 30. Letter from State Treasurer Confirming Registration Number iii MAGNOLIA HILLS SUBDIVISION FU -E NO. 11 -2878 PRELIMINARY ENGmERiNG REPORT PETMON NO. 4342 MAGNOLIA HILLS ESTATES PHASE III UTILITY, STREET, and DRAINAGE DAPROVEMENTS May 2012 r a'4a�� III MAL t_��� Wayne E`." I owl ; P.E. SCOPE OF WORK The installation of curb & gutter, pavement, and grading for approximately 480 lineal feet of Sunset Ridge Drive (the "Street improvements"). The installation of approximately 470 lineal feet of six -inch water main, fire hydrants, valves, fittings, service connections and all appurtenances thereto for water lines within right of way and/or utility easement (the "Water System Improvements "). The installation of approximately 704 lineal feet of eight -inch sanitary sewer main, service connections, manholes and all appurtenances thereto for sanitary sewer lines lying within right of way and/or utility easement, (the "Sanitary Sewer Improvements "). The installation of approximately 419 lineal feet of storm sewer, inlets, and all appurtenances thereto for storm sewer lines lying within right of way and/or drainage easement, -(the "Drainage Improvements "). (collectively, the "Improvements "). BENEFIT DISTRICT Magnolia Hills Estates Addition Lots 3 through 6, Block 5, and Lots 18 through 22, _Block 6, all in the Magnolia Hills Estates Addition, City of Salina, Saline County, Kansas. (the "Improvement District "). ADOPTION OF ASSESSMENT The assessment with accrued interest to be levied as a special assessment tax upon the property included with the benefit district concurrent with the general property tax and shall be payable in fifteen equal annual installments. Each parcel in the Improvement District shall be assessed equally per lot for costs of the various buprovements benefitting such lot as described under the beading Apportionment of Cost below. APPORTIONMENT OF COST One hundred percent (100%) 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. Petition No. 4342 Magnolia Hills Estates to the City of Salina Preliminary Cost of Improvements Item # Item Quantity Unit Unit Cost Extension 1 Compaction of Earthwork 1 CY 17,952.00 _ 17,952.00 2 Temporary Slope Barrier 567 LF 3.92 2,222.64 3 Temporary Ditch Check (Rock) 3.3 CY 61.00 201.30 4 Temporary Inlet Sediment Barrier 312 LB 100.00 312.00 5 Sediment Removal I CY 100.00 100.00 6 Temporary Construction Entrance 1 Ton 30.00 30.00 7 Temporary Fertilizer { *) 188 LB 5.00 940.00 8 Temporary Seed ( * *) 150 LB 5.00 750.00 9 Mobilization (Emergency Erosion Control) 1 Ea. 500.00 500.00 10 Permanent Seeding 1 Acre 2,000.00 2,000.00 11 Standard Conc. Curb and Gutter 1,017 LF 12.75 12,966:75 12 Reinforced Conc. Valley Gutter 39 SY 47.00 1,833.00- 13 Concrete Pavement, 6" 1,790 CY 33.00 59,070:00 14 4' Type I Concrete Ramp 2 Ea 450.00 900.00 15 6" Aggregate (Type AB -3) 739 SY 10.00 7,390.00 16 4' Storm Manhole, Type 1 1 Ea 2,500.00 2,500.00 17 A5 -2 Curb Inlet 3 Ea . 6,200.00 18,600.00 18 Storm Pipe, 24" RCP 419 LF 42.00 17,598.00 19 End Section, 24" RC 1 Ea 700.00 700.00 20 Stone Riprap, Class 1 16 SY 100.00 .1,600.00 21 6" Water Main 470 LF 25.00 11,750.00 22 11/2" Water Service 80 LP 25.00 2,000.00 23 1" Water Service 180 LF 20.00 3,600.00 24 Fire Hydrant and Valve Assembly 1 LF 3,500.00 3,500.00 25 Corporation Stop 1" 6 Ea 300.00 1,800.00 26 Corporation Stop 11/2" 2 Ea 500.00 11000.00 27 Curb Shutoff Valve and Box 7 Ea 275.00 1,925.00 28 Tapping sleeve and valve, 6 "x 6 "x 6" 1 Ea 3,000.00 3,000.00 29 Fittings 1 Ea 675.00 675.00 30 Sanitary Sewer Pipeline 8" 704 LF 33.00 23,232.00 31 4' Standard Sanitary Manhole Type 1 4 LF 3,450.00 13,800.00 32 Extra Depth Manhole 11 Ea 300.00 3,150.00 33 Sanitary Sewer 4" 394 LF 24.00 9,456.00 34 Sanitary Sewer Tees 9 LF 100.00 900.00 35 Connect to Existing Manhole I Ea 700.00 700.00 36 Construction Staking 1 LS 2,500.00 2,500.00 N Item # Item Quantity Unit 'Unit Cost Extension 37 Traffic Control 1 LS 250.00 250.00 38 Type III Barricades Subtotal Developer's Engineering Contingencies City Expenses 12 -6a01 (d) (5 111o) Temp Note, Interest, Bonding & Issue Total 3 Ea 100.00 300.00 $231,703.69 24,500.00 8,109.63 11,585.18 11,585.18 $287,483.69 Petition No. 4342 Magnolia HiRs Estates to the City of Salina Preliminary Cost of Street Improvements Item # Item Quantity Unit Unit Cost Extension 11 Standard Conc. Curb and Gutter 13017 LF 12.75 $12,966.75 12 Reinforced Conc. Valley Gutter 39 SY 47.00 1,833.00 13 Concrete Pavement, 6" 1,790 CY 33.00 59,070.00 14 4' Type I Concrete Ramp ,.2 _ Ea 450.00 900.00 15 6" Aggregate (Type AB -3) 739 SY 10.00 7,390.00 Subtotal Streets $82,159.75 .Developers Engineering 3,062.50 Contingencies 2,875.59 City Expenses 12 -6a01 (d) (5 %) 4,107.99 Temp Note, Interest, Bonding & Issue 4,107.99 Total $96,313.82 Preliminary Cost of Storm Improvements Item # Item Quantity Unit Unit Cost Extension 16 4' Storm Manhole, Type 1 1 Ea .2,500.00 $2,500.00 17 A5 -2 Curb Inlet 3 Ea 6,200.00 18,600.00 1$ Storm Pipe, 24" RCP 419 LF 42.00 17,598.00 19 End Section, 24" RC 1 Ea 700.00 700.00 20 Stone Riprap, Class 1 16 SY 100.00 1,600.00 Subtotal Storm $40,998.00 Developer's Engineering 3,062.50 Contingencies 1,434.93 City Expenses 12 -6a01 (d) (5 %) 2,049.90 Temp Note, Interest, Bonding & Issue 2,049.90 Total $49,595.23 4 Petition No. 4342 Magnolia Hills Estates to the City of Salina Preliminary Cost of Water Improvements Item # . item Quantity Unit Unit Cost Extension 21 6" Water Main 470 LF 25.00 $11,750.00 22 11/2" Water Service 80 LF 25.00 2,000.00 23 1" Water Service 180 LF 20.00 3,600.00 24 Fite Hydrant and Valve Assembly 1 LF 3,500.00 3,500.00 25 Corporation Stop 1" 6 Ea 300.00 1,800.00 26 Corporation Stop 1112" 2 Ea 500.00 1,000.00 27 Curb Shutoff Valve and Box 7 Ea 275.00 1,925.00 28 Tapping sleeve and valve, 6 "x 6 "x 6" 1 Ea 3,000.00 3,000.00 29 Fittings 1 Ea 675.00 675.00 Subtotal Water Main $29,250.00 Developer's Engineering 6,125.00 Contingencies 1,023.75 City Expenses 12 -6a01 (d) (5%) 1,462.50 Temp. Note, Interest, Bonding & Issue 1,462.50 Total $39,323.75 5 Petition No. 4342 Magnolia Hills Estates to the City of Salina Preliminary Cost of Sanitary Sewer Improvements Item # Item Quantity Unit Unit Cost. Extension 30 Sanitary Sewer Pipeline 8" 704 LF 33.00 $23,232.00 31 4' Standard Sanitary Manhole Type 1 4 LF 3,450.40 13,800.00 32 Extra Depth Manhole 10.5 Ea 300.00 3,150.00 33 Sanitary Sewer 4" 394 LF _ 24.00 9,456.00 34 Sanitary Sewer Tees 9 LF 100.00 900.00 35 Connect to Existing Manhole 1 Ea 700.00 700.00 Subtotal Sanitary Sewer $51,238.00 Developer's Engineering 6,125.00 Contingencies 1,793.33 City Expenses 12 -6a01 (d) {5 %) 2,561.90 Temp Note, Interest, Bonding & Issue 2,561.90 Total $64,280.13 0 Petition No. 4342 Magnolia Hills Estates to the City of Salina Preliminary Cost of General Items Item # Item Quantity Unit Unit Cost Extension 1 Compaction of Earthwork 1 LS 17,952.00 17,952.00 2 Temporary Slope Barrier 567 LF 3.92 2,222.64 3 Temporary Ditch Check (Rock) 3.3 CY 61.00 201.30 4 Temporary Inlet Sediment Barrier 3.12 LB 100.00 312.00 5 Sediment Removal 1 CY 100.00 100.00 6 Temporary Construction Entrance 1 Ton 30.00 30.00 7 Temporary Fertilizer ( *) 188 LB 5.00 940.00 8 Temporary Seed ( * *) 150 LB 5.00 750.00 9 Mobilization (Emergency Erosion Control) 1 Ea. 500.00 500.00 10 Permanent Seeding 1 Acre 2,000.00 2,000.00 Subtotal General Items $25,007.94 Developer's Engineering 3,062.50 Contingencies 875.28 City Expenses 12- 6a01,(d) (5 %) 1,250.40 Temp Note, Interest, Bonding & Issue 1,250.40 Total $31,446.51 Preliminary Cost of Miscellaneous Items Item # Item Quantity Unit Unit Cost Extension 36 Construction Staking I LS 2,500.00 $2,500.00 37 Traffic Control 1 LS 250.00 250.00 38 Type III Barricades 3 Ea 100.00 300.00 Subtotal Miscellaneous $3,050.00 Developer's Engineering 3,062.50 Contingencies 106.75 City Expenses 12 -6a01 (d) (5 11b) 152.50 Temp Note, Interest, Bonding & Issue 152.50 Total $6,524.25 7 Petition No. 4342 Magnolia Hills Estates to the City of Salina Property Ownership Magnolia Hills Estates Property Owner Block 5 Lot 3 Magnolia Hills, Inc. Lot 4 Magnolia Hills,, Inc. Lot 5 Magnolia Hills, Inc. Lot 6 Magnolia Hills, Inc. Block 6 Lot 18 Magnolia Hills, Inc. Lot 19 Magnolia Hills, Inc. Lot 20 Magnolia Hills, Inc. Lot 21 Magnolia Hills, Inc. Lot 22 Magnolia Hills, Inc. �3 Petition No. 4342 Magnolia Hills Estates to the City of Salina Preliminary Distribution of Cost .Block 5 Water SS Street Storm General Misc Total Lot 3 4,369.31 7,142.24 10,701.54 5,510.58 3,494.06 724.92 $31,942.63 Lot 4 4,369.31 7,142.24 10,101.54 5,510.58 3,494.06 724.92 $31,942.63 Lot 5 4,369.31 7,142.24 10,701.54 5,510.58 3,494.06 724.92 $31,942.63 Lot 6 4,369.31 7,142.24 10,701.54 5,510.58 3,494.06 724.92 $31,942.63 Block 6 Lot 18 4,369.31 7,14124 10,701.54 5,510.58 3,494.06 724.92 $31,942.63 Lot 19 4,369.31 7,142.24 10,701.54 5,510.58 3,494.06 724.92 $31,942.63 Lot 20 4,369.31 7,142:24 10,701.54 5,510.58 3,494.06 724.92 $31,942.63 Lot 21 4,369.31 7,142.24 10,701.54 5,510.58 3,494.06 724.92 $31,942.63 Lot 22 4,369.31 7,142.24 10,701.54 5,510.58 3,494.06 724.92 $31,942.63 Totals $39,323.75 $64,280.13 $96,313.82 $49,595.23 $31,446.51 $6,524.25 $287,483.69 Z pt . . . . . . . . . . PETITION 4342 4 TO THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS: 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 City create and designate an improvement district for the purpose of making certain improvements in the manner provided by K.S -A. 12.6a01, et seq. L The general nature of the proposed improvements are as follows: The installation of curb & gutter, pavement' and grading for approximately 480 lineal feet of Sunset Ridge Drive (the "Street Improvements" ). The installation of approximately 470 lineal feet of six -inch water main, fie hydrants, valves, fittings, service connections and all appurtenances thereto for water lines within right of way and/or utility easement (the "Water System Improvements"). The installation of approximately 490 Iineal feet of eight -inch sanitary sewer main, service connections, manholes and all appurtenances thereto for sanitary sewer lines lying within right of way and/or utility easement, (the "Sanitary Sewer Improvements"). The installation of approximately 469 lineal feet of storm sewer, inlets, and all appurtenances thereto for storm sewer lines lying within right of way and/or drainage easement, (the "Drainage Improvements"). (collectively, the "Improvements "). 2. The estimated or probable cost of the Improvements is: Two Hundred Forty -Six Thousand Nine Hundred Forty -Eight dollars and Fifty- Five cents ($246,94855). 3. The extent of the proposed improvement district to be assessed is: Lots 3 through 6, Block 5, and Lots 18 through 22, Block 6, all in the Magnolia Hills Estates Addition, in the City of Salina, Saline County Kansas. (the "Improvement District "). 4. The proposed method of assessment shalt be: Each Iot in the Improvement District shall be assessed equally per lot for costs of the various Improvements benefining such lot, as described in paragraph 5 below. 5. The proposed apportionment of cost between the Improvement District and the city at large is: One hundred percent (100 %) of the Sanitary Sewer Improvements shall be assessed to Lots 3 and 4, Block 5 and Lots 18 through 22, Block 6, Magnolia Hills Estates. One hundred percent (100%) of the Drainage Improvements shall be assessed against all lots in the Improvement District. One hundred (1009o') of the total cost of the Water System improvements shall be assessed against all lots in the Improvement District One hundred (1009o) of the total cost of the Street Improvements shall be assessed against all lots in the Improvement District. 6. The signers of this Petition hereby request that the Improvements be made without notice and hearing as required by K-SA- 12- 6a04(a). NAMES MAY NOT 1319 VMWRAWN FROM THE PETITION BY THE SIGNERS 1HEREOF AFTER THE GOVERNING BODY COMMENCES CONSIDERATION OF THE PETITION OR LATER THAN SEVEN (7) DAYS AFTER FILING OF THE PETITION WITH THE CITY CLERK, WHICHEVER OCCURS FIRST. The petitioners certify, under oath, that they have no financial interest in any property with delinquent special assessmentanywhem within the city of Salina. MAGNOIJ,61 LLS, INCORPORATED Kelly R. Dunn, President Stanley C. Byquist, Vice President 4�- D. Markle, Treasarer LEGAL DESCRMT10N OF PROPERTY OWNED WITHIN THE PROPOSED VQROVEMENT DISTRICT: Lots 3 through 6, Block 5, and lots 18 throw 22, Block 6, all in the Magnolia Hills Estates Addition, in the City of Salina, Saline County Kansas, STATE OF KANSAS SALINE COUNTY h the undnsigned Notary Public, hereby certify that the sig tune appearing above is genuine and That this doeumebt was signed before me on this . , day of a 2012. My appointment expires: N-STAC Notary terra - Sty or MY APA Embes osornDv CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS May 7, 2012 4:00 p.m. The City Commission convened at 2:30 p.m. in a Study Session on Bicentennial Center C.I.P. The Regular Meeting of the Board of Commissioners was called to order at 4:00 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 Norman M. Jennings, Presiding Officer; Commissioner Samantha P. Angell; Commissioner Kaye J. Crawford; Commissioner Aaron Householter Absent: Commissioner Barb Shirley ADMWTSTRATION (8.2) Resolution No. 12 -6902 setting forth findings and determinations on the advisability of and authorizing the construction of improvements in the Magnolia Hills Estates Addition. Dan Stack, City Engineer, explained the. project, feasibility study, and development agreement. 12 -0097 Moved by Commissioner Angell, seconded by Commissioner Householter, to adopt Resolution No. 12 -6902. Aye: (4). Nay: (0). Motion carried. ADjoummENT 12 -0104 Moved by Commissioner Angell, seconded by Commissioner Householter, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (4). Nay: (0). Motion carried. The meeting adjourned at 5:36 p.m. [SEAL] ATTEST: LiewA vwv!hg y Lieu Arun Elsey, CMC, City Clerk Al Narwwwv M. - Norman M. Jennings, Mayor I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting on May 7, 2012 regarding first reading of Resolution No. 12 -6902. 4 AFL- Lieu Ann Elsey, City Clerk ° 1870 s � Page 1 *' (Published in the Salina Journal onMgM A 2012) t RESOLUTION NUMBER 12 -6902 A RESOLUTION SETTING FORTH FINDINGS AND DETFAIMINATIONS OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS ON THE ADVISABILITY OF AND AUTHORIZING THE CONSTRUCTION OF CERTAIN IMPROVEMENTS PURSUANT TO K.S.A. 12 -6a01 d M. WHEREAS, a petition was filed with the City Clark for the City of Salina, Kansas (the "City ") on May 2, 2012, proposing certain improvements pursuant to K.SA. 12 -6a01 et seq. (the "Petition"); and 3 WHEREAS, the Petition sets forth: (a) the general nature of the proposed improvements; (b) the estimated or probable cost of the proposed improvements; (c) the extent of the proposed improvement district to be assessed for the cost of the proposed improvements; (d) the proposed method of assessment, (e) the proposed apportionment of the cost between the improvement district and'the City at large; and (f) a request that such improvements be made without notice and hearing as required by K.S.A. 12404(a} and WHEREAS, the owners of record of more than one -half of the area liable to be assessed under the Petition have signed the Petition; and WHEREAS, no signatures have been withdrawn from the petition before the Governing Body began consideration of the Petition; and WHEREAS, K.S.A. 12 -604 provides that the Governing Body may authorize and order public improvements without notice and hearing after a sufficient petition has been filed, and the governing body has reviewed and considered the Preliminary Engineering Estimate and Feasibility Report prepared by the City Engineer and agrees with the conclusions set forth therein. NOW THEREFORE, BE IT RESOLVED BY THE GOVERNING-BODY OF THE CITY OF SAL INA, KANSAS, AS FOLLOWS: Section L The Governing Body hereby finds that the Petition is sufficient, and further finds and determines that it is necessary and advisable to make the following improvements: (a) Ilia nature of the improvements are as follows: The installation of curb &,gutter, payement, and grading for approximately 480 lineal feet of Sunset Ridge Drive (the "Street Improvements"). The installation of approximately 470 lineal fed of six -inch water main, fire hydrants, valves, fittings, service connections and all appurtenances thereto for water lines within right of way and/or utility easement (the "Water System lmprovemente). The installation of approximately 704 lineal fed of eight-inch sanitary sewer main, service connections, manholes and all appurtenances thereto for sanitary sewer lines lying within right of way and/or utility easement, (the "Sanitary Sewer Improvements"). The installation of approximately 419 lineal feet of storm sewer, inlets, and all appurtenances thereto for storm sewer lines lying within right of way and/or drainage easement, (the "Drainage Improvements"). (collectively, the "Improvements'). (b) The estimated cost of the Improvements is: Two Hundred Eigbty -Seven Thousand Four Hundred Eighty -Three dollars and Sixty Nine cents ($287,483.69). (c) The boundaries of the improvement district to be assessed are: Lots 3 through 6, Block 5, and Lots 18 through 22, Block 6, all in the Magnolia Hills Estates Addition, in the City of Salina, Saline County Kansas. (the "Improvement District"). , , „` IS•� OF SALDE C� AS v: �•a n� ' j Book: 1246 Page: 889 -690 (d) The method of assessment shall be «,,• R 7&H9 CNN Fee: Dthw .v ,•••' Recorded: 2 Date Recorded: 5/17/2012 125:28 PM r a Dook: 1248 Page: 89# '� Each lot in the Improvement District shall be assessed equally per lot for costs of the various Improvements. (e) The apportionment of cost between the Improvement District and the city at large is: One hundred percent (I00 %) of the total cost of the Improvements shall be assessed to the Improvement District and no portion of costs shall be paid by the City at Large• . Section 2. The Governing Body hereby declares that the Improvements described in this Resolution are necessary, and autborizes then to be made in accordance with the findings set forth in this Resolution, and further authorizes the levying of assessments and the issuance of bonds therefore, all in accordance with K.S.A.. 12-WI et seq. Section 3. 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 $287,483.69. Section 4. That certain Development Agreement between Magnolia Hills, Incorporated and the City, dated as of May 7, 2412, is hereby approved in substantially the form presented to the governing body on this date. The Mayor is authorized to execute the Development Agreement on behalf of the City, and the Mayor, Clerk and other City staff are authorized to take such further actions as necessary to cry out the transactions contemplated thereby. Section 5. The City Clerk shall file a certified copy of this Resolution with the Register of Deeds of Saline County, Kansas. Section 6. This Resolution shall take effect after its passage and publication once in the official city newspaper: PASSED this 7a day of May, 2012. tL • O G11N12� 1 al'R 870 r 2 Norman ennings, Mayor ieu Ann Elsev, CMC. City Cl I hereby certify that the above and foregoing is a true and correct copy of Ordinance No. 12 -6902 that was adopted by the Governing Body of the City of Salina at their regular meeting pon•_May 7, 2012. Lieu Ann Elsey, CMC, City Clerk 16- ;o m IRmtha04 TYat•ey ]Publisher's Affidavit I. Christy Fink - being duly sworn declare that I am a IPgal C'nnrdinatnr of THE SALINA JOURNAL, a daily newspaper published at Salina, Saline County, Kansas, and of general circulation in said county, which newspaper has been admitted to the mails as second class matter in said county, and continuously and uninterruptedly published for five consecutive years prior to first publication of attached notice, and that the Resolution 12 -6902 Notice has been correctly published in the entire issue of said newspaper one time, publication being given m the issue Of May 14, 2012 Subscribed and sworn to before me, this day of A.D. 20 otxry Public Printer's Fee X0$.00 N07ARY PUBLIC - Stale of tc;dtsas WENDY ROBAK My AppL Exp. Zvi salira,Joumal . RESOLUTION 0U.BER, 1124111112 ; . • - - A-- RESOLUTION SET+'; - TING FORTH, FtNDINGS': AND VETERMINATIONS•I OF THE.:GOVERNING}- BODY OF THE CITY.'OF`i SALINA,._KANSAS• ON THE ASAILTY ,OF ORG THE (AND 1 •. was t i on• Me (, ing cis r pursu 11,12 set Sets �lrl�E rure m� fThe pi meats; the p1 men 1, sassed propos (of) tii � ofopos Jg, Pa; eat nosoe t g0ired tb" a: Petition P WHO lu re. '.t drawn •I mate fPrw r '=Y,-are aiRhdrized'to' take I ''such ,further actions.'as man +g i. 61A the wrte- emF>feted' ur_Ll e" "O1)-- S•'The�'Clty I fine•• Monts -s:. Two _•. Hu ed.-I e. med.-Improve. nano rour Hundrad EIghty- ;Three Miens' L dent: ' tsedi'improve• i -' and 4s A 'cams rid to be as- t this dost of the {c 17ie boundaries of ! ]the improvoment dis-.{ improvements; , 1{iosed matted.' meat; ^(e)• the . trill 10 be assessed i are:. Lots .3- `through- 6 apportionment ' x bahvean the '• ' Block 6, and Lots is tftrO'U 22 'Bi6ek 6 in# district and -- urge; anti (1)•a .• all •in the Magnolia - H7s Estate; Addition, 4silWimpmve-' made without 1. in the City of Sauna, Salina,.CoOnty Iter, fisarind as re- bby.*t .$.A: sas .: the :Improvement A.+the'ovyrters, oT mgre • than; (d) Thetnethod'of as ass= Shall b� the•area liable• iced under Ih6 Ea& b1 in the. IM.' rove Dl9lrici velsigned :iha, 8 ha111 to assessed 9 .:..' w •• Ifsyno sigrie- equally per lot , fqr 7 costs of the Serious r,been. w9h: �' 1 the petlton s,.,0ovemino ghprcvernahis r• 1 0 oonstderatlon coosst etwisen .tho7 Ynproveritent E S • EAS It .DlstrkM,� and the city at urged , ,K:S wldes that the is. �, , - , . One hurtdre� "nt 'Boll ma" id•ordix1grbtic crot st�o1 the, Improver•, Its,witltot8 no ar!' after a:t pr�etg�ionuhas i Monts shall 'be as- ;sassed .to the EIm= •.: 'provement gee 1 Distiict and ,no portion • of. 3 The reviewed I tx7sts shall 6epald,by the't�tyatLarge: fired4the Pre'- '( �:Setdon'2. 7'h¢:GoveN"1- °1+'T Vu, care'., necessaryw. and Srts'set forth' }}athhorizea 4hemt 1 -be F-4. ._ _W�,_ - -- tore, all in ;accordance :ebyTritifs tt M with - K$.A..12.6a0t, qt is'suffici-ent, finds ' artdlde• seq -Nis iqn 3, The 0y ex- � 9t k,is, paces• Pam 10 make capital ex-' advisable. to follovii »g im • pendiwrpsfrom,and•efler the dale of Uiis Resolution In donne tkin with the:lm -1 nmure�tiJ�tl* M onts are• as provemerits described herein, and Im6nds, to re ' ' stallatibn ,� irtltt�i rse, Itself for such ex- - 0114 guner,:pays: pendltures tdttt the pro; ceeda, done or mores -1 'Id g R!o for nately-, 9- Ties of general obligatIm, 2 of Sunset bonds , and %temporary n0tes'of the City'.inrthe Drive (the maximum ptrncip,al lmprovelj amountol $297 aAatibmof Section'4. That certain aA ely$70Ylneal DevefoprrtenttAgreernen,I between Magnolia Hills, ,ix-inch water r, - hydrants, Irxbrpbratgd andihe City dated as 4F.MaY 7, 2012 Ittings, ser4 -, ter.Mlans_snd, isfierebyapprovedfirsub- of 'Development on; behalf• of , ODr'AND PASSEiDt,I 17h dayot May, 2012,1 I ��n .M..lerlritrtge, may, CMC, CAy • _ a ' '11,(111) � t GILMORE & BELL, P.C. MAY 2, 2012 MAGNOLIA HILLS PHASE 3 DEVELOPMENT AGREEMENT VI IMPROVEMENT DISTRICT DEVELOPMENT AGIMEM[ENT by and between the CPTY OF SAUNA, KANSAS And MAGNOLIA HALLS, INCORPORATED DATED AS OF 2012 TABLE OF CONTENTS TMPROVENUM DISTRICT' DEVELOPMENT AGREEMENT Page ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1.01. Rules of Construction ........................................................................ ............................... I Section 1.02. Definitions of Words and Terms ......................................................... ..............................2 ARTICIZU REPRESENTATIONS AND WARRANTIES Section 2.01 Representations of City- ..................................................................... ..............................5 Section 2.02. 'Representations of the Developer .........................................:............ ..............................5 ARTICLE III THE IMPROVEMENT DISTRICT Section 3.01. Creation of the Improvement District ................................................. ..............................7 Section 3.02. Special Assessments ............................................................................ ..............................7 Section 3.03. City Expenses .......................... ARTICLE IV CONSTRUCTION OF IMPROVEMENTS Section 4.01. Design and Engineering of the Improvements ...........................:........ ..............................8 Section4.02. Construction of the Improvements ...................................................... ..............................9 Section 4.03. Rights -of -Way and Easements ........................................................... .............................10 Section 4.04. Dedication of Improvements .............................................................. .............................10 Section 4.05. Completion of improvements ............................................................ .............................10 Section4.06. RightsofA. ccess ....................:............................................................ .............................10 Section 4.07. Certificate of Full. Completion ........................................................... .............................11 ARTICLE V RUMBURSEMENI' OF IMPROVEMENT COSTS Section5.01. Improvement Costs, Generally ........................................................ ............................... I 1 Section 5.02. Developer to Advance Costs ............................................................... .._..........................I1 Section 5.03. City's Obligation to Reimburse Developer ...................................... ............................... I 1 Section 5.04. Developer Reimbursement Process ................................................... .............................12 Section 5.05. Right to Inspect and Audit ................................................................. .............................12 ARTICLE VI IMPROVEMENT DISTRICT OBLIGATIONS Section 6.01. Conditions to the Issuance of Improvement District Obligations...... .. ...........................13 Section 6.02. Security for the Improvement District Obligations ............................. ............................13' Section 6.03. Terms of Improvement District Obligations ...................................... .............................14 ARTICLE VII ASSIGNN ENT,TRANSFER Section 7.01. Transfer of Obligations ...................................................................... .............................14 ARTICLE VIII GENERAL COVENANTS Section 8.01. Indemnification of City ...................................................................... .............................15 Section8.02. Insurance ............................................................................................ .............................15 Section 8.03. Non - liability of Officials, Employees and Agents of the City ........... .............................16 ARTICLE I K DEFAULTS AND REN"IES Section 9.01. Developer Event of Default ............................................ ............................... Section 9.02. City Event of Default ....................................................;.................... .............................16 Section 9.03. Remedies Upon a Developer Event of Default .................................. .............................17 Section 9.04. Remedies Upon a City Event of Default ............................................ .............................17 Section 9.05. Excusable Delays. ......... .............................18 Section9.06. Legal Actions ..................................................................................... .............................18 ARTICLE X GENERAL PROVISIONS Section 10.01. Mutual Assistance .............................................................................. .............................18 Section 10.2. Effect of Violation of the Terms and Provisions of this Agreement; NoPartnership .............................. ............................................. .............................18 Section10.03. Time of Essence ................................................................................. .............................1$ Section10.04. Amendments ...................................................................................... .............................19 Section 10.05. Agreement Controls ......................................................... ............................... ...19 Section 10.06. Conflicts of Interest ............................................................................ .............................19 Section10.07. Term ................................................................................................... ............:................19 Section 10.08. Validity and Severability .................................................................... .............................19 Section 10.09. Required Disclosures ......................................................................... .............................19 .Section 10.10. Tax Implications ............................... , ............................................. .............................20 Section10.11. Authorized Parties .............................................................................. .............................20 Section10.12. Notice .................................................................................................. .............................20 Section10.13. Kansas Law ....................................................................................... .............................20 Section10.14. Counterparts ...................................................................................... .............................20 Section 10.15. Recordation ofAgreement ................................................................ .............................20 Section 10.16. Consent or Approval .......................................................................... .............................21 li E IPROVEMENT DISTRICT DEVELOPMENT AGREEMENT THIS AGREEMENT is entered into by and between the CITY OF SALINA, KANSAS, a municipal corporation duly organized and existing under the laws of the State of Kansas as a city of the third class (the "City'), and MAGNOLIA HILLS, INCORPORATED, a corporation organized and existing under the laws of the State of Kansas (the "Developer," and together with the City, the "Parties", and is dated as of-p %_; 2012. WHEREAS, on May 2, 2012, the Developer filed with the City Clerk the Improvement District Petition, pursuant to K.S.A. 12 -6a01 of seq. (the "Act"; and WHEREAS, the Improvement District Petition requests that the City create the Improvement District, construct the Improvements, assess the costs thereof against the Improvement District, and issue the City's general obligation bonds to finance the-costs of the Improvements; and WHEREAS, the City and the Developer desire to enter into this Agreement to address issues related to construction and financing of the Improvements. NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby aclmowledged, the Parties do hereby agree as follows: ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1.01. Rules of Construction. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following rules of construction apply in construing the provisions of this Agreement. A. The terms defined in this Article include the plural as well as the singular. B. Ali accounting.terms not otherwise defined hereon shall have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with generally accepted accounting principles. C. All references herein to "generally accepted accounting principles" refer to such principles in effect on the date of the determination, certification, computation or other action to be taken hereunder using or involving such terms. D. All references in this instrument to designated "Articles," "Sections" and other subdivisions are to be the designated Articles, Sections and other subdivisions of this instrument as originally executed. E. The words `herein," "hereof' and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. F. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. G. The representations, covenants and recitations set forth in the foregoing recitals are . material to this Agreement and are hereby incorporated into and made a part of this Agreement as though they were fully set forth in this Section. The provisions of the Petition, and such Improvement District Proceedings, and the provisions of the Act, as amended, are hereby incorporated herein by reference and made a part of this Agreement, subject in every case to the specific terms hereof. Section 1.02. Definitions of Words and Terms. Capitalized words used in this Agreement shall have the meanings set forth in the Recitals to this Agreement or they shall have the following meanings: "Act" means the General Improvement and Assessment Law, KS.A. 12 -6aOl et seq., as amended and supplemented from time to time. "Agreement" means this Improvement District Development Agreement, as amended as supplemented from time to time. "Applicable Law and Requirements" means any applicable constitution, treaty, statute, rule, regulation, ordinance, order, directive, code, interpretation, judgment, decree, injunction, writ, determination, award, permit, license, authorization, directive, requirement or decision of or agreement with or by Governmental Authorities. "Bond Counsel" means Gilmore & Bell, P.C. "Bond Proceeds" means proceeds of any Improvement District Obligations issued by the City, less costs of issuance, capitalized interest and any required reserves. "Certificate of Improvement District Costs" means a certificate relating to Improvement District Costs in, substantially the form attached hereto as Exhibit A. "Certificate of Full Completion" means a certificate evidencing Full Completion of the Improvements, in substantially the form attached hereto as Exhibit B. "City" mews the City of Salina, Kansas. "City Event of Default" means any event or occurrence defined in Section 4.02 of this Agreement:. "City Expenses" means the expenses described in Section 3.03 of this Agreement. "City Representative" means the City Manager of the City, and such other person or persons at the time designated to act on behalf of the City in matters relating to this Agreement. "Construction Plans" means plans, drawings, specifications and related documents, and construction schedules for the construction of the Improvements, together with all supplements, amendments or corrections, submitted by the Developer and approved by the City in accordance with this Agreement. "Developer" means Magnolia Hills, Incorporated, a corporation organized and existing under the laws of the State of Kansas, and any successors and assigns approved pursuant to this Agreement. "Developer Event of Default" means any event or occurrence defined in Section 9.01 of this Agreement. "Developer Representative" means Kelly R. Dunn and such other person or persons at the time designated to act on behalf of the Developer in matters relating to this Agreement as evidenced by a written certificate furnished to the City containing the specimen signature of such person or persons and signed on behalf of the Developer. "Engineering Estimate and Feasibility Report" means the Preliminary Engineering Estimate and Feasibility Report prepared by the City and related to the Petition. "Estimated Special Assessments" means the City's estimate of the total amount of Special Assessments to be levied against the Improvement District, based on actual Improvement Costs submitted by -the Developer and the City's estimate of additional costs related to the Improvements to be levied against the Improvement District pursuant to the Improvement District Proceedings. The Estimated Special Assessments shall not exceed the Improvement Costs Cap without the written consent of all owners of property within the Improvement District. "Excusable Delays" means any delay beyond the reasonable control of the Party affected, caused by damage or destruction by fire or other casualty, power failure, strike, shortage of materials, unavailability of labor, delays in the receipt of Permitted Subsequent Approvals as a result of unreasonable delay on the part of the applicable Governmental Authorities, adverse weather conditions such as, by way of illustration and not limitation, severe rainstorms or below freezing temperatures of abnormal degree or abnormal duration, tornadoes, and any other everts or conditions, which shall include but not be limited to any litigation interfering with or delaying the construction of all or any portion of the Improvements in accordance with this Agreement, which in fact prevents the Party so affected from discharging its respective obligations hereunder. "Governmental Approvals" means all plat approvals, re- zoning or other zoning changes, site plan approvals, conditional use permits, variances, building permits, architectural review or other subdivision, zoning or similar approvals required, for the implementation of the Improvements and consistent with the Petition, the Improvement District Proceedings, and this Agreement. "Governmental Authorities" means any and all jurisdictions, entities, courts, boards, agencies, commissions, offices, divisions, subdivisions, departments, bodies or authorities of any type of any, governmental unit (federal, state or local) whether now or hereafter in existence. " Improvement Costs" means the costs of the Improvements, and such other costs to be charged to the Improvement District as set forth in the Petition, including interest and costs of issuance related to any Improvement District Obligations issued by the City to finance the Improvements, all determined in accordance with the Act. "Improvement Costs Cap" means $264,313.32 (the Improvement Costs, as shown in the Petition and Engineering Estimate and Feasiblity Report related thereto, less estimated costs of interest on Improvement District Obligations, costs of issuing Improvement District Obligations and City engineering, inspection and administrative costs). "Improvement District- means the improvement district to be established by the governing body of the City pursuant to the Act and the Petition. 3 "Improvement District Obligation Conditions" means those conditions precedent to the City's obligation to issue Improvement District Obligations, as set forth in Section 6.01. " Improvement District Obligations" means bonds or other obligations issued by the City pursuant to the Act and in accordance with this Agreement. "Improvement District Proceedings" means any of the proceedings of the governing body of the City creating the Iimprovement District and/or levying Special Assessments. "Improvement District" means the improvement district to be established by the governing body of the City pursuant to the Act and the Petition. "Improvements" means the construction of the following improvements, all to be constructed as shown on the Preliminary Engineering Estimate and Feasibility Report related to the petition: The installation of curb & gutter, pavement, and grading for approximately 480 lineal feet of Sunset Ridge Drive (the "Street Improvements'). The installation of approximately 470 lineal feet of six-inch water main, fire hydrants, valves, fittings, service connections and all appurtenances thereto for water Imes within right of way and/or utility easement (the "Water System Improvements"). The installation of approximately 704 lineal feet of eight -inch sanitary sewer main, service connections, manholes and all appurtenances thereto for sanitary sewer lines lying within right of way and/or utility easement, (the "Sanitary Sewer Improvements'). The installation of approximately 419 lineal feet of storm sewer, inlets, and all appurtenances thereto for storm sewer lines lying within right of way and/or drainage easement, (the "Drainage Improvements "). "Permitted Subsequent Approvals" means the building permits and other governmental approvals customarily obtained prior to construction which have not been obtained on the date that this Agreement is executed, which the City or other governmental entity has not yet determined to grant. "Petition" means the petition submitted by the Developer to the City Clerk on �T 2 2012, requesting the construction of the Improvements, as further described therein, and that the costs of such improvements be assessed against the property described therein, all in accordance with the Act. "Plans" means site plans, Construction Plans and all other Governmental Approvals necessary to construct the Improvements in accordance with City code, applicable laws of Governmental Authorities and-this Agreement. "Prepayment Period" means a period of time within 30 days from the publication date of any ordinance levying Special Assessments. "Related Entity" means any individual or legal entity related to the Developer, determined in accordance with federal tax regulations. "Special Assessments" means any special assessment levied or proposed to be levied against any property within the improvement District, as determined in accordance with the Act and the Improvement District Proceedings. ARTICLE R REPRESENTATIONS AND WARRANTIES Section 2.01 Representations of City. The City makes the following representations and warranties, which are true and correct on the date hereof: A. Due Authority. The City has full constitutional and lawful right, power and authority, under current applicable law, to execute and deliver and perform the terms and obligations of this Agreement, and this Agreement has been duly and validly authorized and approved by all necessary City proceedings, findings and actions. Accordingly, this Agreement constitutes the legal valid and binding obligation of the City, enforceable in accordance with its terms. B. No Defaults or Violation of Law. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of the terms and conditions hereof do not and will not conflict with or result in a breach of any of the terms or conditions of any agreement or instrument to which it is now a party, and do not and will not constitute a default under any of the foregoing. C. No Uti ag tion. There is no litigation, proceeding or investigation pending or, to the knowledge of the City, threatened against the City with respect to the Petition or this Agreement. In addition, no litigation, proceeding or investigation is pending or, to the knowledge of the City, threatened against the City seeking to restrain, enjoin or in any way limit the approval or issuance and delivery of this Agreement or which would in any manner challenge or adversely affect the existence or powers of the City to enter into and carry out the transactions described in or contemplated by the execution, delivery, validity or performance by the City of the terms and provisions of this Agreement. D. Governmental or Corporate Consents. No consent or approval is required to be obtained from, and no action need be taken by, or document filed with, any governmental body or corporate entity in connection with the execution and' delivery by the City of this Agreement. E. No Default. No default or City Event of Default has occurred and is continuing, and no event has occurred and is continuing which with the lapse of time or the giving of notice, or both, would constitute a default or an event of default in any material respect on the part of the City under this Agreement. Section 2.02. Representations of the Developer. The Developer makes the following representations and warranties, which are true and correct on the date hereof A. Due Authority. The Developer has all necessary power and authority to execute and deliver and perform the terms and obligations of this Agreement and to execute and deliver the documents required of the Developer herein, and such execution and delivery has been duly and validly authorized and approved by all necessary proceedings of the Developer. Accordingly, this Agreement constitutes the legal valid and binding obligation of the Developer, enforceable in accordance with its terms. B. No Defaults or Violation of Law. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of the terms and conditions 5 hereof do not and will not conflict with or result in a breach of any of the terms or conditions of any corporate or organizational restriction or of any agreement or instrument to which it is now a party, and do not and will not constitute a default under any of the foregoing. C. No Litigation. No litigation, proceeding or investigation is pending or, to the knowledge of the Developer, threatened against the Improvements, the Project, the Developer or any officer, director, member or shareholder of the Developer. In addition, no litigation, proceeding or investigation is pending or, to the knowledge of the Developer, threatened against the Developer seeking to restrain, enjoin or in any way limit the approval or issuance and .delivery of this Agreement or which would, in any manner challenge or adversely affect the existence or powers of the Developer to enter into and'carry out the transactions described in or contemplated by the execution, delivery, validity or performance by the Developer, of the terms and provisions of this Agreement. D. No Material Chance. (1) The Developer has not incurred any material liabilities or entered into any material transactions other than in the ordinary course of business except for the transactions contemplated by this Agreement and (2) there has been no material adverse change in the business, financial position, prospects or results of operations of the Developer, which could affect the Developer's ability to perform its obligations pursuant to this Agreement. E. Governmental or Corporate'Consents. No consent or approval is required to be obtained from, and no action need be taken by, or document filed with, any governmental body or corporate entity in connection with the execution; delivery and performance by the Developer of this Agreement, other than Permitted Subsequent Approvals. F. No Default. 'No deefault or Developer Event of Default has occurred and is continuing, and no event has occurred and is continuing which with the lapse of time or the giving of notice, or both, would constitute a default or an event of default in any maternal respect on the part of the Developer under this Agreement, or any other material agreement or material instrument to which the Developer is a party or by which the Developer is or may, be bound. G. Approvals. Except for Permitted Subsequent Approvals, the Developer has received and is in good standing with respect to all certificates, licenses, inspections, franchises, consents,-immunities, permits, authorizations and approvals, governmental or otherwise, necessary to conduct and to continue to conduct its business as heretofore conducted by it and to own or lease. and operate its properties as now owned or leased by it. Except for Permitted Subsequent Approvals, the Developer has obtained all certificates, licenses, inspections, franchises, consents, immunities, permits, authorizations and approvals, governmental or otherwise, necessary to acquire, construct, equip, operate and maintain the Improvements. The Developer reasonably believes that all such certificates, licenses, consents, permits, authorizations or approvals which have not yet been obtained will be obtained in due course. IL Construction Permits. Except for Permitted Subsequent Approvals, all governmental permits and licenses required by applicable law to construct, occupy and operate the Improvements have been issued and are in frill force and effect or, if the present stage of development does not allow such issuance, the Developer reasonably believes, after due inquiry of the appropriate governmental officials, that such permits and licenses will be issued in a timely manner in order to permit the Improvements to be constructed 1. Compliance with Laws. The Developer is in compliance with all valid laws, ordinances, orders, decrees, decisions, rules, regulations and requirements of every duly constituted governmental authority, commission and court applicable to any of its affairs, business, operations as contemplated by this Agreement. 6 L Other Disclosures. The information furnished to the.City by the Developer in connection with the matters covered in this Agreement are true and correct and do not contain any untrue statement of any material fact and do not omit to state any material fact required to be stated therein or necessary to make any statement made therein, m the light of the circumstances under which it was made, not misleading. Section 203. Conditions to the Effective Date of this Agreement. Contemixnmmusly with the execution of this Agreement, and as a precondition to the effectiveness of this Agreement, the Developer shall provide to the City the Deposit set forth in Section 3.03. ARTICLE III TILE EM[PROVEN[ENT DISTRICT Section 3.01. Creation of the Improvement District. A. The Developer has taken all actions required by the Act to present the Petition to the City Commission. The Developer agrees to cooperate in good faith to provide such additional information, as deemed necessary by the City, to allow for full consideration of the Petition by the City Commission. B. The Parties acknowledge and agree that the creation of an improvement district by the City is a legislative act, that the City cannot agree by contract to take future legislative action, and that the City will diligently consider the Petition in good faith pursuant to the Act and the terms of this Agreement. C. The Developer hereby agrees to waive any rights that it may have pursuant to state statute, the Kansas Constitution, the United States Constitution, or as otherwise provided by law to object to any Special Assessments requested in the Petition and imposed pursuant to the Act. Developer acknowledges and agrees that this waiver is freely given and with full knowledge of the extent of all statutory, constitutional or other legal rights being waived thereby, and is given in consideration of the City forming the improvement District and assisting in providing for the financing and construction of the Improvements. Section 3.02. Special Assessments. Upon (a) completion of the Improvements, as evidenced by the City's execution of the Certificate of Full Completion pursuant to Section 4.07 hereof, and (b) the Developer's submission of all Certificates of Improvement Costs pursuant to Section 5.04 hereof the City sha11 initiate proceedings pursuant to the Act to levy Special Assessments against property within the Improvement District. The Special Assessments shall be payable in fifteen (15) equal annual installments. The City shall allow all property owners within the Improvement District an opportunity to prepay all or any portion of such Special Assessments within the Prepayment Period. Section 3.03. City Expenses. A. City Expenses, Generally The Developer acknowledges that the City does not have a source of fiords to finance costs incurred for non - employee legal, financial and planning consultants or for direct out- of =pocket expenses and other reasonable costs resulting from services rendered to the Developer and the City to review, evaluate, process and consider the Petition and this Agreement (the "City Expenses"). 7 B. Initial Deposit. In order to insure the prompt and timely payment of the City Expenses, the Developer shall establish a fund in the amount of Two Thousand Dollars ($2,000.O0) (the "Deposit') by paying such amount to the City contemporaneously with the execution of this Agreement, receipt of which is hereby acknowledged. The City shall pay initial City Expenses from the Deposit and shall promptly submit an itemized statement for such City Expenses to the Developer. The City shall submit monthly statements itemizing the City Expenses paid from the Deposit during the preceding month. C. Disbursement of Funds. The City shall disburse the Deposit for reimbursement of costs to the City on or before the thirtieth (30th) day of each month, and for consulting fees and the payment of all out -of- pocket expenses incurred by the City in connection with the performance of its obligations under this Agreement as payment for such expenses become due. Upon reasonable notice, the City shall make its records available for inspection by Developer with respect to such disbursements. D. Reimbursement By the Citv. All amounts paid by the Developer to the City pursuant to this Section shall constitute costs chargeable to the Improvement District and shall be approved for reimbursement as such by the City (but only from proceeds of Improvement District Obligations and only to the extent such amounts together with the actual Improvement Costs do not exceed the Improvement Costs Cap), except for (i) any amounts attributable to the preparation and review of any agreements between the Developer and the City or among the Developer, the City and any third party, to the extent such agreements are related to the Developer's reimbursement to the City or any third party for all or any portion of any costs to be assessed against the City's or such third party's property as a result of the Improvement District and (ii) any amounts that are not "costs" as defined by the Act. The Developer acknowledges that the actual fees and expenses of the Developer in negotiating and entering into this Agreement are not reimbursable costs pursuant to the Act. E. Refunding of Deposit. The City shall return to the Developer any unspent Deposit on the date when the City reimburses the Developer for the improvement Costs from the proceeds of Improvement District Obligations. ARTICLE IV CONSTRUCTION OF IMPROVEMENTS Section 4.01. Design and Engineering of the Improvements. A. The Developer has submitted and the City has approved Construction Plans for the Improvements pursuant to City Code. All Improvements shall be designed, engineered, constructed, and installed in accordance with all Applicable Law and Requirements of the City. The Construction Plans sball be in sufficient completeness and detail to show that construction will be in conformance with the Petition, the Improvement District Proceedings and this Agreement. All plans, speeifiegtiovs, contracts and change orders related to the Improvements shall be approved by the City Engineer. B. All costs associated with the preparation of the Plans for the Improvements shall be paid by the Developer, but shall be reimbursable from proceeds of the improvement District Obligations in the manner provided by Article V hereof. C. Any firm preparing Plans for the Improvements sMU receive prior written approval of the City Engineer on behalf of the City. Section 4.02. Construction of the Improvements. All Improvements shall be designed, engineered and constructed by the Developer as agent for the -City The Developer agrees that all construction, improvement, equipping, and installation work on the Project shall be douse in accordance with the Petition, the Improvement District Proceedings, Construction Plans and related documents to be approved by the City in compliance with City Code. The Developer, as agent for the City, shall comply with the following requirements: A. Construction Permits and Approvals. Before commencement of construction or development of any work or improvements, the Developer shall, at its own expense, secure or cause to be secured any and all permits and approvals which may be customarily required by the City and any other governmental agency having jurisdiction as to such construction, development or work. The City shall cooperate with and provide all usual assistance to the Developer in securing these permits and approvals, and shall diligently process, review and consider all such permits and approvals as may be" required by law; except provided that the City shall not be required to issue any such permits or approval for any portion of the Improvements not in conformance with the Petition or this Agreement. B. Engineer's Estimate. Before the Developer shall" enter into any contract for the Improvements, an estimate of the cost of the Improvements shall be pwpared by the City Engineer and submitted to the City Commission. The Developer shall not enter into any contract for construction of the Improvements if the price exceeds the amount set forth in such estimate of the City Engineer. C. Bonds. The Developer or the Developer's contractor(s) shall provide performance bond(s) ("Performance Bond "} and statutory public works bond(s) required by K.S.A. 60 -1111 (`Payment Bond'J prior to commencement of construction of the Improvements, as follows: (1) PERFORMANCE BOND. A surety bond, running independently to both the City and the Developer, conditioned upon the prompt, full, and complete performance by the contractor as principal of its covenants, obligations, and agreements as contained in the contract documents; and further conditioned that for a period of no less than one year after the City's final acceptance of the Improvements as a whole (as indicated on the "Certificate of Completion'), the contractor, at its expense and free of charge to the City or the Developer, shall make good all defects in materials or workmanship or any improper, imperfect, or defective preparation of the ground upon which such improvements are constructed. (2) PAYMENT BOND. A surety bond running to the state of Kansas, conditioned that the contractor as principal shall pay all indebtedness incurred for labor, supplies, equipment, and materials furnished in making the improvements called for by the contract documents. Each bond shall be in an amount at least equal to the contract price and shall remain in effect until no less than one year after the City's final acceptance of the Improvements as a whole. The form of each bond shall be subject to the approval of the City. Each bond shall be executed by such sureties as are authorized to conduct business in the state of Kansas. All bonds signed by an agent must be accompanied by a certified copy of the agent's authority to act. A Performance Bond shall be delivered to the City Clerk. A Payment Bond shall be filed with the Clerk of the Saline County District Court in accordance with K.S.A. 60-111 l(b) and a file stamped copy delivered to the City Cleric. The premiums for such bonds shall constitute costs chargeable to the Improvement District. The Developer shall indemnify the City and its officers and employees for any damage resulting from failure of the Developer to provide the bonds required under this subsection. D. Aatidiscximination During Construction. The Developer, for itself, its successors and assigns, and any contractor with whom the Developer has contracted for the performance of work on the Improvements, agrees that in the construction, renovation, improvement, equipping, repair and installation of the Improvements provided for in this Agreement, the Developer shall not discriminate against any employee or applicant for employment because of race, color, creed, religion, age, sex, marital status, disability , national origin or ancestry. E. Cost Overruns. The Parties acknowledge that the estimated and probable costs of the Improvements included in the Petition are based upon calculations prepared by the Developer. The Improvements shall be constructed in accordance with the estimated and probable costs set forth in the Petition. The Patties Rather acknowledge that the City may not impose Special Assessments for any cost in excess of the Improvement Costs. The Developer shall pay for all Improvement Costs that exceed the Improvement Costs Cap. Section 4.03. Rights- of-Way and Easements. Developer will provide or cause to be provided, in a form suitable for recording in the real property records of Saline County, Kansas, within ten (10) days after written demand by the City, all rights -of -way and easements across or encumbering the respective portion of the property necessary for the construction, ownership and operation of the improvements at no cost to the City. All Improvements shall be located within standard storm drainage and utility easements or rights -of -way dedicated to public use and constructed in compliance with all Applicable Law and Requirements. Section 4.04. Dedication of Improvements. The Improvements will be dedicated to the City once the Improvements are completed. The Parties acknowledge that any Improvements which remain private in nature cannot be financed under the Act, and cannot be paid for with the proceeds of tax exempt bonds or from Special Assessments. The City shall not be obligated to accept dedication of any Improvements until the City has verified that the applicable Improvements have been built in accordance with all Applicable Law and Requirements; until the City has verified that the Improvements have been built in accordance with the specifications approved by it; and until the City has issued a Certificate of Full Completion for the Improvements to be dedicated Section 4.05. Completion of Improvemeab. A. Development Schedule. The Developer' shall commence construction of the Improvements in good and workmanlike manner in accordance with the terms of this Agreement. The Developer shall cause the Improvements to be completed with due diligence. Upon reasonable advance notice, the Developer shall meet with the City to review and discuss the design and construction of the Improvements in order to enable the City to monitor the status of construction and to determine that the Improvements are being performed and completed in accordance with this Agreement. B. Continuation and Completion. Subject to Excusable Delays, once the Developer has commenced construction of the Improvements, the Developer shall not permit cessation of work on the Improvements for a period in excess of 45 consecutive days or 90 days in the aggregate without prior written consent of the City. C. No Waives Nothing -in this Agreement shall constitute a waiver of the City's right to consider and approve or deny Governmental Approvals pursuant to the City's regulatory authority as provided by City Code and applicable state law. Section 4.06. Rights of Access. Representatives of the City shall have the right of access to the Improvements, without charges or fees, at nomW construction hours during the period of construction, for the purpose of ensuring compliance with this Agreement, including, but not limited to, the inspection of the work being performed in constructing, renovating, improving, equipping, repairing and installing the 10 Improvements, so long as they comply with all safety rules. Representatives of the City shall conduct all inspections the City deems .necessary to ensure the Developer's construction of the Improvements in accordance with the Construction Plans and City Code. Except in case of emergency, prior to any such access, such representatives of the City will check in with the on -site manager. Such representatives of the City shall carry proper identification, shall insure their own safety, assuming the risk of injury, and shall not interfere with the construction activity. Section 4.07. Certificate of Full Completion. A. Promptly after completion of the Improvements in accordance with the provisions of this Agreement, the Developer may submit a Certificate of Full Completion to the City. The Certificate of Full Completion shall be in substantially the form attached as Exhibit B. The City shall, within ten (10) days following delivery of the Certificate of Full Completion, complete such inspections as it deems necessary to verify to its reasonable satisfaction the accuracy of the certifications contained in the Certificate of Full Completion. The City's execution of the Certificate of Full Completion shall constitute evidence of the satisfaction ofthe Developer's agreements and covenants to construct the Improvements. B. The City shall have the right to withhold delivery of the Certificate of Full Completion until such time as the Developer has: 1. completed the Improvements in accordance with the Improvement District Proceedings, the Construction Plans, and all Applicable law and Requirements, and 2. provided the Developer's Financial Commitment described in Section 6.02(B). ARTICLE V REMURSEIMIENT OF IldPROVEMENT COSTS Section 5.01. Improvement Costs, Generally. In consideration for the Developer's agreement to construct the Improvements, the City agrees to reimburse the Developer for Improvement Costs, up to the Impwwment Costs Cap, subject to the terms of the improvement District Proceedings, the Act, and this Agreement. Section 5.02. Developer to Advance Costs. The Developer agrees to advance all Improvement Costs as necessary to complete the Improvements, until such time as the City issues Improvement District Obligations in accordance with Article VI hereof. After the City has issued Improvement District Obligations, the Developer may request that the City directly pay Improvement District Costs in accordance with Section 5.04 hereof. Within five (5) business days of the City's written request, the Developer shall deposit with the City the funds set forth in Section 3.03 for the purpose of reimbursing the City for City Expenses related to planning, legal, administrative and other costs associated with the Improvements, the Improvement District and this Agreement. Section 5.03. City's Obligation to Reimburse Developer. Subject to the terns of this Agreement and the conditions in this Section, the City agrees to reimburse Developer for Improvement Costs in a total amount not to exceed the Improvement Costs Cap less any improvement Costs incurred by the City and interest and costs of issuance related to the Improvement District Obligations. Developer may be reimbursed for Improvement Costs only from the proceeds of Improvement District Obligations as provided in Articles V and VI hereof, and the City shall have no obligation to reimburse Developer until proceeds of Improvement District Obligations are available. The Parties agree that 0 reimbursement to the Developer it shall be made only from the proceeds of Improvement District Obligations and not from any other source. Nothing in this Agreement shall obligate the City to issue Improvement District Obligations to reimburse Developer for any cost that is not both an Improvement Cost and a "cost" as defined by the Act. Seddon 5.04. Developer Reuanbursement Process. A. All requests for reimbursement and/or payment of Improvement Costs shall be made in a Certificate of Improvement Costs in substantial compliance with the form attached hereto as Exhibit A and shall all be submitted at one time together with the Certificate of Full Completion. (1) With respect to costs requested to be reimbursed, the Developer shall provide itemized invoices, receipts or other information reasonably requested, if any, to confirm that any such cost has been paid and qualifies as an Improvement Cost, and shall further provide a summary sheet detailing the costs requested to be reimbursed. Such summary sheet shall show the date such cost was paid by the Developer, the payee, a brief description of the type of cost paid, the amount paid. The Developer shall provide such additional information as reasonably requested by the City to confirm that such costs have been paid and qualify as Improvement Costs. (2) With respect to costs required to be paid directly by the City, the Developer shall provide itemized invoices to confirm that any such cost qualifies as an Improvement Cost, and shall further provide a summary sheet detailing the costs requested to be paid. Such summary sheet shall show the payee, a brief description of the type of cost, the amount to be paid, and the payment due date. The Developer shall provide, or shall cause its contractors to provide, such additional information as reasonably requested by the City to confirm that the such costs qualify as Improvement Costs. B. The City reserves the right to have its engineer or other agents or employees inspect all work in respect of which a Certificate of Improvement Costs is submitted, to examine the Developer's and others' records relating to all expenses related to the invoices to be paid, and to obtain from such parties such other information as is reasonably necessary for the City to evaluate compliance with the terms hereof. C. The City shall have 30 calendar days after receipt of any Certificate of Improvement Costs to review and respond by written notice to the Developer. If the submitted Certificate of Improvement Costs and supporting documentation demonstrates that (1) the request relates to the Improvement Costs; (2) the expense has been paid or is due and owing to a third party; (3) Developer is not in material default under this Agreement; and (4) there is no fraud on the part of the Developer, then the City shall approve the Certificate of Improvement Costs and make, or cause to be made, reimbursement or payment from the proceeds of Improvement District Obligations, within fifteen (15) days of the City's approval of the Certificate of Improvement Costs. N the City reasonably disapproves of the Certificate of Improvement Costs, the City shall notify the Developer in writing of the reason for such disapproval within such 30-day period. Approval of the Certificate of Improvement Costs will not be unreasonably withheld, conditioned or delayed Section 5.05 RigM to inspect and Audit. The Developer agrees that, up to one year after completion of the Improvements, the City, with reasonable advance notice and during normal business hours, shall have the right and authority to review, audit, and copy, from time to time, all the Developer's books and records relating to the Improvement Costs (including, but not limited to, all general contractor's sworn statements, general contracts, subcontracts, material purchase orders, waivers of lien, paid receipts and invoices). 12 ARTICLE VI IlVUROVEME14T DISTRICT OBLIGATIONS Section 6.01. Conditions to the Issuance of Improvement District Obligations. After the following conditions have been satisfied, the Developer may make a written request to the City to issue Improvement District Obligations, and the City agrees to take-all reasonably necessary steps to consider the issuance of Improvement District Obligations upon receipt of such written request and when the following conditions have been satisfied (collectively, the "Improvement District Obligation Conditions'): A. the City has executed the Certificate& Full Completion; B. all improvement Costs have been submitted by the Developer and approved by the City pursuant to Section 5.04 hereof; C. the Developer has provided the security described in Section 6.02(B); and D. the City has adopted an ordinance levying the Special Assessments against the Improvement District. Section 6.02. Security for the Improvement District Obligations. A. The Improvement District Obligations 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, or from 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 City. The full faith, credit and resources of the City shall be irrevocably pledged for the prompt payment of . the principal of and interest on the Improvement District Obligations as the same become due. B. In consideration for the City entering into this Agreement and issuing its improvement - District Obligations, and as additional security for such Improvement District Obligations and to secure prompt payment'of the Special Assessments, the Developer shall provide certain financial commitments to the City (the "Developer's Financial Commitment'). l . The Developer's Financial Commitment shall be in one of the following forms: a. cash, cashier's check or an escrow account equal to ?A% of the total Special Assessments levied against all properties within the Improvement District; or b. an irrevocable letter of credit equal to 35% of the total Special Assessments levied against all properties within the Improvement District. 2. The Developer's Financial Commitment may be applied annually to satisfy the principal of and interest on the Improvement District Obligations, if any Special Assessments are not paid when due. The Developer's Financial Commitment shall be released upon the request of the Developer at the earlier of (i) five (5) years from the date the governing body of the City adopts an ordinance levying the Special Assessments or (ii) the date when certificates of occupancy are issued for at least four of the lots within the Improvement District. 13 Section 6.03. Terms of Improvement District Obligations. A. Upon the Developer's satisfaction of the conditions set forth in Section 6.01 hereof, the City shall use its best efforts to issue Improvement District Obligations to finance the Improvements. B. The Parties acknowledge that the City may not issue its general obligation bonds to finance the costs of the Improvements until 30 days after the publication of an ordinance levying Special Assessments. After construction of the Improvements is complete (as evidenced by the City's execution of the Certificate of Pull Completion), all Improvement Costs have been submitted by the Developer and approved by the City pursuant to Section 5.04 hereof, and the 30-day protest period following publication of an ordinance levying Special Assessments has expired, the City shall use its best efforts to issue its general obligation bonds to finance the costs of the Improvements. C. The City-shall have the sole right to select the designated Bond Counsel, financial advisor and underwriter (and such additional consultants as the City deems necessary for the issuance of -the Improvement District Obligations). The City will approve the method of marketing the Improvement District Obligations. The Improvement District Obligations shall- bear interest at such Yates, shall be subject to redemption and shall have such other terms as the City shall determine in its sole discretion. The City shall have the sole control of the disbursement of the proceeds of the Improvement District Obligations, subject to the requirements in the documents goveming the Improvement District Obligations and this Agreement. ARTICLE VII ASSIGMIENIT; TRANSFER Section 7.01. Transfer of Obligations. A. The rights, duties and obligations of the Developer contained herein may not be assigned, in whole or in part, to another entity, without the prior approval of the City Commission by resolution following verification by the City Attorney that the assignment complies with the terms of this Agreement. Any proposed assignee shall have qualifications and financial responsibility, as reasonably determined by the City Manager, necessary and adequate to fulfill the obligations of the Developer with respect to the portion of the Improvement District being transferred. Any proposed assignee shall, by instrument in writing, for itseWand its successors and assigns, and expressly for the benefit of the City, assume all of the obligations of the Developer under this Agreement and agree to be subject to all the conditions and restrictions to which the Developer is subject (or, in the event the transfer is of or relates to a portion of the Improvement District, such obligations, conditions and restrictions to the extent that they relate to such portion). The Developer shall not be relieved from any obligations set forth herein unless and until the City specifically agrees to release the Developer. The Developer agrees to record all assignments in the office of the Register of Deeds of Saline County, Kansas, in a timely manner following the execution of such agreements. B. The Parties' obligations pursuant to this Agreement, unless earlier satisfied, shall inure to and be binding upon the heirs, exectrtors, administrators, successors and assigns of the respective parties as if they were in every case specifically named and shall be construed as a covenant running with the land, enforceable against the purchasers or other transferees as if such purchaser or transferee were originally a party and bound by this Agreement. Notwithstanding the foregoing, no tenant of any part of the Improvement District shall be bound by any obligation of the Developer solely by virtue of being a tenant; provided, however, that no transferee or owner of properly within the Improvement District except the Developer shall be entitled to any rights whatsoever or claim upon any rights of the Developer to 14 reimbursement of Improvement Costs as set forth herein, except as specifically authorized in writing by the Developer. ARTICLE VIII GENERAL COVENANTS Section 8.01. Indemnification of City. A. Developer agrees to indemnify and hold the City, its employees, agents and independent contractors and consultants .(collectively, the "City Indemnified Parties") harmless from and against any and all suits, claims, costs of defense, damages, injuries, liabilities, judgments, costs and/or expenses, including court costs and reasonable attorneys fees, resulting from, arising out of, or in any way connected with: 1. the Developer's actions and undertaking in implementation of the Improvements or this Agreement; and 2. the negligence or willful misconduct of Developer, its employees, agents or independent contractors and consultants in connection with the management, design, development, redevelopment and construction of the Improvements. 3. any delay or expense resulting from any litigation filed against the Developer by any member or shareholder of the Developer, any prospective investor, prospective partner or joint venture partner, lender, co- proposer, architect, contractor, consultant or other vendor. This section shall not apply to willful misconduct or negligence of the City or its officers, employees or agents, independent contractors or consultants. This section includes, but is not limited to, any repair, cleanup, remediation, detoxification, or preparation and implementation of any removal, remediation, response, closure or other plan (regardless of whether undertaken due to governmental action) concerning any hazardous substance or hazardous wastes including petroleum and its fractions as defined in (i) the Comprehensive Environmental Response, Compensation and Liability Act ( "CEP-CLAP; 42 U.S.C. Section 9601, et sell.), (ii) the Resource Conservation and Recovery Act ("RCRA"; 42 U.S.C. Section 6901 et seq.) and (iii) Article 34, Chapter 65, K.S.A. and all amendments thereto, at any place where Developer owns or has control of real property pursuant to any of Developer's activities under this Agreement. The foregoing indemnity is intended to operate as an agreement pursuant to Section 107 (e) of CERCLA to assure, protect, hold harmless and indemnify City from liability. 13. In the event any suit, action, investigation, claim or proceeding (collectively, an "Action') is begun or made as a result of which the Developer may become obligated to one or more of the City Indemnified Parties hereunder, any one of the City Indemnified Parties shall give prompt notice to the Developer of the occurrence of such event. C. The right to indemnification set forth in this Agreement shall survive the termination of this Agreement. Section 8.02. Insurance. A At all times, the Developer shall maintain such insurance on the Developer's Property as required by any lender(s) to the Developer. 15 B. During construction of the Improvements, the Developer or its agents shall maintain insurance in favor of the City against all such risks and in such amounts, with such deductible provisions as are customary with connection'witli the construction of similar improvements. Section 8.03. - Non4ability of Offldnls, Employees and Agents of the City. No recourse shall be had for the reimbursement of the Improvement Costs or for any claim based thereon or upon any representation, obligation, covenant or agreement contained in this Agreement against any past, present or future official, officer, employee or agent of the City, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such officials, officers, .employees or agents as such is hereby expressly waived and released as a condition of and consideration for the execution of this Agreement. DEFAULTS AND REMEDIES Section 9.01. Developer Event of Default. Except as further provided herein, and subject to Section 9.05, a "Developer Event of Default" shall mean a default in the performance of any obligation or breach of any covenant or agreement of the Developer in this Agreement (other than a covenant or agreement, a default in the performance or breach of which is specifically dealt with elsewhere in this Section), and continuance of such default or breach for a period of 30 days after City has delivered to Developer a written notice specifying such default or breach and requiring it to be remedied; provided, that if such default or breach cannot be fully remedied within such 30-day period, but can reasonably be expected to be fully remedied and the Developer is diligently attempting to remedy such default or breach, such default or breach shall not constitute an event of default if the Developer shall promptly upon receipt of such notice diligently attempt to remedy such default or breach and shall thereafter prosecute and complete the same with due diligence and dispatch. Section 9.02. City Event of Default. Subject to Section 9.05, the occurrence and continuance of any of the following events shall constitute a f°Clty Event of Default" hereunder. A.- After closing of any improvement District Obligations, the City fails to use the proceeds of such Improvement District Obligations to reimburse the Developer within 30 days, and such delay is not cured or corrected for a period of 45 consecutive days; or 13. Default in the performance of any obligation or breach of any other covenant or agreement of the City in this Agreement (other than a covenant or agreement, a default in the performance or breach of which is specifically dealt with elsewhere in this Section), and continuance of such default or breach for a period of 30 days after there has been given to the City by the Developer a written notice specifying such default or breach and requiring it to be remedied; provided, that if such default or breach cannot be fully remedied within such 30-day period, but can reasonably be expected to be fully remedied and the City is diligently attempting to remedy such default or breach, such default or breach shall not constitute an event of default if the City shall immediately upon receipt of such notice diligently attempt to remedy such default or breach and shall thereafter prosecute and complete the same with due diligence and dispatch. 16 Section 9.03. Remedies Upon a Developer Event of Default. A. Upon the occurrence and continuance of a Developer Event of Default, the City shall have the following rights and remedies, in addition to any other rights and remedies provided under this Agreement or by law: 1. The City shall have the right to terminate this Agreement or terminate the Developer's rights under this Agreement. 2. The City may pursue any available remedy at law or in equity (including specific performance) by suit, action, mandamus or other proceeding to enforce and compel the performance of the duties and obligations of the Developer as set forth in this Agreement, to enforce or preserve any other rights or interests of the City under this Agreement or otherwise existing at law or in equity and to recover any damages incurred by the City resulting from such Developer Event of Default. B. Upon any Developer Event of Default, the City shall have no- obligation to (i) reimburse the Developer for any amounts advanced under this Agreement or costs otherwise incurred or paid by Developer or (ii) issue any Improvement District Obligations. C. if the City has instituted any proceeding to enforce any right or remedy under this Agreement by suit or otherwise, and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the City, then and in every case the City and the Developer shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder, and thereafter all rights and remedies of the City shall continue as though no such proceeding had been instituted. D. The exercise by the City of any one remedy shall not preclude the exercise by it, at the same or different times, of any other remedies for the same default or breach. 'No waiver made by the City shall apply to obligations beyond those expressly waived. E. Any delay by the City in instituting or prosecuting any such actions or proceedings or otherwise asserting its rights under this Section shall not operate as a waiver of such rights or limit it in any way. No waiver in fact made by the City of any specific default by the Developer shall be considered or treated as a waiver of the rights with respect to any other defaults, or with respect to the particular default except to the extent specifically waived. Section 9.04. Remedies Upon a City Event of Default. A. Upon the occurrence and continuance of a City Event of Default, the Developer shall have the following rights and remedies, in addition to any other rights and remedies provided under this Agreement or by law: 1. The Developer shall have the right to terminate the Developer's obligations under this Agreement; 2. The Developer may pursue any available remedy at law or in equity by suit, action, mandamus or other proceeding to enforce and compel the performance of the duties and obligations of the City as set forth in this Agreement, to enforce or preserve any other rights or interests of the Developer under this Agreement or otherwise existing at law or in equity and to recover any damages incurred by the Developer resulting from such City Event of Default. 17 B. If the Developer has instituted any proceeding to enforce any right or remedy under this Agreement by suit or otherwise, and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Developer, then and in every case the Developer and the City shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder, and thereafter all rights and remedies of the Developer shall continue as though no such proceeding had been instituted. C. The exercise by the Developer of any one remedy shall not preclude the exercise by it, at the same or different times, of any other remedies for the same default or breach. No waiver made by the Developer shall apply to obligations beyond those expressly waived. D. Any delay by the Developer in instituting or prosecuting any such actions or proceedings or otherwise asserting its rights under this paragraph shall not operate as a waiver of such rights or limit it in any way. No waiver in fact made by the Developer of any specific default by the Developer shall be considered or treated as a waiver of the rights with respect to any other defaults, or with respect to the particular default except to the extent specifically waived Section 9.05. Excusable Delays. Neither the City nor the Developer shall be deemed to be in default of this Agreement because of an Excusable Delay. Section 9.06. Legal Actions. Any legal actions related to or arising out of this Agreement must be instituted in the District Court of Saline County, Kansas or, if federal jurisdiction exists, in the United States District Court for the District of Kansas. ARTICLE X GENERAL PROVISIONS Section 10.01. Mutual Assistance. The City and the Developer agree to take such actions, including the execution and delivery of such documents, instruments, petitions and certifications as may be reasonably necessary or appropriate to carry out the terms, provisions and intent of this Agreement and to reasonably aid and assist each other in carrying out said terms, provisions and intent. Each party agrees that all actions to be taken by it under this Agreement shall be taken diligently and in good faith. Section 10.02. Effect of Violation of the Terms and Provisions of this Agreement; No Partnership. The City is deemed the beneficiary of the terms and provisions of this Agreement, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants nmmng with the land have been provided. The Agreement shall run in favor of the City, without regard to whether the City has been, remains or is an owner of any land or interest therein in the Improvements or the Improvement District. The City shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled Nothing contained herein shall be construed as creating a partnership between the Developer and the City. Section 10.03. Time of Essence. Time is of the essence of this Agreement. The Parties will make every reasonable effort to expedite the subject matters hereof and acknowledge that the successful performance of this Agreement requires their continued cooperation. 18 Section 10.04. Amendments. This Agreement may be amended only by the mutual consent of the Parties, by the adoption of a resolution of the City approving said amendment, as provided by law, and by the execution of said amendment by the Parties or their successors m interest. Section 10.05. Agreement Controls. The Parties agree that the Improvement District will be implemented as agreed in this Agreement. This Agreement specifies the rights, duties and obligations of the City and Developer with respect to constructing the Improvements, the payment of Improvement Costs and the payment of certain Special Assessments. The Parties further agree that this Agreement contains provisions that are in greater detail than as set forth in the Petition and the Improvement District Proceedings. Nothing in this Agreement shall be deemed an amendment of the Improvement District Proceedings. Except as otherwise expressly provided herein, this Agreement supersedes all prior agreements, negotiations and discussions relative to the subject matter hereof and is a full integration of the agreement of the Parties. Section 10.06. Conflicts of Interest. A. No member of the City's governing body or of any branch of the City's government that has any power of review or approval of any of the Developer's undertakings shall participate in any decisions relating thereto which affect such person's personal interest or the interests of any corporation or partnership in which such person is directly or indirectly interested. Any person having such interest shall immediately, upon knowledge of such possible conflict, disclose, in writing, to the City the nature of such interest and seek a determination with respect to such interest by the City and, in the meantime, shall no participate in any actions or discussions relating to the activities herein proscribed B. The Developer warrants that it has not paid or given and will not pay or give any officer, employee or agent of the City any money or other consideration for obtaining this Agreement. The Developer further represents that, to its best knowledge and belief, no officer, employee or agent of the City who exercises or has exercised any functions or responsibilities with respect to the Improvements during his or her tenure, or who is in a position to participate in a decision malting process or gain insider information with regard to the Improvements, has or will have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be performed in connection with the Improvements, or in any activity, or benefit therefrom, which is part of the Improvements at any time during or after such person's tenure. Section 10.07. Term. Unless earlier terminated as provided herein, this Agreement shall remain in full force and effect until such time as all Special Assessments are paid in full and all Improvement District Obligations are no longer outstanding. Section 10.08. Validity and Severabiiity. It is the intention of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies of State ofKansas, and that the unenforceability (or modification to conform with such laws or public policies) of any provision hereof shall not render unenforceable, or impair, the remainder of this Agreement. Accordingly, if any provision of this Agreement shall be deemed invalid or unenforceable in whole or in part, this Agreement shall be deemed amended to delete or modify, in whole or in part, if necessary, the invalid or unenforceable provision or provisions, or portions thereof, and to alter the balance of this Agreement in order to render the same valid and enforceable. Section 10.09. Required Disclosures. The Developer shall immediately notify the City of the occurrence of any material event which would cause any of the information furnished to the City by the Developer in connection with the matters covered in this Agreement to contain any untrue statement of 19 any material fact or to omit to state any material fact required to be stated therein or necessary to make any statement made therein, in the light of the circumstances under which it was made, not misleading. Section 10.10. Tax Implications. The Developer acknowledges and represents that (1) neither the City nor any of its officials, employees, consultants, attorneys or other agents has provided to the Developer any advice regarding the federal or state income tax implications or consequences of this Agreement and the transactions contemplated hereby, and (2) the Developer is relying solely upon its own tax advisors in this regard. Section 10.11. Authorized Parties. Whenever under the provisions of this Agreement and other related documents, instruments or any supplemental agreement, a request, demand, approval, notice or consent of the City or the Developer is required, or the City or the Developer is required to agree or to take some action at the request of the other Party, such approval or such consent or such request shall be given for the City, unless otherwise provided herein, by the City Representative and for the Developer by any officer of Developer so authorized; and any person shall be authorized to act on any such agreement, request, demand, approval, notice or consent or other action and neither Party shall have any complaint against the other as a result of any such action taken. The City Representative may seek the advice, consent or approval of the City Commission before providing any supplemental agreement, request, demand, approval, notice or consent for the City pursuant to this Section. Section 10.12. Notice. All notices and requests required pursuant to this Agreement shall be sent as follows: To the City: City Manager City of Salina 300 West Ash Street Salina, Kansas 67402 With a copy to: City Attorney City of Salina. 300 West Ash Street Salina, Kansas 67402 To the Developer. Magnolia Hills, Incorporated Attu: Kelly R. Dunn 3059 Quail Creek Place Salina, Kansas 67401 or at such other addresses as the Parties may indicate in writing to the other either by personal delivery, courier, or by registered mail, return receipt requested, with proof of delivery thereof. Mailed notices shall be deemed effective on the third day after mailing; all other notices shall be effective when delivered. Section 10.13. Kansas Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Kansas. Section 10.14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. Section 10.15. Recordation of Agreement. The Parties agree to execute and deliver an original of this Agreement and any amendments or supplements hereto, in proper form for recording and/or 20 indexing in the appropriate land or governmental records, including, but not limited to, recording in the real estate records of Saline County, Kansas. This Agreement shall be recorded by the Developer, and proof of recording shall be provided to the City. Section 10.16. Consent or Approval. Except as otherwise provided in this Agreement, whenever the consent, approval or acceptance of either Party is required hereunder, such consent, approval or acceptance shall not be unreasonably withheld, conditioned or unduly delayed. [THE REMAINDER OF THIS PAGE MENTIONALLY LEFT BLANK] 21 THIS AGREEMENT has been executed as of the date first heremabove written. CITY OF SAUNA, KANSAS By. Mayor (SEAL) ATTEST: C City Clerk STATE OF KANSAS ) SS. COUNTY OF SALINE On LMY— 7 , 2012, before me, the undersigned, a Notary Public in and for said state, personally appeared Cwon M. JeMLn46 and Lies Ann Else y , prod to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument as Mayor and City Clerk, respectively, of the City of Salina, Kansas, and aclmowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand acid official seal. [ZAbSHANDI L. WICKS Notary Public - State of Kansas My Appt. Expires My commission expires: 22 Notary Public THIS AUNT has been executed as of the date first heranabove written. MAGNOLIA HILLS, INCORPORATED, a KansTtion By: Name: Kelly R. Dunn Title: President .By: �'- � ✓ Name: Stanley C. B uist -10 Title: Vim President LE Name: Iames D. Markle Title: Tr11easurer STATE OF S ) SS. COUNTY O ) On 2012, before me, the undersigned, a Notary Public in and for said State, personally R. Dunn, who proved tome on the basis of satisfactory evidence to be President of rvbgnolia Bills, Incorporated and acknowledged to me that they executed the same in their authorized deity, and that by such person's signature on the instrument the entity upon behalf of which such persons acted, executed the inshument WITNESS my hand and official seal. My commission expires: 9/2-,g//3 23 czl�L'-- Notary Pa6fic CATHY BOLL f OWY Public - Sbte Of K2Pfs2S iPL Expires S EXHIBIT A FORM OF CERTIFICATE OF EOPROVEMENT COSTS CERTIFICATE OF 1MYROVEMENT COSTS TO: City of Salina, Kansas Attention: City Manager Re: Magnolia Hills Phase 3 Improvement District Terms not otherwise defined herein shall have the meaning ascribed to such terms in the Improvement District Development Agreement dated as of , 2012 (the "Agreement'g between the City and the Developer. In connection with the Agreement, the undersigned hereby states and certifies that: 1. Each item listed on Schedule I hereto is an Improvement Cost and was incurred in connection with the construction of the Improvements after , 20 [INSERT DATE DISTRICT CREATED BY RESOLUTION]. Attached hereto are invoices and other supporting documentation showing proof that each cost listed in Schedule I is an improvement Cost. 2. These Improvement Costs are reimbursable under the Improvement District Proceedings, the Act and the Agreement. 3. Each item listed on Schedule I has not previously been paid or reimbursed from money derived from any project fund established by the issuance of any Improvement District Obligations, and no part thereof has been included in any other certificate previously filed with the City. - 4. There has not been filed with or served upon the Developer any notice of any lien, right of lien or attachment upon or claim affecting the right of any person, firm or corporation to receive payment of the amounts stated in this request, except to the extent any such lien is being contested in good faith. 5. All necessary permits and approvals required for the work for which this certificate relates were issued and were in full force and effect at the time such work was being performed, 6. All work for which payment or reimbursement is requested has been performed in a good and workmanlike manner and in accordance with the Agreement. 7. The Developer is not in default or breach of any term or condition of the Agreement, and no event has occurred and no condition exists which constitutes a Developer Event of Default under the Agreement. 9. All of the Developer's representations set forth in the Agreement remain true and correct as of the date hereof. Al Dated this day of , 20 MAGNOLIA HILLS, INCORPORATED, a Kansas Corporation By: Name: Kelly R. Dunn Title: President By: Name: Stanley C. Byquist Title: Vice President By: Name: James D. Markle Title: Treasurer Approved for Payment this day of , 20 C= OF SALINA, KANSAS By: Title: A -2 EXHIBIT B FORM OF CERTIFICATE OF FULL COMPLETION Pursuant to Section ,07 of the Agreement, the City shall, within ten (10) days following delivery of this Certificate, carry out such inspections as it deems necessary to verify to its reasonable satisfaction the accuracy ofthe certifications contained in this Cor ificate. CERTIFICATE OF FULL COMPLETION The undersigned, MAGNOLIA EMI S, INCORPORATED (the "Developer"), pursuant to that certain Improvement District Development Agreement dated as of T, 2012, between the CITY -OF SALINA, KANSAS (the "City") and the Developer (the "Agreement'), hereby certifies to the City as follows: 1. That as. of , 20_, the construction of all Improvements related to the Improvement District (as such terms are defined in the Agreement) have been completed in accordance with the Agreement. 2. The Improvements related to the Improvement District have been completed in a workmanlike manner and in accordance with the Construction Plans (as those terms are defined in the Agreement). 3. Lien waivers for applicable portions of the Improvements have been obtained, or, to the extent that a good faith dispute exists with respect to the payment of any construction cost with respect to the Improvements, Developer has provided the City with a bond or other security reasonably acceptable to the City. 4. This Certificate of Full Completion is being issued by the Developer to the City in accordance with the Agreement to evidence the Developer's satisfaction of all obligations and covenants with respect to the construction of the Improvements. 5. The City's acceptance and the recordation of this Certificate with the Saline County Recorder of Deeds, shall evidence the satisfaction of the Developer's agreements and covenants to construct the Improvements. 6. The Improvement District is legally described as follows: [INSERT LEGAL DESCRIPTION] B -1 This Certificate shall be recorded in the office of the Saline County Recorder of Deeds against aU of the Developer's Property which is subject to the Agreement. This Certificate is given without prejudice to any rights against third parties which exist as of the date hereof or which may subsequently come into being. Terms not otherwise defined herein shall have the meaning ascnlbed to such terms in the Agreement. IN 'SWIINESS WHEREOF, the undersigned has hereunto set his/her hand this day of 20 STATE OF COUNTY OF MAGNOLIA H LLS, INCORPORATED a Kansas Corporation 0 Name. Kelly R. Dunn Title: President By: Name: Stanley C. Byquist Title: Vice President By . Name: James D. Markle Title: Treasurer } ) SS. On 2012, before me, the undersigned, a Notary Public in and for said State, personally appeared , who proved to me on the basis of satisfactory evidence to be of Magnoit BRIs, Incorporated and acknowledged to me that they executed the same in their authorized capacity, and that by such person's signature on the instrument the entity upon behalf of which such persons acted, executed the instrument. WTINESS my hand and official seal My commission expires: M Notary Public ACCEPTED: CITY OF SALINA, KANSAS By: Name: Title: STATE OF KANSAS ) ) SS. COUNTY OF SALINE ) On , 2012, before me, the undersigned, a Notary Public in and for said state, personally appeared , proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument as of the City of Sali es, Kansas, and acknowledged to me that they executed the same in ( his)(her) authorized capacity, and that by (his)(her) signature on the in&ment the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. My commission expires: MN Notary Public Publisher's Affidavit I. Christy Fink . being duly sworn declare that I am a Legal Coordinator 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 Project 11 -2878 Notice has been correctly published in the entire issue of said newspaper one time, publication being given in the issue of April 5, 2013 Subscribed and sworn to before me, this J� day of A.D. 20 /_3 W4: Notary Public Printer's Fee S] 78.50 r MELISSA VIA MW .. AppL MY � -9 -7 Department of Finance & Administration° rt`` Office of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402 -0736 Salina TELEPHONE (785) 309 -5735 FAX (785) 309 -5738 TDD (785) 309 -5747 e -mail: lieuann.elsey @salina.org Website: www.salina - ks.gov 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 2013 -B General Obligation Bonds. These letters were mailed to the property owners on April 2, 2013. rG�ZV OF& • -' 1870 $ Lieu Ann Elsey City Clerk DeJSAh1 Idh dfFinance & Administration ci"yof Office of City Clerk Lieu Ann Elsey, City Clerk 300 West Ash Street, Suite 206 P.O. Box 736 Salina, Kansas 67402 -0736 Salina April 2, 2013 MAGNOLIA HILLS INC 2601 S OHIO ST SALINA, KS 67401 Dear Property Owner: TELEPHONE (785) 309 -5735 FAX (785) 309 -5738 TDD (785) 309 -5747 e -mail: lieuann.elsey @salina.org Website: www.salina - ks.gov Please consider this letter your notice of a public hearing, which will be held by the Salina Board of Commissioners on Monday, April 22, 2013 at 4:00 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: 30624 Legal Description: LOT 3, BLOCK 5, MAGNOLIA HILLS ESTATES ADDITION City of Salina, Saline County, Kansas This property is included in the proposed assessments for improvements in Engineering Project No. 2011 -2878. The proposed assessment to your property for the improvements is $30967.14. 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, A� Lieu Ann Elsey City Clerk CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS April 1, 2013 4:00 p.m. The City Commission convened at 3:45 p.m. in a Study Session for a Citizens Open Forum. The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City - County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. Those present and comprising a quorum: Mayor Norman M. Jennings (presiding), Commissioners Samantha P. Angell, Kaye J. Crawford, Aaron Householter, and Barb Shirley ADMINISTRATION (8.3) Certification of final costs for 2012 special assessment projects. (8.3a) First reading Ordinance No. 13 -10687 levying special assessments for improvements in Magnolia Hills Estates Addition. Dan Stack, City Engineer, explained the project, final cost, and funding. 13 -0098 Moved by Commissioner Angell, seconded by Commissioner Householter, to accept the certification of final costs and set the date of public hearing for April 22, 2013. Aye: (5). Nay: (0). Motion carried. 13 -0099 Moved by Commissioner Angell, seconded by Commissioner Householter, to pass Ordinance No. 13 -10687 on first reading. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT 13 -0105 Moved by Commissioner Householter, seconded by Commissioner Crawford, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 4:55 p.m. [SEAL] ATTEST: 1k1 _Sha t1ZU1W 6&k Shandi Wicks, Deputy City Clerk 1W Narntia w M. T� Norman M. Jennings, Mayor I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting on April 1, 2013 regarding Ordinance No. 13- 10687. 6il OF 1 870 Flo A� Lieu Ann Elsey, Ci Clerk Page 1 CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS April 22, 2013 4:00 p.m. The City Commission convened at 2:30 p.m. in a Study Session on community art and design and indoor recreation center. The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City - County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. Those present and comprising a quorum: Mayor Barbara V. Shirley (presiding), Commissioners Jon R. Blanchard, Kaye J. Crawford, Randall R. Hardy, and Aaron Householter PUBLIC HEARINGS AND ITEMS SCHEDULED FOR A CERTAIN TIME (5.2) Public hearing on the 2012 special assessment projects. (5.2a) Second reading Ordinance No. 13 -10687 levying special assessments for improvements in Magnolia Hills Estates Addition. Mayor Shirley opened the public hearing. Dan Stack, City Engineer, explained the project and final costs. A discussion followed between Commissioner Hardy, City Manager Jason Gage, Commissioner Householter, Commissioner Blanchard and Mr. Stack regarding payment of specials, improvements costs, financial security, and special assessment process. There being no further comments the public hearing was closed. 13 -0132 Moved by Commissioner Householter, seconded by Commissioner Crawford, to adopt Ordinance No. 13 -10687 on second reading. A roll call vote was taken. Aye: (5) Blanchard, Crawford, Hardy, Householter, Shirley. Nay: (0). Motion carried. ADJOURNMENT 13 -0141 Moved by Mayor Shirley, seconded by Commissioner Blanchard, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (3). Nay: (0). Motion carried. The meeting adjourned at 8:08 p.m. 1k 1'8C Wb'CWC1'V. Sl1%rI [SEAL] Barbara V. Shirley, Mayor ATTEST: A/ Sha lzul W Lc Shandi Wicks, CMC, Deputy 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 April 22, 2013 regarding Ordinance No. 13- 10687. OQ f oRC�rwrzS= Lieu Ann Elsey, Cit� Clerk C3. 1870 ��'••.••.•,.�aG' Page 1 Summary published in The Salina Journal on April.Z-7 , 2013. Ordinance posted on the City of Salina website from ADrt l a3 - iI'Irty 7 , 2013. ORDINANCE NUMBER 13 -10687 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 CERTAIN IMPROVEMENTS IN THE CITY. ' 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 et seq.: ; PROJECT NO. 11 -2878 — MAGNOLIA HILLS ESTATES ADDITION STREET, DRAINAGE & UTILITY IMPROVEMENTS The installation of curb & gutter, pavement, and grading for approximately 480 lineal feet of Sunset Ridge Drive (the "Street Improvements "). The installation of approximately 470 lineal feet of six -inch water main, fire hydrants, valves, fittings, service connections and all appurtenances thereto for water lines within right of way and/or utility easement (the "Water System Improvements "). The installation of approximately 704 lineal feet of eight -inch sanitary sewer main, service connections, manholes and all appurtenances thereto for sanitary sewer lines lying within right of way and /or utility easement, (the "Sanitary Sewer Improvements "). The installation of approximately 419 lineal feet of storm sewer, inlets, and all appurtenances thereto for storm sewer lines lying within right of way and/or drainage easement, (the "Drainage Improvements "). (collectively, the "Improvements "). WHEREAS, the total costs of such improvements have been determined; the Goveming Body has caused the assessments against each lot, piece or parcel of land deemed to be benefited by such improvements, to be J determined in the manner set forth in the resolution as to advisability of the improvements provided for pursuant to K.S.A. 12 -604; and an assessment roll has been prepared; and :1 WHEREAS, such assessment roll was filed with the City Clerk and has been open to public inspection; and WHEREAS, the City Clerk, at the direction of the Governing Body, caused notice of the hearing on the 1. special assessments to be published not less than 10 days prior to such hearing, and notice to be mailed to the Iproperty owners to be assessed, in accordance with K.S.A 12 -6a09 et seq.; and WHEREAS, the Governing Body held a public hearing to consider the proposed assessments. b i! BE IT ORDAINED by the Governing Body of the city of Salina, Kansas: i; 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: ,i PROJECT NO. 11 -2878 i MAGNOLIA HILLS ESTATES ADDITION STREET, DRAINAGE & UTILITY IMPROVEMENTS Lot 3, Block 5, Magnolia Hills Estates Addition ............................................ ............................... $30,967.15 Lot 4, Block 5, Magnolia Hills Estates Addition ............................................ ............................... $30,967.15 Lot 5, Block 5, Magnolia Hills Estates Addition ............................................ ............................... $30,967.15 Lot 6, Block 5, Magnolia Hills Estates Addition ............................................ ............................... $30,967.15 ' Lot 18, Block 6, Magnolia Hills Estates Addition .......................................... ............................... $30,967.15 Lot 19, Block 6, Magnolia Hills Estates Addition .......................................... ............................... $30,967.15 Lot 20, Block 6, Magnolia Hills Estates Addition .......................................... ............................... $30,967.15 Lot 21, Block 6, Magnolia Hills Estates Addition .......................................... ............................... $30,967.15 Lot 22, Block 6, Magnolia Hills Estates Addition .......................................... ............................... $30,967.15 TOTAL COST TO THE IMPROVEMENT DISTRICT ............................ ..................... $278,70431 TOTAL COST TO CITY AT- LARGE .......................... ... 0.00 TOTAL PROJECT COST ................................................................... ............................... $278,704.31 ' 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 installment shall become due with the first payment of general property taxes for the year 2013. 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 added to the first installment. The interest for one year on all unpaid installments shall be added to each subsequent installment until paid. ;1 Section 3. The owner of any piece or parcel of property Iiable for any such assessments may redeem his �. property, in whole or in part, from such liability by paying to the City Treasurer the entire amount, or a portion thereof, chargeable against said property, at any time on or before May 28, 2013, 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. f j Section 4. This ordinance shall be published by the following summary: I ; Ordinance No. 13 -10687 Summary j On April 22, 2013, the City of Salina, Kansas, passed Ordinance No. 13- 10687. The ordinance levies special assessments to pay the cost of street, drainage and utility improvements on Lots 3 -6, Block 5 and Lots 18 -22, Block 6 in the Magnolia Hills Estates Addition. A complete copy of the ordinance is available at www.salina- ks.gov or in the office of the city clerk, 300 W. Ash Street, free of charge. This summary is certified by the city attorney. li Section 5. This ordinance shall be in full force and effect from and after its adoption and publication by summary once in the official city newspaper. Introduced: April 1, 2013 Passed: April 22, 2013 [SEAL] ' EST "4;� Lieu Ann Elsey, CMC, City �—lerk (' AN i/ Barbara V. Shirley, Mayor G Publisher's Affidavit I. Christy Fink , being duly sworn declare that I am a Legal Coordinator 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 Ordinance 13 -10687 Notice has been correctly published in the entire issue of said newspaper one time, publication being given in the issue Of April 27, 2013 Subscribed and sworn to before me, this 2 day of ��.,,,,r ; �` A.D. 20 SIC /�11��a��C Notary Pu lic Printer's Fee $39.00 qtr MELISSA WINDHOLZ AppL Ems. rat) (PUBLISHED IN THE SALIVA JOURNAL ON APRIL 27, 2013) SUMMARY OF ORDINANCE NO. 13-10687 On April 22, 2013, the City of Salina, Kansas, passed Ordinance No. 13- 10687. The Ordinance levies special assessments to pay the cost of street, drainage and utility improvements on Lots 3-6, Block 5 and Lots 18 -22, Block 6 in the Magnolia Hills Estates Addition. A complete copy of the ordinance is available at www.salina- ks.gov or in the office of the city clerk, 300 W. Ash Street, free of charge. This Summary is certified by the City Attorney. I hereby acknowledge that 1 certified and approved this Summary of Ordinance No. 13 -10687 to be legally accurate and sufficient on April 23, 2013. DATED: �%Nn c �y 2013. _ 0 City Attorney CERTIFICATE OF NO PROTEST STATE OF KANSAS ) ) ss: COUNTY OF SALINE ) I, City Clerk of the City of Salina, Kansas, do hereby certify that no suit to set aside the assessments levied pursuant to Ordinance No. 13 -10687 or to otherwise question the validity of the proceedings in connection with the Magnolia Hills Estates was brought before the expiration of thirty (30) days from the publication of the summary for Ordinance No. 13 -10687 fixing the assessments related to said Improvement District. WITNESS my hand and official seal on May 29, 2013 OF qs 1870 Lieu Ann Elsey, CMC, dty Clerk SPECIAL ASSESSMENT PREPAYMENTS 2012 Tract Number Name Assessment Amount Project No. 11 -2878 30650 Kyle Morrison $ 30,967.14 $ 16,000.00 Total Prepayments $ 30,967:14 $ 16,000.00 GRAND TOTAL $ 16,000.00 I, Lieu Ann Elsey, hereby certify that the that the amount of $16,000 was paid by the owners of the properties assessed during the 30 -day prepayment period ending May 28, 2013. G��Y OFS tier Q caw► � = 9 S 1870 Co :z Lieu Ann Elsey, City Clerk 5/31/2013 FIRE STATION #1 RENOVATION a Wq N 8 1 �F� RESOLUTION NO. 09-6681 A RESOLUTION AUTHORIZING AND- PROVIDING FOR THE CONSTRUCTION OF BIPROVEMENTS 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 WHEREAS, 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 fully 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 IT 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 electrical, plumbing and HVAC 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 § 1. 1 50-2. 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 November 23, 2009. (Seal) ATTEST: Agiq�� — Clerk r %pc�.. Commission Action # CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS November 23, 2009 4:00 p.m. The City Commission convened at 2:00 p.m. in a Study Session on the Municipal Water Plan Revisions and Junkyards and Salvage Yards. The Regular Meeting of the Board of Commissioners was called to order at 4:00 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 21, 2009 as the public hearing date on the 2009 budget amendments. (6.3) Resolution No. 09 -6681 authorizing and providing for the construction of improvements to Fire Station #1 (Project No. 08- 2699). (6.4) Resolution No. 09 -6682 authorizing a renewal agreement with CV S Caremark for prescription benefit services. 09 -7841 Moved by Commissioner Angell, seconded by Commissioner Jennings, to approve the consent agenda as presented. Aye: (5). Nay: (0). Motion carved. ADJOURNMENT 09 -7848 Moved by Commissioner Peck, seconded by Commissioner Arpke, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (5). Nay: (0). Motion carved. The meeting adjourned at 5:37 p.m. AIM LucriLarjow M. Luci Larson, Mayor [SEAL] ATTEST: 1j11_4ew,4n*v y 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 November 23, 2009 regarding Resolution No. 09 -6681. OFS A nn lsey, Cit�erk ZORGA.4% ° 1870 r- 4V Page 1 RESOLUTION NO. 13 -7015 A RESOLUTION AMENDING RESOLUTION NO. 09 -6681 AUTHORIZING AND PROVIDING FOR THE CONSTRUCTION OF IMPROVEMENTS TO CERTAIN EXISTING PUBLIC BUILDINGS IN THE CITY OF SALINA, KANSAS AND PROVIDING FOR THE PAYMENT OF THE COSTS THEREOF. WHEREAS, the City of Salina (the "City ") is authorized and empowered pursuant to K.S.A. 12 -1736 to 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 WHEREAS, the City is authorized and empowered pursuant to K.S.A. 12 -1737, to issue general obligation bonds for the purpose of financing the costs associated with the foregoing; and WHERE, AS, on November 23, 2009 the City adopted Resolution No. 09 -6681 authorizing improvements to Fire Station # 1, as more fully described therein; and WHEREAS, it is necessary to increase the estimated cost of the improvements and the amount of general obligation bonds to be issued for the improvements, as provided by Resolution No. 09 -6681. NOW, THEREFORE: BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: Section 1. Section 2 of Resolution No. 09 -6681, is hereby amended to read as follows Section 2, Bond Authorization. The estimated costs of the Project are in the amount of $2,600,000. 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 2 The City expects to make capital expenditures in connection with the Improvements and intends to reimburse itself for such expenditures with the proceeds of general obligation bonds and /or temporary notes in an amount not to exceed $2,600,000, plus capitalized interest and costs of issuance. Any general obligation bonds and /or temporary notes issued under the authority of this Resolution may be used to reimburse expenditures made on or after the date that is 60 days before the date of adoption of this Resolution pursuant to U,S. Treasury Regulation §1.150 -2, Section 3. Resolution No. 09 -6681, as amended by this Resolution, is hereby ratified and confirmed, and shall remain in full force and effect. Section 4. This Resolution shall take effect and be in full force immediately after its adoption by the governing body. ADOPTED AND APPROVED by die governing body of the Ci a . a, Kansas, on 24 °' day of .Tune, 2013, Aaron Householtcr, Vice -mayor A' FIRST: Lieu Ann Elsey, CMC, Ci Clerk I hereby certify that the above and foregoing is a true and correct copy of Resolution No. 13-7015 that was adopted by the Governing Body of the City of Salina at their regular meeting on June 24, 2013. OFS,,. �� QRGANtTfp�� 1870 x Lieu Ann Elsey, CMC, ty Clerk CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS June 24, 2013 4:00 P.M. The City Commission convened at 2:30 p.m. in a Study Session on the 2014 Budget (transportation). The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City - County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. Those present and comprising a quorum: Vice -mayor Aaron Householter (presiding), Commissioners Jon R. Blanchard and Randall R. Hardy Absent: Mayor Barbara V. Shirley and Commissioner Kaye J. Crawford DEVELOPMENT BUSINESS None. ADMINISTRATION (8.1) Resolution No. 13 -7015 amending Resolution No. 09 -6681 authorizing and providing for the construction of improvements to certain public buildings in the City of Salina and providing for the payment of the costs. Rod Fran, Director of Finance and Administration, explained the authorization 13 -0201 Moved by Commissioner Hardy, seconded by Commissioner Blanchard, to adopt Resolution No. 13 -7015. Aye: (3). Nay: (0). Motion carried. [SEAL] ATTEST: IjILLec An y_ E&f. Lieu Ann Elsey, CMC, City Clerk 1y/;6arba4-a' 1! Slu;Yle�v Barbara V. Shirley, Mayor I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting on June 24, 2013 regardin es :lution No 13 -701 r ieu Ann Else y, s' 0IRG 2 1870 o Page 1 EAST MAGNOLIA DESIGN {published in the Snlina Journal ou Fdmary , 2002) ORDINANCE NUMBER 02.10071 AN ORDINANCE DESIGNATING CERTAIN STREETS AS MAIN TRAMCWAYS PURSUANT TO KS.A. 22-685 AND DESIGNATING CERTAIN ADDMONAL STRMS AS TRAFFICWAY CONNECTIONS PURSUANT TO K.S.A. 12406, AND REPEALING ORDINANCE NUMBER 43.4562. BE IT ORDAINED by the Governing Body of the City of Salina, Kansas: • 711e Psiwmy fiutction of the streets desct W in this section is hereby found to be the am wement of through traffic between areas of concentrated activity within the city or between such we" within the city and traffic facilities outside the city performing the funotion of a major trafFiewey, based upon the following: •A. ASH STREET is a major collector street running cast from Broadway Boulevard to Obio Street and is a principal street carrying easttwest traffic through the center portion of the City. B. BELMONT BOULEVARD is a major arterial street running southwest fro- Ohio Street to Mint„ Sir= and is a principal stmt carrying southwesthortheast traffic through the southeast portion of the City. C. BROADWAY BOULEVARD is a major arterial aural summing wart and south from North Ninth Street and Pacific Avemic and is a principal atrnet emtQrrying north/south uaffie on the west side of the Ch'. D. CENTEbINIAL ROAD is a major arterial street running north from Waterwelh Road to West Crawford Avenue and is a principal street carrying northfsouth irefiic through the west portion of the City. E. CLOUD STREET is a major collector gird running cast from Centennial Road to the flood laves system east of Ohio Street and is a principal street canying cost/wee traffic through the south- ccntral portion of the City. F. COUNTRY CLUB ROAD is a major arterial street roaming west from the cast city Broil line to Marymoant Road and is a principal street carrying casthvest traffic thmugh the east- central portion of the City. G. C RAWFORD AVENUE is a nxr or arterial sweet running east from one of the I -135 inton hanges into the City, to the east City limits and is a principal street carrying east/west traffic through the central portion of the city. H. IRON AVENUE. is a major arterial street carrying traffic between the City's central and eastern commercial districts and is a principal stn et carrying eeWwest traffic through the north-centrai portion of the City. L MAGNOLIA ROAD is a major arterial street running east from the west city limits to the east city limits and is a principal street carrying eastiwest traffic through rho south portion of the City. J. MARKLEY ROAD is a major collector street running south from Crawford to Magnolia Road and is a principal street carrying northtaouth traffic through the east portion of the City. K.. MARYMOUNT ROAD is a msgor arterial street running north born Cloud Strew to Country Club Road and is a principal street canymg norddsouth traffic through the out portion of the City. L. NINTH STREET is a major arterial street Stour the north city limits, north of Interstate 70 to the south city limits near Waterwell Road carrying traffic between the City`s north ceatret and southern coattnemial districts and is a principal street carrying northlscuth traffic through the central portion of the City. M. NORM STREET is a major arterial street running from the west city limits to tha east city limits and is a principal atroet carrying aststhvest traffic through the north portion of the City. N. OHIO STREET is a major arterial strut running south from am of the Interstate 70 interchanges to the south city limits and is the principal street carrying north/south traffic on the eau - central side of the City. O, PACMC AVENUE is a major arterial street curling can from Korth Smrot oo the east City limits and is a principal street cmying east /west traffic through the north portion of the City, P. REPUBLIC AVENUE is a major collector street rmriing east from Centennial Road to the east city Iimit near the flood levee system and is a principal strut harrying east/won traffic through the south portion of the City. Q. SANTA FE AVENUE is a major arterial street rowing north from Clatiin to Otis and is a principal street carrying north/south traffic through the central portion of the City. R. SCEi1LLING ROAD is a major arterial street running west from Ohio Street to Arnold Avenue in the Airport Industrial Area and is a principal street carrying east/west traffic through the south portion of the City. S. SOUTH STREET is a major collector street running east from Broadway Boulevard to Fourth Street and is a principal street carrying east/west traffic through the central portion of the City. T. STATE STREET is a major arterial street rating cast from interstate 135 to the central business district and is a principal street carrying east/wost traffic through the north portion of the City. U. WATER WELL ROAD is a major arterial sbvd running west from North Street through the south end of a tru jor industrial area to Airport Road, and is a principal street carrying oast and west traffre between major industrial commercial and Interstate 135 interchanges. Section 2 That Ash Street, Belmont Boulevard, Broadway Boulevard, Centennial Road, Cloud Street, Country Club Road, Crawford Avenue, Iron Avenue, Magnolia Road, Markley Road, Marymount Road, Ninth Street, North Street, Ohio Street, Pacific Avenue, Republic Avenue, Santa Fe Avenue, Schilling Road, South Street, State Street, and Water Well Road arm hereby designated and established as "main trafoways" pursuant to K.S.A. 12 -685. &cHea 3. To provide adesauata cormectioas with the Ohio Stmt main traffrCway in order to relieve traffic congestion and rdtigate traffic safety issues related to the construction of the North Ohio Railroad Overpass and rotated improvements it is necessary to establish the following as ttaf away cennectiorm A. VAN BORNE STREET— At and near its connection with North Ohio Street. B. YORK STREET — At and new its connection with North Ohio Street. C. UNNAMED FRONTAGE ROAD —To be established on forma North Ohio Street tight -of -way to connect area streets with realigned North Ohio Stmt. Srxgon !& That Ordinance Number 93 -9562 is hereby repealed. Affidavit of Publication Following is a true and correot copy of Out No. 0Z'2OM together with proof of publication of the same, AFFIDAVIT f Kjm Norwood , baing dui sworn, declare that f am the Advertising Manage► of THE SALINA JOURNAL, a daily newspaper published at Salina, Sallno County, Kansas, and of general circulation M sal county, which newspaper has been confinuousyr and unin WA Ma 4W b a fbrtbd bas d ar iYm 0M aa4pt awe 07169 md"m bA "" ad alaaf m It two we as waw d reseMN. i b wooer a wM . b rW, , a aI• K wateio. am b Ra>Arosnbttrr. y a Iva am eeaip A. 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CT WIGADNAV WOIA& row Awed Meer Nnbf Vim arrbiabaaa4io0 Ma ftm eve Asa 0 * Ono A l A arq Amp h b wen ear soli Wro pM ease A% ad b a µ1-0w M" ed Y a OY * - Aga Waft luck" bare arM mhal nWWarabr ad• w0O* b OM pads, at m 1 COMaaabd4 Mi. able 67P@r Y . aw q Qx10 RtNO a a okra eAgtbrdb a0rdaer eWUbarO ~b wW Oanlaa '" �A 000 IV* took" W-AIW =0 Nac 6m* M b Weep $00% a +atOWOWU IPp�, L MI smrr b a a* £ QiOW O►MYr b nr p erode WON �9 wo IN -� mm �9 an b wiw . . Aar QP%n1 t had b N ea Iwaea Nee atl r • wie a-e .'ro 'a a -weal � a" pa_.aad�ayMW" WalMa°"tl�b nb'aOaAWnaOWp� as vM04WAM 0* /. tOlanAt' cm a0M0 . LL TAIT1q NIiL a -mfr prAN rode ar "° a no a" r•ra bra M wa ay M save ed $I a aW i" V4 a W WaWMiat�wpp nr• md b 1 000 and a�uR• Ya waibrt flee tlWO fin at OW aad wa war b-• QMg wAwrN pptae a to 041,00 ad bwwm 139 t aaa prat we nfap tbaba 2 lbk ww Ymr W M M 4176 b 812001 a ft1d to ow ft b to �pdd -fpw7 OW-0aaU aW.d. Op11a1a�yAa�aMNI 1� me Wall ow. M*VA Mae V MAW �plCpam ""'is a 00 laa4 Otap ar7Wel hd% b beam to Cart amm p part *a- 40 Mn ds- own a" ft* ad A apbyWp� b � 9n-K aaUAIM 061 rrao VON barttM�orr L"'" t fe• M Irate f1dy"I s'i ANOADba Apra Y • amtow K 1� Mato aWA1L wjCr WWrari .0 neap gAUr a to paw w ew Am M sap db bt b w4eeaa v a ab emArtDV� w�Masa`raA' p4Z 000 0 RIM "No N erorprraeaurhw. a Ito �� pm ' Wwaitar r.. 'A � wale* a a= Commission Action # CITY OF SAUNA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS February 11, 2002 4:00 p.m. The City Commission convened at 3:30 p.m. for a Citizen Open Forum. The Regular Meeting of the Board of Commissioners was called to order at 4:00 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 Kristin M. Seaton, Chairman presiding, Commissioner Deborah P. Divine, Commissioner Don Heath, Commissioner Alan E. Jilka, Commissioner Monte D. Shadwick Absent: None. ADMINISTRATION (8.2) First reading Ordinance No. 02 -10071 designating certain streets as main trafiicways and designating certain additional streets as traf icway connections. 02 -3184 Moved by Commissioner Shadwick, seconded by Commissioner Divine, to pass Ordinance No. 01 -10071 on first reading. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT 02 -3191 Moved by Commissioner Shadwick, seconded by Commissioner Heath, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 5:47 p.m. W KAstin M. Seaton Kristin M. Seaton, Mayor [SEAL] ATTEST: IsI Lieu Ann Nic ,lg Lieu Ann Nicola, 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 11, 2002 regarding Ordinance No. 01- 10071. nLLieu Ann Elsey, City Clerk Commission Action # CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS February 25, 2002 4:00 p.m. The City Commission convened at 3:30 p.m. for a Citizen Open Forum. The City Commission also met in a Study Session after the regular meeting for a City/USD 305 Programs Briefing. The Regular Meeting of the Board of Commissioners was called to order at 4:00 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 Kristin M. Seaton, Chairman presiding, Commissioner Deborah P. Divine, Commissioner Don Heath, Commissioner Alan E. Jilka, Commissioner Monte D. Shadwick Absent: None. ADMINISTRATION (8.1) Second reading Ordinance No. 02 -10071 designating certain streets as main trafficways and designating certain additional streets as trafficway connections. 02 -3193 Moved by Commissioner Shadwick, seconded by Commissioner Alka, to adopt Ordiance No. 02 -10071 on second reading. A roll call vote was taken. Aye: (5) Divine, Heath, Jilka, Shadwick, Seaton. Nay: (0). Motion carried. ADJOURNMENT 02 -3198 Moved by Commissioner Jilka, seconded by Commissioner Divine, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 4:32 p.m. /s/ Kristin M. Seaton Kristin M. Seaton, Mayor [SEAL] ATTEST: Lieu Ann Nicola Lieu Ann Nicola, 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 25, 2002 regarding Ordinance No. 002,J- 10071. Lieu Ann Elsey, City Clerk z d w E I. RESOLUTION NUMBER 11 -6812 A RESOLUTION INITIATIING PROCEEDINGS BY THE GOVERNING BODY FOR STREET AND INTERSECTION IMPROVEMENTS IN THE CITY OF SALINA, KANSAS. WHEREAS, by the adoption of Ordinance No. 02 -10071 on February 25, 2002, the Governing Body of the City of Salina, Kansas (the "City "), designated Magnolia Road as a main trafiicway pursuant to K S.A. 12-685 et seq. (the "Acf); and WHEREAS, the Governing Body of the City has determined that it is necessary to improve or reimprove portions of said main traffieway as follows: Reconstruction of Magnolia Road from Ohio Street east to a point approximately 600 feet east of the flood protection levee, to include road bed improvements; surfacing, curb, gutter and storm dri'mage improvements; traffic control devices and improvements; and all other improvements necessary and related thereto (the "Improvements ");' and WHEREAS, reports, estimates and plans have been compiled and furnished to the Governing Body of the City to provide them with sufficient information in order to enable them to commence proceedings for the construction of the Improvements. NOW THEREFORE BE IT RESOLVED by'the Governing Body of the City of Salina, Kansas: Section 1. Proceedings are hereby initiated pursuant to the provisions of the Act for the purpose of proceeding with the Improvements. Section 2. • The City Manager and other City -staff are authorized to take all necessary actions to proceed with the Improvements. Section 3. It is anticipated that the cost of the Improvements shall be paid from funds of the City available for such purpose and/or by. the City -at -large through the issuance of one or more series of general obligation bonds of the City as provided by the Act, and pending the issuance of said bonds, through the issuance of one or more series of temporary notes. of the City, the estimated maximum principal amount of such obligations being $4,500,000.00, plus costs of issuance and plus costs of interest on any temporary financing. Section 4. The City expects to make capital expenditures on and after the date of adoption of this Resolution in "connection with the Improvements, and intends to reimburse itself for such expenditures with the proceeds of one or more series of general obligation bonds and/or temporary notes of the'City in the estimated maximum principal amount of $4,500,000.00, plus costs of issuance and plus costs of interest on any temporary financing. Section 5. This resolution shall be in fiill force and effect from and after its adoption. Adopted by the Board of Commissioners and signed by the Mayor this 8` I ay of March, 2011. Mayor (SEAL) ATTEST: City Clerk CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS March 28, 2011 4:00 p.m. The City Commission convened at 2:30 p.m. in a Study Session for Financial Updates. The Regular Meeting of the Board of Commissioners was called to order at 4:00 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 Aaron G. Peck, Presiding Officer Commissioner Samantha P. Angell Commissioner Norman Jennings Commissioner M. Lud Larson Commissioner john K Vanier comprising a quorum of the Board, also present Jason A. Gage, City Manager Greg Bengtson, City Attorney Lieu Ann Elsey, City Clerk ADMINISTRATION (8.2) Resolution No. 11 -6812 initiating proceedings for street and intersection improvements on East Magnolia Road. 11 -0088 Moved by Commissioner Angell, seconded by Commissioner Larson, to adopt Resolution No. 11- 6812. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT 11 -0093 Moved by Commissioner Vanier, seconded by Commissioner Larson, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (4). Nay: (1) Jennings. Motion carried. The meeting adjourned at 6:04 p.m. [SEAL] ATTEST: AIL4u4- 4n4v Lieu Ann Elsey, CMC, City Clerk 1J1'S"W4WSWP. .41W& Samantha P. Angell, Vice- Mayor 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 28, 2011 regarding Resol}�tion No. 11 -6812. �GQF�,� Z& 'aa�wrxea Lieu Ann Elsey, City Clerk 1870 ZP Page l BICENTENNIAL CENTER RENOVATION CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS March 4, 2013 4:00 p.m. The City Commission convened at 3:45 p.m. in a Study Session for a Citizen Open Forum. The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City - County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. Comprising a quorum of the Board were: Mayor Norman M. Jennings (presiding officer), Commissioner Kaye J. Crawford, Commissioner Aaron Householter Absent: Commissioner Samantha P. Angell, Commissioner Barb Shirley ADMINISTRATION (8.7) Resolution No. 13 -6988 authorizing and providing for the issuance of bonds to finance construction of improvements to the Bicentennial Center. Rod Franz, Director of Finance and Administration, explained resolution and cost estimates. 13 -0069 Moved by Commissioner Householter, seconded by Commissioner Crawford, to adopt Resolution No. 13 -6988. Aye: (3). Nay: (0). Motion carried. ADJOURNMENT 13 -0072 Moved by Commissioner Householter, seconded by Commissioner Crawford, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (3). Nay: (0). Motion carried. The meeting adjourned at 6:19 p.m. [SEAL] ATTEST: /s/Sha4 dvW6C4 Shandi Wicks, Deputy City Clerk IV Norma4g/ M. Norman M. Jennings, Mayor 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 4, 2013 regarding Resolution No. 13 -6988. raFS j U. : flpGAN17 't� P 1870 z Z ALO,u6L� Lieu Ann Elsey, CClerk Page 1 s U RESOLUTION NUMBER 13 -6988 A RESOLUTION AUTHORIZING AND PROVIDING FOR THE CONSTRUCTION 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 WHEREAS, 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 fully 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 se o., as amended and supplemented from time to time (the "Act "). THEREFORE, 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 "): Various capital improvements to the Bicentennial Center including, but not limited to: roof reinforcement and repair; arena renovation; electrical and mechanical system and HVAC improvements; replacement of interior and exterior doors; remodel of concession stands, lobby, entrance and administrative areas; exterior improvements including sidewalks, curbs and landscaping; furnishings, fixtures and equipment for arena, stage and office spaces; building marquees to be located on Ohio Street at The Midway and Oakdale at The Midway; and all other necessary and related improvements. Section 2. Bond Authorization. The estimated costs for the Project are in the amount of $8,750,000 plus costs of issuance and interest on any temporary financing. The costs from the Project and associated financing costs shall be payable from the proceeds of general obligation bonds and /or temporary notes 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 § 1.1-50 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. ADO , OVED by the governing body of the City of Salina. Kansas, on March 4, 2013. ..a . SKY Norm n M. Jennings, Mayor A,TTTEn Lieu Ann Elsey, CMC, City Jerk I hereby certify that the above and foregoing is a true and correct copy of Resolution No 13 -6986 that was adopted by the Governing Body of the City of Salina at their regular meeting on March 4. 2013 a �GZI OF Y� 1870 Lieu Ann Elsey, CMC. City .lerk ,4 North Ohio Grade Sep, Commisskx Auk a B CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS February 25, 2002 4:00 p.nn. The City Corna fission convened at 3:30 p.m. for a Citizen Open Forum. The ipity Commission also nxx in a Study Session after the regular meeting for a Citj/USD 305 Programs Briefing. The Regular Meeting of the Board of Commissioner's was called to order at 4:00 p.m. in Room I07, City - County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. There were present: Mayor Ksistin.M. Seaton, Chairman presiding Commissioner Deborah P. Divine Commissioner Don Heath Commissioner Alan E. Trlka Commissioner Monte D. Shadwick comprising a quorum of the Board, also present: Greg Bengtson, City Attorney Dennis K Kissinger, City Manager Lien Ann. Ncola, City Clerk Absent: None. ADMMVISTRATION (83) Second reading Ordinance No. 42 -10071 designating certain streets as main traffieways and designating certain additional streets as &affi.cway connections. 02 -3193 Moved by Commissioner Shadwick, seconded by Commissioner Tdka, to adopt Ordinance No. 02 -10071 on second reading. A roll call vote was taken. Aye: (5) Divine, Heath, Atka, Shadwick, Seaton. Nay: (0). Motion carried. ADJOURNMENT OZ -3198 Moved by Commissioner.Tilka, seconded by Commissioner Divine, that the Regular Meeting of the Bowd of Commissionaa be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjoumed at 4:32 p.m. Kristin M. Seaton Kristin M. Seaton, Mayor {SCI ATTEST: Al Lieu Ann Nicdla Lieu Aron Ncola, City Clerk I hereby ecru; fy that the above and foregoing is a true and, correct excerpt of the action taken by the Governing Body at its regular meeting on February 23, 2002 regarding Ordinance No. 02- 10071. Lieu Ann Nicola, City Clerk (Published in the Salina Joumal on February , 2002) :w w ORDINANCE NUIVMER 02-100 ! 1 AN ORDINANCE DESIGNATING CERTAIN STREETS AS MAIN TRAMbWAYS PURSUANT TO K.S.A. 12-685 AND DESIGNATING CERTAIN ADDITIONAL STREETS AS TRAFFICWAY CONNECTIONS PURSUANT TO K.S.A. 12 -686, AND REPEALING ORDINANCE NUMBER 93-9562. BE IT ORDAINED by the Governing Body of the City of Salina, Kansas: Section : The primary finiction of the streets described in this section is hereby found to be the movement of through traffic betwcea areas of concentrated activity within the city or between such areas within the city and traffic facilities outside the city performing the function of a, major tzaff iaway, based upon the following: A. ASH STREET is a major collector sheet nursing east fro m Broadway Boulevard to Ohio Street and is a principal street carrying ewt/west traffic through the center portion of the City. B. BELMONT BOULEVARD is a major arterial street running southwest from Ohio Street to Nmth Street and is a principal street carrying southwest/nordwist traffic through the southeast portion of the City. C. BROADWAY BOULEVARD is a major arterial street running west and south from North Ninth Street and Pacific Avenue and is a principal street carrying north/south traffic on the westside ofthe City. D. CENTENNIAL ROAD is a major arterial street running north from Waterwell Road to West Crawford Avenue and is a principal street carrying nortb/south traffic through the west portion of the City. E. CLOUD STREET is a major collector street running east from Centennial Road to the flood levee system east of Obio Street and is a principal. street carrying eastlwest traffic through the south- central portion of the City, F. COUNTRY CLUB ROAD is a major arterial street running west from the cast city limit line to Marymount Road and is a principal street carrying cast/west traffic through the cast - central portion of the City. G. CRAWFORD AVENUE is a major arterial street running cast from one of the I -135 interchanges into the City, to the east City limits and is a principal street carrying eastlwest traffic through the central portion of the City. H. IRON AVENUE is a major arterial street carrying traffic between the City's central and eastern commercial districts and is a principal street carrying east(west traffic through the north-c central portion of the City. m. ' L MAGNOLIA ROAD is a major arterial street mmnms east from the west city limits to the cast city limits and is a principal street carrying east/west traffic through the south portion of the City. ). MARKLEY ROAD is a major collector street running south from Crawford to Magnolia Road and is a principal sired carrying norddsouth traffic through the cast portion of the City. K MARYMOUNT ROAD is a major arterial street nurning north from Cloud Street to Country Club Road and is a principal street carrying norWsouth traffic through the east portion of the City. L. NINIH STREET is a major arterial street from the north city limits, north of Interstate 70 to the south city limits hear Waterwa Road carrying traffic between the City's north central and southern commercial districts and is a principal street carrying north/south traffic through the central portion of the City. M NORTH STREET is a major arterial street running from the west city limits to the east city limits and is a principal strieet carrying east/west _ traffic through the north, portion of the City. ' N. OHIO STREET is a major arterial street running south from one of the Interstate 70 interchanges to the south city limits and is the principal street carrying north/south traffic on the east-ccatral side of the City. �. PACIFIC AVENUE is a major arterial street running east from Kurth Street to the east city limits and is a principal street carrying east/west traffic through the north portion of the City. • P. - REPUBLIC AVENUE its a major collector street running east from Centennial Road to the cast city limit near the flood levee system and is a principal street carrying east/west traffic through the south portion of the City. Q. SANTA, FE AVENUE is a mayor arterial street running north from Claflin to Otis and is a principal street carrying north/south traffic through the central portion of the City. R SCHILLING ROAD is a major arterial street nmpi og west from Ohio Street to Arnold Avenue in the Airport. industrial Area and is a principat street carrying east/west traffic through the south portion of the City. S. SOUTH STREET is a major collector street running east axone Broadway Boulevard to Fourth Street and is a principal street carrying L east/west traffic through the central portion of the City. T. STATE STREET is a major arterial street running east from Interstate 135 to. the central business district and is a principal street carrying cast/west traffic through the north portion of the City. U. WATER WELL ROAD is a.major arterial street running west from Ninth Street through the south end of a major industrial area to Airport Road, and is a principal street carrying east and west traffic between major industrial commercial and interstate 135 interchanges. Section 2. That Ash Street, Belmont Boulevard, Broadway Boulevard, Centennial Road, Cloud Street, Country Club Road, Crawford Avenue, Iron Avenue, Magnolia Road, Markley Road, Marymount Road, Ninth Street's North Street, Ohio Street, Pacific Avenue, Republic Avenue, Santa Fe Axeauw Schilling Road, South, Street, Stato Street, aad Water Well Road are hereby designated and established as "main trafficways" pursuant to KS.A. IZ -685. Section 3. To provide adequate connections with the Ohio StrcrA main traificway is order to relieve traffic congestion and mitigate traffic safety issues related to the construction of the North Ohio' Railroad Overpass and related improvements it is necessary to establish the following as _ trafficway connections. 3 A. VAN HORNE STREET -- At and near its connection with North Ohio Street. L B. YORK STREET — At and near its connection with North Ohio Street. C. UNNAMED FRONTAGE ROAD —To be established on former North Olio Street right -of -way to connect area streets with realigned North Ohio Sorcet. Section 4. That Ordinance Number 93 -9562 is hereby repealed . Section 5. That this ordinance, shall be in full force and effect from and after its adoption and publication once in the official city newspaper. k hoduced: February 11, 2002 Passed: February 25, 2002 /s/ Kristin M. Seaton Kristin M. Seaton, Mayor jSEALj ATTEST: Lien Ann NLi�gla Lieu Amt Nicola, City Clerk I hereby certify" that the above and foregoing is a true and correct copy of Ordinance No. 02 -10071 parsed by the Governing Body at its regular meeting on February 25, 2002. Lieu Ann N:cok City Clerk C./; Affidavit of Publication 3h F*U&wbCh Mtroxeand cw"dCW,O, O d&*w* K% O2 --MM td�'lt�1CC W�l E1lOO�a�h011 CCtIYe tAtOt as wrM rr Y . 1#awd M d as a.Y ar Itfaa I �..ratwd r,"^' « ,. AFFiDAVTT wMf. Y .�. , a .r# .a1 w .a toot swsr . mfs a m@ a t w ad . A W a.m a O t+•.. 0t «W W .. aws.pa. lbdm .�. iaka a ,MMr taut -,1 at l wlfrl t� R # .► G M #N� IMI[aMnaE ddtF swaMt<. dedafe that i aC11 the � �a"Wa•# lad aM.ti w.`. M1".r it i aw w�.t +r`► CoDdwoaf�SALINA OURNA4 M �i ha£- •rr at. Ma a.A A Mft. M.r . •MVr w a % no-me i4! No Ob bw #r Co r. W." _ a w4q �r a ad or.� r amma ia. a #ty/ aYaM a#a10 Y fait a• pqw POND d Mt � Sw me ri t;ww^ tWd M #IOaMfet aM71t• ta.t as f a.aa t l Tr M w. VA%* COMM 5MWM dro&ht at1 insaid 1 iK� as Man a��p�� filrtlM' w , 4 isaw fa" Y o Ad Y�r M it Y► aMl aa# w®ItarM am .01 arf �� r ad . was Y aM a_ N aff M aft a r rdHa.ft.,.a„fw OM tlnrlw•ti V* � w#` v ItE pCOtILjIW illd GOOM IN t01 OK Y#.ii.t F aw eaw ets .1. a& a°K+cc*00 sr ,.r wa. M IOt'i[V'#l,7atfV1!)TifC FtfoftO fag aal ofaN- MOM MIIMIQrRt fllb, dK WY tCb[t r a .iM ft #�ttoi K a.. r ~ Y�r r 7►• .r..a hl'11Mti t10't�Cl..fd thit the a:YC)M'i(� •w Ow" t • af. Aft a.a k r aw (!A! Yafa f d aww 4d. ° 20 •i atf�! M= AI. d ar' iWMMSf V Y•aY idFt # C�Mn+ 14 .aM • tf K +w+rM i � � ♦ Oadhtao[e tit.02- -:0671 A.f as 'ar.t a+ �9tE • tHtif�1CQlKlIr FfLltshld ie Maid pRiNSpiFtl` ��� N AM i klrlw W1 a� aft M f0 1{ t Kd- M it/ a" OWN" i tfaa4 Y. ""a' f Y ..wr .da 4sqOftky� M w arY w+r �a� tIMMe;, tilt fdta F.Wiaubf !�"t'/ to ►. fO.i< +wd r . Zi 1�1.t iae[+am 600 mom" Ow • A" fa. w.r.r wnl.aft' . w aw f so M.f . +�• ar w fa► ar #. t!e isslte o[ Feb:to an 1B . 1�OL MII. wr W Ir a M.M a" amft ,m am Ywyh M �.r 0.00 f gg - �WW s �.11GtGtx�' r'thatsdn Y+ 0=0 a+rr #.s Oaf Oab r a.=af a I41a-Awt W ► t $wbso*Ed end #wOm to bdom Caw. Y .• awf+ aw awly N moms o* r as (A �' ADi � q a.. Y OW .. Y Ik miam .wd f r rrf wiY Yw 0." AM #t Y . l#•M. f.r fGF a.1t r #ask awt ft** atdaM #au am I U. w.po M 00 fob d lt+M+gA11it t� Mil "&%w w fltBt Y t wr ' ==ft. iw aM.Yll w� Y A tM. wf.AM $"a at R a t%It/d�.Ilwtlf Owma "a anti WON M�wwMw ta'Apyi,Mllf� M9 "NO 0 a" pK1 d :i�C•i1Mlt Ii �111Yt t. tilgl0 ►s t1► t: NIIdT • # aft an tofY* yyrr atad rMt Mlwi r .MI Ii11W.t1{ U .r MNr !fs o lMMMr�t MMa11i� to wfwrf MMit w Y t M1�R11R ti -t aw bas art wraf f/i *A MIwMrM .raw fae rw �r �tMtM #M�, .yMf.alw+ps s, tt iMAt iii IIttO k D t • a..f0• RESOLIMON NO 02 -5811 RESOLUTION INITIATING PROCEEDINGS BY THE GOVERNING BODY FOR MAIN TRAFFICWAY AND MAIN TRAI3'FICWAY CONNEC'XIO N MMOVEMSNTS INVOLVING NORTH OHIO STREET AND RELATED STRF.EIS IN TOR CITY OF SALINA, KANSAS WHEREAS, the Governing Body of the City of Salina. Kansas (the "City") has determined that it is necessary and desirable to eliminate all existing railroad crossing on North Ohio Strut between North Street sand Pacific Avenue by proceeding with the North Ohio Sam Railroad Grade Separation project (thc "P-jec'i: and WI;EREAS. the torah estimated east of the Pmjat is Stg,000.000 to be paid 6om funds provtdod by the KDOT Local PutnendW Grade Separation Program, fords provided by the affected railroad(a) and farads provided by the City-. and , WfIEREAS. the City has designated North Ohio Shea and Pacific Avenue as main tra ficways pursuant to.K SA 12-685 etseq. (the "Act "); and WHEREAS, the City is in the process of designating York Avenue, Van Horse Avenue and the proposed frontage shed described herein as grain traftimay connections pursuant to the Act; and WlMU1KAS, the Governing Body of the City has determined that it is necessary to improve or =improve portions of said main traffiewsys and main tcaf sway connections as part of the Project, as follows: Relocation of a portion of North Ohio Sheet starting from a point approximately 600 feet north of its interAxtion with North Sheet and wending approximately 3.000 fat to the northh, including the construction of an overpass bridge, drainage improvements and sidewalk improvements the relocation of approximately 4,000 tat of Pacific Avenue, irxiuding improvements to its inte4mdiot with North Ohio Street~ the relocation of a portion of York Avenue to line up with Van home Avenue. including impmvancats to their intersection with North Ohio Street. the construction of and improvement to a age mad on the east side of North Ohio Street extending north from Van Home Avenue; and other related improvewcub (eolhcc6vOy. the "imptm'emcnts% and WHEREAS, reports, estimates and plants have been compiled and famished to the Governing Body of the City to provide than with sufficient information in order to enable them to commence proceedings for the coastraetion of the Improvements: NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE QTY OF SALINA, KANSAS, AS FOLLOWS: Segdon 1. Proceedings are hereby initiated pursuant to the provisions o_ f the Act for the purpose ofproceeding with the LnprovernmIL SedLen 2. The City Manager and other City daft' are authorized to take all necessary actions to proceed with the Improvements. Sim 3. The: cost of the lmprovema is or portions thanof AA be paid fran funds provided by the KDOT Loral Partnership Grade Separation Program fends of the City available for such purpose "or by the City -at -large through the issuance of one or more series of general obligation bonds of the City as provided by the Act, and pending the issuance of said bonds, ehrottgh the issuance of one or more aeries of temporary rotes of the City. the estimated mandmrm principal amount of shuck obligations of the City being 54. 000,000 phis costs of issuance and phis cocas of interest on any temporary financing. Sudan 4. The City expects to make capital expenditures on and after the, date of adoption of this Resolution in connection with the Improvements, and intends to reimburse itself for arch cxpeaditwm with the proceeds of one or snore series of genaai obligation binds and temporary notes of tie City in the estimated maximum principal amount of 54,000.000 plus costa of issuance and phis costs of interest on any temporary financing. Segos 5. This resohdion shall be in full force and eHedt front and after its adoption PASSED by the Govaning Body on l:ebnory i 1, 2061 . (SEAL,) s _ ATTEST. . n I hereby, certif 7 correct co . the Cove �o �NN3M I the above and foregoing is a true and 'inal Resolution No. 02 -5811 passed bj regular meeting on February 11, 20 ,y9 j . 2 Lieu Ann Nicola, City Clerk 2• aaissioa on CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF February 11, 2002 4:00 p.m. The City Commission convened at 3.30 p.m. for a Citizen Open Forum. The Regular Meeting of the Board of Commissioners was called to order at 4:00 pm. 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 Kristin M. Seaton, Chairman presiding Commissioner Deborah P. Divine Commissioner Don Heath Commissioner Alan E. Jilka Commissioner Monte D. Shadwick comprising a quorum of the Board, also present: Greg Bengtson, City Attorney Dennis M. Kissinger, City Manager Lieu Ann Nicola, City Clerk Absent: None. ADN MISTRATION (8.3) Resolution No. 02 -5811 initiating proceedings for main trafficway and main trafficway connection improvements involving North Ohio Street and related streets. Rodney Franz, Director of Finance and Administration, explained the proceedings. )2 -3185 Moved by Commissioner Heath, seconded by Commissioner Jilka, to adopt Resolution No. 02 -5811. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT )2 -3191 Moved by Commissioner Shadwick, seconded by Commissioner Heath, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried- The meeting adjourned at 5:47 p.m. [SEAL] ATTEST: /s/ Lieu Ann Nicola Lieu Ann Nicola, City Clerk /s/ Kristin M. Seaton Kristin M. Seaton, Mayor I hereby that the above and foregoing it a true and correct excerpt of the action regarding Resolution Vo. 02 -5811 passed by the Governing Body at its regular meeting on Februa 11, 2002, oe a R W ber, Deputy City Clerk RESOLUTION NUMBER 06 -6237 A RESOLUTION AMENDING RESOLUTION NO. 02-5811 RELATED TO MAIN TRAFFICWAY AND MAINTRAFFICWAY CONNECTION IMPROVEMENTS INVOLVING NORTH OHIO STREET AND RELATED STREETS IN THE CITY OF SALINA, KANSAS. W WHEREAS, the Governing Body of the City of Salina, Kansas (the "City") adopted - Resolution No. 02 -5811 on February 11, 2002 authorizing certain improvements: a Relocation of a portion of North Ohio Street starting from a point approximately 600 feet north of its intersection with North Street and ° extending approximately 3,000 feet to the north, including the construction of an overpass bridge, drainage improvements and sidewalk improvements; the relocation of approximately 4,000 feet of Pacific Avenue, including improvements to its intersection with North Ohio Street; the relocation of a portion of York Avenue to line up with Van Home Avenue, including improvements to their intersection with North Ohio Street; the construction ' of and improvement to a frontage road on the east side of North Ohio Street extending north from Van Home Avenue; and other related improvements (the "Improvements "); and WHEREAS, the total estimated cost of the Improvements has increased to $20,200,000; and WHEREAS, the Governing Body of the City has determined that it is necessary to amend Sections 3 and 4 of Resolution No. 02 -5811 in order to provide for financing of the Improvements, NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: Section 1. Section 3 of Resolution No. 02 -5811 is hereby amended to read as follows: `"The cost of the Improvements or portions thereof shall be paid from funds provided by the KDOT Local Partnership Grade Separation Program, funds of the City available for such purpose and/or by the City-at -large through the issuance of one or more series of general obligation bonds of the City as provided by.the Act, and pending the issuance of said bonds, through the issuance of one or more series of temporary notes of the City, the estimated maximum principal amount of such obligations of the City being $6,200,000 plus costs of issuance and plus costs of interest on any temporary financing." Section 2. Section 4 of Resolution No. 02 -5811 is hereby amended to read as follows: "Me City expects to make capital expenditures on and after the date of adoption of this Resolution in connection with the Improvements, 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 estimated maximum principal amount of $6,200,000 plus costs of issuance and plus costs of interest on any temporary financing." Section 3. The existing Sections 3 and 4 of Resolution No. 02 -5811 are hereby repealed Section 4. This resolution shall be in full force and effect from and after its adoption. Adopted by the Board of Commissioners and signed by the Mayor this 9s' day of January, 2006. [SEAL] Deborah P. Divine, Mayor ATTEST: Lieu Ann Elsey, CMC, Cj# Clerk Commission Action # CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS January 9, 2006 4:00 p.m. The City Commission convened at 2:30 p.m. in a Study Session for a Lead Safe Community Initiative presentation by Tom Lange of Kansas Department of Health and Environment. The Regular Meeting of the Board of Commissioners was called to order at 4:00 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 Deborah P. Divine, Chairman presiding, Commissioner Alan E. Jilka, Commissioner Donnie D. Marrs, Commissioner R. Abner Perney, Commissioner John K. Vanier H Absent: None ADMINISTRATION (8.2) Resolution No. 06 -6237 amending Resolution No. 02 -5811 relating to the main ftaffcways and main trafficways connection improvements involving North Ohio Street and other related streets. 06 -7071 Moved by Commissioner Vanier, seconded by Commissioner Marrs, to adopt Resolution No. 06 -6237. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT 06 -7076 Moved by Commissioner Marrs, seconded by Commissioner Jilka, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 5:35 p.m. Deborah Divine Deborah Divine, Mayor [SEAL] ATTEST: Lieu Ann Elsey 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 9, 2006 regarding Resolution No. 06 -6237. Lieu Ann Elsey, City Cl k Page 1 CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS June 10, 2013 4:00 p.m. The City Commission convened at 2:30 p.m. in a Study Session on 2014 Budget and Greeley Bridge. The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City-County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. Those present and comprising a quorum: Mayor Barbara V. Shirley (presiding), Commissioners Jon R. Blanchard, Kaye J. Crawford, Randall R. Hardy, and Aaron Householter Also present: Jason A. Gage, City Manager; Michael D. Schrage, Deputy City Manager, Greg Bengtson, City Attorney; and Lieu Ann Elsey, City Clerk ADMINISTRATION (8.3a) Resolution No. 13 -7010 authorizing the offering for public sale of general obligation temporary notes and bonds. Rod Franz, Director of Finance and Administration, explained the disclosure, issuances, and projects to be funded. Mr. Franz then responded to Commissioner Blanchard's questions regarding the North Ohio project relocation expenses. 13 -0184 Moved by Commissioner Crawford, seconded by Commissioner Householter, to adopt Resolution No. 13 -7010. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT 13 -0190 Moved by Commissioner Householter, seconded by Commissioner Blanchard, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 6:09 p.m. 1J18aV&Wa -N. Slcr� -Zey [SEAL] Barbara V. Shirley, Mayor ATTEST: /y�1LLeie Annli=L ey - 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 June 10, 2013 regarding Resolution No: 13 -7010. ' � 1 'i of s �tF��ct (, .. Lieu Ann Elsey, City C k AN LL e j'; 9870 , fdi Page 1 RESOLUTION NO. 13-7010 RESOLUTION AUTHORIZING THE OFFERING FOR SALE OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2013-B AND GENERAL OBLIGATION TEMPORARY NOTES, SERIES 2013-1 OF THE CITY OF SALINA, KANSAS. WHEREAS, the City of Salina, Kansas (the "Issuer"), has heretofore authorized certain internal improvements described as follows (the "Note Improvements"): Estimated Improvement Project Description Ord./Res. No. Authority Fund Deposit Downtown Street Lighting Res. 13-6987 K.S.A. 12-685 et seq. $ 3,150,000.00 Ninth and Cloud Improvements Res. 13-7007 K.S.A. 12-685 et seq. 650,000.00 Total. $3,800,000.00 WHEREAS, the governing body of the Issuer is authorized by law to issue general obligation bonds to pay the costs of the Note Improvements; and WHEREAS, it is necessary for the Issuer to provide cash funds (from time to time) to meet its obligations incurred in constructing the Note Improvements prior to the completion thereof and the issuance of the Issuer's general obligation bonds, and it is desirable and in the interest of the Issuer that such funds be ii raised by the issuance of temporary notes of the Issuer; and ij WHEREAS, none of such temporary notes heretofore authorized have been issued and the Issuer i; proposes to issue its temporary notes to pay a portion of the costs of the Note Improvements; and i it WHEREAS, the Issuer has heretofore authorized certain internal improvements described as follows `� li (the "Bond Improvements," and together with the Note Improvements, the "Improvements"): Estimated Ordinance/ Improvement Project Description Resolution No. Authority Fund Deposit Magnolia Hills Subdivision Ord. 13 -10687 K.S.A. 12 -6a01 et seq. $262,704.31 Fire Station 41 Res. 09-6681 K.S.A. 12-1736 el seq. 810,000.00 East Magnolia Road Res. 11-6812 K.S.A. 12-685 et seq. 2,100,000.00 iE Bicentennial Center Res. 13-6988 K.S.A. 12 -1736 et seq. 2,000,000.00 North Ohio Grade Separation Res. 06-6237 K.S.A. 12-685 etseq. 100,653.00 Total. $5,273,357.31 ;and WHEREAS, the Issuer desires to issue its general obligation bonds in order to permanently finance li the costs of such Bond Improvements and to retire the following temporary notes of the Issuer, which were issued to temporarily finance a portion of the costs of the Bond Improvements (the "Refunded Notes"): Dated Maturity Original Il Series Date Date Amount 2012-1 July 15, 2012 August 1, 2013 $1,485,000.00 and WHEREAS, the Issuer has selected the firm of George K. Baum & Co., Kansas City, Missouri ("Financial Advisor"), as financial advisor for a series of general obligation bonds of the Issuer to be issued in order to provide funds to permanently finance the Bond Improvements and to retire the Refunded Notes, and a series of general obligation temporary notes of the Issuer to be issued in order to provide funds to temporarily finance the Note Improvements; and WHEREAS, the Issuer desires to authorize the Financial Advisor to proceed with the offering for ji sale of said general obligation bonds and general obligation temporary notes and related activities; and WHEREAS, one of the duties and responsibilities of the Issuer is to prepare and distribute a preliminary official statement relating to said general obligation bonds and general obligation temporary notes; and WHEREAS, the Issuer desires to authorize the Financial Advisor and Bond Counsel, in conjunction with the Clerk, to proceed with the preparation and distribution of a preliminary official statement and notice 1lof sale and to authorize the distribution thereof and all other preliminary action necessary to sell said general 1 obligation bonds and general obligation temporary notes. BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: Section 1. The Issuer is hereby authorized to offer for sale the Issuer's General Obligation Internal Improvement Bonds, Series 2013 -B (the "Bonds ") and General Obligation Temporary Notes, Series 2013 -1 II (the "Notes," and together with the Bonds, the "Obligations ") described in the Notice of Sale, which is i hereby approved in substantially the form presented to the governing body on this date. �I 1 Section 2. The Mayor and Clerk, in conjunction with the Financial Advisor and Bond Counsel, are hereby authorized to cause to be prepared a Preliminary Official Statement, and such officials and other representatives of the Issuer are hereby authorized to use such document in connection with the sale of the Obligations. 1 Section 3. The Clerk, in conjunction with the Financial Advisor and Gilmore & Bell, P.C., Kansas !s City, Missouri ( "Bond Counsel "), is hereby authorized and directed to give notice of sale of the Bonds by publishing a summary of the Notice of Bond Sale not less than 6 days before the date of the bond sale in a newspaper of general circulation in Saline County, Kansas, and the Kansas Register and by distributing copies of the Notice of Sale and Preliminary Official Statement to prospective purchasers of the Obligations. Proposals for the purchase of the Obligations shall be submitted upon the terms and conditions set forth in # said Notice of Sale, and shall be delivered to the governing body at its meeting to be held on such date, at which meeting the governing body shall review such bids and shall award the sale of the Obligations or reject all proposals. ?; Section 4. For the purpose of enabling the purchaser(s) of the Obligations (the "Purchaser(s) ") to comply with the requirements of Rule 15c2 -12 of the Securities and Exchange Commission (the "Rule "), the Mayor and Clerk or other appropriate officers of the Issuer are hereby authorized: (a) to approve the form of said Preliminary Official Statement and to execute the "Certificate Deeming Preliminary Official Statement Final" in substantially the form attached hereto as Exhibit A as approval of the Preliminary Official Statement, such official's signature thereon being conclusive evidence of such official's and the Issuer's approval thereof; (b) covenant to provide continuous secondary market disclosure by annually transmitting certain financial information and operating data and other information necessary to comply with the Rule to the Municipal Securities Rulemaking Board; and (c) take such other actions or execute such other documents as such officers in their reasonable judgment deem necessary to enable the Purchaser(s) to comply with the requirement of the Rule. Section Sc The Issuer agrees to provide to the Purchaser(s) within seven business days of the date of the sale of the Obligations or within sufficient time to accompany any confirmation that requests payment from any customer of the Purchaser(s), whichever is earlier, sufficient copies of the final Official Statement to enable the Purchaser(s) to comply with the requirements of the Rule and with the requirements of Rule G- 32 of the Municipal Securities Rulemaking Board. Section 6. The Mayor, Clerk and the other officers and representatives of the Issuer, the Financial Advisor and Bond Counsel are hereby authorized and directed to take such other action as may be necessary to carry out the sale of the Obligations. Such officials are also directed and authorized to make provision for payment and/or redemption of the Refunded Notes from proceeds of the Bonds and other available funds. Section 7. This Resolution shall be in full force and effect from and after its adoption. �e governing body on June 10, 2013. G��yOFSq! •.2 LL. (SE ' 1870 Mayor ATTE �s�s•• �•' j Clerk MASTER \TRADITIONALIGOBONDSISALEDOCS (04- 17 -13) I hereby certify that the above and foregoing is a true and correct copy of Resolution No. 13 -7010 that was adopted by the Governing Body of the City of Salina at their regular meeting on June 10, 2013. Est or 1870 12 Tracey Sparks, Account Clerk, EXHIBIT A CERTIFICATE DEEMING PRELIMINARY OFFICIAL STATEMENT FINAL June 10, 2013 To: [Purchaser Name] [Purchaser City, State] [Purchaser Name] [Purchaser City, State] Re: Approximately $4,330,000 General Obligation Internal Improvement Bonds, Series 2013 -B and $3,800,000 General Obligation Temporary Notes, Series 2013 -1 The undersigned 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(s) (the "Purchaser(s) ") on behalf of the Issuer. The Issuer has heretofore caused to be delivered to the Purchaser(s) copies of the Preliminary Official Statement (the "Preliminary Official Statement ") relating to the above - referenced notes and bonds (the "Obligations "). For the purpose of enabling the Purchaser(s) 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 underwriters and other terms of the Obligations depending on such matters. CITY OF SALINA, KANSAS By: Title: Mayor By: _ Title: Clerk NOTICE OF SALE CITY OF SALINA, KANSAS $3,800,000# GENERAL OBLIGATION TEMPORARY NOTES SERIES 2013 -1 $4,330,000* GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B (GENERAL OBLIGATION BONDS PAYABLE FROM UNLIMITED AD VALOREM TAXES) Bids. Written and electronic (as explained below) bids for the purchase of the above - referenced notes (the "Notes ") and bonds (the 'Bonds," and collectively with the Notes, the "Obligations ") of the City of Salina, Kansas (the "Issuer ") herein described will be received on behalf of the undersigned Clerk of the Issuer at the address hereinafter set forth in the case of written bids, and via PARITY® in the case of electronic bids, on July 8, 2013 (the "Sale Date ") until the following times (the "Submittal Hour "): SUBMITTAL HOUR SERIES (Central Time) Series 2013 -B Bonds 1:00 P.M. Series 2013 -1 Notes 2:00 p.m. All bids will be publicly evaluated at said time and place and the award of the Obligations to the successful bidders (the "Successful Bidders ") will be acted upon by the governing body at its meeting to be held at 4:00 p.m. on the Sale Date. No oral or auction bids will be considered. Capitalized terms not otherwise defined herein shall have the meanings set forth in the hereinafter referenced Preliminary Official Statement relating to the Obligations. THE 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 July 15, 2013 (the "Dated Date "), and will become due on August 1, 2014. The Notes will bear interest from the Dated Date at rates to be determined when the Notes are sold as hereinafter provided, which interest will be payable at maturity. Place of Payment. The principal of and interest on the Notes 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 "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 "Note Register ") of the Note Registrar (the "Registered Owner ") upon presentation and surrender at the principal office of the Paying Agent. Preliminary; subject to change as provided in "Adjustment of Issue Size," herein. 1 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: (a) DTC determines not to continue to act as securities depository for the Notes, or (b) 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 registration of the Notes and DTC. Redemption of Notes Prior to Maturity. The Notes are not subject to redemption prior to maturity. Authority, Purpose and Security. The Notes are being issued pursuant to K.S.A. 10 -123 and K.S.A. 12 -685 et seq., as amended, and a resolution adopted by the governing body of the Issuer (the "Note Resolution ") for the purpose of paying a portion of the cost of certain public improvements (the "Improvements "). The Notes shall be general obligations of the Issuer payable as to both principal and interest 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. THE 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 July 15, 2013 (the "Dated Date "), and will become due in principal installments on October 1 in the years as follows: 2 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, 2014 (the "Interest Payment Dates "). 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 owner thereof whose name is on the registration books (the "Bond Register ") of the Bond Registrar (the "Registered Owner ") upon presentation and surrender at the principal office 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 Cede & Co. or 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 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 "State "). 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 Preliminary; subject to change as provided in "Adjustment of Issue Size," herein. Principal Principal October 1 Amount* October 1 Amount* 2014 $205,000 2024 $285,000 2015 235,000 2025 290,000 2016 235,000 2026 300,000 2017 240,000 2027 310,000 2018 245,000 2028 315,000 2019 250,000 2029 65,000 2020 260,000 2030 65,000 2021 265,000 2031 70,000 2022 270,000 2032 70,000 2023 275,000 2033 80,000 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, 2014 (the "Interest Payment Dates "). 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 owner thereof whose name is on the registration books (the "Bond Register ") of the Bond Registrar (the "Registered Owner ") upon presentation and surrender at the principal office 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 Cede & Co. or 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 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 "State "). 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 Preliminary; subject to change as provided in "Adjustment of Issue Size," herein. the records maintained by DTC, its participants or persons acting through such participants. In the event that: (a) DTC determines not to continue to act as securities depository for the Bonds, or (b) 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 Official 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 maturing on October 1 in the years 2022, and thereafter, will be subject to redemption and payment prior to maturity on October 1, 2021, 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 consecutive years 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 the 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 or completing the applicable information on PARITY ®. 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 maturity thereof, the Issuer shall give written notice of its intention to call and pay said Bonds to the Bond Registrar and the Successful Bidder. 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 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 from and after the date for which such call is made, provided funds are available for its payment at the price hereinbefore specified. W Authority, Purpose and Security. The Bonds are being issued pursuant to K.S.A. 12 -685 et seq., K.S.A. 12 -6a01 et seq., K.S.A. 12 -1736 et seq., all as amended, and an ordinance and a resolution adopted by the governing body of the Issuer (collectively the "Bond Resolution ") for the purpose of paying a portion of the cost of certain public improvements (the "Improvements "). The Bonds shall be 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 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. THE NOTES AND THE BONDS Adjustment of Issue Size. The Issuer reserves the right to increase or decrease the total principal amount of the Obligations, and the principal amount of any maturity depending on the purchase price and interest rates bid and the offering prices specified by the Successful Bidder(s). Such adjustments may be made in order to properly size the Obligations based on the required funding needs and offering prices and interest rates bid on the Obligations. 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 Obligations or principal of any maturity as described herein, provided, however, that the total principal amount of the Notes or the Bonds will not be changed by more than 15% w/o the consent of the Successful Bidder(s). If there is an increase or decrease in the final aggregate principal amount of the Obligations 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 4:00 p.m., Central Time, on the Sale Date. The net production as a percentage of the principal amount of the Obligations generated from the bids(s) of the Successful Bidders(s) will not be decreased as a result of any change in the total principal amount of the Obligations. Submission of Bids. Written bids must be made on forms which may be procured from the Clerk or the Financial Advisor and shall be addressed to the undersigned, and marked "Proposal for General Obligation Temporary Notes, Series 2013 -1" or "Proposal for General Obligation Internal Improvement Bonds, Series 2013 -B," as applicable. 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 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 -5023. Conditions of Bids. Bids shall be submitted separately for each series of the Obligations. Proposals will be received on the Obligations bearing such rate or rates of interest as may be specified by the bidders, subject to the following conditions: 5 For the Notes: Proposals will be received on the Notes bearing such rate of interest as may be specified by the bidders, subject to the following conditions: (a) the same rate shall apply to all Notes; (b) no interest rate may exceed a rate equal to the daily yield for the 10 -year Treasury Bond published by THE BOND BUYER, in New York, New York, on the Monday next preceding the day on which the Bonds are sold, plus 6 %; and (c) no supplemental interest payments will be considered. No bid for less than 99.25% of the principal amount of the Notes and accrued interest thereon to the date of delivery will be considered. Each bid shall specify the total interest cost (expressed in dollars) during the term of the Notes on the basis of such bid, the discount, if any, the premium, if any, offered by the bidder, the net interest cost (expressed in dollars) on the basis of such bid. Each bid for the Notes must also specify the average annual interest rate to the Issuer on the basis of such bid. For the Bonds: Proposals will be received on the Bonds bearing such rate or rates of interest as may be specified by the bidders, subject to the following conditions: (a) the same rate shall apply to all Bonds of the same maturity year; (b) no interest rate may exceed a rate equal to the daily yield for the 10 -year Treasury Bond published by THE BOND BUYER, in New York, New York, on the Monday next preceding the day on which the Bonds are sold, plus 6 %; (c) no supplemental interest payments will be considered; (d) each interest rate specified shall be a multiple of 1/8 or 1/20 of 1 %; and (e) no interest rates of zero percent are permitted. The difference between the highest rate specified and the lowest rate specified cannot exceed 4 %. No bid for less than 100% of the principal amount of the Bonds and accrued interest thereon to the date of delivery will be considered. Each bid shall specify the total interest cost (expressed in dollars) during the term of the Bonds on the basis of such bid, the discount, if any, the premium, if any, offered by the bidder, the net interest cost (expressed in dollars) on the basis of such bid, and an estimate of the TIC (as hereinafter defined) on the basis of such bid. For All Obligations: Each bidder shall certify to the Issuer the correctness of the information contained on the Official Bid Form; the Issuer will be entitled to rely on such certification. Each bidder agrees that, if it is awarded the Notes or the Bonds, it will provide the certification as to initial offering prices described under the caption "Certification as to Offering Price" in this Notice. Good Faith Deposit. Each bid for the Bonds shall be accompanied by a good faith deposit (the "Deposit ") as follows: For the Notes: A good faith deposit will not be required for the Notes. For the Bonds: Each bid for a series of the Bonds shall be accompanied by a Deposit payable to the order of the Issuer to secure the Issuer from any loss resulting from the failure of the bidder to comply with the terms of its bid. The amount of the Deposit for the Bonds shall be $86,600. The Deposit, which must be received by the Issuer prior to the Submittal Hour, may be submitted in any of the following forms: (a) Certified or cashier's check drawn on a bank located in the United States of America; (b) financial surety bond as hereinafter described (the "Surety Bond "); or (c) wire transfer in Federal Reserve funds, immediately available for use by the Issuer (wire transfer information may be obtained from the Financial Advisor at the addresses set forth below). Contemporaneously with the submission of a wire transfer Deposit, such bidder shall send an email to the Issuer and the Financial Advisor at the email address set forth below, including the following information: (a) notification that a wire transfer has been made; (b) the amount of the wire transfer; and (c) return wire transfer instructions in the event such bid is unsuccessful. All Surety Bonds must be from an insurance or surety company rated "AA" by Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc., or "Aa" by Moody's Investors Service and licensed to issue such a surety bond in the State. The Surety Bond must identify each bidder whose deposit is guaranteed by such Surety Bond. Good Faith checks submitted by unsuccessful bidders will be returned; wire transfer Deposits submitted by unsuccessful bidders will not be accepted or shall be returned in the same manner received on the next business day following the Sale Date. The Issuer reserves the right to withhold reasonable charges for any fees or expenses incurred in returning a wire transfer Deposit. If the sale of the Obligations is awarded to a bidder utilizing a Surety Bond, the Successful Bidder is required to submit to the Issuer a cashier's or certified check or wire transfer of immediately available federal funds to such financial institution requested by the Issuer, not later than 2:00 p.m., Central Time on the next business day following the Sale Date. If such funds are not received by such time, the Surety Bond may be drawn on by the Issuer to satisfy the Deposit requirement. No interest on the Deposit will be paid by the Issuer. If a bid is accepted, the Deposit, or the proceeds thereof, will be held by the Issuer until the Successful Bidder has complied with all of the terms and conditions of this Notice at which time the amount of said Deposit shall be returned to the Successful Bidder or deducted from the purchase price at the option of the Issuer. If a bid is accepted but the Issuer fails to deliver the Bonds to the Successful Bidder in accordance with the terms and conditions of this Notice, said Deposit, or the proceeds thereof, will be returned to the Successful Bidder. If a bid is accepted but the bidder defaults in the performance of any of the terms and conditions of this Notice, the proceeds of such Deposit will be retained by the Issuer as and for liquidated damages. Basis of Award. For the Bonds: Subject to the timely receipt of the Deposit for the Bonds as set forth above, 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 provide a calculation 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 Issuer or the bidder. The Issuer or its Financial Advisor will verify the TIC based on such bids. If there is any discrepancy between the TIC specified and the bid price and interest rates specified, the specified bid price and interest rates shall govern and the TIC 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 the 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 rate and premium /discount specified, the interest rate and premium /discount specified shall govern and the net interest cost specified in the bid shall be adjusted accordingly. If two or more proper bids providing for identical VA 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. For All Obligations: The Issuer reserves the right to reject any and /or 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 the State, 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. The Issuer's acceptance, including electronic acceptance through PARITY ®, of the Successful Bidder's proposal for the purchase of the Obligations in accordance with this Notice of Sale shall constitute a contract between the Issuer and the Successful Bidder for the purposes of Rule 15c2 -12 of the Securities and Exchange Commission (the "Rule ") and Rule G -32 of the Municipal Securities Rulemaking Board ( "Rule G -32 ") and a bond purchase agreement for purposes of the laws of the State. Bond Ratings. The outstanding general obligation temporary notes of the Issuer are rated "MIG1" by Moody's Investors Service and the outstanding general obligation bonds of the Issuer are rated `Aa3" by Moody's Investors Service. Optional Bond Insurance. The Issuer has not applied for any policy of municipal bond insurance with respect to the Obligations. If the Obligations qualify for municipal bond insurance, and any bidder desires to purchase such policy, such indication and the name of the desired insurer must be set forth on the bidder's Official Bid Form. The Issuer specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest bid to the Issuer. All costs associated with the issuance of such policy and associated ratings and expenses (other than any independent rating requested by the Issuer) shall be paid by the Successful Bidder. Failure of the municipal bond insurer to issue the policy after the award of the Obligations shall not constitute cause for failure or refusal by the Successful Bidder to accept delivery of the Obligations. CUSIP Numbers. CUSIP identification numbers will be assigned and printed on the Obligations, but neither the failure to print such number on any Obligation 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 Obligations in accordance with the terms of this Notice. All expenses in relation to the assignment and printing of CUSIP numbers on the Obligations will be paid by the Issuer. Delivery and Payment. The Issuer will pay for preparation of the Obligations and will deliver the Obligations properly prepared, executed and registered without cost on or about JULY 25, 2013 (the "Closing Date "), to DTC for the account of the Successful Bidder. The Successful Bidder will be furnished with a certified transcript of the proceedings evidencing the authorization and issuance of the Obligations and the usual closing documents, including a certificate that there is no litigation pending or threatened at the time of delivery of the Obligations affecting their validity and a certificate regarding the completeness and accuracy of the Official Statement. Payment for the Obligations shall be made in federal reserve funds, immediately available for use by the Issuer. The Issuer will deliver one Obligation of each maturity registered in the nominee name of DTC. Reoffering 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 will be required to complete, execute and deliver to the Issuer prior to the delivery of the Obligations, a written 8 certification (the "Issue Price Certificate ") containing the following: (a) the initial offering price and interest rate for each maturity of the Obligations; (b) that all of the Obligations were offered to the public in a bona fide public offering at the initial offering prices on the Sale Date; and (c) on the Sale Date the Successful Bidder reasonably expected that at least 10% of each maturity of the Obligations would be sold to the "public" at prices not higher than the initial offering prices. For purposes of the preceding sentence "public" means persons other than bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers. However, such Issue Price Certificate may indicate that the Successful Bidder has purchased the Obligations for its own account in a capacity other than as an underwriter or wholesaler, and currently has no intent to reoffer the Obligations for sale to the public. Subsequent to the Submittal Hour, such initial offering prices to the public shall be provided to the Issuer or the Financial Advisor not more than 20 minutes after requested by the Issuer or the Financial Advisor. At the request of the Issuer, the Successful Bidder will provide information explaining the factual basis for the Successful Bidder's Issue Price Certificate. This agreement by the Successful Bidder to provide such information will continue to apply after the Closing Time if: (a) the Issuer requests the information in connection with an audit or inquiry by the Internal Revenue Service (the "IRS ") or the Securities and Exchange Commission (the "SEC ") or (b) the information is required to be retained by the Issuer pursuant to future regulation or similar guidance from the IRS, the SEC or other federal or state regulatory authority. Preliminary Official Statement and Official Statement. The Issuer has prepared a Preliminary Official Statement dated June 10, 2013, "deemed final" by the Issuer except for the omission of certain information as provided in the Rule, copies of which may be obtained from the Clerk or from the Financial Advisor. Upon the sale of the Obligations, 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, which may be in electronic format, in order for the Successful Bidder to comply with the requirements of the Rule and Rule G -32. Additional copies may be ordered by the Successful Bidder at its expense. Continuing Disclosure. In the Note Resolution and the Bond 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 the Municipal Securities Rulemaking Board. This covenant is for the benefit of and is enforceable by any Registered Owner of the Obligations. 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 2012 is as follows: Equalized Assessed Valuation of Taxable Tangible Property ................................ ............................... $403,850,282 Tangible Valuation of Motor Vehicles ................... ............................... 47,553,744 Equalized Assessed Tangible Valuation for Computation of Bonded Debt Limitations ... ............................... $451,404,026 D The total general obligation indebtedness of the Issuer as of the Dated Date, including the Obligations being sold, is $67,715,000. Legal Opinion. The Obligations 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 Obligations, if the Obligations are printed, and will be delivered to the Successful Bidder when the Obligations are delivered. Said opinion will also include the opinion of Bond Counsel relating to the interest on the Obligations being excluded from gross income for federal income tax purposes and exempt from income taxation by the State. Reference is made to the Preliminary Official Statement for further discussion of federal and Kansas income tax matters relating to the interest on the Obligations. Additional Information. Additional information regarding the Obligations may be obtained from the undersigned, or from the Financial Advisor, at the addresses set forth below: DATED: June 10, 2013. CITY OF SALINA, KANSAS By Lieu Ann Elsey, Clerk Written and Facsimile Bid and Good Faith Deposit Delivery Address: Rod Franz, Finance Director City of Salina, Kansas 300 West Ash Salina, Kansas 67402 Phone No.: (785) 309 -5735 Fax No.: (785) 309 -5738 Email: rod.franz @salina.org Financial Advisor: George K. Baum & Company 4801 Main Street, Suite 500 Kansas City, Missouri 64112 Attn: David Arteberry Phone No.: (816) 474 -1100 Fax No.: (816) 283 -5326 Email: arteberry@gkbaum.com 10 OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES TO: Lieu Ann Elsey, Clerk July 8, 2013 City of Salina, Kansas For $3,800,000 principal amount of General Obligation Temporary Notes, Series 2013 -1, of the City of Salina, Kansas, to be dated July 15, 2013, as described in your Notice of Sale dated June 10, 2013, said Notes to bear interest as follows: Maturity Principal Interest AuLyust 1 Amount Rate 2014 $3,800,000 % the undersigned will pay the purchase price for the Notes set forth below, plus accrued interest to the date of delivery. PrincipalAmount .............................................................. ............................... Less Discount (not to exceed 99. 25%) ............................... ............................... PlusPremium (if any) ........................................................ ............................... Total Purchase Price .......................................................... ............................... ...... $3,800,000.00* Total interest cost to maturity at the rate(s) specified ........... ............................... $ Netinterest cost ...................................................................... ............................... $ Average Annual Net Interest Cost ........................................... ............................... This proposal is subject to all terms and conditions contained in said Notice of Note 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 15c2 -12 of the Securities and Exchange Commission. Submitted by: (LISTACCOUNT MEMBERS ON REVERSE) 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 July 8, 2013. 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 Clerk, Lieu Ann Elsey, 300 West Ash, Salina, Kansas 67402, facsimile bids may be filed with the Clerk, Fax No. (785)309 -5738 or electronic bids may be submitted via PARITY , at or prior to 2:00 p.m., Central Time, on July 8, 2013. Any bid received after such time will not be accepted or shall be returned to the bidder. kPreliminary; subject to change as described in the Notice of Sale. OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS TO: Lieu Ann Elsey, Clerk City of Salina, Kansas July 8, 2013 For $4,330,000 principal amount of General Obligation Internal Improvement Bonds, Series 2013 -B, of the City of Salina, Kansas, to be dated July 15, 2013, as described in the Notice of Sale dated June 10, 2013, said Bonds to bear interest as follows: Stated Annual Stated Annual Maturity Principal Rate of Maturity Principal Rate of October 1 Amount' Interest October 1 Amount* Interest 2014 $205,000 % 2024 $285,000 % 2015 235,000 % 2025 290,000 % 2016 235,000 % 2026 300,000 % 2017 240,000 % 2027 310,000 % 2018 245,000 % 2028 315,000 % 2019 250,000 % 2029 65,000 % 2020 260,000 % 2030 65,000 % 2021 265,000 % 2031 70,000 % 2022 270,000 % 2032 70,000 % 2023 275,000 % 2033 80,000 the undersigned will pay the purchase price for the Bonds set forth below, plus accrued interest to the date of delivery. PrincipalAmount ........................................................................................................................... ............................... $4,330,000.00* PlusPremium (if any) .................................................................................................................... ............................... $ TotalPurchase Price ...................................................................................................................... ............................... S Total interest cost to maturity at the rates specified ..................................................................... ............................... $ Net interest cost (adjusted for [Discount and /or] Premium) .......................................................... ............................... $ TrueInterest Cost .......................................................................................................................... ............................... % ❑ The Bidder elects to have the following Term Bonds: Maturity Date Years 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, a wire transfer or a qualified financial surety bond in the amount of $86,600 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 15c2 -12 of the Securities and Exchange Commission and a bond purchase agreement for purposes of the laws of the State of Kansas. Submitted by: (LIST ACCOUNT MEMBERS ON REVERSE) 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 July 8, 2013. 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 Clerk, Lieu Ann Elsey, 300 West Ash, Salina, Kansas 67402, facsimile bids may be filed with the Clerk, Fax No. (785)309 -5738 or electronic bids may be submitted via PARITY , at or prior to 1:00 p.m., Central Time, on July 8, 2013. Any bid received after such time will not be accepted or shall be returned to the bidder. •Preliminary; subject to change as described in the Notice of Sale L s� J ^J �1 f L :l L L 3= J "J :J v !i v a J _ J � J j U v s - v � v t s PRELIMINARY OFFICIAL STATEMENT DATED JUNE 10, 2013 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 "Code "): (1) the interest on the Notes and Bonds [(including any original issue discount properly allocable to an owner thereof)] is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, (2) the interest on the Notes and Bonds is exempt from income taxation by the State of Kansas, and (3) the Notes and Bonds are "qualified tax- exempt obligations" within the meaning of Code Section 265(b)(3). See TAX MATTERS — "Opinion of Bond Counsel" herein. New Issues Book -Entry Only Bank Qualified CITY OF SALINA, KANSAS Moody's Ratings: Bonds- "Aa3" Notes- "MIG 1" $3,800,000 (subject to change) GENERAL OBLIGATION TEMPORARY NOTES SERIES 2013 -1 $4,330,000 (subject to change) GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B Dated: July 15, 2013 Due: As Shown Herein The Series 2013 -1 Notes (the "Notes ") will be issued as fully registered notes in the denomination of $5,000 or any integral multiple thereof. The Notes shall be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company ( "DTC "), New York, New York, to which payment of principal and interest will be made. Individual purchases of Notes will be made in book -entry form. Purchasers will not receive certificates representing their interest in the Notes purchased. Interest on the Notes will be payable at maturity. Principal and interest on the Notes will be payable by check, draft, or wire transfer from the Treasurer of the State of Kansas (the "Note Paying Agent "). The Notes are not subject to redemption prior to maturity. The Series 2013 -B 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, 2014. The principal of and interest on the Bonds will be payable by check, draft, or wire transfer from the Treasurer of the State of Kansas (the "Bond Paying Agent "). The Bonds are subject to redemption at the option of the City as further described herein. MATURITY 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 of DTC on or about July 25, 2013. BIDS FOR THE PURCHASE OF THE NOTES AND BONDS WILL BE RECEIVED PURSUANT TO THE NOTICE OF SALE: The Bonds: On or before 1:00 p.m., Central Daylight Time The Notes: On or before 2:00 p.m., Central Daylight Time On Monday, July 8, 2013 THIS COVER PAGE CONTAINS INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THE ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIALTO THE MAKING OF AN INFORMED INVESTMENT DECISION. MATURITY SCHEDULES $3,800,000 (subject to change) GENERAL OBLIGATION TEMPORARY NOTES SERIES 2013 -1 Base CUSIPM Maturitv Amount Rate Yield 794743 08 -01 -14 $3,800,000 The Notes are not subject to redemption prior to maturity. $4,330,000 (subject to change) GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B Maturity Amount 10 -01 -14 $205,000 10 -01 -15 235,000 10 -01 -16 235,000 10 -01 -17 240,000 10 -01 -18 245,000 10 -01 -19 250,000 10 -01 -20 260,000 10- 01 -21* 265,000 10- 01 -22* 270,000 10- 01 -23* 275,000 10- 01 -24* 285,000 10- 01 -25* 290,000 10- 01 -26* 300,000 10- 01 -27* 310,000 10- 01 -28* 315,000 10- 01 -29* 65,000 10- 01 -30* 65,000 10- 01 -31* 70,000 10- 01 -32* 70,000 10- 01 -33* 80,000 Base CUSIPf �1 Rate Yield 794743 *The Bonds maturing on or after October 1, 2021, will be subject to redemption prior to maturity at the option of the City on October 1, 2020, 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 Bonds are also subject to mandatory redemption.] See THE BONDS - "Redemption Provisions" herein. (')CUSIP numbers have been assigned to this issue by Standard & Poor s CUSIP Service Bureau, a division of the McGraw -Hill Financial., and are included solely for the convenience of the Owners of the Notes and Bonds. Neither the City nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth above. CITY OF SALINA, KANSAS City /County Building - Room 206 300 West Ash P. 0. Box 736 Salina, Kansas 67402 -0736 CITY COMMISSION Barbara Shirley, Mayor Aaron Householter, Vice Mayor Kaye Crawford, Commissioner Jon Blanchard, Commissioner Randall Hardy, Commissioner CITY STAFF Jason Gage, City Manager Mike Schrage, Deputy City Manager Rodney Franz, Director of Finance and Administration 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 the 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 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 the 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 THENOTES ........................................................................................................... ............................... 2 THEBONDS .......................................................................................................... ............................... S THE DEPOSITORY TRUST COMPANY .................................................................... ............................... 10 THEFINANCING PLAN .......................................................................................... ............................... 11 SOURCES AND USES OF FUNDS ........................................................................... ............................... 12 RISK FACTORS AND INVESTMENT CONSIDERATIONS .......................................... ............................... 12 LEGALMATTERS .................................................................................................. ............................... 14 TAXMATTERS ...................................................................................................... ............................... 14 RATINGS............................................................................................................... ............................... 16 FINANCIAL ADVISOR ............................................................................................ ............................... 16 UNDERWRITING.................................................................................................. ............................... 16 ABSENCE OF MATERIAL LITIGATION .................................................................... ............................... 17 CONTINUINGDISCLOSURE .................................................................................. ............................... 17 CERTIFICATION OF OFFICIAL STATEMENT ........................................................... ............................... 17 APPENDIX A: INFORMATION CONCERNING THE CITY FINANCIAL OVERVIEW OF THE CITY ............................................................... ............................... A -1 GENERAL INFORMATION CONCERNING THE CITY ......................................... ............................... A -2 ECONOMIC INFORMATION CONCERNING THE CITY ...................................... ............................... A -6 DEBT SUMMARY OF THE CITY ........................................................................ ............................... A -9 FINANCIAL INFORMATION CONCERNING THE CITY ....................................... ............................... A -12 APPENDIX B: OMNIBUS CONTINUING DISCLOSURE UNDERTAKING APPENDIX C: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2011 APPENDIX D: UNAUDITED FINANCIAL STATEMENTS FOR FISCALYEAR ENDING DECEMBER 31, 2012 CITY OF SALINA, KANSAS $3,800,000 (subject to change) GENERAL OBLIGATION TEMPORARY NOTES SERIES 2013 -1 $4,330,000 (subject to change) GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B 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 $3,800,000 (subject to change) General Obligation Temporary Notes, Series 2013 -1 (the "Notes "), and its $4,330,000 (subject to change) General Obligation Internal Improvement Bonds, Series 2013 -B (the "Bonds ", and together with the Notes, the "Securities "). The Notes and the Bonds are being issued to provide funds to finance certain public improvements within the City and to retire the City's Series 2012 -1 Notes. 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 Notes and Bonds as the same becomes due. See THE NOTES - "Security" and THE BONDS - "Security" herein. The Appendices are an integral part of this Official Statement and should be read in their 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 — OMNIBUS CONTINUING DISCLOSURE UNDERTAKING 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 ordinance and resolution of the governing body of the City authorizing the Bonds (the "Bond Resolution "), as applicable. Copies of the Note Resolution and the Bond Resolution are available upon request to the City, the Financial Advisor, or Bond Counsel. Additional Information Additional information regarding the City, the Notes, or the Bonds may be obtained from George K. Baum & Company, 4801 Main Street, Kansas City, Missouri 64112, telephone 816 - 474 -1100. THE NOTES 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 -685 et seq., all as amended, and a resolution adopted by the governing body of the City on , 2013, 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 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 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. Description The Notes shall consist of fully registered book - entry-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 July 15, 2013, shall become due in the amounts on the 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) 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. Redemption Provisions The Notes are not subject to redemption and payment prior to maturity. Designation of Note Paving Agent and Note Registrar The City will at all times maintain a paying agent and note registrar meeting the qualifications set forth in the Note Resolution. The City 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 City 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 City 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. 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 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 provisions of the Note Resolution. The City 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 City 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 City 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 City and the Note Registrar such security or indemnity as may be required by each of them, then, in the absence of notice to the City or the Note Registrar that such Note has been acquired by a bona fide purchaser, the City shall execute and, upon the City'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 City, in its discretion, may pay such Note instead of issuing a new Note. Upon the issuance of any new Note, the City 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 City 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 City 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 City, and the Owner thereof shall be entitled to look only to the City for payment, and then only to the extent of the amount so repaid to it by the Note Paying Agent, and the City shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Method and Place of Payment 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. 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 City 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 of the proposed payment. The Note Paying Agent shall notify the City 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 -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 Depository 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 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 4 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 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)(1) or (a)(2) of this paragraph, the City, 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 City, 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 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 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 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. and K.S.A. 12 -6a01 et seq., all as amended, and an ordinance and resolution adopted by the governing body of the City on , 2013, authorizing the issuance of the Bonds (the `Bond Resolution "). Security 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 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 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. 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 July 15, 2013, 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. Redemption Provisions _Optional Redemption. At the option of the City, Bonds or portions thereof maturing on October 1, 2021 and thereafter may be called for redemption and payment prior to their Stated Maturity on October 1, 2020, 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 City 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 Bonds maturing (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 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: 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 City 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 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 City shall call any Bonds for redemption and payment prior to the Stated Maturity thereof, the City shall give written notice of its intention to call and pay said Bonds to the State Treasurer and the Purchaser. In addition, the City 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 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 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 City 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 from and after the Redemption Date (unless the City 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 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. In addition to the foregoing notice, the City 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. Designation of Bond Paying Agent and Bond Registrar The City will at all times maintain a paying agent and bond registrar meeting the qualifications set forth in the Bond Resolutions. The City 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 City 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 City 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. 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 City 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 City 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 from the City of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest. 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 City 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 City 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. Book -Entry 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 from 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)(1) 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 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 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 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 (collectively, 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 maturity of such series of the Securities, 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 3.5 million issues of U.S. 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 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 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 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 a Standard & Poor's rating of AA +. 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 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 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 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 the Securities, except in the event that use of the book -entry system for the Securities is discontinued. 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. 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. 10 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 Securities unless authorized by a Direct Participant in accordance with DTC's MMI 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 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 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, 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 Securities purchased or tendered, through its Participant, to the Note Paying Agent and the Bond Paying Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to the Note Paying Agent and the Bond Paying Agent. The requirement for physical delivery of the 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 the Note Paying Agent's or Bond Paying Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Securities 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 to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. THE FINANCING PLAN The Note Projects Proceeds from the sale of the Notes will be used to provide construction period financing for improvements to certain main trafficways in the City and to pay the costs associated with the issuance of the Notes. 11 The projects to be financed with the Notes are as follows: Improvement Project Ordinance/ Fund Description Resolution No. Authority Deposit Downtown Street Lighting Res. 13 -6987 K.S.A. 12 -685 et seq. $3,150,000.00 Ninth and Cloud Improvements K.S.A. 12 -685 et seq. 650.000.00 $3,800,000.00 The Bond Projects Proceeds from the sale of the Bonds will be used to provide long term financing for certain public improvements within the City and to pay the costs associated with the issuance of the Bonds. The projects to be financed with the Bonds are as follows: Improvement Project Ordinance/ Fund Description Resolution No. Authority Deposit Magnolia Hills Subdivision Ord. 13 -10687 K.S.A. 12 -6a01 et seq. $ 262,704.31 Fire Station #1 Res. K.S.A. 12 -1736 et seq. 8250,000.00 East Magnolia Road Res. 11 -6812 K.S.A. 12 -685 et seq. 2,127,295.69 Bicentennial Center Res. 13 -6988 K.S.A. 12 -1736 et seq. 1,010,000.00 North Ohio Grade Separation Res. 06 -6237 K.S.A. 12 -685 etseq. 105,000.00 $4,330,000.00 A portion of the cost of these improvements was originally financed by the issuance of the City's Series 2012 -1 General Obligation Temporary Notes (the "Series 2012 -1 Notes "), which will be retired with proceeds from the sale of the Bonds. 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. Notes Bonds Sources of Funds: Note and Bond Proceeds Total Sources of Funds Uses of Funds: Deposit to Improvement Fund Retire Series 2012 -1 Notes Costs of Issuance Total Application of Funds RISK FACTORS AND INVESTMENT CONSIDERATIONS A PROSPECTIVE PURCHASER OF THE NOTES AND BONDS (COLLECTIVELY, THE "SECURITIES ") DESCRIBED HEREIN SHOULD BE AWARE THAT THERE ARE CERTAIN RISKS ASSOCIATED WITH THE SECURITIES WHICH MUST BE RECOGNIZED. THE FOLLOWING STATEMENTS REGARDING CERTAIN RISKS ASSOCIATED WITH THE OFFERING SHOULD NOT BE CONSIDERED AS A COMPLETE DESCRIPTION OF ALL RISKS TO BE CONSIDERED IN THE DECISION TO PURCHASE THE SECURITIES. PROSPECTIVE PURCHASERS OF THE SECURITIES SHOULD ANALYZE CAREFULLY THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT AND ADDITIONAL INFORMATION IN THE FORM OF THE COMPLETE DOCUMENTS SUMMARIZED HEREIN, COPIES OF WHICH ARE AVAILABLE AND MAY BE OBTAINED FROM THE CITY OR THE UNDERWRITER. 12 Legal Matters Various state and federal laws, regulations and constitutional provisions apply to the obligations created by the Securities. There is no assurance that there will not be any change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have a material effect, either directly or indirectly, on the City or the taxing authority of the City. Limitations on Remedies Available to Owners of Securities The enforceability of the rights and remedies of the owners of Securities, and the obligations incurred by the City in issuing the Securities, are subject to the following: the federal Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the United States Constitution; and the reasonable and necessary exercise, in certain unusual situations, of the police power inherent in the State of Kansas and its governmental subdivisions in the interest of serving a legitimate and significant public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Securities to judicial discretion and interpretation of their rights in bankruptcy and otherwise, and consequently may involve risks of delay, limitation or modification of their rights. Premium on Bonds [The initial offering prices of certain maturities of the Bonds that are subject to optional redemption are in excess of the respective principal amounts thereof.] Any person who purchases a Bond in excess of its principal amount, whether during the initial offering or in a secondary market transaction, should consider that the Bonds are subject to redemption at par under the various circumstances described under "THE BONDS — Redemption Provisions." No Additional Interest or Mandatory Redemption upon Event of Taxability Neither the Bond Resolution nor the Note Resolution provide for the payment of additional interest or penalty on the Securities or the mandatory redemption thereof if the interest thereon becomes includable in gross income for federal income tax purposes. Likewise, neither the Bond Resolution nor the Note Resolution provide for the payment of any additional interest or penalty on the Securities if the interest thereon becomes includable in gross income for Kansas income tax purposes. Suitability of Investment The tax exempt feature of the Securities is more valuable to high tax bracket investors than to investors who are in low tax brackets, and so the value of the interest compensation to any particular investor will vary with individual tax rates. Each prospective investor should carefully examine this Official Statement, including the Appendices hereto, and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Securities are an appropriate investment. Market for the Securities Ratings. The Securities have been assigned the financial ratings set forth in the section hereof titled RATINGS. There is no assurance that a particular rating will remain in effect for any given period of time or that it will not be revised, either downward or upward, or withdrawn entirely, if in the judgment of the agency originally 13 establishing such rating, circumstances so warrant. Any downward revision or withdrawal of any rating may have an adverse affect on the market price of the Securities. Secondary Market. There is no assurance that a secondary market will develop for the purchase and sale of the Securities. Prices of securities traded in the secondary market, though, are subject to adjustment upward and downward in response to changes in the credit markets. From time to time it may be necessary to suspend indefinitely secondary market trading in the Securities as a result of financial condition or market position of broker - dealers, prevailing market conditions, lack of adequate current financial information about the City, or a material adverse change in the financial condition of the City, whether or not the Securities are in default as to principal and interest payments, and other factors which may give rise to uncertainty concerning prudent secondary market practices. Recent Legislative Proposal Congress and the President are working on various proposals to increase income taxes and to reduce tax deductions and expenditures. These discussions have made it clear that the tax exemption of municipal bonds is considered a tax expenditure and as such there is no guaranty that the tax exempt status on municipal bonds will remain unchanged as a result of these discussions. If a legislative change is enacted which results in all, or a portion, of the interest on the Bonds being subjected to Federal income taxes, such legislation or proposals could affect the value or marketability of the Bonds. Prospective purchasers of the Bonds should consult their own tax advisers regarding the impact of any change in law on the Bonds. LEGAL MATTERS All matters incident to the authorization and issuance of the Securities by the City are subject to the approval of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel. The factual and financial information appearing herein has been supplied or reviewed by certain officials of the City and its certified public accountants, as referred to herein. Bond Counsel has participated in the preparation of the matters appearing in the sections of this Official Statement captioned INTRODUCTORY STATEMENT, THE NOTES, THE BONDS, LEGAL MATTERS, TAX MATTERS, CONTINUING DISCLOSURE, and APPENDIX B —OMNIBUS CONTINUING DISCLOSURE UNDERTAKING. TAX MATTERS General The following is a summary of the material federal and State of Kansas income tax consequences of holding and disposing of the Notes and the Bonds (collectively referred to herein as 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. 14 Opinion of Bond Counsel In the opinion of Bond Counsel, under the law existing as of the issue date of the Securities: Federal Tax Exemption: The interest on the Securities [(including any original issue discount properly allocable to an owner thereof)] is excluded from gross income for federal income tax purposes. Alternative Minimum Tax. Interest on the Securities is not an item of tax preference for purposes of computing 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. Bank Qualification. The Securities are "qualified tax - exempt obligations" for purposes of Code §265(b)(3. Kansas Tax Exemption. The interest on the Securities is exempt from income taxation by the State of Kansas. No Other Opinions. Bond Counsel's opinions are provided as of the date of the original issue of the Securities, subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Securities in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Securities in gross income for federal income tax purposes retroactive to the date of issuance of the Securities. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Securities. Other Tax Consequences [ Original Issue Discount. For Federal income tax purposes, original issue discount ( "OID ") is the excess of the stated redemption price at maturity of a Security over its issue price. The issue price of a Security is the first price at which a substantial amount of the Securities of that maturity have been sold (ignoring sales to bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers). Under Code § 1288, OID on tax - exempt bonds accrues on a compound basis. The amount of OID that accrues to an owner of a Security during any accrual period generally equals: (a) the issue price of that Security, plus the amount of OID accrued in all prior accrual periods; multiplied by (b) the yield to maturity on that Security (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period); minus (c) any interest payable on that Security during that accrual period. The amount of OID accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excludable from gross income for Federal income tax purposes, and will increase the owner's tax basis in that Security. Prospective investors should consult their own tax advisors concerning the calculation and accrual of OID.] [ Original Issue Premium. If a Security is issued at a price that exceeds the stated redemption price at maturity of the Security, the excess of the purchase price over the stated redemption price at maturity constitutes "premium" on that Security. Under Code § 171, the purchaser of that Security must amortize the premium over the term of the Security using constant yield principles, based on the purchaser's yield to maturity. As premium is amortized, the owner's basis in the Security and the amount of tax - exempt interest received will be reduced by the amount of amortizable premium properly allocable to the owner. This will result in an increase in the gain (or decrease in the loss) to be recognized for Federal income tax purposes on sale or disposition of the Security prior to its maturity. Even though the owner's basis is reduced, no Federal income tax deduction is allowed. Prospective investors should consult their own tax advisors concerning the calculation and accrual of bond premium.] 15 Sale, Exchange 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 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 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. Collateral Federal Income 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. RATINGS 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 ( "Moody's "). 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 theirjudgment, 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 City in connection with the sale of the Securities. The Financial Advisor has assisted the City in the preparation of this Official Statement and in other matters relating to the issuance of the Securities. The fees of the Financial Advisor are contingent upon the issuance of the Securities. UNDERWRITING The Notes were purchased at public sale on , 2013, by Underwriter") at a price equal to , plus accrued interest to the date of closing. The Bonds were purchased at public sale on , 2013, by Underwriter") at a price equal to , plus accrued interest to the date of closing. (the "Notes (the "Bonds The Notes Underwriter and the Bonds Underwriter are collectively referred to herein as (the "Underwriters "). 16 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 15c2 -12 (the "Rule "), requiring continuous secondary market disclosure. The Issuer has adopted an Omnibus Continuing Disclosure Undertaking (the "Disclosure Undertaking ") wherein 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 the Municipal Securities Rulemaking Board. In the Note Resolution and the Bond Resolution, the Issuer has covenanted with the Underwriter and the Beneficial Owners to apply the provisions of the Disclosure Undertaking to the Securities. This covenant is for the benefit of and is enforceable by the Beneficial Owners of the Securities. For more information regarding the Issuer's continuing disclosure undertaking, see APPENDIX B — OMNIBUS CONTINUING DISCLOSURE UNDERTAKING. The City filed with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access system ( "EMMA ") the annual financial information and operating data required pursuant to its existing continuing disclosure undertakings and complied in a timely manner with its obligations for the fiscal years ending December 31, 2011 and December 31, 2012. During prior years the City did not always file the annual financial information and operating data within 180 days of the end of its fiscal year as required. Past failures to file the annual financial information was primarily the result of not having audited financial statements completed within 180 days of the end of the fiscal year. The required operating data was made available to the public through the City's filing of certain official statements with the MSRB in April 2011 and 2010, July 2009 and 2008, and June 2007. The City has put into place procedures to assist in continued compliance with all undertakings with respect to the City's note and bond issues including the formal adoption of a post issuance compliance policy and adoption of an omnibus continuing disclosure undertaking. 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. ATTEST: City Clerk 17 CITY OF SALINA, KANSAS By /s/ Director of Finance and Administration APPENDIX A INFORMATION CONCERNING THE CITY APPENDIX A FINANCIAL OVERVIEW OF THE CITY 2012 Estimated Actual Valuation (1) $ 2,884,188,981 2012 Assessed Valuation $ 451,404,026 Outstanding General Obligation Bonds (2) $ 62,915,000 Population -2011 U.S. Census Bureau Estimate 47,910 General Obligation Debt Per Capita $ 1,313 Ratio of General Obligation Debt to Estimated Actual Valuation 2.18% Ratio of General Obligation Debt to Estimated Assessed Valuation 13.94% Outstanding Temporary Notes (3) $ 3,800,000 Outstanding Lease Purchase Obligations $ 0.00 Outstanding Revenue Bonds $ 15,780,000 Overlapping General Obligation Debt (4) $ 60,033,027 Direct and Overlapping General Obligation Debt (5) $ 126,748,027 Direct and Overlapping Debt Per Capita $ 2,646 Ratio of Direct and Overlapping Debt to Estimated Actual Valuation 4.39% Ratio of Direct and Overlapping Debt to Estimated Assessed Valuation 28.08% (1) For a further description of how Estimated Actual Valuation is calculated and additional historical figures see the section titled FINANCIAL INFORMATION CONCERNING THE CITY— "Estimated Actual Valuation ". (2) Includes the Bonds. (3) Includes the Notes. Does not include notes to be retired with proceeds from the sale of the Bonds. (4) For a more detailed explanation of the overlapping debt of the other jurisdictions, see DEBT SUMMARY OF THE CITY - "Overlapping Debt ". (5) Includes outstanding general obligation bonds and temporary notes of the City and overlapping jurisdictions. A -1 GENERAL INFORMATION CONCERNING THE CITY 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 2011 U.S. Census Bureau estimate of 47,910. The City is the county seat for Saline County which had an estimated 2011 U.S. Census Bureau population of 55,844. 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 23 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 Title Term Expires Barb Shirley Mayor 2015 Aaron Householter Vice Mayor 2015 Kaye Crawford Commissioner 2017 Jon Blanchard Commissioner 2017 Randall Hardy Commissioner 2015 Population The City of Salina has a population that is approaching metropolitan area status. This is defined by the U.S. Census Bureau as cities with 50,000 inhabitants or more. According to the U. S. Census Bureau, the City's citizens had a median age of 36.4 years in 2010. The following table and graph show the population for the City for selected years as provided by the U.S. Census Bureau. A -2 U.S. Census Year Bureau Population 2010 47,707 2009 46,180 2008 45,998 2007 46,025 2006 45,898 A -2 Police and Fire Protection The City of Salina provides police and fire protection services to residents of the City and surrounding areas. Firefighting 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 81 full -time police officers and operates 37 police vehicles, including patrol vehicles, motorcycles, and Cushmans. Educational Facilities 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. Current enrollment is over 7,000. The District also operates alternative education, vocational - technical, and special education schools. 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. Kansas State University at Salina. The University offers a variety of two- and four -year aviation and technology degree programs. 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 716 students are currently enrolled in the school. 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. Transportation In addition to 1 -70 and 1 -135, US -81 and US -40 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 Regional Airport and scheduled air service is provided by SeaPort Airlines, offering weekday and weekend flights to Kansas City and Denver. 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 for the Airport. SBC provides telephone service. Two cellular phone companies provide service to the City. A -3 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 Ten banks operating a total of 24 different facilities are located in the City. Four banks are headquartered in the City and reported combined deposits in excess of $1.99 billion as of December 31, 2012. A savings bank has a branch office in the City. Pension and Employee Retirement Plans The City participates in the Kansas Public Employees Retirement System ( KPERS) established in 1962, as an instrumentality of the State, pursuant to K.S.A. 74 -4901 et seq., to provide retirement and related benefits to public employees in Kansas. KPERS is governed by a board of trustees consisting of nine members, including four members appointed by the Governor subject to confirmation by the State Senate, one appointed by the President of the Senate, one appointed by the Speaker of the House of Representatives, two elected by members and retirants of the retirement system, who must be members of such system, and the State Treasurer. Members of the board of trustees serve four -year terms and elect a chairperson annually. The board of trustees appoints an Executive Director to serve as the managing officer of KPERS and employs a staff of approximately 95 people. As of June 30, 2012, KPERS serves about 281,000 members and 1,500 participating employers, including the State, school districts, counties, cities, public libraries, hospitals and other governmental units. KPERS administers the following three statewide, defined benefit retirement plans for public employees: (a) Kansas Public Employees Retirement System; (b) Kansas Police and Firemen's Retirement System; and (c) Kansas Retirement System for Judges. These three plans are separate and distinct with different membership groups, actuarial assumptions, experience, contribution rates and benefit options. The Kansas Public Employees Retirement System is the largest of the three plans, accounting for more than 95% of the members. The Kansas Public Employees Retirement System is further divided into two separate groups, as follows: (a) State /School Group - includes members employed by the State, school districts, community colleges, vocational - technical schools and educational cooperatives. The State of Kansas makes all employer contributions for this group, 85% of which comes from the State General Fund. State legislation enacted in 2003 made certain pre -1962 Board employees (which are part of a small group of pre -1962 Board and University of Kansas Hospital Authority employees known as the "TIAA Group "), special members of the State /School Group. (b) Local Group - all participating cities, counties, library boards, water districts and political subdivisions are included in this group. Local employers contribute at a different rate than the State /School Group rate. State legislation enacted in 2003 made certain pre -1962 employees of the University of Kansas Hospital Authority (which are a part of a small group of pre -1962 Board and University of Kansas Hospital Authority employees known as the "TIAA Group "), special members of the Local Group. A -4 KPERS is currently a qualified, governmental, § 401(a) defined benefit pension plan, and has received IRS determination letters attesting to the plan's qualified status dated October 14, 1999 and March 5, 2001. KPERS is also a "contributory" defined benefit plan, meaning that employees make contributions to the plan. This contrasts it from noncontributory pension plans, which are funded solely by employer contributions. The City's employees currently annually contribute: (a) 4% of their gross salary to the plan if such employees are KPERS Tier 1 members (covered employment prior to July 1, 2009), or (b) 6% of their gross salary to the plan if such employees are KPERS Tier 2 members (covered employment on or after July 1, 2009). In 2012, the Kansas legislature created a new KPERS Tier 3 category (covered employment on or after January 1, 2015) based on a cash balance plan. Each Tier 3 participant shall have a retirement annuity account to which such participant shall contribute 6% of their gross salary to the plan. The employer or State contribution varies based on longevity of participant service: (1) 3% for less than 5 years; (2) 4% for at least 5 years but less than 12 years; (3) 5% for at least 12 years but less than 24 years; and (4) 6% for 24 or more years. Such account shall receive an interest credit of 5.25% per annum, and under certain circumstances, shall receive additional interest credits. Subject to certain exceptions, a Tier 3 participant, upon retirement, shall receive a single life annuity benefit. The 2012 Kansas legislature adopted a number of other changes to KPERS, including: (a) increasing the statutory maximum employer contribution annual increase from 0.6% per year (status quo) to 0.9% per year in 2014, 1.0% in 2015, 1.1% in 2016 and 1.2% per year by 2017, (b) providing additional contribution flexibility for Tier 1 participants with corresponding benefit adjustments (effective January 1, 2014), (c) eliminating COLA adjustments for Tier 2 participants with corresponding benefit adjustments (effective January 1, 2014) and (d) providing additional flexibility for alternative investments for the plan. According to the Valuation Report as of December 31, 2011 (the "Valuation Report ") the KPERS Local Group, of which the Issuer is a member, carried an unfunded accrued actuarial liability ( "UAAL ") of $1.542 billion at the end of 2011. KPERS' actuaries identified that an employer contribution rate of 9.77% of covered payroll would be necessary, in addition to statutory contributions by covered employees, to eliminate the UAAL by 2033, the end of the actuarial period. Because the annual growth in employer contribution rates is limited by State law, the actual contribution rate permitted at the time of calculation was only 8.84 %. As a result, members of the Local Group are underfunding their projected actuarial liabilities and the UAAL can be expected to grow over time. KPERS' actuaries project the required employer contribution rate to increase by the maximum statutorily allowed rate, which is currently 0.6% per year, then 0.9% in fiscal year 2014, 1.0% in fiscal year 2015, 1.1% in fiscal year 2016 and 1.2% in fiscal year 2017, until such time as the permitted rate equals the actuarial rate. The authors of the Valuation Report expect this to occur in approximately 2017 based upon the actuarial assumptions made by the authors.] ( The City has established membership in the Kansas Police and Fire Retirement System ( "KPFRS ") for its police and fire personnel. KPFRS is a division of and is administered by KPERS. Annual contributions are adjusted annually based on actuarial studies, subject to legislative caps on percentage increases. Commencing with the first payroll period on or after July 1, 2013, employees contribute 7.15% of gross compensation and the City contributes 21.03% of employees' gross compensation. The 2013 Kansas Legislature adopted a number of changes to the KPFRS which included (a) raising the cap on maximum KPFRS benefits from 80% to 90% of final average salary and (b) permitting certain active KPFRS members to pay a lump sum amount prior to or on their retirement date to enhance the individual retirement benefit at their own cost.] Other Information Public recreation facilities available to city residents include 27 parks, a public golf course, baseball /softball fields, the Kenwood Cove Aquatic Park, the Stifel Theatre for the Performing Arts, the Salina Community Theater, two museums, tennis courts, and ice and roller skating facilities. Two private clubs provide additional recreational opportunities for residents of the City. A -5 The Bicentennial Center, a 7,500 -seat facility, with over 40,000 square feet of exhibit space, nicknamed "Mid- America's Meeting Place ", provides a venue for the region's 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. One public library with over 230,000 volumes, two college libraries, a medical library, and a law library are located within the City. ECONOMIC INFORMATION CONCERNING THE CITY 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 Schwan's Global Supply Chain, Inc., Salina Vortex, GeoProbe, Bergkamp, Kasa Industrial Controls, Premier Pneumatics, Great Plains Manufacturing, PKM Steel, Crestwood Cabinets, McShares, Inc., Pepsi Cola, ElDorado Bus, Exide Battery, Advance Auto Parts Distribution Center, 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 24- county regional trade center for north central Kansas. Many individuals and businesses within a 70 -mile radius travel to the City to purchase consumer goods and services. This designation as a regional trade center is supported by the fact that the City had the third highest "trade pull factor" of all Kansas first class cities in 2012 according to Kansas State University. City trade pull factor is computed by dividing the per capita sales tax of a city by the statewide per capita sales tax. 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. 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 College 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. Several major commercial projects are currently under construction in Salina. Dillon Companies, Inc., a subsidiary of Kroger Company, recently completed and opened a 77,000 square foot facility. Dick's Sporting Goods is in the process of rehabilitating a facility formerly occupied by Sutherland Lumber Company. The location will be shared with a Marshalls clothing store. In addition, several new restaurants have either opened or are under construction, including Olive Garden, Longhorn Steakhouse, Starbucks and Taco Bell. Daimaru steakhouse doubled in size at a new location. Unified School District No. 305 has completed construction of a new maintenance and school service facility, consolidating operations from 3 separate locations. The community has 1,200 acres of industrial sites available in North Salina, the South Industrial District, and the Airport Industrial Center. Sites range in size from 1 -to 240 acres, and are available for aviation, manufacturing, and distribution and warehouse businesses. A -6 The Salina Airport Authority 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 Air Force Base, 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. In 2012, the Salina Municipal Airport was renamed the Salina Regional Airport. The Salina Regional Airport is the only commercial service airport serving Salina /Saline County and the 24- 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 adjacent to the Airport. The University offers degrees in professional flight training, airframe and power plant maintenance, and avionics technology. Scheduled air service is provided by SeaPort Airlines. The airline offers weekday and weekend flights to the Kansas City International hub. In 2012, the Airport enplaned 2,723 passengers and also accommodates a wide variety of aircraft including business jets, military, flight training and general aviation aircraft. In 2012, the Salina Air Traffic Control Tower logged over 97,338 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 2.59 million gallons of fuel to the wide variety of aircraft utilizing the Airport in 2012. As of December 31, 2011, over 70 businesses and organizations at the Salina Regional Airport and Airport Industrial Center employed over 3,700 employees with a combined payroll in excess of $140 million. 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, and the Kansas Department of Commerce for the retention of existing business and industry and the recruitment of new business and industry. Major 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. Name Schwan's Global Supply Chain, Inc. Unified School District No. 305 Salina Regional Health Center Exide Technologies Blue Philips Lighting Company City of Salina Walmart Dillon Stores Solomon Corporation Great Plains Manufacturing ElDorado National Crestwood, Inc. Advance Auto Parts Source: Salina Chamber of Commerce A -7 Estimated Product /Business Employment Frozen Pizza 1,800 School System 1,659 Health Care 1,300 Battery Manufacturer 750 Fluorescent Lamps 490 City Government 465 Discount Retail 421 Grocery 343 Electrical Equipment 324 Agricultural & Landscaping Equipment 258 Transit and Shuttle Busses 221 Wooden Cabinets 219 Distribution Center 195 A -7 Income The following table shows the per capita personal income for residents of Saline County and the State during the years indicated: Source: Kansas Statistical Abstract, 2011 Labor Force The following tables show the labor force figures for the City of Salina and the State of Kansas. City of Salina: Saline State of Year County Kansas 2010 $39,384 $38,977 2009 38,752 38,301 2008 40,675 40,466 2007 36,781 37,663 2006 35,759 35,678 Source: Kansas Statistical Abstract, 2011 Labor Force The following tables show the labor force figures for the City of Salina and the State of Kansas. City of Salina: Total Unemployment Year Total Employed Unemployed Unemployment Year Labor Force Employed Unemployed Rate 2013 (May) 25,974 24,515 1,459 5.6% 2012 25,808 24,241 1,567 6.1 2011 26,004 24,349 1,655 6.4 2010 26,156 24,434 1,722 6.6 2009 26,765 25,153 1,612 6.0 State of Kansas: Source: Kansas Department of Labor REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY A -8 Total Unemployment Year Labor Force Employed Unemployed Rate 2013 (May) 1,491,745 1,405,036 86,709 5.8% 2012 1,489,320 1,403,866 85,454 5.7 2011 1,498,872 1,401,055 97,817 6.5 2010 1,506,229 1,399,805 106,424 7.1 2009 1,509,447 1,401,704 107,743 7.1 Source: Kansas Department of Labor REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY A -8 DEBT SUMMARY OF THE CITY 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: Date Amount Final Amount Issued Series Purpose of Issue Maturity Outstanding 07 -15 -03 2003 -A Internal Improvements $ 4,350,000 10 -01 -13 $ 320,000 05 -01 -04 2004 -A Refunding 5,585,000 08 -01 -15 760,000 07 -15 -05 2005 -A Internal Improvements 4,210,000 10 -01 -13 330,000 03 -15 -06 2006 -A Internal Improvements 2,200,000 10 -01 -26 1,540,000 07 -15 -06 2006 -B Internal Improvements 885,000 10 -01 -21 465,000 06 -15 -07 2007 -A Internal Improvements 6,545,000 10 -01 -27 4,725,000 07 -15 -08 2008 -A Internal Improvements 3,720,000 10 -01 -23 2,750,000 12 -15 -08 2008 -B Internal Improvements 3,525,000 07 -01 -28 3,165,000 07 -15 -09 2009 -A Internal Improvements 23,695,000 10 -01 -29 18,960,000 05 -01 -10 2010 -A Refunding & Improvement 6,875,000 10 -01 -25 5,235,000 10 -15 -10 2010 -B Refunding 7,860,000 10 -01 -23 6,510,000 07 -15 -11 2011 -A Internal Improvements 6,565,000 10 -01 -31 6,315,000 07 -15 -12 2012 -A Internal Improvements 2,365,000 10 -01 -27 2,365,000 07 -15 -12 2012 -B Refunding 3,785,000 10 -01 -20 3,785,000 02 -15 -13 2013 -A Taxable Improvements 1,360,000 10 -01 -28 1,360,000 07 -15 -13 2013 -B Improvements 4,330,000 10 -01 -33 4,330,000 $62,915,000 A portion of the City's outstanding general obligation bonds are payable from special assessments levied upon properties benefited by certain internal improvement projects, local option sales tax and transfers from enterprise funds of the City. If such payments are not provided in a timely manner, the principal of and interest on the bonds must then be paid from the City's ability to levy unlimited ad valorem taxes. See FINANCIAL INFORMATION - "Special Assessments" for a further description of special assessment financing. Temporary Notes: Final Original Date Maturity Note Amount Project Series Issued Date Amount Outstanding Street, Water, and Sewer 2012 -1 07 -15 -12 08 -01 -13 $1,485,000 $ 0* Street 2013 -1 07 -15 -13 08 -01 -14 3,800,000 3,800,000 $3,800,000 *Entire amount outstanding ($1,485,000) to be retired with proceeds from the sale of the Bonds. Revenue Bonds: Revenue bonds are payable solely from the net revenues derived by the City from the operation of its combined water and sewage system. Revenue bonds do not represent a general obligation indebtedness of the City for which the City's taxing ability has been pledged. Date Amount Final Amount Issued Purpose of Issue Maturity Outstanding 04 -15 -11 Improvements $16,120,000 10 -01 -31 $15,780,000 A -9 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 31, 2012. Amount Jurisdiction Outstanding Salina Airport Authority $25,080,000 Unified School District No. 305 37,335,000 Saline County 0 Annual Debt Payments Estimated Share of the Ci Amount Percentage $25,080,000 100.00% 34,953,027 93.62 0 $60,033,027 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. A -10 Total Outstanding Bonds Series 2013 -B Bonds Year Principal Interest Principal Interest 2013 $ 6,210,000 $ 1,831,356 $ 0 2014 6,070,000 1,809,182 205,000 2015 5,320,000 1,618,936 235,000 2016 5,160,000 1,460,974 235,000 2017 4,935,000 1,302,434 240,000 2018 5,015,000 1,124,416 245,000 2019 4,895,000 935,369 250,000 2020 3,070,000 784,524 260,000 2021 2,830,000 686,909 265,000 2022 2,870,000 588,779 270,000 2023 2,640,000 485,386 275,000 2024 2,340,000 386,372 285,000 2025 2,000,000 295,909 290,000 2026 1,660,000 216,312 300,000 2027 1,370,000 149,019 310,000 2028 1,065,000 93,685 315,000 2029 625,000 47,878 65,000 2030 250,000 21,675 65,000 2031 260,000 11,050 70,000 2032 0 0 70,000 2033 0 0 80,000 $58,585,000 $13,850,165 $4,330,000 A -10 Total Historical Debt Information The following table shows historical balances of outstanding general obligation bonds for the City during the most recent five -year period. 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 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 typically undertakes such projects after receiving and reviewing a valid petition from property owners. See FINANCIAL INFORMATION — "Special Assessments ". The City has been involved with civil litigation concerning environmental contamination in certain areas within the boundaries of the Salina Airport Industrial Center. The contamination was caused by military activity that occurred between 1942 and 1966 when the site was operated as the Schilling Air Force Base. The City, the Salina Airport Authority, Unified School District No. 305, and Kansas State University (the "Salina Public Entities ") sued the Unites States seeking federal funds to clean up federal agency (DoD) caused contamination. The Salina Public Entities have reached a settlement agreement with the U.S. Department of Justice (DO1) and the terms of the settlement are detailed in a Consent Decree filed in U.S. District Court on May 2nd, 2013. The Consent Decree provides for a 10% local share of initial project costs to be paid by the City. 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 supply wells. The exact timing and amount, if any, of such borrowing cannot be determined at this time. If City borrowing is necessary for the project, it is anticipated that utility revenue bonds will be the final type of debt considered. Debt Payment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. 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 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. A -11 Bonds Debtto Debtto U.S. Debt Outstanding Assessed Estimated Actual Census Per Year December 31 Valuation Valuation Population Capita 2012 $57,355,000 12.71% 1.99% 47,910 $1,197.14 2011 61,045,000 13.57 2.11 47,707 1,279.58 2010 60,280,000 13.44 2.09 47,707 1,263.55 2009 52,900,000 11.81 1.83 46,180 1,145.52 2008 31,645,000 7.01 1.09 45,998 687.96 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 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 typically undertakes such projects after receiving and reviewing a valid petition from property owners. See FINANCIAL INFORMATION — "Special Assessments ". The City has been involved with civil litigation concerning environmental contamination in certain areas within the boundaries of the Salina Airport Industrial Center. The contamination was caused by military activity that occurred between 1942 and 1966 when the site was operated as the Schilling Air Force Base. The City, the Salina Airport Authority, Unified School District No. 305, and Kansas State University (the "Salina Public Entities ") sued the Unites States seeking federal funds to clean up federal agency (DoD) caused contamination. The Salina Public Entities have reached a settlement agreement with the U.S. Department of Justice (DO1) and the terms of the settlement are detailed in a Consent Decree filed in U.S. District Court on May 2nd, 2013. The Consent Decree provides for a 10% local share of initial project costs to be paid by the City. 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 supply wells. The exact timing and amount, if any, of such borrowing cannot be determined at this time. If City borrowing is necessary for the project, it is anticipated that utility revenue bonds will be the final type of debt considered. Debt Payment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. 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 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. A -11 FINANCIAL INFORMATION CONCERNING THE CITY Financial Statement Summary The following is a summary of the combined revenues, expenditures, and fund balances for the City's General Fund for the most recent years as shown in the City's Comprehensive Annual Financial Reports. This summary has not been prepared or reviewed by the City's auditor. Assessed Valuation According to the Saline County Clerk's Office, the following table gives the November 1 assessed valuation of the City, unless otherwise noted, in the years indicated. Audited Audited Audited Revenues: 2009 2010 2011 Property Taxes $ 9,909,912 $ 8,764,040 $ 8,671,423 Sales Tax 11,668,987 11,117,078 11,767,400 Other Taxes 4,789,524 4,965,601 5,083,919 Intergovernmental 1,227,486 1,008,482 813,185 Charges for Services 5,375,308 7,193,831 7,822,307 Investment Revenue 0 0 28,972 Miscellaneous 356,249 352,308 501,260 Total Revenues $33,327,466 $33,401,340 $34,688,466 Expenditures: 447,800,878 2008 356,678,712 General Government $ 3,007,751 $ 3,549,487 $ 3,461,488 Public Safety 17,883,362 18,228,881 18,117,827 Public Works 6,345,981 6,245,355 6,132,020 Public Health and Sanitation 1,176,096 1,176,743 1,176,082 Culture and Recreation 2,294,894 2,599,921 2,734,957 Planning and Development 2,381,797 2,428,900 2,319,300 Capital Outlay 887,449 560,129 555,048 Total Expenditures $33,977,330 $34,789,416 $34,496,722 Revenues Over (Under) Expenditures $ (649,864) $(1,388,076) $ 191,744 Other Sources (Uses) (292,278) (82,124) (129,111) Net Change in Fund Balance $ (942,142) $(1,470,200) $ (62,633) Fund Balance January 1 $ 6,029,523 $ 5,087,381 $ 3,617,181 Restatement of Prior Year Balance - - 156,424 Fund Balance December 31 $ 5,087,381 $ 3,617,181 $ 3,836,238 Assessed Valuation According to the Saline County Clerk's Office, the following table gives the November 1 assessed valuation of the City, unless otherwise noted, in the years indicated. (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 ". A -12 State Total Real Personal Assessed Motor Assessed Year Estate Property (1) Utilities Vehicle Valuation 2012 $369,416,422 $18,654,394 $15,779,466 $47,553,744 $451,404,026 2011 367,750,803 19,918,188 14,685,585 47,406,062 449,760,638 2010 364,544,771 21,488,933 14,214,579 48,184,331 448,432,614 2009 358,979,211 24,760,806 13,730,609 50,330,252 447,800,878 2008 356,678,712 28,373,980 14,929,456 51,351,656 451,333,804 2007 342,045,389 34,507,464 16,175,634 50,548,706 443,277,193 (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 ". A -12 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 November 1 estimated actual valuations for the City in the years indicated. 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. 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. 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. A -13 Residential Real Estate Estimated Year Equalization Ratio Actual Value 2012 11.95% (prel) $2,884,188,981 2011 12.04 2,891,461,447 2010 11.89 2,888,659,004 2009 11.67 2,893,359,541 2008 11.66 2,914,775,730 2007 11.68 2,833,709,391 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. 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. 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. A -13 Personal property taxes are assessed, due and may be paid in the same manner as real estate taxes. Motor vehicle property taxes are based on valuations provided by the Kansas Department of Revenue and the county average tax rate for the county in which the vehicle is registered. Motor vehicle taxes are payable to the county treasurer at the time of the vehicle's annual registration. Vehicle registration dates are assigned by the State in a manner such as to equal registration over a twelve -month period. Motor vehicle taxes are distributed by the county to the state, city and other taxing jurisdictions based on their proportionate tax levies. Delinquent personal and motor vehicle taxes are penalized at the same rate as delinquent real property taxes. The following is a summary of tax collections for the years shown. *Collections as of May 31, 2013 Tax Levies Nov Nov Current Nov Current and Delinquent Levy Tax Taxes Tax Collections Tax Collections Year Rate Levied Amount % Amount % 2012* 26.190 $10,588,130 $ 9,845,384 93.0% $ 9,954,860 94.0% 2011 26.272 10,582,043 10,276,937 97.1 10,522,106 99.4 2010 26.022 10,425,260 9,823,578 94.2 10,118,285 97.1 2009 25.855 10,289,701 9,831,289 95.5 10,126,228 98.4 2008 25.886 10,369,087 9,825,122 94.8 10,119,876 97.6 2007 23.959 9,432,248 8,941,650 94.8 9,209,900 97.6 *Collections as of May 31, 2013 Tax Levies Largest Taxpayers According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their November 2012 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. Company Schwan's Sales (Tony's Pizza) Westar Energy Garrison Salina Owner LLC Salina Regional Health Centers Kansas Gas Service Menard Inc. Gateway Adams Inc. (Midstate Plaza) Wal -Mart Stores (includes Sam' s) Southwestern Bell Telephone Great Plains Manufacturing Nov Nov Nov Nov Nov Business 2008 2009 2010 2011 2012 Utility Levy Levv Levy L_yy Levy City of Salina 25.886 25.855 26.022 26.272 26.190 Salina Library 5.419 5.413 5.372 5.292 5.452 State Education & Other 1.500 1.500 1.500 1.500 1.500 Unified School District No. 305 58.547 58.495 58.913 58.820 58.649 Airport Authority 2.877 4.315 4.055 4.007 4.007 Central Kansas Extension District 1.175 1.173 1.204 1.179 1.176 Saline County 29.347 31.303 31.432 32.576 34.823 Total 124.751 128.054 128.498 129.646 131.797 Largest Taxpayers According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their November 2012 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. Company Schwan's Sales (Tony's Pizza) Westar Energy Garrison Salina Owner LLC Salina Regional Health Centers Kansas Gas Service Menard Inc. Gateway Adams Inc. (Midstate Plaza) Wal -Mart Stores (includes Sam' s) Southwestern Bell Telephone Great Plains Manufacturing of Type of Assessed Total Business Valuation Valuation Manufacturing $ 8,050,871 1.78% Utility 7,852,360 1.74% Regional Shopping Center 6,160,267 1.36% Hospital and Medical Offices 4,317,497 0.96% Utility 3,352,360 0.74% Home Improvement Store 3,552,249 0.79% Shopping Center 3,551,440 0.79% Discount Retail 3,458,708 0.77% Utility 2,464,079 0.55% Manufacturing 2,346,169 0.52% $45,106,000 10.00% A -14 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 Value 2012 $54,863,040 2011 19,752,335 2010 52,358,547 2009 12,192,481 2008 18,276,022 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 8.20 %, which consists of 6.3% 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 .50% citywide sales tax for purposes of helping fund general operations expenditures of the City. In November 1998, voters within the City approved an additional .25% restricted local option sales tax to be collected through June 1, 2004 and distributed to Unified School District No. 305 to fund educational technology. The 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 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. 2008 1992 City's Portion of .40% Citywide .50% Citywide 1% Countywide Local Option Local Option Local Option Year Sales Tax Receipts Sales Tax Receipts Sales Tax Receipts 2009 $3,379,938 (1) $4,987,415 $6,703,839 2010 3,861,809 4,818,398 6,339,236 2011 4,080,342 5,076,751 6,690,649 2012 4,244,974 5,306,218 6,992,853 2013 (thru May) 1,083,085 2,253,857 2,916,200 (1) The 2008.40% sales tax became effective April 1, 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 A -15 Budeetine Procedures Applicable Kansas statutes require that budgets be legally adopted for all funds (including debt service and enterprise funds) unless exempted by a specific statute. All budgets are prepared utilizing the modified accrual basis further modified by the encumbrance method of accounting. For example, commitments such as purchase orders and contracts, in addition to disbursements and accounts payable, are recorded as expenditures. The statutes provide that the budget for the succeeding calendar year must be prepared on or before August 1 and published on or before August 5 of each year. A public hearing is required to be held on or before August 15, with the final budget being adopted on or before August 25 of each year. Original appropriations may be modified by supplemental appropriations and transfers among budget categories. The City Commission must approve all significant changes. Kansas law prohibits cities and other governmental units from creating indebtedness unless there is money on hand in the proper fund and unencumbered by previous commitments with which to pay the indebtedness. The execution of a contract, or the issuing of a purchase order, automatically encumbers the money in the fund for the payment of the amount represented by the commitment. It makes no difference that the amount may not have to be paid until more moneys are in the fund or until the following year. An exception to this cash basis law is the issuance of debt, in the form of bonds, notes, or warrants, pursuant to statutory authority, referendum or by the State Board of Tax Appeals. In the event debt is issued, funds need not be on hand for future payments. Appraisal and Assessment Procedures The determination of appraised and assessed valuation and the collection of property taxes for all political subdivisions in the State of Kansas are the responsibility of the various counties. The Saline County appraiser annually determines the appraised valuation of property located in the City. The appraiser's determination is based on a number of criteria established by Kansas's statute. All property, with the exception of agricultural land, is appraised based on estimated fair market value. Agricultural property is appraised based on productivity value. Kansas statutes require that each parcel of real property be reviewed and inspected by the county appraiser once every four years for taxation purposes. Once appraised valuations have been determined, they are multiplied by the applicable statutory assessment rates to arrive at the assessed valuations. The total assessed valuation is then used to establish property tax rates. Property Assessment Rates In order to determine the assessed valuation of a parcel of property for taxation purposes, the county appraiser multiplies the appraised value of the parcel by the applicable assessment rate. Current property assessment rates were established in 1986, effective in 1989, and slightly modified in 1992. The most significant 1992 modifications involved lowering the assessment rate on commercial and industrial real property from 30% to 25% and on residential property from 12% to 11.5 %. The following table shows the current assessment rates for the different classes of taxable tangible property within the State of Kansas. Real Property: Residential 11.5% Commercial and Industrial- Real Property 25.0 Agricultural Land (1) 30.0 Agricultural Improvements 25.0 Vacant Lots 12.0 Not - for - Profit (2) 12.0 All Other 30.0 A -16 Personal Property: (3) Mobile Homes Mineral Leaseholds (large) Mineral Leaseholds (small) Commercial & Industrial Machinery & Equipment All Other Utilities: Railroads All Other Public Utilities 11.5% 30.0 25.0 25.0 30.0 federally mandated rate 33.0% Motor Vehicles: 20.0% Property Exempt: Property used for the following purposes, or portions thereof, are exempt from taxation provided certain statutory requirements are met: religious, educational, literary, scientific, benevolent, alumni associations, veterans' organizations, or charitable purposes, including parsonages and community service organizations providing humanitarian services. (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 from 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 2012 Preliminary Kansas Appraisal /Sales Ratio Study, the equalization ratio for residential real property in Saline County was 11.95 %, and commercial and industrial property was 25.20 %. REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY A -17 APPENDIX B Omnibus Continuing Disclosure Undertaking OMNIBUS CONTINUING DISCLOSURE UNDERTAKING THIS OMNIBUS CONTINUING DISCLOSURE UNDERTAKING (the "Disclosure Undertaking "), dated as of June 10, 2013, is executed and delivered by the City of Salina, Kansas (the "Issuer "). RECITALS 1. This Disclosure Undertaking is executed and delivered by the Issuer, pursuant to a resolution adopted by the governing body of the Issuer to consolidate the continuing disclosure obligations of the Issuer with respect to the Bonds and the Prior Undertakings, both as defined below, to enhance efficiency of the administration of Prior Undertakings and promote timely disclosure by the Issuer. 2. The Issuer is executing this Disclosure Undertaking for the benefit of the Beneficial Owners of the Bonds and in order to assist each Participating Underwriter in complying with the SEC Rule, as defined below. The Issuer is the only "obligated person," as defined in the SEC Rule, with responsibility for continuing disclosure hereunder. 3. This Disclosure Undertaking shall apply with respect to any series of Bonds issued prior to the effective date hereof and subject to the SEC Rule. In consideration of the foregoing, the Issuer covenants and agrees as follows: Section 1. Definitions. In addition to the definitions set forth in the Bond Resolution, which apply to any capitalized term used in this Disclosure Undertaking, unless otherwise defined herein, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report filed by the Issuer pursuant to, and as described in, Section 2 of this Disclosure Undertaking, which may include the Issuer's CAFR, so long as the CAFR contains the Financial Information and Operating Data. "Beneficial Owner" means, with respect to a series of Bonds, any registered owner of any Bonds of such series 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 of such series (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds of such series for federal income tax purposes. "Bond Insurer" means the provider of the bond insurance policy, if any, for any series of Bonds. "Bond Resolution" means collectively the ordinance(s) and /or resolution(s) of the governing body of the Issuer authorizing the issuance of each series of the Bonds. "Bonds" means all bonds, notes, installment sale agreements, leases or certificates intended to be a debt obligation of the Issuer identified on Schedule 1 as such schedule may be supplemented and amended and, as context may require, the Bonds of any particular series identified on Schedule 1. The Issuer may make future series of Bonds subject to this Disclosure Undertaking by incorporating by reference in a Bond Resolution or executing a certificate to such effect in conjunction with the issuance of such series of Bonds. B -1 "Business Day" means a day other than: (a) a Saturday, Sunday or legal holiday; (b) a day on which banks located in any city in which the principal corporate trust office or designated payment office of the trustee, any paying agent or a Dissemination Agent, as applicable, is located are required or authorized by law to remain closed; or (c) a day on which the Securities Depository or the New York Stock Exchange is closed. "CAFR" means the Issuer's Comprehensive Annual Financial Report, if any. "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 this Disclosure Undertaking. "Dissemination Agent" means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to this Disclosure Undertaking and which has filed with the Issuer a written acceptance of such designation substantially in the form attached hereto as Exhibit C. "EMMA" means the Electronic Municipal Market Access system for municipal securities disclosures established and maintained by the MSRB, which can be accessed at www.emma.msrb.org. "Financial Information" means the financial information of the Issuer described in Section 2(a)(1) 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. "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 of Salina, Kansas, 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, or any successor repository designated as such by the Securities and Exchange Commission in accordance with the SEC Rule. "Official Statement" means collectively the Issuer's Official Statement(s) for each series of the Bonds, including all appendices and exhibits thereto. "Operating Data" means the operating data of the Issuer described in Section 2(a)(2) hereof. "Participating Underwriter" means each of the original underwriters of a series of Bonds required to comply with the SEC Rule in connection with the offering of such Bonds. "Prior Undertakings" means the prior continuing disclosure undertakings of the Issuer under the SEC Rule. "Repository" means the MSRB via EMMA. "SEC" means the Securities and Exchange Commission of the United States. B -2 "SEC Rule" means Rule 15c2 -12 adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. "System" means the entire combined waterworks plant and system and sewerage plant and system owned and operated by the Issuer for the production, storage, treatment and distribution of water, and for the collection, treatment and disposal of sewage, to serve the needs of the Issuer and its inhabitants and others, including all appurtenances and facilities connected therewith or relating thereto, together with all extensions, improvements, additions and enlargements thereto hereafter made or acquired by the Issuer. 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 2013, file with the Repository the Issuer's Annual Report, consisting of the Financial Information and Operating Data described as follows: (1) Financial Information. The financial statements of the Issuer and the System 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 of 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 summary unaudited financial information 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(b) hereof. (2) Operating Data. Updates as of the end of the Fiscal Year of certain financial information and operating data described in Exhibit A, with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer; provided, any substantive change to information provided shall be effected only in accordance with Section 6 hereof. 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 Repository. 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 B -3 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) From and after such time that Section (b)(5) of the SEC Rule applies to any series of Bonds, if the Annual Report is not filed within the time period specified in subsection (a) hereof, the Issuer shall send a notice to the Repository in a timely manner, in substantially the form attached as Exhibit B. (c) Pursuant to Section (d)(3) of the SEC Rule, the provisions of Section 2(a)(1) hereof shall not apply to any Bonds with a stated maturity of 18 months or less. Section 3. Reporting of Material Events. (a) No later than 10 Business Days after the occurrence of any of the following Material Events, the Issuer shall give, or cause to be given, to the Repository notice of the occurrence of any of the following Material Events with respect to the Bonds, with copies to the Bond Insurer, if any: (1) principal and interest payment delinquencies; (2) non - payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of bondholders, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the Issuer or System (which shall be deemed to occur as provided in the SEC Rule); (13) the consummation of a merger, consolidation, or acquisition involving the Issuer or System or the sale of all or substantially all of the assets of the Issuer or System, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an B -4 action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional paying agent or trustee or the change of name of the paying agent or trustee, if material. (b) 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 this Disclosure Undertaking, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign as Dissemination Agent hereunder at any time upon 30 days prior written notice to the Issuer. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report (including without limitation the Annual Report) prepared by the Issuer pursuant to this Disclosure Undertaking. (b) Annual Reports. Except as provided in Section 2(c) hereof, 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 filed pursuant to this Disclosure Undertaking, stating the date it was filed, or that the Issuer has certified to the Dissemination Agent that the Issuer has filed the Annual Report with the Repository. Except as provided in Section 2(b) hereof, if the Dissemination Agent has not received an Annual Report or has not received a written notice from the Issuer that it has filed an Annual Report with the Repository, by the date required in Section 2(a), 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) Whenever the Issuer obtains knowledge of the occurrence of an event, because of a notice from the Dissemination Agent pursuant to Section 4(c)(1) or otherwise, the Issuer shall promptly determine if such event constitutes a Material Event and shall promptly notify the Dissemination Agent of such determination. If appropriate, such writing shall instruct the Dissemination Agent 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 pursuant to Section 4(c)(2), the Dissemination Agent shall promptly file a notice of such Material Event with the Repository and provide a copy B -5 thereof to the Issuer and the Bond Insurer. Notwithstanding the foregoing, notice of Material Events described in Sections 3(a)(8) and (g) 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 this Disclosure Undertaking, 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 this Disclosure Undertaking. (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 this Disclosure Undertaking. 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 this Disclosure Undertaking. The Issuer may revoke this designation at any time upon written notice to the Designated Agent. Section S. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Undertaking for a particular series of Bonds shall terminate upon the legal defeasance, prior redemption or payment in full of that series of 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 this Disclosure Undertaking in the same manner as if it were the Issuer, and the Issuer shall have no further responsibility hereunder. If such termination or assumption occurs prior to the final maturity of such Bonds, the Issuer shall give notice of such termination or assumption in the same manner as for a Material Event under Section 3(b). Section 6. Bonds Subject to this Disclosure Undertaking; Amendment; Waiver. (a) All outstanding Bonds as of the date of this Disclosure Undertaking shown on Schedule 1 are hereby made subject to this Disclosure Undertaking. The Issuer may make any future series of Bonds subject to this Disclosure Undertaking by incorporating by reference in a Bond Resolution or executing a certificate to such effect in conjunction with the issuance of such series of Bonds. (b) All references to the "Bonds" in this Disclosure Undertaking shall apply separately to each series of Bonds that are or become subject to this Disclosure Undertaking, without further amendment hereto. (c) Notwithstanding the provisions of subsection (d) or anything else contained in this Disclosure Undertaking to the contrary, in conjunction with the public offering of any series of Bonds, the Issuer and the Dissemination Agent may amend the categories of Operating Data to be updated as set forth in Section 2(a)(2) and Exhibit A to conform to the operating data included in the final Official Statement for such series of Bonds, in conformance with the requirements and interpretations of the SEC Rule as of the date of such final Official Statement, without further amendment to this Disclosure M Undertaking. Thereafter, the Operating Data to be filed by the Issuer with the Repository with respect to the Bonds (and all other series of Bonds then subject to this Disclosure Undertaking) shall be deemed to be amended to reflect the requirements of the revised Exhibit for the new series of Bonds. (d) Except as otherwise provided in subsection (c), the Issuer may amend this Disclosure Undertaking and any provision of this Disclosure Undertaking may be waived, provided that Bond Counsel or other counsel experienced in federal securities law matters provides the Issuer with its written 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 this Disclosure Undertaking; provided, however, that this Disclosure Undertaking, including Schedule 1 hereto, may be amended for the purpose of (1) extending the coverage of this Disclosure Undertaking to any additional series of Bonds or (2) removing reference to any series of Bonds for which the Issuer's reporting obligations have terminated in accordance with Section 5 hereof, each without the provision of a written opinion as otherwise required by this paragraph. (e) If a provision of this Disclosure Undertaking is amended or waived with respect to a series of Bonds pursuant to subsection (d), the Issuer shall describe such amendment or waiver 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: (1) notice of such change shall be given in the same manner as for a Material Event under Section 3(b); and (2) 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 this Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Undertaking 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 this Disclosure Undertaking. 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 this Disclosure Undertaking, the Issuer shall have no obligation under this Disclosure Undertaking 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 this Disclosure Undertaking with respect to a series of Bonds, any 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 this Disclosure Undertaking. Noncompliance with the provisions of this Disclosure Undertaking shall not be deemed an Event of Default under the Bond Resolution or the Bonds, and the sole remedy under this Disclosure Undertaking in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with this Disclosure Undertaking shall be an action to compel performance. B -7 Section 9. Notices. Any notices or communications to or among the parties referenced in this Disclosure Undertaking shall be given the Notice Representatives at the Notice Addresses set forth in the Bond Resolution for each series of Bonds; provided notice to the Dissemination Agent shall be given at the Notice Address set forth on Exhibit C hereto. Section 10. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. Section 11. Beneficiaries. This Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, each Participating Underwriter and Beneficial Owners from time to time with respect to a series of Bonds, and shall create no rights in any other person or entity. Section 12. Severability. If any provision in this Disclosure Undertaking, the Bond Resolution or the Bonds relating hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Disclosure Undertaking shall not in any way be affected or impaired thereby. Section 13. Governing Law. This Disclosure Undertaking shall be governed by and construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the Issuer has caused this Disclosure Undertaking to be executed as of June 10, 2013. (SEAL) Clerk B -8 CITY OF SALINA, KANSAS Mayor SCHEDULE 1 DESCRIPTION OF BONDS SUBJECT TO DISCLOSURE UNDERTAKING General Obligation Bonds (Base CUSIP No.: 794743) Description of Dated Final Indebtedness Date Maturity General Obligation Internal Improvement Bonds, Series 2003 -A 07 -15 -03 10 -01 -13 General Obligation Refunding Bonds, Series 2004 -A 05 -01 -04 08 -01 -15 General Obligation Internal Improvement Bonds, Series 2005 -A 07 -15 -05 10 -01 -13 General Obligation Internal Improvement Bonds, Series 2006 -A 04 -01 -06 10 -01 -26 General Obligation Internal Improvement Bonds, Series 2006 -B 07 -15 -06 10 -01 -21 General Obligation Internal Improvement Bonds, Series 2007 -A 06 -15 -07 10 -01 -27 General Obligation Internal Improvement Bonds, Series 2008 -A 07 -15 -08 10 -01 -23 General Obligation Internal Improvement Bonds, Series 2008 -B 12 -15 -08 07 -01 -28 General Obligation Internal Improvement Bonds, Series 2009 -A 07 -15 -09 10 -01 -29 General Obligation Internal Improvement and Refunding Bonds, Series 2010 -A 05 -01 -10 10 -01 -25 General Obligation Refunding Bonds, Series 2010 -B 10 -15 -10 10 -01 -23 General Obligation Internal Improvement Bonds, Series 2011 -A 07 -15 -11 10 -01 -31 General Obligation Internal Improvement Bonds, Series 2012 -A 07 -15 -12 10 -01 -27 General Obligation Refunding Bonds, Series 2012 -B 07 -15 -12 10 -01 -20 Taxable General Obligation Internal Improvement Bonds, Series 2013 -A 02 -15 -13 10 -01 -28 General Obligation Internal Improvement Bonds, Series 2013 -B 07 -15 -13 10 -01 -33 Temporary Notes (Base CUSIP No.: 794743) Description of Dated Final Indebtedness Date Maturity General Obligation Temporary Notes, Series 2012 -1 07 -15 -12 08 -01 -13 General Obligation Temporary Notes, Series 2013 -1 07 -15 -13 08 -01 -14 Revenue Bonds (Base CUSIP No.: 794811) Description of Indebtedness Water and Sewage System Revenue Bonds, Series 2011 B -9 Dated Final Date Maturity 04 -15 -11 10 -01 -31 EXHIBIT A OPERATING DATA TO BE INCLUDED IN ANNUAL REPORT The Operating Data in the sections and tables contained in the most recent Official Statement (with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer) generally described as follows: Operating Data for General Obligation Bonds, Temporary Notes Lease Obligations Financial Overview Tax Levies Assessed Valuation Estimated Actual Valuation Tax Collections Largest Taxpayers Operating Data for Revenue Bonds User Characteristics (number of users; percentage split between residential and other customers) Largest Users (top ten; name; business type; total cf billed; total dollars billed) User Trends (gallons of water metered; gallons of sewage treated; average number of customers) Current Water Rate Structures Current Sewage Rate Structure Historical and Projected Financials (but only updating historical financials) Outstanding System Indebtedness (Net Income, Debt Service, Bond Coverage, Additional Utility Debt Payments) Additionally, the Issuer shall provide updates as of the end of the Fiscal Year for any material adverse changes in the portions of the final Official Statement concerning Property Valuations and Pension and Employee Retirement Plans. 1.1501 EXHIBIT B NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Name of Bond Issue: Name of Obligated Person Date of Issuance: City of Salina, Kansas [Description of Bonds], Series [_], dated as of [Bonds Dated Date] City of Salina, Kansas [Bonds Closing Date] 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 Issuer's Omnibus Continuing Disclosure Undertaking. The Issuer anticipates that the Annual Report will be filed by Dated: cc: City of Salina, Kansas B -11 CITY OF SALINA, KANSAS By By Dissemination Agent as EXHIBIT C ACCEPTANCE OF DISSEMINATION AGENT Name of Issuer: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series [ ], dated as of [Bonds Dated Date] 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 Disclosure Undertaking, to which this acceptance is attached, accepts such duties and responsibilities set forth therein. Dated: B -12 APPENDIX C December 31, 2011 Audited 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 31, 2011, prepared by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. M I ZE HOUSES. U'OMPANYPA. 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, 2011, which collectively comprise the City's basic financial statements as listed in the table of contents. These 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 $55,525,038 as of December 31, 2011 and total revenues of $4,588,747 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets of $8,034,589 as of June 30, 2011 and total revenues of $2,442,060 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 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 opinions. In our opinion, based on our audit and the reports 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, 2011, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund, Flood & Drainage Improvement Fund, Tourism and Convention Fund, Special Gas Fund, Bicentennial Center Fund and the Sales Tax Capital Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. www.mazehoueer.com ■ mhco @mizehouser.com 534 S Kansas Ave, Suite 700 ■ Topeka, KS 66603 -3465 IN 785.233.0536 p ■ 785.233.1078 f 534 S Kansas Ave, Suite 400 ■ Topeka, KS 66603 -3454 ■ 785.234.5573 p ■ 785.234.1037 f 7101 College Blvd, Suite 900 IN Overland Park, KS 66210 -1984 ■ 913.451.1882 p ■ 913.451.2211f 120 E Ninth ■ Lawrence, KS 66044 -2682 ■ 785.842.8844 p ■ 785.842.9049 f 900 Massachusetts, Suite 301■ Lawrence, KS 66044 -2868 ■ 785.749.5050 p ■ 785.749.5061 f Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 through 13 and the schedules of funding progress on page 52 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole. 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 combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. i October 24, 2012 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) 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, 2011. 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 $5,912,298. Governmental Net Assets declined by $463,769, while Business Type Net Assets increased by $6,376,067. (After prior year adjustments) Liabilities also increased substantially due to the issuance of $16,120,000 in Revenue Bonds. Sales taxes grew modestly (4.1 %), a reversal of the previous two years of decline. s In Business Type Activities, the Water and Sewer fund saw asset growth, despite increases in operating expenditures, due to good revenue production. ♦ The multi -year decline in fund balance for the General Fund was halted, with a slight recovery. ♦ Tax delinquency rates have declined to a relatively normal level of 2.7 %. Personal property taxes continued to decline as a result of the exemption of business equipment from the tax rolls. ♦ Investment revenues continue to be very minimal, but levels have stabilized. ♦ The unemployment rate declined from 6.4% to 6.3 %. 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 providing 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. CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) 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 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, 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 Systems 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 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 Information 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. 4 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) 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 (36 %) and Business -type (64 %) activities. Charges for Services account for about 46% ($37,249,107) 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 illustrates service volume and rate adjustments for some of the more significant services for the year ending December 31, 2011. Description Golf Course: Rounds, 18 Hole Rounds, Par 3 Annual Golf Members River Festival Gate Count Development Services Inspections Performed Permits Issued Finance /Administration EMS Runs Billed Licenses Issued Water Billings Issued Water Metered (in Billion Gallons) Parks and Recreation Kenwood Cove Attendance Youth Teams Adult Teams Special Pops Programs Trips/Tours offered Youth Tournament Teams Adult Tournament Teams Public Works Sanitation Customers Landfill Tonnage Street Cut and Excavation Permits Concrete Permits Water and Wastewater 2010 Volume 2011 Volume Change Rate Comments 30,420 26,782 (3,638) No fee increase 3,707 3,368 (339) No fee increase 33 18 (15) No fee increase 64,835 72,664 7,829 $2.00 per button increase 6,391 5,473 (918) 3,031 2,678 (353) 3,473 4,003 530 Five percent increase 1,296 1,358 62 238,635 239,448 813 1.97 NA 119,000 111,063 (7,937) No fee increase 164 178 14 300 308 8 109 114 5 31 54 23 424 388 (36) 140 164 24 14,520 14,604 84 3% fee increase 94,907 96,178 1,271 No fee increase 181 201 20 155 143 (12) $2.00 per month per Water Treated (Billion Gallons) 2.30 2.30 - typical user $2.00 per month per Wastewater Treated (Billion Gallons) 1.50 1.45 (0.05) typical user * *In general, if not specified in the table, rates were adjusted an average of about 2% for most services. Sales taxes are the next largest component of the revenue mix, providing 20% ($15,847,742) of the total revenues. This is a slightly smaller portion than 2010 (21 %). The City receives a .90% City -wide sales tax, and also a portion of the County -wide 1 % sales tax. Forty -four percent, (a rate of .4 %) 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 2011 was $ 15,847,742, up from $ 15,224,888 in 2010. This 4.1 % increase follows a 4.7% decline (after adjustment for a change in rate) for 2010. CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) A number of factors affect the sales tax. First are the regional and local economic conditions and relationships. These are most directly reflected in the proceeds of the City -wide tax, which grew by 5.8 %. The City was unfavorably 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 2011, the City's allocated portion of the County -wide sales tax was decreased from 63.3% in 2010 61.85% in 2011. Total Countywide taxes received in 2011 were approximately $6,755,629. The change in formula thus resulted in a shift of about $158,000 from the City of Salina to Saline County in 2011. 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% ($11,711,254) 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 assessed value increased by 2.4 %. The total City mill levy was increased slightly, by .2 %, while the overlapping levy increased by .3% Tax delinquency decreased from 5.6% to 2.7 %. Personal property value continued to slide, presumably as a result of removing business equipment from the tax base. Personal property value has now dropped to $19.9 million from it's peak of $39.7 million in 2007. At the 2011 tax rate, this exemption is equivalent to $514,546 in lost revenue for 2011. Motor Vehicle value decreased by 5.8 %. 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: Comparative Property Values and Tax Levy Rates Fiscal (Budget) Year 2010 2011 Change Real Estate and Personal Property Assessed Valuation $ 397,470,626 $ 402,354,576 $ 4,883,950 City Mill Levy ($ per $1,000) Operating (General Fund) Debt Service Total City Rate Total Overlapping Levy Percent of Total Taxes Collected Ratio of Total Taxes (including delinquent collections) to taxes Ii Motor Vehicle Valuation 20.082 19.236 [0.846] 5.773 6.786 1.013 25.855 26.022 0.167 124.707 128.498 3.791 94.4% 97.3% 2.9% 97.1% 99.9% 2.8% 50,330,252 $ 47,406,072 $ [2,924,180] The unemployment rate in Saline County declined very slightly from 6.4% in 2010 to 6.3% in 2011, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force increased to 26,656, a change of 1.5 %. In 2011, the top ten property taxpayers accounted for 11.22% of total assessed value. This is slightly more concentrated than ten years ago (at 11.18 %) CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) 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 $187,641,000 at December 31, 2011. This represents an increase in net assets of $6,519,000 over 2010. A comparative condensed Statement of Net Assets at December 31, 2010 and 2011: Net Assets: Invested in capital assets, Total Primary Government % of Governmental Business -Type 2011 2010 Activities Activities Total Change $ 31,465 12% $ 45,522 2010 2011 2010 2011 Cash and Investments $ 13,935 $ 17,475 $17,530 $28,047 Other Current Assets $ 12,309 $ 12,670 $ 2,025 $ 2,344 Noncurrent (Capital) Asset: $166,122 $164,515 $ 58,273 $ 67,639 Total Assets $192,366 $194,660 $ 77,828 $ 98,030 Current Liabilities $ 21,918 $ 21,687 $ 3,352 $ 2,944 Noncurrent Liabilities $ 52,650 $ 55,639 $10,538 $ 24,772 Total Liabilities $ 74,568 $ 77,326 $13,890 $ 27,716 Net Assets: Invested in capital assets, Total Primary Government $ 270,194 !QM $ 292,690 100% $ 22,496 $ 25,270 29% $ 24,631 23% $ (639) $ 63,188 71% $ 80,411 77% $ 17,223 $ 88,458 100% $105,042 10�% $ 16,584 net of related debt % of $109,289 % of 2011 2010 Total 2011 Total Change $ 31,465 12% $ 45,522 16% $ 14,057 $ 14,334 5% $ 15,014 5% $ 680 $ 224,395 83% $ 232,154 79% $ 7,759 $ 270,194 !QM $ 292,690 100% $ 22,496 $ 25,270 29% $ 24,631 23% $ (639) $ 63,188 71% $ 80,411 77% $ 17,223 $ 88,458 100% $105,042 10�% $ 16,584 net of related debt $113,001 $109,289 $ 48,079 $ 44,227 $161,080 89% $153,516 82% $ (7,564) Restricted for Permanent Funds $ 417 $ 427 $ - $ - $ 417 0% $ 427 0% $ 10 Restricted for Debt Service $ 572 $ 1,285 $ 1,553 $ 1,553 $ 2,125 1% $ 2,838 2% $ 713 Unrestricted $ 3,808 $ 6,333 $14,306 $ 24,534 $ 18,114 10% $ 30,867 16% $ 12,753 Total Net Assets $117,798 $117,334 $ 63,938 $ 70,314 $181,736 1QQ°L $187,648 100% $ 5,912 Percent of Total Assets 65% 63% 35% 37% 100% 100% Cash and Investments as a percentage of current liabilities 64% 81% 523% 953% 125% 185% The largest segment of the City's net assets (82 %) 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. A small portion of net assets (2 %) is restricted for debt service. The remainder (unrestricted) of net assets (16 %) may be used to meet the City's obligations to citizens and creditors. This is comparable to previous years. In 2011, the amount invested in capital assets net of related debt decreased by $7,564,000. Unrestricted net assets increased by $12,573,000. These represent diverse changes throughout the financial statement: Increases in cash in both Governmental and Business type activities, a decrease in Capital assets in Governmental Activities and an increase in Capital Assets in Business type activities. Total liabilities remained much the same in Governmental Activities, but increased significantly in Business Type Activities, attributable to the issuance of Revenue Bonds to finance the Advanced Meter Infrastructure project. During the year ended December 31, 2011, there were several significant events that changed the balance of net assets. Governmental Activities. 2011 saw an increase in cash and investments in Governmental funds. This is due to controlled expenditures for both capital and operating requirements as well as improved revenues from the Sales Tax. CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Business -type Activities: The Water and Wastewater fund has a dominant influence on the Business Type Activities net assets. The increase in net assets is due to good revenue production and controlled expenses. Statement of Activities A condensed statement of activities is shown below. Condensed Comparitive Statement of Activities, 2010 and 2011 (In $000's) Governmental Activities. Total expenses for Governmental Activities for the year ending December 31, 2011 were $55,213,000 compared to $53,128,000 in 2010. Governmental activities represent 74% of the City's total expenses. The largest element of Governmental Activity expense was Public Safety, accounting for 34% of the total. Charges for service attributable to Governmental Activities totaled $13,470,000 and operating grants for those purposes were $2,907,000. The balance was funded by general revenues. Sales taxes accounted for $15,848,000 of the general revenues, with property taxes providing $11,712,000. Net assets decreased by $1,576,000 as a result of Governmental Activities. Business Type Activities. Total expenses for Business -type Activities for the year were $19,628,000, or 26% of the City's total expense. The majority of this expense ($13,597,000) is attributable to Water and Sewer operations, with the other activities (Solid Waste Disposal, Sanitation, and Golf Course) costing a combined total of $6,031,000. These activities are primarily supported by user charges, with only $413,000 coming from general revenues, representing largely the interest earned on fund balances held by the City. Net assets increased by $6,407,000 as a result of Business -type Activity operations. Governmental Activities Business -Type Total Primary Government 2010 2011 2010 2011 2010 % 2011 % 2010 -2011 Program Revenues: Change Charges for Services $ 12,306 $ 13,470 $ 22,419 $ 23,779 $ 34,725 48% $ 37,249 47% $ 2,524 Operating Grants and Contributions $ 3,415 $ 2,907 $ 202 $ 3,415 5% $ 3,109 4% $ (306) Capital Grants and Contributions $ 3,804 $ - 0% $ 3,804 5% $ 3,804 General Revenues: Property Taxes $ 11,179 $ 11,712 $ 11,179 16% $ 11,712 15% $ 533 Sales Taxes $ 15,225 $ 15,848 $ 15,225 21% $ 15,848 20% $ 623 Other Taxes $ 6,298 $ 6,389 $ 6,298 9% $ 6,389 8% $ 91 Investment Revenue $ 81 $ 77 $ 67 $ 83 $ 148 0% $ 160 0% $ 12 Other Miscellaneous $ 565 $ 872 $ 341 $ 330 $ 906 1% $ 1,202 2% $ 296 Total Revenues: $ 49,069 $ 51,275 $22,827 $28,198 $ 71,896 100% $ 79,473 100% $ 7,577 Expenses: $ - General Government $ 10,845 $ 13,615 $ 10,845 15% $ 13,615 18% $ 2,770 Public Safety $ 18,592 $ 18,579 $ 18,592 25% $ 18,579 25% $ (13) Public Works $ 9,782 $ 9,858 $ 9,782 13% $ 9,858 13% $ 76 Public Health and Sanitation $ 1,365 $ 1,368 $ 1,365 2% $ 1,368 2% $ 3 Culture and Recreation $ 6,572 $ 6,693 $ 6,572 9% $ 6,693 9% $ 121 Planning and Development $ 3,715 $ 3,450 $ 3,715 5% $ 3,450 5% $ (265) Solid Waste Disposal $ 2,925 $ 2,945 $ 2,925 4% $ 2,945 4% $ 20 Water and Sewer $14,050 $13,597 $ 14,050 19% $ 13,597 18% $ (453) Sanitation $ 2,261 $ 2,261 $ 2,261 3% $ 2,261 3% $ - Golf Course $ 817 $ 825 $ 817 1% $ 825 1% $ 8 Interest on Long Term Debt $ 2,257 $ 1,650 $ 2,257 3% $ 1,650 2% $ (607) Total Expenses $ 53,128 $ 55,213 $ 20,053 $19,628 $ 73,181 100% $ 74,841 100% i $ 1,660 Increase in net assets before transfers $ (4,059) $ (3,938) $ 2,774 $ 8,570 $ (1,285) $ 4,632 $ 5,917 Transfers and other extraordinary items $ 92 $ 2,362 $ 92 $ 2,163 $ - $ 199 $ 199 Increase in Net Assets $ 3,967 $ 1,576 $ 2,682 $ 6,407 $ 1,285 $ 4,831 $ 6,116 Net Assets, January 1 $119,854 $ 117,798 $ 61,270 $ 63,938 $181,124 $181,736 $ 612 Prior Period Adjustment $ 1,911 $ 1,112 $ 14 $ (31) $ 1,897 $ 1,081 $ 816 Net Assets, January 1, restated $121,765 $ 118,910 $ 61,256 $ 63,907 $183,021 $182,817 $ (204) Net Assets December 31 $117,798 $ 117,334 $ 63,938 $ 70,314 $181,736 $187,648 $ 5,912 Governmental Activities. Total expenses for Governmental Activities for the year ending December 31, 2011 were $55,213,000 compared to $53,128,000 in 2010. Governmental activities represent 74% of the City's total expenses. The largest element of Governmental Activity expense was Public Safety, accounting for 34% of the total. Charges for service attributable to Governmental Activities totaled $13,470,000 and operating grants for those purposes were $2,907,000. The balance was funded by general revenues. Sales taxes accounted for $15,848,000 of the general revenues, with property taxes providing $11,712,000. Net assets decreased by $1,576,000 as a result of Governmental Activities. Business Type Activities. Total expenses for Business -type Activities for the year were $19,628,000, or 26% of the City's total expense. The majority of this expense ($13,597,000) is attributable to Water and Sewer operations, with the other activities (Solid Waste Disposal, Sanitation, and Golf Course) costing a combined total of $6,031,000. These activities are primarily supported by user charges, with only $413,000 coming from general revenues, representing largely the interest earned on fund balances held by the City. Net assets increased by $6,407,000 as a result of Business -type Activity operations. CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds for the years ended December 31, 2010 and December 31, 2011. Governmental Fund Balances, 2010 and 2011 Fund $ 2010 2011 2011 Change General $ 3,617,181 $ 3,836,238 $ 219,057 Flood and Drainage $ 188,526 $ 907 $ (187,619) Tourism and Convention $ 367,197 $ 340,473 $ (26,724) Special Gas $ 1,484,641 $ 1,417,743 $ (66,898) Bicentennial Center $ 46,048 $ 142,881 $ 96,833 Sales Tax Capital $ 2,154,367 $ 1,397,571 $ (756,796) Debt Service $ 571,873 $ 1,285,130 $ 713,257 Capital Projects $ (2,610,001) $ 390,852 $ 3,000,853 Other Governmental Funds $ 2,981,652 $ 2,792,546 $ (189,106) Total $ 8,801,484 $ 11,604,341 $ 2,802,857 Total Governmental Fund balances increased by $2,802,857. The reasons for these changes are varied. The most significant change is in the Capital Projects Fund, and is largely the result of Project financing activities. General Fund balances stabilized and grew slightly in 2011. The Flood and Drainage Fund was scheduled for depletion in 2011. The Special Sales Tax Capital Outlay Fund shows a significant reduction in fund balance due to an aggressive capital improvements program, most notably the reconstruction of Marymount Road. 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, 2010 and 2011. Consolidated Statement of Revenues and Expenditures for Major Funds, 2010 and 2011 Modified Accrual Basis Fund $ 2010 $ 2011 $ Change Revenues (Including Other Financing Sources) $ 3,223 $ 206,092 $ 202,869 General $ 34,303,574 $ 35,557,304 $ 1,253,730 Flood and Drainage Improvement $ 1,312 $ 18,473 $ 17,161 Tourism and Convention $ 1,332,671 $ 1,306,102 $ (26,569) Special Gas $ 1,569,648 $ 1,546,045 $ (23,603) Bicentennial Center $ 1,702,066 $ 1,656,762 $ (45,304) Sales Tax Capital $ 3,815,966 $ 3,777,286 $ (38,680) Debt Service $ 7,943,865 $ 6,844,521 $ (1,099,344) Capital Projects $ 5,552,906 $ 9,896,198 $ 4,343,292 Other Governmental Funds' $ 2,954,257 $ 2,800,508 $ (153,749) Total Revenues $ 59,176,265 $ 63,403,199 $ 4,226,934 Less Other Sources $ 12,157,284 $ 14,581,655 $ 2,424,371 Revenues, net of other sources $ 47,018,981 $ 48,821,544 $ 1,802,563 Expenditures (Including Other Financing Uses) General $ 35,773,774 $ 35,494,671 $ (279,103) Flood and Drainage Improvement $ 3,223 $ 206,092 $ 202,869 Tourism and Convention $ 1,228,789 $ 1,332,826 $ 104,037 Special Gas $ 2,138,057 $ 1,612,943 $ (525,114) Bicentennial Center $ 1,768,246 $ 1,559,929 $ (208,317) Sales Tax Capital $ 3,289,009 $ 4,534,082 $ 1,245,073 Debt Service $ 8,107,283 $ 6,131,264 $ (1,976,019) Capital Projects $ 15,936,269 $ 6,895,345 $ (9,040,924) Other Governmental Funds' $ 2,829,609 $ 2,989,614 $ 160,005 Total Expenditures $ 71,074,259 $ 60,756,766 $ (10,317,493) Less Other Uses $ 4,983,834 $ 5,692,077 $ 708,243 Expenditures, net of other uses $ 66,090,425 $ 55,064,689 $ (11,025,736) 0 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Total revenues and other sources increased by $4,226,934 from 2010 to 2011. The largest component of this change was in the Capital Projects accounts, and is related to Construction activities. Other changes include an increased General supplement for the Bi- Centennial Center and changes in temporary note activity. Expenditures generally declined, with the notable exception of the Sales Tax Capital Fund, which was committed to the Marymount Road reconstruction, along with some smaller projects. 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: Comparative Summary Statement of Net Assets; 2010 - 2011 (in $000's) Solid Waste Disposal Water and Sewer 2010 2011 Change 2010 2011 Change Current Assets $ 3,887 $ 3,611 $ (276) $ 14,755 $ 25,988 $ 11,233 Capital Assets $ 4,211 $ 3,495 $ (716) $ 53,075 $ 63,184 $ 10,109 Total Assets $ 8,098 $ 7,106 $992 $ 67,830 $ 89,172 $ 21,342 Current Liabilities $ 1,010 $ 528 $ (482) $ 2,091 $ 2,363 $ 272 Noncurrent Liabilities $ 3,192 $ 2,868 $ 324 $ 7,161 $ 21,640 $ 14,479 Total Liabilities $ 4,202 $ 3,396 $ 806 $ 9,252 $ 24,003 $ 14,751 Assets Invested in Capital, net of related debt $ 2,294 $ 2,276 $ (18) $ 45,567 $ 40,991 $ (4,576) Restricted Net Assets $ - $ - $ - $ 1,553 $ 1,553 $ - Unrestricted Net Assets $ 1,602 $ 1,434 $ 168 $ 11,458 $ 22,625 $ 11,167 Total Net Assets $ 3,896 $ 3,710 $ 186 $ 58,578 $ 65,169 $ 6,591 Current Assets as a percentage of current liabilities 385% 684% 706% 1100% Sanitation Golf Course 2010 2011 Change 2010 2011 Change Current Assets $ 846 $ 761 $ (85) $ - 66 $ 32 $ (34) Capital Assets $ 639 $ 646 $ 7 $ 348 $ 314 $ (34) Total Assets $ 1,485 $ 1,407 $ 78 $ 414 $ 346 $ (68) Current Liabilities $ 203 $ 29 $ (174) $ 48 $ 24 $ (24) Noncurrent Liabilities $ 123 $ 156 $ 33 $ 61 $ 109 $ 48 Total Liabilities $ 326 $ 185 $ 141 $ 109 $ 133 $ 24 Assets Invested in Capital, net of related debt $ 639 $ 646 $ 7 $ 348 $ 314 $ (34) Restricted Net Assets $ - $ - $ - $ - $ - $ - Unrestricted Net Assets $ 520 $ 576 $ 56 $ 43 $ (101) $ (58) Total Net Assets $ 1,159 $ 1,222 $ 63 $ 305 $ 213 $ 92 Current Assets as a percentage of current liabilities 417% 2624% 138% 133% 10 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) 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 $101,000 deficit balance, up from $43,000 a year ago. The Solid Waste fund shows decreases in assets as well as liabilities, the result of constructing an additional cell. The Water and Sewer fund shows a significant increase in long term liabilities as a result of a Revenue Bond Issue. Both Current and Capital assets increase significantly within this fund. Revenues, Expenses, and Changes in Net Assets The Water and Wastewater Funds, showed healthy results from operations, with net assets increasing significantly due to a good revenue flow (attributable to both adequate rates and favorable weather conditions) and controlled expenses. The Golf Course showed a very significant loss on the year, requiring increased transfers from the General Fund to maintain cash liquidity. The Sanitation Fund is stable. Net assets declined slightly in the Solid Waste fund. Comparative Summary of Revenues, Expenses and Changes in l' (In $000's) Solid Waste Disposal 2010 2011 Change Operating Revenues $ 2,878 $ 2,929 $ 51 Operating Expenses $ 2,852 $ 2,829 $ 23 Operating Income $ 26 $ 100 $ 74 Jet Assets, 2010 and 2011 Water and Sewer 2010 2011 Change $ 16,789 $ 18,361 $ 1,572 $ 13,571 $ 12,964 $ (607) $ 3,218 $ 5,397 $ 2,179 Non - operating revenues (expenses) $ 55 $ 107 $ 52 $ (433) $ 561 $ 128 Income (Loss) before Transfers $ (29) $ (7) $ 22 $ 2,785 $ 4,836 $ 2,051 Transfers in (out) $ (139) $ (180) $ (41) $ 77 $ (2,030) $ (2,107) Capital Contributions $ - $ - $ - $ - $ 3,804 $ 3,804 Change in Net Assets $ 168 $ (187) $ (19) $ 2,862 $ 6,610 $ 3,748 Net Assets, January 1 $ 4,121 $ 3,896 $ (225) $ 55,668 $ 58,578 $ 2,910 Restatement $ 57 $ 1 $ 58 $ 48 $ 19 $ 67 Net Assets, January 1, restated $ 4,064 $ 3,897 $ 167 $ 55,716 $ 58,559 $ 2,843 Net Assets, December 31 $ 3,896 $ 3,710 $ 186 $ 58,578 $ 65,169 $ 6,591 Sanitation Golf Course 2010 2011 Change 2010 2011 Change Operating Revenues $ 2,311 $ 2,335 $ 24 $ 783 $ 687 $ (96) Operating Expenses $ 2,276 $ 2,292 $ 16 $ 817 $ 825 $ 8 Operating Income $ 35 $ 43 $ 8 $ (34) $ (138) $ (104) Non - operating revenues (expenses) $ 18 $ 32 $ 14 $ - $ - $ - Income (Loss) before Transfers $ 53 $ 75 $ 22 $ (34) $ (138) $ (104) Transfers in (out) $ (50) $ - $ 50 $ 20 $ 47 $ 27 Capital Contributions $ - $ - $ - $ - $ - $ - Change in Net Assets $ 3 $ 75 $ 72 $ (91) $ 77 Net Assets, January 1 $ 1,166 $ 1,159 $ (7) $ 314 $ 305 $ (9) Restatement $ (10) $ (12) $ (2) $ 5 $ (1) $ (6) Net Assets, January 1, restated $ 1,156 $ 1,147 $ (9) $ 319 $ 304 $ 15 Net Assets, December 31 $ 1,159 $ 1,222 $ 63 $ 305 $ 213 $ (92) 11 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Budgetary Highlights 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, 2011. 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 result of these transfers, the original budget and the final budgets may not be the same for departments within a fund. There were a number of funds in which the budgets were amended, including the Flood and Drainage Improvement Fund, Sales Tax Capital Fund, Risk Management Fund, Central Garage Fund and the Water and Sewer Fund. The City experienced a number of significant variances from budgeted items in the General Fund, however, the total fund was within budgeted expenses. Motor vehicle taxes fell short of budget due to a delayed distribution from the County. Public Safety charges for service were significantly short of budget. This includes Court Revenues and EMS fees due from Saline County. Sales taxes exceeded budgetary levels slightly. Several expenditure items were also significantly over or under budget. Several Departments exceeded budgeted expenditures. In general, retirement system contributions exceeded budget Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31, 2011 was $232,153,260 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2010 and 2011: Capital Asset Balances Net of Depreciation, (In 000's) Governmental Activity 2010 2011 Equipment, Furniture and Fixtures $ 1,314 $ 1,288 Vehicles $ 2,445 $ 2,996 Buildings and Improvements $ 23,625 $ 22,591 Land $ 22,477 $ 22,477 Infrastructure $ 83,712 $ 82,609 Construction in Progress $ 32,549 $ 32,554 Total $ 166,122 $ 164,515 " Net of Accumulated Depreciation 12 12/31/2010 and 12/31/2011 Business -type Activity 2010 2010 2011 $ 1,982 $ 1,729 $ 903 $ 812 $ 12,345 $ 11,904 $ 1,541 $ 1,541 $ 39,985 $ 40,591 $ 1,517 $ 11,062 $ 58,273 $ 67,639 Total 2010 2011 $ 3,296 $ 3,017 $ 3,348 $ 3,808 $ 35,970 $ 34,495 $ 24,018 $ 24,018 $ 123,697 $ 123,200 $ 34,066 $ 43,616 $ 224,395 $ 232,154 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Changes to capital assets may be summarized as follows: Changes to Capital Assets, 2011 (in 000's) Governmental Business -Type Activity Activity Total Additions $ 547 $ 10,633 $ 11,180 Retirements $ (3,110) $ (1,236) $ (4,346) Adjustments $ 956 $ (31) $ 925 Net Additions $ (1,607) $ 9,366 $ 7,759 Depreciation Expense Applied $ 4,730 $ 2,653 $ 7,383 Additional information on the City's capital assets can be found in Note 4,D. of the notes to the basic financial statements. 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 for Governmental activities at December 31, 2011 totaled $55,225,670. In addition, there were temporary notes outstanding in the amount of $3,400,000. Business -type activities had $16,193,925 in Revenue Bonds outstanding, as well as $7,217,907 in General Obligation Bonds. 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 2011. On August 1 st, the City issued $6,565,000 in internal improvement bonds. The bulk of the proceeds ($3,765,836) were used to finance an industrial fire protection system located at the Salina Airport Industrial Center. The balance of the proceeds were used to finance several residential subdivisions. Also on August 1s', the City issued $3,400,000 in temporary notes to finance public facilities to serve a commercial subdivision development. These note will be refinanced into a long term bond issue in August, 2012. 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. 13 BASIC FINANCIAL STATEMENTS CITY OF SALINA, KANSAS STATEMENT OF NET ASSETS December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 14 Primary Government Component Units Total Total Total Salina Salina Governmental Business -type Primary Housing Airport Activities Activities Government Authority Authority ASSETS Current assets, Cash and investments $ 17,475,299 $ 28,047,281 $ 45,522,580 $1,549,189 $ 5,308,083 Receivables (net of allowance for uncollectibles) Accounts 1,122,221 1,396,659 2,518,880 39,676 106,659 Taxes 10,848,090 - 10,848,090 - 1,638,423 Interest 35,877 16 35,893 - - Inventory 205,410 571,702 777,112 15,828 1,722 Restricted cash and investments - - - 196,148 - Prepaid expenses - - - 33,224 945 Deferred charges 458,315 375,179 833,494 205,317 Total current assets 30,145,212 30,390,837 60,536,049 1,834,065 7,261,149 Noncurrent assets: Notes receivable - - - 3,304 - Capital assets, nondepreciable Construction in progress 32,554,357 11,062,055 43,616,412 516,945 1,570,190 Land 22,477,191 1,541,002 24,018,193 1,456,891 10,818,059 Capital assets, depreciable 196,166,753 101,308,419 297,475,172 7,357,626 62,449,020 Less: Accumulated depreciation 86,683,788 46,272,729 132,956,517 3,134,242 26,573,380 Total noncurrent assets 164,514,513 67,638,747 232,153,260 6,200,524 48,263,889 Total assets $ 194,659,725 $ 98,029,584 $ 292,689,309 $ 8,034,589 $ 55,525,038 Liabilities: Current liabilities: Accounts payable $ 788,731 $ 294,449 $ 1,083,180 $ 14,447 $ 221,039 Retainage payable 468,309 608,219 1,076,528 - - Accrued liabilities 563,720 - 563,720 46,395 169,143 Matured bond principal and interest 5,145 - 5,145 - - Accruedinterestpayable 512,680 211,291 723,971 - 404,167 Deposits payable - 163,904 163,904 84,154 - Uneamed revenue 10,315,524 - 10,315,524 29,165 1,720,237 Due to other governments - - - 25,115 - Current portion of compensated absences 581,694 122,301 703,995 16,811 Current portion of temporary notes payable 3,400,000 - 3,400,000 - Current portion of revenue bonds payable - 343,696 343,696 - Current portion of financing leases payable - - 42,941 Current portion of special assessment debt payable - - - 21,066 Current portion of general obligation bonds payable 5,051,038 1,200,048 6,251,086 1,090,000 Total current liabilities 21,686,841 2,943,908 24,630,749 216,087 3,668,593 Noncurrent liabilities: Accrued liabilities 149,245 - 149,245 50,090 - Compensated absences 2,507,440 527,190 3,034,630 4,203 Net OPEB obligation 2,807,425 334,458 3,141,883 - Revenue bonds payable - 15,850,229 15,850,229 - Financing leases payable - - 202,617 Temporary notes payable - Special assessment debt payable - - 103,946 General obligation bonds payable 50,174,632 6,017,859 56,192,491 24,718,985 Landfill post - closure care liabilities 2,042,254 2,042,254 Total noncurrent liabilities 55,638,742 24,771,990 80,410,732 54,293 25,025,548 Total liabilities $ 77,325,583 $ 27,715,898 $ 105,041,481 $ 270,380 $28,694,141 Net Assets Invested in capital assets, net of related debt $ 109,288,843 $ 44,226,915 $ 153,515,758 $ 6,197,219 $ 22,084,333 Restricted for- Permanent funds: Expendable 426,741 - 426,741 146,058 - Debt service 1,285,130 1,553,016 2,838,146 - - Unrestricted 6,333,428 24,533,755 30,867,183 1,420,932 4,746,564 Total net assets $ 117,334,142 $ 70,313,686 $ 187,647,828 $ 7,764,209 $ 26,830,897 The notes to the basic financial statements are an integral part of this statement. 14 CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 15 Net [Expenses] Revenue and Changes in Net Assets Program Revenues Primary Government Component Units Operating Capital Total Total Total Salina Salina Charges for Grants and Grants and Governmental Business -type Primary Housing Airport Expenses Services Contributions Contributions Activities Activities Government Authority Authority Governmental activities: General government $ 13,614,508 $ 6,106,067 $ 359,148 $ $ [1,149,293] $ $ [7,149,293] $ $ Public safety 18,579,041 3,766,156 631,417 [14,181,468] [14,181,468] Public works 9,858,199 261,707 1,368,577 [8,227,915] [8,227,915] Public health and sanitation 1,367,825 42,729 153,566 [1,171,530] [1,171,530] Culture and recreation 6,693,341 3,140,025 177,048 [3,376,268] [3,376,268] Planning and development 3,450,078 153,675 217,643 [3,078,760] [3,078,760] Interest on long -term debt 1,650,426 - [1,650,426] [1,650,426] Total governmental activities 55,213,418 13,470,359 2,907,399 [38,835,660] [38,835,660] Business -type activities: - Solid Waste Disposal 2,944,765 2,904,371 - [40,394] [40,394] Water and Sewer 13,596,918 17,904,056 201,700 3,803,565 8,312,403 8,312,403 Sanitation 2,261,462 2,334,119 - - - 72,657 72,657 - - Golf Course 825,057 636,202 [188,855] [188.855] Total business -type activities 19,628,202 23,778,748 201,700 3,803,565 8,155,811 8,155,811 Total primary government $ 74,841,620 $37,249,107 $ 3,109,099 $ 3,803,565 [38,835,660] 8,155,811 [30,679,849] Component units: Salina Housing Authority $ 2,256,924 $ 624,322 $ 1,629,627 $ 168,427 - 165,452 Salina Airport Authority 5,548,077 2,273,000 457,227 - [2,817,850] Total component units $ 7,805,001 $ 2,897,322 $ 1,629,627 $ 625,654 - 165,452 [2,817,850] General Revenues: Property taxes levied for General purposes 7,782,768 7,782,768 - 1,795,660 Debt service 2,778,845 2,778,845 Motor vehicle tax General purposes 1,149,641 1,149,641 Sales tax General purposes 11,767,400 11,767,400 Selective purposes 4,080,342 4,080,342 Othertaxes General purposes 6,389,878 6,389,878 - - Investment revenues 77,095 83,399 160,494 19,684 9,856 Miscellaneous 871,904 330,351 1,202,255 - 53,004 Transfers, net 2,361,593 [2,162,772] 198,821 Subtotal general revenues 37,259,466 [1,749,022] 35,510,444 19,684 1,858,520 Change in net assets [1,576,194] 6,406,789 4,830,595 185,136 [959,330] Net assets - beginning 117,797,911 63,937,619 181,735,530 7,580,003 27,790,227 Prior period adjustment 1,112,425 [30,722] 1,081,703 [930] - Net assets - beginning, restated 118,910,336 63,906,897 182,817,233 7,579,073 27,790,227 Net assets - ending $117,334,142 $ 70,313,686 $187,647,828 $ 7,764,209 $ 26,830,897 The notes to the basic financial statements are an integral part of this statement. 15 CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTALFUNDS December 31, 2011 Flood & Tourism Drainage and Special General Improvement Convention Gas ASSETS Cash and investments $ 3,153,960 $ 907 $ 2,202 $ 1,195,840 Receivables (net) Accounts 677,815 - 338,271 - Taxes 8,094,093 - - 312,648 Interest 35,877 - - - Inventory 89,716 - - - Due from other funds 9,375 - - - Cash with fiscal agent - - - - Total assets $ 12,060,836 $ 907 $ 340,473 $ 1,508,488 LIABILITIES AND FUND BALANCE Liabilities: Accounts payable $ 301,319 $ - $ - $ 46,356 Retainage payable - - - 44,389 Deferred revenue 7,923,279 - - - Due to other funds - - - - Matured principal and interest - - - - Temporary notes payable - - - - Total liabilities 8,224,598 - - 90,745 Fund balance: Nonspendable 89,716 - - - Restricted - - 340,473 1,094,720 Committed - - - - Assigned 292,816 907 - 323,023 Unassigned 3,453,706 - - - Total fund balances 3,836,238 907 340,473 1,417,743 Total liabilities and fund balance $ 12,060,836 $ 907 $ 340,473 $ 1,508,488 Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Projects Funds Funds $ 117,993 $ 1,397,571 $ 1,236,026 $ 4,503,053 $ 2,773,395 $ 14,380,947 54,966 - - - 51,169 1,122,221 - - 2,441,349 - - 10,848,090 - - - 35,877 - - 89,716 - - - - 9,375 5,145 - - 5,145 $ 172,959 $ 1,397,571 $ 3,682,520 $ 4,503,053 $ 2,824,564 $ 26,491,371 $ 30,078 $ - $ - $ 288,281 $ 22,643 $ 688,677 - - - 423,920 - 468,309 2,392,245 - - 10,315,524 - - 9,375 9,375 5,145 - - 5,145 - 3,400,000 - 3,400,000 30,078 - 2,397,390 4,112,201 32,018 14,887,030 89,716 - - 1,285,130 - 891,254 3,611,577 142,881 610,134 - [2,477,564] 1,851,292 126,743 - 787,437 - 2,868,416 50,000 4,322,599 - - - - 3,453,706 142,881 1,397,571 1,285,130 390,852 2,792,546 11,604,341 $ 172,959 $ 1,397,571 $ 3,682,520 $ 4,503,053 $ 2,824,564 $ 26,491,371 The notes to the basic financial statements are an integral part of this statement. 16 CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET ASSETS OF GOVERNMENTAL ACTIVITIES December 31, 2011 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 Bonds payable Accrued interest on the bonds Net Assets of Governmental Activities $ 11,604,341 458,315 250,331,663 85, 844, 940 164, 486, 723 2,327,348 2,996,810 2,807,425 55,225,670 512,680 [61,542,585] The notes to the basic financial statements are an integral part of this statement. 17 $ 117,334,142 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31, 2011 Flood & Tourism Drainage and Special General Improvement Convention Gas REVENUES: Taxes Real estate taxes $ 7,564,508 $ - $ - $ - Delinquent taxes 212,244 6,016 - - Motor vehicle taxes 894,671 - - - General sales taxes 11,767,400 - - - Selective sales taxes - Othertaxes 5,083,919 - 1,305,959 - Intergovernmental 813,185 - - 1,362,327 Special assessments - - - _ Licenses and permits - Charges for services 7,822,307 - - - Investment revenue 28,972 - 143 3,718 Reimbursements - - - _ Miscellaneous 501,260 11,550 - - Total revenues 34,688,466 17,566 1,306,102 1,366,045 EXPENDITURES: Current General government 3,461,488 - - - Public safety 18,117,827 - - - Public works 6,132,020 9,784 - 427,429 Public health and sanitation 1,176,082 - - - Culture and recreation 2,734,957 - - - Planning and development 2,319,300 - 736,386 - Miscellaneous - _ _ - Capital outlay 555,048 196,308 - 1,183,678 Debt service Principal retirement - - - _ Interest and other charges - - - - Total expenditures 34,496,722 206,092 736,386 1,611,107 Excess [deficiency] of revenue and other sources over [under] expenditures and other [uses] 191,744 [188,526] 569,716 [245,062] OTHER FINANCING SOURCES [USES] Issuance of bonds - - - - Bond premium - - _ - Transfers in 868,838 907 - 180,000 Transfers [out] [997,949] - [596,440] [1,836] Total other financing sources [uses] [129,111] 907 [596,440] 178,164 Net change in fund balance 62,633 [187,619] [26,724] [66,898] Fund balance - Beginning of year 3,617,181 188,526 367,197 1,484,641 Restatement of prior year fund balance 156,424 - - - FUND BALANCE - Beginning of year, as restated 3,773,605 188,526 367,197 1,484,641 Fund balance - End of year $ 3,836,238 $ 907 $ 340,473 $ 1,417,743 [776,016] 2,736,202 [1,451,805] [6,448,162] [631,236] [6,243,145] - - - 6,565,000 Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Proiects Funds Funds $ - $ - $ 2,723,262 $ - $ - $ 10,287,770 - - 55,583 - - 273,843 - - 254,970 - - 1,149,641 - - - - - 11,767,400 - 3,763,045 - - 317,297 4,080,342 - - - - - 6,389,878 - - - - 725,637 2,901,149 - - 1,535,487 - - 1,535,487 - - - - 6,250 6,250 783,028 - - - 1,125,022 9,730,357 193 5,683 13,686 9,634 6,620 68,649 - - - 32,000 - 32,000 692 - 12,983 - 72,293 598,778 783,913 3,768,728 4,595,971 41,634 2,253,119 48,821,544 - - - - - 3,461,488 - - - - - 18,117,827 - - - - - 6,569,233 - - - - 153,730 1,329,812 1,548,901 - - - 1,616,170 5,900,028 - - - - 288,275 3,343,961 - - - - 35 35 11,028 1,032,526 - 6,338,741 529,401 9,846,730 - - 4,276,195 - 135,000 4,411,195 - - 1,771,581 151,055 161,744 2,084,380 1,559,929 1,032,526 6,047,776 6,489,796 2,884,355 55,064,689 [776,016] 2,736,202 [1,451,805] [6,448,162] [631,236] [6,243,145] - - - 6,565,000 - 6,565,000 - - 22,985 - - 22,985 872,849 8,558 2,225,565 3,289,564 547,389 7,993,670 - [3,501,556] [83,488] [405,549] [105,259] [5,692,077] 872,849 [3,492,998] 2,165,062 9,449,015 442,130 8,889,578 96,833 [756,796] 713,257 3,000,853 [189,106] 2,646,433 46,048 2,154,367 571,873 [2,610,001] 2,981,652 8,801,484 - - - - - 156,424 46,048 2,154,367 571,873 [2,610,001] 2,981,652 8,957,908 $ 142,881 $ 1,397,571 $ 1,285,130 $ 390,852 $ 2,792,546 $ 11,604,341 The notes to the basic financial statements are an integral part of this statement. 18 CITY OF SALINA, KANSAS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE WITH THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2011 Total Net Change In Fund Balances - Governmental Funds $ 2,646,433 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 [77,143] Proceeds from sale of assets [10,070] Capital outlays 2,254,765 Depreciation expense [4,725,361] [2,557,809] 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 decreased. 314,150 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. 584,822 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. [523,988] 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. [6,570,801] 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. 4,530,999 Changes In Net Assets of Governmental Activities The notes to the basic financial statements are an integral part of this statement. 19 CITY OF SALINA, KANSAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 20 Business -Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service ASSETS Disposal Sewer Sanitation Golf Course Funds Funds Current assets: Cash and investments $ 3,379,526 $ 24,042,117 $ 621,683 $ 3,955 $ 28,047,281 $ 3,089,207 Receivables (net of allowance for uncollectibles) Accounts 231,123 1,026,364 139,172 - 1,396,659 Interest 16 - - - 16 - Inventory and prepaid supplies - 544,052 27,650 571,702 115,694 Deferred charges - 375,179 - - 375,179 - Total current assets 3,610,665 25,987,712 760,855 31,605 30,390,837 3,204,901 Capital assets: Nondepreciable capital assets: Construction in progress - 11,062,055 - - 11,062,055 - Land 682,000 844,002 - 15,000 1,541,002 - Depreciable capital assets: Capital assets 8,278,501 90,480,372 1,557,447 992,099 101,308,419 866,638 Less: accumulated depreciation 5,465,856 39,202,619 911,117 693,137 46,272,729 838,848 Total capital assets 3,494,645 63,183,810 646,330 313,962 67,638,747 27,790 Total assets $ 7,105,310 $ 89,171,522 $1,407,185 $ 345,567 $ 98,029,584 $ 3,232,691 Liabilities: Current liabilities Accounts payable $ 22,192 $ 262,444 $ 6,859 $ 2,954 $ 294,449 $ 100,054 Retainage payable - 608,219 - - 608,219 - Interest payable 8,514 202,777 - 211,291 Meter deposits payable - 163,904 - 163,904 - Current portion of compensated absences payable 11,215 68,382 22,203 20,501 122,301 17,384 Current portion of accrued claims payable - - - - - 563,720 Current portion of general obligation bonds payable 486,302 713,746 - 1,200,048 - Current portion of revenue bonds payable - 343,696 343,696 - Total current liabilities 528,223 2,363,168 29,062 23,455 2,943,908 681,158 Noncurrent liabilities: Compensated absences payable 48,340 294,765 95,709 88,376 527,190 74,940 Accrued claims payable - - - - - 149,245 Net OPEB Obligation 43,944 209,872 59,830 20,812 334,458 - Payable from restricted assets General obligation bonds payable 732,806 5,285,053 - - 6,017,859 - Revenue bonds payable - 15,850,229 15,850,229 - Landfill post - closure care liabilities 2,042,254 - 2,042,254 - Total noncurrent liabilities 2,867,344 21,639,919 155,539 109,188 24,771,990 224,185 Total liabilities $ 3,395,567 $ 24,003,087 $ 184,601 $ 132,643 $ 27,715,898 $ 905,343 Net Assets Invested in capital assets, net of related debt $ 2,275,537 $ 40,991,086 $ 646,330 $ 313,962 $ 44,226,915 $ 27,790 Restricted Restricted for bond retirement - 1,553,016 - - 1,553,016 - Unrestricted 1,434,206 22,624,333 576,254 1[ 01,038] 24,533,755 2,299,558 Total net assets $ 3,709,743 $ 65,168,435 $1,222,584 $ 212,924 $ 70,313,686 $ 2,327,348 The notes to the basic financial statements are an integral part of this statement. 20 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31, 2011 Operating expenses General government - - - - 9.611,278 Public works 2,088,843 11,205,114 2,170,663 - 15,464,620 - Recreation - - - 791,488 791,488 - Depreciation 740,047 1,758,777 120,799 33,569 2,653,192 4,698 Total operating expenses 2,828,890 12,963,891 2,291,462 825,057 18,909,300 9,615,976 Operating income [loss] 99,972 5,397,121 43,081 [138,675] 5,401,499 516,376 Nonoperating revenues [expenses] Investment revenue 9,072 Business -Type Activities: 1,839 36 83,399 8,446 Enterprise Funds [115,875] [632,390] - - [748,265] Total Internal - Solid Waste Water and Enterprise Service 1,129 Disposal Sewer Sanitation Golf Course Funds Funds Operating revenues 7,864 - Amortization of bond issuance costs - Charges for services $ 2,904,371 $ 17,904,056 $ 2,334,119 $ 636,202 $ 23,778,748 $ 9,881,156 Federal grants - 201,700 - - 201,700 - Miscellaneous 24,491 255,256 424 50,180 330,351 251,196 Total operating revenues 2,928,862 18,361,012 2,334,543 686,382 24,310,799 10,132,352 Operating expenses General government - - - - 9.611,278 Public works 2,088,843 11,205,114 2,170,663 - 15,464,620 - Recreation - - - 791,488 791,488 - Depreciation 740,047 1,758,777 120,799 33,569 2,653,192 4,698 Total operating expenses 2,828,890 12,963,891 2,291,462 825,057 18,909,300 9,615,976 Operating income [loss] 99,972 5,397,121 43,081 [138,675] 5,401,499 516,376 Nonoperating revenues [expenses] Investment revenue 9,072 72,452 1,839 36 83,399 8,446 Debt service [115,875] [632,390] - - [748,265] - Gain![loss] on disposal of fixed assets - 2,550 30,000 - 32,550 1,129 Accretion of bond premium - 7,864 - - 7,864 - Amortization of bond issuance costs - [11,051] - - [11,051] - Total nonoperating revenues [expenses] [106,803] [560,575] 31,839 36 [635,503] 9,575 Income [loss] before transfers [6,831] 4,836,546 74,920 [138,639] 4,765,996 525,951 Transfers from [to] other funds Transfers in - - - 47,228 47,228 60,000 Transfers [out] [180,000] [2,030,000] - [2,210,000] - Total transfers [180,000] [2,030,000] 47,228 [2,162,772] 60,000 Capital contributions - 3,803,565 - - 3,803,565 - Change in net assets [186,831] 6,610,111 74,920 [91,411] 6,406,789 585,951 Net assets, January 1 3,895,812 58,578,036 1,159,149 304,622 63,937,619 1,737,815 Restatement 762 [19,712] [11,485] [287] [30,722] 3,582 Net assets, January 1, restated 3,896,574 58,558,324 1,147,664 304,335 63,906,897 1,741,397 Net assets, December 31 $ 3,709,743 $ 65,168,435 $ 1,222,584 $ 212,924 $ 70,313,686 $ 2,327,348 The notes to the basic financial statements are an integral part of this statement. 21 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2011 Cash flows from operating activities Cash received from customers and users Cash paid to suppliers of goods or services Cash paid to employees Other operating receipts Net cash provided by [used in] operating activities Cash flows from capital and related financing activities Purchase and construction of capital assets Capital contributions Debt issuance costs incurred Proceeds from sale of capital assets Principal payments - general obligation bonds Principal payments - revenue bonds Proceeds from issuance of revenue bonds Interest paid Net cash provided by [used in] capital and related financing activities Cash flows from investing activities Interest received Business -Type Activities - Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $ 2,948,382 $17,850,055 $ 2,332,281 $ 636,201 $ 23,766,919 $ 9,786,038 [1,722,492] [7,552,182] [1,616,344] [391,100] [11,282,118] [8,955,819] [454,426] [2,945,574] [696,074] [386,401] [4,482,475] [631,488] 24,491 456,956 424 50,180 532,051 251,196 795,955 7,809,255 20,287 [91,120] 8,534,377 449,927 [23,446] [11,886,827] [139,452] - [12,049,725] - - 3,803,565 3,803,565 [315,426] - [315,426] - 2,550 30,000 32,550 1,129 [697,396] [691,410] - [1,388,806] - 11,580,000] [1,580,000] 16,193,925 16,193,925 [136,908] [496,760] [633,668] - [857,750] 5,029,617 [109,452] 4,062,415 1,129 9,072 72,453 1,839 37 83,401 8,445 Cash flows from noncapital financing activities Transfers in Transfers [out] 180,000 [2,030,000] Net cash provided by [used in] noncapital financing activities [180,000] [2,030,000] 47,228 47,228 60,000 - [2,210,000] - 47,228 [2,162,772] 60,000 Net increase [decrease] in cash and cash equivalents [232,723] 10,881,325 [87,326] [43,855] 10,517,421 519,501 Cash and cash equivalents, January 1 3,612,249 13,160,792 709,009 47,810 17,529,860 2,569,706 Cash and cash equivalents, December 31 $ 3,379,526 $ 24,042,117 $ 621,683 $ 3,955 $ 28,047,281 $ 3,089,207 The notes to the basic financial statements are an integral part of this statement. 22 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2011 Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss] Adjustments to reconcile operating income [loss] 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 retainage payable Increase [decrease] in accrued compensated absences Increase [decrease] in claims payable Increase [decrease] in landfill postclosure liabilities Increase [decrease] in net OBEB obligation Increase [decrease] in meter deposits payable Net cash provided by [used in] operating activities Business -Type Activities. Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $ 99,972 $ 5,397,121 $ 43,081 $ [138,675] $ 5,401,499 $ 516,376 740,047 1,758,777 120,799 44,011 79,0171 [1,838] - 31,950 [218,286] 35,620 [120,339] [12,979] 591,610 - [342] [1,806] [35,666] 133,066 - - 10,466 49,984 14,250 - 25,016 - 33,569 2,653,192 4,698 - [36,844] - [9,113] 22,837 6,646 [1,394] [304,399] 14,032 - 578,631 - 19,536 [18,278] 3,294 - - [95,119] - 133,066 - 4,957 79,657 - 25,016 $ 795,955 $ 7,809,255 $ 20,287 $ (91,120 ] $ 8,534,377 $ 449,927 The notes to the basic financial statements are an integral part of this statement 23 CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCYFUNDS December 31, 2011 ASSETS Cash and investments Total assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Total liabilities The notes to the basic financial statements are an integral part of this statement. 24 $ 313,300 $ 313,300 $ 313,300 $ 313,300 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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. 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 A.F.B that was closed by the United States Department of Defense in June 1965. One of the primary functions of the Airport Authority is to facilitate the continued growth of jobs and payroll at the Airport Industrial Center. The Airport Authority is managed and controlled by a five- member Board of Directors appointed by the Salina City Commission. Any director may be removed by a majority vote of the Salina City Commission. The Airport Authority's basic mill levy (up to 3 mills) requires the approval of the City Commission. The Commission must also approve the issuance of general obligation debt by the Airport Authority. The Airport Authority 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, 2011. Complete financial statements for each of the individual component units may be obtained at the entity's administrative offices. Salina Airport Authority Housing Authority of 3237 Arnold Ave. the City of Salina Salina, KS 469 S. 5th Salina, KS Joint Ventures The City of Salina also participates with Saline County in two joint ventures. The Salina - Saline County Board of Health was organized by the City and County to promote public health. The 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. Total net assets /unencumbered cash, December 31, 2011 Total change in net assets /change in unencumbered cash, year ended December 31, 2011 Total revenues /cash receipts, year ended December 31, 2011 Total revenues /cash receipts from City of Salina 25 (GAAP Basis) (Kansas Prescribed Basis) Board of Building Health Authority (Audited) (Audited) $ 1,697,636 $ 931,040 [62,456] [247,094] 3,856,055 748,166 1,018,101 278,756 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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. Salina - Saline County Board of Health Salina County -City 125 West Elm Street Building Authority Salina, KS 300 West Ash Street Salina, KS 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. 26 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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. Expenditure - driven grants are recognized as revenue when the qualifying 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 and /or other funds. The City reports the following major governmental funds: General fund - 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. 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. Sales tax capital fund - To account for 87.5% of the 1/4 cent sales tax designated for capital, debt, and human services purposes. Debt service fund - 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. 27 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Capital projects fund - 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 City'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, Fund Balance, and Net Assets 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 carded 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 lending /borrowing 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 to /from other funds" (i.e., the non - current portion of interfund loans). All other outstanding balances between funds are reported as "due to /from other funds." Accounts Receivable. The City records revenues when services are provided. All receivables are shown net of an allowance for 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 2012. 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. 28 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 2. Receivables and Pavables (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 Preoaid Items Inventories are valued at cost using the first -in /first -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. 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. 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 Years Buildings 50 Other equipment 5-15 Vehicles 6-10 Infrastructure 30-50 29 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Assets (Continued) 5. 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. Employees must use 50% of leave accrued each calendar year and an employee's maximum accrued vacation leave balance cannot exceed 250 hours (or 350 hours for employees working 24 hour shifts). 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. 6. 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. 7. Long -term Obligations 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. ME CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Assets (Continued) 8. Fund Balances In the fund financial statements, governmental funds report fund balance in the following classifications: nonspendable, restricted, committed, assigned and unassigned. Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Restricted fund balance indicates that constraints have been placed on the use of resources either by being externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Committed fund balances include amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the city commission. Assigned fund balances include amounts that are constrained by the City management's intent to be used for specific purposes, but are neither restricted nor committed. Unassigned fund balance represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available restricted amounts are considered to be spent first. When an expenditure is incurred for purposes for which committed, assigned, or unassigned fund balance is available, the following is the order in which resources will be expended: committed, assigned and unassigned. The following is the detail for fund balance classifications in the financial statements: 31 Major Governmental Funds Flood & Tourism Other Total Drainage and Special Bicentennial Sales Tax Debt Capital Governmental Governmental General Imorovement Convention Gas Center Capital ervwce Proiects Funds Funds Fund Balances Nonspendable for Inventory $ 89,716 $ $ $ $ $ $ $ $ $ 89,716 Restricted for. Public works - - 1,094,720 - - - - - 1,094,720 Public health and sanitation - - - - - - - - 4 4 Culture and recreation - - - - - - - - 45,236 45,236 Planning and development - - 340,473 - - - - - 298,015 638,488 Debt payments - - - - - - 1,285,130 - 547,999 1,833,129 Committed for: Public safety - - - - - - - [7,866] [7,866] Culture and recreation - - - - 142,881 - - - 524,907 667,788 Planning and development - - - - - - - - 6,102 6,102 Cemetery - - - - - - - - 421,037 421,037 Capital improvements - - - - - 610,134 - [2,477,564] 907,112 [960,318] Assigned for: General government 18,450 - - - - - - - - 18,450 Publicworks 36,755 907 323,023 360,685 Planning and development 11.376 - - - - - - - - 11,376 Capital improvements 226,235 - - - - 787,437 - 2,868,416 50,000 3,932,088 Unassigned. 3,453,706 3,453,706 Total Fund Balances $ 3,836,238 $ 907 $ 340,473 $ 1,417,743 $ 142,881 $ 1,397,571 $ 1.285,130 $ 390,852 $ 2,792,546 $ 11,604.341 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Assets (Continued) 9. 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. 10. 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. 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 2011 budget was amended for the Flood & Drainage Improvement Fund, Sales Tax Capital Fund, Water and Sewer Fund, Risk Management Fund and Central Garage Fund. 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budgetary Information (Continued) 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, non -major debt service 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 Federal Care Grant. 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. B. Statutory Violations Actual exceeded budgeted expenditures at December 31, 2011 in the Flood & Drainage Improvement Fund and Sales Tax Economic Development Fund, which violates KSA 79 -2935. C. 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, 2011, the statutory limit for the City was $133,379,948, providing a debt margin of 75,990,305. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 3. RESTATEMENT OF EQUITY The implementation of GASB 54 required the reclassification of the governmental fund balances. The following is the reclassification of fund balance as of December 31, 2010. Governmental Fund: General Fund Flood & Drainage Improvement Fund Tourism and Convention Fund Special Gas Fund Bicentennial Center Fund Sales Tax Capital Fund Debt Service Fund Capital Projects Fund Other Governmental Funds Total Governmental Funds Fund Balance Classification As of December 31, 2010 Unreserved Reserved Total $ 3,517,895 $ 99,286 $ 3,617,181 187,350 1,176 188,526 367,197 - 367,197 986.224 498.417 1.484,641 46,048 - 46,048 1,572,216 582,151 2,154,367 - 571,873 571,873 [6,654,370] 4,044,369 [2,610,001] 2,365,603 616,049 2,981,652 $ 2,388,163 $ 6,413,321 $ 8,801,484 Fund Balance Classification As of December 31, 2010, Reclassified Nonspendable Restricted Committed Assigned Unassigned Total Governmental Fund: General Fund $ 87,238 $ $ - $ 99,286 $ 3,430,657 $ 3,617,181 Flood & Drainage Improvement Fund - 187,350 1,176 - 188,526 Tourism and Convention Fund 367,197 - - - 367,197 Special Gas Fund 986,224 - 498,417 - 1,484,641 Bicentennial Center Fund - 46,048 - - 46,048 Sales Tax Capital Fund - 1,572,216 582,151 - 2,154,367 Debt Service Fund 571,873 - - - 571,873 Capital Projects Fund - [6,654,370] 4,044,369 - [2,610,001] Other Governmental Funds 944,240 2,031,076 6,336 - 2,981,652 Total Governmental Funds $ 87,238 $ 2,869,534 $ [2,817,680] $ 5,231,735 $ 3,430,657 $ 8,801,484 Following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or recorded incorrectly. Additionally, it was discovered that accounts receivable had not been properly recorded. Accordingly, the beginning net assets balances were restated, the effects of which are as follows: Solid Waste Water and Golf Central Governmental General Disposal Sewer Sanitation Course Garage Activities Fund Fund Fund Fund Fund Fund Net Assets /Fund Balance, $ 117,797,911 $ 3,617,181 $ 3,895,812 $ 58,578,036 $ 1,159,149 $ 304,622 $ 205,887 December 31, 2010 Capital Asset Adjustment 956,001 - 762 [19,712] [11,485] [287] 3,582 Accounts Receivable Adjustment 156,424 156,424 - - - - - Net Assets /Fund Balance, December 31, 2010, Restated $ 118,910,336 $ 3,773,605 $ 3,896,574 $ 58,558,324 $ 1,147,664 $ 304,335 $ 209,469 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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 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 U.S. 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, 2011, the City has the following investments: Investment Type Kansas Municipal Investment Pool U.S. Government Securities Total fair value Fair Value Rating $ 305,158 S &P AAAf /S 1 + 22,063,739 N/A $ 22,368,897 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 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. 35 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A. 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. B. Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: 0 Tourism and Special Bicentennial Debt General Convention Gas Center Service Subtotal Primary Government Receivables: Accounts $ 2,889,545 $ 338,271 $ - $ 54,966 $ - $ 3,282,782 Taxes 8,094,093 - 312,648 - 2,441,349 10,848,090 Interest 35,877 - - - 35,877 Gross receivables 11,019,515 338,271 312,648 54,966 2,441,349 14,166,749 Less: allowance for uncollectibles [2,211,730] - - [2,211,730] Total $ 8,807,785 $ 338,271 $ 312,648 $ 54,966 $ 2,441,349 $ 11,955,019 Solid Water Other Waste and Governmental Sanitation Disposal Sewer Total Primary Government Receivables: Accounts $ 52,151 $ 201,973 $ 231,123 $ 1,489,511 $ 5,257,540 Taxes - - - - 10,848,090 Interest 16 35,893 Gross receivables 52,151 201,973 231,139 1,489,511 16,141,523 Less: allowance for uncollectibles [982] [62,801] - [463,147] x2,738,660] Total $ 51,169 $ 139,172 $ 231,139 $ 1,026,364 $ 13,402,863 Component Units Salina Airport Authority Accounts $ 107,643 Less: allowance for uncollectibles [984] 106,659 Taxes 1,638,423 Total Salina Airport Authority 1,745,082 Salina Housing Authority Accounts 37,957 Other 1,719 Total Salina Housing Authority 39,676 Total $ 1,784,758 0 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) C. Inter-fund Receivables and Payables The composition of interfund balances as of December 31, 2011, is as follows: Fund Types General Fund Other Government Funds Due From Due To $ 9,375 $ - - 9,375 $ 9,375 $ 9,375 The City uses interfund receivables and payabies as needed when pooled cash is negative within a fund until investments mature or grant proceeds are received. All payabies are cleared in less than one year. 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2011, was as follows: 38 Balance Adj. Bal. Balance 12/31/2010 Adjustments 12/31/2010 Additions Retirements 12/31/2011 City governmental activities: Governmental activities: Capital assets, not being depreciated Construction in progress $ 32,549,155 $ 81,670 $ 32,630,825 $ 2,945,099 $ 3,021,567 $ 32,554,357 Land 22,477,191 - 22,477,191 - - 22,477,191 Capital assets, being depreciated Infrastructure 144,316,296 144,316,296 1,829,401 146,145,697 Buildings and improvements 36,233,800 36,233,800 - 36,233,800 Vehicles 7,480,033 810,889 8,290,922 255,156 216,023 8,330,055 Equipment, furniture and fixtures 5,353,682 92,755 5,446,437 246,676 235,912 5,457,201 Total capital assets 248,410,157 985,314 249,395,471 5,276,332 3,473,502 251,198,301 Less accumulated depreciation for: Infrastructure 60,603,797 [30,296] 60,573,501 2,964,133 - 63,537,634 Buildings and improvements 12,609,132 10,741 12,619,873 1,023,364 - 13,643,237 Vehicles 5,035,374 [40,529] 4,994,845 513,718 174,927 5,333,636 Equipment, furniture and fixtures 4,039,705 89,397 4,129,102 228,844 188,665 4,169,281 Total accumulated depreciation 82,288,008 29,313 82,317,321 4,730,059 363,592 86,683,788 Governmental activities capital assets, net $ 166,122,149 $ 956,001 $ 167,078,150 $ 546,273 $ 3,109,910 $ 164,514,513 Business -type activities: Capital assets, not being depreciated Construction in progress $ 1,516,604 $ - $ 1,516,604 $ 10,781,482 $ 1,236,031 $ 11,062,055 Land 1,541,002 - 1,541,002 - - 1,541,002 Capital assets, being depreciated Infrastructure 68,957,665 11,932 68,969,597 2,333,997 71,303,594 Buildings and improvements 22,587,106 - 22,587,106 - 22,587,106 Vehicles 2,987,740 [41,385] 2,946,355 139,452 102,647 2,983,160 Equipment, furniture and fixtures 4,376,725 27,010 4,403,735 30,824 4,434,559 Total capital assets 101,966,842 [2,443] 101,964,399 13,285,755 1,338,678 113,911,476 Less accumulated depreciation for. Infrastructure 28,973,288 [34,750] 28,938,538 1,774,866 - 30,713,404 Buildings and improvements 10,241,870 17,027 10,258,897 424,276 - 10,683,173 Vehicles 2,084,391 9,460 2,093,851 179,756 102,647 2,170,960 Equipment, furniture and fixtures 2,394,356 36,542 2,430,898 274,294 2,705,192 Total accumulated depreciation 43,693,905 28,279 43,722,184 2,653,192 102,647 46.272,729 Business -type activities capital assets, net $ 58,272,937 $ [30,722] $ 58,242,215 $ 10,632,563 $ 1,236,031 $ 67,638,747 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets (Continued) The City's depreciation expense was charged to governmental functions as follows: Governmental Activities: General government $ 8,990 Public safety 507,826 Public works 3,265,341 Public health 38,013 Culture and recreation 803,772 Planning and development 106,117 Total depreciation $ 4,730,059 Business -type Activities: Solid Waste Disposal $ 740,047 Water and Sewer 1,758,777 Sanitation 120,799 Golf Course Division 33,569 Total depreciation $2,653,192 E. Long -Term Debt Following is a summary of changes in long -term debt for fiscal year 2011: Governmental activities - General obligation bonds Accrued compensation Temporary notes Total Business -type activities: General obligation bonds Revenue bonds Accrued compensation Total Component Units: General obligation bonds Financing lease Temporary notes Special assessment debt Total component units Balance Balance Amounts January 1, December 31, Due Within 2011 Additions Deletions 2011 One Year $ 53,120,953 $ 6,587,986 $ 4,483,269 $ 55,225,670 $ 5,051,038 3,230,488 440,340 581,694 3,089,134 581,694 2,500,000 3,400,000 2,500,000 3,400,000 3,400,000 $ 58,851,441 $ 10,428,326 $ 7,564,963 $ 61,714,804 $ 9,032,732 $ 8,614,577 $ - $ 1,396,670 $ 7,217,907 $ 1,200,048 1,580,000 16,193,925 1,580,000 16,193,925 343,696 667,768 104,025 122,302 649,491 122,301 $ 10,862,345 $ 16,297,950 $ 3,098,972 $ 24,061,323 $ 1,666,045 $ 12,792,154 $ 14,056,831 $ 1,040,000 $ 25,808,985 $ 1,090,000 285,796 - 40,238 245,558 42,941 11,652,467 11,652,467 - - 145,299 20,287 125,012 21,066 $ 24,875,716 $ 14,056,831 $ 12,752,992 $ 26,179,555 $ 1,154,007 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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 Original Interest Bonds General Obligation Bonds Issue Rates Outstanding Internal Improvements 2002B, due 10/112017 $ 1,980,000 2.70% to 4.50% $ 165,000 Internal Improvements 2003A, due 10/1/2018 4,350,000 2.13% to 3.85% 1,765,000 Refunding 2004A, due 8/1/2015 5,585,000 2.10% to 4.00% 1,170,000 Internal Improvements 20048, due 10/1/2019 4,053,000 3.00% to 4.00% 1,390,000 Internal Improvements 2005A, due 10/1/2020 4,210,000 2.95% to 4.25% 2,200,000 Internal Improvements 2006A, due 10/1/2026 2,200,000 3.55% to 5.50% 1,650,000 Internal Improvements 2006B, due 10/1/2021 885,000 4.00% to 4.50% 535,000 Internal Improvements 2007A, due 10/1/2027 6,545,000 4.25% to 4.625% 5,085,000 Internal Improvements 2008A, due 10/1/2023 3,720,000 3.25% to 4.00% 3,000,000 Internal Improvements 2008B, due 7/1/2028 3,525,000 3.65% to 5.00% 3,415,000 Internal Improvements 2009A, due 10/1/2029 23,695,000 2.00% to 5.00% 21,877,424 Internal Improvements 2010A, due 10/1/2025 6,916,592 2.00% to 3.875% 6,138,819 Internal Improvements 2010B, due 10/1/2023 7,973,044 0.50% to 3.00% 7,464,348 Internal Improvements 2011A, due 10/1/2031 6,587,985 2.00% to 5.00% 6,587,986 Total general obligation bonds $ 62,443,577 Revenue Bonds Revenue 2011, due 10/1/31 $ 16,193,925 2.00% to 4.60% $ 16,193,925 Total revenue bonds $ 16,193,925 Temporary Notes Series 2011 -1, due 8/1/2012 $ 3,400,000 0.40% $ 3,400,000 Total revenue bonds $ 3,400,000 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long -Term Debt (Continued) 41 Original Interest Bonds Issue Rates Outstanding Component Unit Salina Airport Authority General Obligation Bonds General Obligation 2001 A, due 2012 $ 1,385,000 4.45% to 5.60% $ 175,000 General Obligation 2002A, due 2012 2,635,000 2.45% to 3.70% 305,000 General Obligation 2005A, due 2020 3,635,000 4.75% to 5.25% 2,935,000 General Obligation 2007A, due 2022 1,005,000 4.60% to 6.00% 800,000 General Obligation 2009A, due 2029 2,025,000 4.20% to 4.25% 1,932,154 General Obligation 2009B, due 2026 6,080,000 3.00% to 5.50% 5,605,000 General Obligation 2011A, due 2030 11,820,000 4.64% 11,603,309 General Obligation 2011 B, due 2031 2,505,000 4.28% 2,453,522 Total general obligation bonds 25,808,985 Special Assessment Debt Airport Industrial Center, due 2016 565,235 3.79% 104,691 Hangar 600 Sanitary Sewer, due 2021 27,599 4.47% 20,321 Total special assessment debt 125,012 Financing Lease, due 2015 425,000 6.609% 245,558 Total $ 26,179,555 Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: General Obligation - Primary Government Bonds Interest Year Outstandina Due Total 2012 $ 6,251,086 $ 2,299,881 $ 8,550,967 2013 6,286,086 2,026,639 8,312,725 2014 5,961,086 1,802,699 7,763,785 2015 5,161,086 1,611,107 6,772,193 2016 5,001,086 1,440,080 6,441,166 2017 -2021 19,865,428 4,617,544 24,482,972 2022 -2026 10,541,564 1,805,185 12,346,749 2027 -2031 3,376,155 307,047 3,683,202 Total $ 62,443,577 $ 15,910,181 $ 78,353,758 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long -Term Debt (Continued) Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: General Obligation - Component Units Bonds Interest Year Outstandinq Due Total 2012 $ 1,090,000 $ 1,169,829 $ 2,259,829 2013 895,000 1,096,914 1,991,914 2014 925,000 1,067,866 1,992,866 2015 955,000 1,036,264 1,991,264 2016 990,000 1,001,531 1,991,531 2017 -2021 5,600,000 4,370,941 9,970,941 2022 -2026 6,965,000 3,006,746 9,971,746 2027 -2031 8,750,000 1,218,234 9,968,234 Total $ 26,170,000 $ 13,968,325 $ 40,138,325 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: Temporary Notes - Primary Government Bonds Interest Year Outstanding Due Total 2012 $ 3,400,000 $ 14,204 $ 3,414,204 42 Revenue Bonds - Primary Government Bonds Interest Year Outstandinq Due Total 2012 $ 343,696 $ 596,991 $ 940,687 2013 623,696 590,191 1,213,887 2014 633,696 577,791 1,211,487 2015 643,696 565,191 1,208,887 2016 663,696 549,191 1,212,887 2017 -2021 3,638,480 2,433,862 6,072,342 2022 -2026 4,323,480 1,738,821 6,062,301 2027 -2031 5,323,485 743,320 6,066,805 Total $ 16,193,925 $ 7,795,358 $ 23,989,283 Annual debt service requirements to maturity for temporary notes - to be paid through the issuance of general obligation bonds: Temporary Notes - Primary Government Bonds Interest Year Outstanding Due Total 2012 $ 3,400,000 $ 14,204 $ 3,414,204 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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: Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: Financing Lease - Component Units Assessment Lease Interest Year Year Outstanding Due Total 2012 $ 42,941 $ 15,531 $ 58,472 2013 45,826 12,646 58,472 2014 48,905 9,567 58,472 2015 52,19D 6,282 58,472 2016 55,696 2,776 58,472 Total $ 245,558 $ 46,802 $ 292,360 Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: 43 Special Assessment Debt - Component Units Assessment Interest Year Outstanding Due Total 2012 $ 21,066 $ 4,876 $ 25,942 2013 21,876 4,067 25,943 2014 22,717 3,226 25,943 2015 23,590 2,352 25,942 2016 24,497 1,446 25,943 2017 -2021 11,266 1,555 12,821 Total $ 125,012 $ 17,522 $ 142,534 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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 defaults, which have historically been immaterial. Conduit debt. The City has entered into several conduit debt arrangements wherein the City issues industrial revenue bonds to finance a portion of the construction of facilities by private enterprises. In return, the private enterprises have executed mortgage notes or leases with the City. The City is not responsible for payment of the original bonds, but rather the debt is secured only by the cash payments agreed to be paid by the private enterprises under the 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, 2011, total outstanding conduit debt was $86,472,423. 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, 2011, the City had $325,000 of outstanding defeased debt. F. Reconciliation of Transfers A reconciliation of interfund transfers follows: Major Funds: General fund $ Flood and drainage improvement fund Tourism and convention fund Special gas fund Bicentennial center fund Sales tax capital fund Debt service Capital projects fund Other governmental funds Agencyfunds Solid waste disposal fund Water and sewer fund Golf course fund Central garage fund Total Transfers Transfer In Transfer Out 868,838 $ 997,949 907 - - 596,440 180,000 1,836 872,849 - 8,558 3,501,556 2,225,565 83,488 3,289,564 405,549 547,389 105,259 - 198,821 - 180,000 - 2,030,000 47,228 - 60,000 - $ 8,100,898 $ 8,100,898 The City uses interfund transfers to share administrative costs between funds. 44 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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 (KP &F). Both are cost - sharing multiple - employer defined benefit pension plans as provided by Kansas statutes (KSA 74 -4901 et seq). KPERS and KP &F 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 611 South Kansas, Suite 100; Topeka, Kansas 66603 or by calling 1- 888 - 275 -5737. Funding Policy. K.S.A. 74 -4919 establishes the KPERS member - employee contribution rate at up to 6% of covered salary. K.S.A. 74 -4975 establishes the KP &F member - employee contribution rate at 7% of covered salary. The employer collects and remits member- employee contributions according to the provisions of section 414 (h) of the Internal Revenue Code. State law provides that the employer contribution rates be determined annually based on the results of an annual actuarial valuation. KPERS and KP &F are funded on an actuarial reserve basis. State law sets a limitation on annual increases in the employer contribution rates. The KPERS employer rate was 6.96% from January 1 to December 31, 2011. The City employer contributions to KPERS for the years ending December 31, 2011, 2010, and 2009 were $987,826, $1,039,728 and $831,493, respectively, equal to the required contributions for each year. The KP &F employer rate established for fiscal years beginning in 2011 is 17.68 %. Employers participating in KP &F also make contributions to amortize the liability for past service costs, if any, which are determined separately for each participating employer. The City's contributions to KP &F for the years ended December 31, 2011, 2010, and 2009 were $1,787,801, $1,664,356 and $1,769,379, 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. 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. 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. 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) 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, $172,545 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2011 2010 Unpaid claims, January 1 $ 425,582 $ 372,610 Incurred claims (including IBNRs) 126,625 409,801 Claim payments 230,417 3[ 56,829] Unpaid claims, December 31 $ 321,790 $ 425,582 The City established a limited risk management program for employee health and dental insurance in 1997. The program covers eligible City employees. Premiums are paid into the health insurance fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $50,000. Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments 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: 2011 2010 Unpaid claims, January 1 $ 382,502 $ 421,530 Incurred claims (including IBNRs) 4,229,571 4,198,012 Claim payments 4,2I 20,8981 4,237,040 Unpaid claims, December 31 $ 391,175 $ 382,502 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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, 2011. Proiect N Ohio Grade Separation Bicentennial Improvements Markley, Magnolia, Valleyview Sanitary Sewer Improvements and Manhole and Wastewater Pump Station Rehabilitation Grand Prairie Addition Magnolia Commons South 9th Corridor, Phase IV Scoular Addition Waterline Imp. Stone Creek Addition Riffel # 2 Infrastructure East Magnolia Road Replacement Aviation Service Center Fire Station # 1 Authorization $ 6,617,581 2,500,000 5,150,000 1,618,096 3,415,564 6,500,000 75,453 440,193 977,917 4,500,000 5,500,000 1,787,000 Expenditures $ 6,523,786 2,505,636 1,070,277 1,479,406 3,003,051 6,201,014 48,673 324,404 893,024 432,128 3,737,322 226,131 Project overages in the Bicentennial Improvements project 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, 2011. 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 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 $2,042,254 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 29.5% of the estimated capacity of the landfill. 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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 $4,891,330 as the remaining estimated capacity is filled over the remaining life expectancy of 68.8 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2011. 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 post - closure 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 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. Department of Defense transferred property located at the former Schilling Air Force Base (the Base or Site) to the City on or about September 9, 1966. The property is now known to contain areas of extensive soil and groundwater contamination, which is a result of the use and disposal of chlorinated solvents during military operations at the Base from 1942 until Base closure in 1965. The U.S. 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 (Corps) is the lead agency for the Department at formerly used defense sites. The Corps has investigated the soil and groundwater contamination at the Site under the regulatory oversight of the U.S. Environmental Protection Agency (EPA) and the Kansas Department of Health and Environment (KDHE). The Site is not designated as a National Priority List Superfund site, but investigation and remediation are required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act ( CERCLA). Potential liability for contamination under CERCLA 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 Site, the City is potentially liable under CERCLA, although the City believes that it has meritorious defenses to such liability. The City is under no administrative orders from the EPA or KDHE. The City is considered to be a Potentially Responsible Party (PRP) for the Site, primarily due to its status as a property owner. The Salina Airport Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University at Salina) (collectively Salina Public Entities) currently own over 90% of the nearly 4,000 acres of the Base property. 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Beginning in August 2007, the Salina Public Entities initiated settlement negotiations with the U.S. Federal Government. The negotiation objectives at that time included transferring the responsibility for completing the cleanup from the U.S. to the Salina Public Entities. The local objective was to reach a settlement agreement with the U.S. 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, by and through its environmental consultant, 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 Corps. Subsequently, on January 23, 2009, the Salina Public Entities delivered a demand letter to the Corps. The letter demanded that settlement negotiations begin immediately with the U.S. Department of Justice. On May 14, 2009 the City was notified that the Corp referred the Base demand letter to the U.S. Department of Justice on May 12, 2009. The Salina Public Entities delivered on or about May 10, 2010, a settlement offer and a draft of a lawsuit complaint to the attorney for the U.S. Department of Justice. The Salina Public Entities planned to file suit against the U.S. if the matter was not settled by the end of May, 2010. The Salina Public Entities did not intend to cut off settlement negotiations by the filing of suit, and this has been communicated to the U.S. No remedial action plan or record of decision has been adopted by the EPA or KDHE. On or about May 27, 2010, the Salina Public Entities filed their Complaint against the United States of America, the United States Department of Defense and Secretary of Defense, Robert M. Gates, in his official capacity (collectively, "Defendants "). On or about September 22, 2010, the Salina Public Entities filed their First Amended Complaint in four counts: Count I Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(2), Count II Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(1), Count III Claim for Recovery of Response Costs Pursuant to 42 U.S.C.§ 9607(a) and Count IV Claim for Declaratory Judgment Pursuant to 42 U.S.C.§ 9613(g)(2). On or about October 6, 2010, Defendants filed their motion to dismiss and to strike, primarily with respect to the citizen suit claims. On or about March 25, 2011, Judge Murguia entered his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I and II (citizen suit claims) for lack of subject matter jurisdiction. He also granted the Defendants' motion to dismiss the Salina Public Entities' requests for attorney fees, with the exception of non - litigation attorney fees. He denied the Defendants' motion to strike the Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims under Counts III and IV for response costs under CERCLA 9607(a) are not affected by the Judge's rulings. The Salina Public Entities disagree with most of the Judge's filings and, if necessary, plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings. On or about April 22, 2011, Defendants filed their Answer to First Amended Complaint and Counterclaim against the Salina Public Entities. Count I of the Counterclaim alleges a claim for contribution under CERCLA, 42 U.S.C.§ 9613(f)(1). Count II of the Counterclaim alleges a claim for cost recovery under CERCLA, 42 U.S.C.§ 9607(a)(1). Count II alleges costs incurred by the U.S. Environmental Protection Agency of approximately $1,838,241 as of September 30, 2007, and alleges costs incurred by the Corps of approximately $14,915,228 as of April 17, 2009. The Salina Public Entities intend to vigorously contest the claims brought against them and will assert, among other defenses, the third party defense under 42 U.S.C.§ 9607(b)(3). 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Since the lawsuit remains pending without a final settlement, the City intends to vigorously pursue its claims and contest the claims brought against it. Based on presently known information, the City has determined that while a possible liability exists, at this time no reasonable estimate of the possible liability can be made. Therefore, no liability related to that matter has been recorded. 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 $229,000 to the Plan (approximately 100% of total premiums) through their required contribution of $425 per month for retiree -only coverage and $1,141 for family 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 $ 961,335 Interest on Net OPEB Obligation 95,743 Adjustment to Annual Required Contribution [79,7861 Annual OPEB cost (expense) 977,292 Benefit payments 229,000 Change in net OPEB obligation 748,292 Net OPEB obligation - beginning of year 2,393,591 Net OPEB obligation - end of year $ 3,141,883 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) I. 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, 2011 was as follows: Funding Status and Funding Progress. As of the year ended December 31, 2011, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $9,019,806 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $9,019,806. The covered payroll (annual payroll of active employees covered by the plan) was $21,942,428, and the ratio of the UAAL to the covered payroll was 41.11 %. 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 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, 2011, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 4.00% investment rate of return, which is the rate of the employer's own investments as there are no plan assets and an initial annual medical and dental healthcare cost trend of 9.30 %, reduced by decrements to an ultimate rate 4.70% after eighty -two years. The UAAL is being amortized as a level dollar over an open thirty -year period. 51 Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2008 $ 910,418 $ 96,672 $ 813,746 December 31, 2009 957,353 100,000 1,671,099 December 31, 2010 921,492 199,000 2,393,591 December 31, 2011 977,292 229,000 3,141,883 Funding Status and Funding Progress. As of the year ended December 31, 2011, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $9,019,806 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $9,019,806. The covered payroll (annual payroll of active employees covered by the plan) was $21,942,428, and the ratio of the UAAL to the covered payroll was 41.11 %. 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 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, 2011, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 4.00% investment rate of return, which is the rate of the employer's own investments as there are no plan assets and an initial annual medical and dental healthcare cost trend of 9.30 %, reduced by decrements to an ultimate rate 4.70% after eighty -two years. The UAAL is being amortized as a level dollar over an open thirty -year period. 51 APPENDIX D December 31, 2012 Unaudited Financial Statements The City's 2012 audited financial statements were not completed as of the date of this Official Statement. The following is a portion of the report on examination of the City of Salina, Kansas for the fiscal year ended December 31, 2012, prepared by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. MIZE MOUSER CJOMPANYRA. INDEPENDENT AUDITOR'S REPORT ON THE BASIC FINANCIAL STATEMENTS Mayor and City Commissioners City of Salina, Kansas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activ tid the business -type activities, the aggregate discretely presented component units, each major fund, and the ` baggregate remaining fund information of the City of Salina, Kansas, as of and for the year ended Decemb `t 111, 2'012, and the related notes to the financial statements, which collectively comprise the City's basic financial'''statdi ents as listed in the table of contents. Management's Responsibility for the Financial Statements`" Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United "Mates of America; this includes the design, implementation, and maintenance of internal control relevant`'4to the "preparation and fair presentation of financial statements that are free from material misstatement, whether''due to fraud or error. Auditor's Responsibility:, Our responsibility is to express opinions on these filla- cial statements based on our audit. We conducted our audit in accordance with auditing standards gene rally`accepted in the United States of America and the "Kansas Municipal Accounting and Audit Guide." These'.,starJdards require that we plan and perform the audit to obtain reasonable assurance about whether the financial stat e-ments are free of material misstatement. We did not audit the financial statements of the Salina Airport Authority which statements reflect total assets of $52,209,963 as of December 31, 2012 and total revenues of _.$5,8;833`fior the year then ended, and the Housing Authority of the City of Salina which statements reflect toial `assets of $7,900,623 as of June 30, 2012 and total revenues of $2,074,377 for the year then ended, which are.d'scretely 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. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. www.mizehouser.com ■ mhco@mizehouser.com 534 S Kansas Ave, Suite 700 ■ Topeka, KS 66603 -3465 ■ 785.233.0536 p ■ 785.233.1078 f 534 S Kansas Ave, Suite 400 ■ Topeka, KS 66603 -3454 ■ 785.234.5573 p ■ 785.234.1037 f 7101 College Blvd, Suite 900 ■ Overland Park, KS 66210 -1984 ■ 913.451.1882 p ■ 913.451.2211 f 211 E Eighth Suite AN Lawrence, KS 66044 -2771 ■ 785.842.8844 p ■ 785.8&9049 f Opinions In our opinion, based on our audit and the reports 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, as of December 31, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 through 13 and the schedules of funding progress on page 52 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of,* anargement about the methods of preparing the information and comparing the information for consistency withznaraagement's responses to our inquiries, the basic financial statements, and other knowledge we obtained ddring'jour audit of the basic financial statements. We do not express an opinion or provide any assurance_ on theainformation because the limited procedures do not provide us with sufficient evidence to express an o rnioh4or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions: ft, financial statements that collectively comprise the City's financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tabfesl s` =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 combining and individual nonmajor fund financial statements and scl�ed "uses are the responsibility of management and were derived from and relate directly to the underlying accountirfg_and other records used to prepare the financial statements. The information has been subjected to the auditingtrocedures applied in the audit of the financial statements and certain additional procedures, including comparing:and„reconciling such information directly to the underlying account and other records used to prepare the fna6ctal . statements or to the financial statements themselves, and other additional procedures in accordance with „at��iiting standards generally accepted in the United States of America. In our opinion, the information is fairly,�s�i�'ted,`ain7 all material respects in relation to the financial statements as a whole. The introductory and statistical seci,i is have not been subjected to the auditing procedures applied in the audit of the basic financial statemepts,�nd,,.,accordingly, we do not express an opinion or provide any assurance on them. October 24, 2013 2 BASIC FINANCIAL STATEMENTS CITY OF SALINA, KANSAS STATEMENT OF NET POSITION December 31, 2012 ASSETS AND DEFERRED OUTLFOWS OF RESOURCES Current assets: Cash and investments Receivables (net of allowance for uncollectibles) Accounts Taxes Interest Inventory Restricted cash and investments Prepaid expenses Total current assets Noncurrent assets, Notes receivable Capital assets, nondepreciable Construction in progress Land Capital assets, depreciable Less. Accumulated depreciation Total noncurrent assets Total assets Deferred outflows of resources Deferred charge on bond issuance Total deferred outflows of resources Total assets and deferred outflows of resources Liabilities Current liabilities Accounts payable Retainage payable � e Accrued liabilities Matured bond principal and interestti'` Accrued interest payable Deposits payable °_- Unearned revenue E Current portion of compensated absences" °. Current portion of temporary notes payable Current portion of revenue bonds payable' _ Current portion of financing leases payable ; Current portion of special assessmen't'debt payable Current portion of general obligat(n bonds payable Total current liabilities Noncurrent liabilities Accrued liabilities Compensated absences Net OPEB obligation Revenue bonds payable Financing leases payable Special assessment debt payable General obligation bonds payable Landfill post - closure care liabilities Total noncurrent liabilities Total liabilities Net Position Invested in capital assets, net of related debt Restricted for Permanent funds Expendable Debt service Unrestricted Total net position Primary Government Component Units Total Total Total Salina Salina Governmental Business -type Primary Housing Airport Activities Activities Government Authority Authority $ 14,512,406 $ 25,459,075 $ 39,971,481 $ 1,618,067 $ 1,660,132 1,155,058 1,457,579 2,612,637 15,248 134,386 11,093,639 - 11,093,639 - - 33,497 16 33,513 - - 242,774 586,568 829,342 17,474 3,260 - - - 162,930 - 32,620 8,936 27,037,374 27,503,238 54,540,612 1,846,339 1,806,714 - p - 2,138 - 9,190,083 20,962,212 Y 30, 52,295 482,494 734 309 22,640,475 1,541,806 24182;281 1,456,891 9,872,183 221,623,024 102,602,443,,"" 324, 25,467 7,452,363 68,884,724 91,415,423 48,785,418` 1 ;200,841 3,339,602 29,087,967 162,038,159 764321;043 �X '238,359,202 6,054,284 50,403,249 Wf a'� . 189,075 533 103,824,281° 292,899,814 7,900,623 52.209,963 483,006 `329,943 812,951 4834408y 329,943 812,951 $ 189,558,541 $ 104,154,224 $ 293,712,765 $ 7,900,623 $ 52,209,963 v. $ 415,671 $ 1,409,471 $ 41,427 $ 76,611 " 328,811 1,364,869 1,693,680 - - 499,216 - 499,216 38,532 147,323 145 - 145 - - 429,113 200,178 629,291 - 370,102 - 161,252 161,252 83,935 - 10,576,448 - 10,576,448 8,530 41,127 1,555,549 319,073 1,874,622 13,352 - 1,485,000 - 1,485,000 - - 623,696 623,696 - - - 45,826 - - - 21,876 5,121,431 1,304,929 6,426,360 895,000 20,989,513 4,389,668 25,379,181 185,776 1,597,865 361,378 - 361,378 48,642 - 1,501,450 307,978 1,809,428 3,338 - 3,502,807 417,300 3,920,107 - - 15,226,532 15,226,532 - - - 156,791 - - - 82.071 43,988,144 8,308,997 52,297,141 23.861,769 1,693,368 1,693,368 49,353,779 25,954,175 75,307,954 51,980 24,100,631 $ 70,343,292 $ 30,343,843 $ 100,687,135 $ 237,756 $25,698,496 $ 112,928,584 $ 50,856,889 $ 163,785,473 $ 6,052,146 $ 25,339,916 442,509 - 442,509 114,288 639,324 1,553,016 2,192,340 - - 5,204,832 21,400,476 26,605,308 1,496,433 1,171,551 $ 119,215,249 $ 73,810,381 $ 193,025,630 $7,662,867 $26,511,467 The notes to the basic financial statements are an integral part of this statement. 14 Governmental activities: General government Public safety Public works Public health and sanitation Culture and recreation Planning and development Interest on long-term debt Total governmental activities Business -type activities: Solid Waste Disposal Water and Sewer Sanitation Golf Course Total business -type activities Total primary government Component units: Salina Housing Authority Salina Airport Authority Total component units CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 The notes to the basic financial statements are an integral part of this statement. 15 Net [Expenses] Revenue and Changes in Net Assets Program Revenues Primary Government Component Units Operating Capital Total Total Total Salina Salina Charges for Grants and Grants and Governmental Business -type Primary Housing Airport Expenses Services Contributions Contributions Activities Activities Government Authority Authority $ 11,584,628 $ 6,327,712 $ 1,091,708 $ $ [4,165,208] $ $ [4,165,208] $ $ 19,065,686 4,290,288 1,284,505 [13,490,893] [13,490,893] 10,956,931 305,965 1,548,322 [9,102,644] [9,102,644] 1,382,595 46,250 154,001 [1,182,344] [1,182,344] 5,338,344 1,728,259 155,343 [3,454,742] [3,454,742] 3,362,142 158,010 260,538 12,943,5941 [2.943,5941 1,914,286 [1,914,2861 [1,914,286] 53,604,612 12,856,484 4,494,417 [36,253,711] [36,253,711] 2,052,794 3,137,035 - 124,000 1,208,241 :, 1,208,241 14,889,043 19,098,626 150,194 4,359,7712 N -A3 ^4,359,777 2,515,303 2,461,965 - [53,338] 53,3381 720,420 783,169 62,749, - 62,749 20,177,560 25,480,795 274,194 5;577429 5,577,429 415,577;429 $ 73,782,172 $38,337,279 $ 4,494,417 $ 274,194 [36.253,711] [30,676,282] $ 2,177,417 $ 375,357 $ 1,572,748 $ 87,759 [141,553] 5,804,008 2,103,416 1,779,827 [1,920,765] $ 7,981,425 $ 2,478,773 $ 1,572,748 $ 1,867,586 7 [141,553 1 [1,920,765] General Revenues: Property taxes levied for .,y' General purposes ?;.; 8,272,455 - 8,272,455 - 1,767,338 Debt service 2,438,787 2,438,787 Motor vehicle tax" General purposes 1,152,767 1,152,767 - Sales tax General purposes 12,165,281 - 12,165,281 - - Selective purposes - `� Othertaxes 4,209,889 4,209,889 General purposes mfg 6,485,860 6,485,860 Investment revenue's 66,375 79,491 145,866 15,275 1,500 Miscellaneous 660,161 433,942 1,094,103 24,936 56,752 Transfers, net �i. 30,000 [30,000] Subtotal general revenues 35,481,575 483,433 35,965,008 40,211 1,825,590 W!. Change in net position [772,136] 6,060,862 5,288,726 [101,342] [95,175] Netposition - beginning 117,334,142 70,313,686 187,647,828 7,764,209 26,606,642 Prior period adjustment 2,653,243 12,564,1671 89,076 Net position - beginning, restated 119,987,385 67,749,519 187,736,904 7,764,209 26,606,642 Net position - ending $ 119,215,249 $ 73,810,381 $ 193,025,630 $ 7,662,867 $ 26,511,467 The notes to the basic financial statements are an integral part of this statement. 15 CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2012 Flood & Tourism Drainage and Special General Improvement Convention Gas Is.&i;1110 Cash and investments $ 3,120,342 $ - $ 28,785 $ 1,197,049 Receivables (net) Accounts 709,238 - 390,720 - Taxes 8,335,679 - �;_y - 298,952 Interest 33,497 - Inventory 115,900r - - Due from other funds 31,049' y - - - Cash with fiscal agent - - - Total assets $ 12,345,705 $ - $ 419,505 $ 1,496,001 LIABILITIES, DEFERRED INFLOWS OF¢D " lei 4 RESOURCES AND FUND BALANCES Liabilities:�`;� Accounts payable $4;'� °' 344,243 $ - $ - $ 118,806 Retainage payable 2,020 Due to other funds - Matured principal and interest � 4t' - - - - Temporary notes payable "��' Total liabilities �z ,, 344,243 - - 120,826 ky", Deferred inflows of reso ces,, Unavailable revenue - property taxes 8,174,352 - - - Total deferred inflows of resources 8,174,352 - - - Fund balance: Nonspendable 115,900 - - - Restricted - - 419,505 1,160,305 Committed - - - - Assigned 539,656 - - 214,870 Unassigned 3,171,554 - - - Total fund balances 3,827,110 - 419,505 1,375,175 Total liabilities, deferred inflows of resources and fund balances $ 12,345,705 $ - $ 419,505 $ 1,496,001 Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Proaects Funds Funds ` - - 55,100 1 155,058 - 2,459.008 - .oax R%M,497 - - - - - - ' - 15.800 - ' /�» / 4n 14,057 2,043,802 3,041,565 1,163,487 -1146 $ 23,969,268 � 10.919 27.834 47.999 $ 830.178 ' 8.029 - 320.7G2 - 328.811 - - ��- 31O48 . 31 . 049 - - 445 ' 145 --------__� _-_-_-----�� �_-1��5, - 1,485,000 1O,91S 33,663 ' 2O8S_-��,339 79z048 2-_�zGT5�183 � 2,402,096 10,576,448 115,900 - ' 639.324 - 1.090.754 3.318.888 2.158 1.768.357 - [4.474.792 ] 2.190.129 [516.148 880 243.782 - 3.551.940 78.215 4.827.443 3,138 2,010,139 639,324 3,366,098 10,717,637 The notes ho the basic financial statements are an integral part of this statement. 16 CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES December 31, 2012 Total Governmental Fund Balances Amounts reported for governmental activities in the statement of net position 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 r N't The cost of capital assets is 252,592,284 Accumulated depreciation is 90,577,217 An internal service fund is used by the City's management to charge the costs of the worker's compensation program. The assets andxliakilities of the internal service fund are included with governmental 'tivifT "s' . .; e �<p' The following liabilities, including bonds payable, are_no 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, Bonds payable o. Accrued interest on the bonds' 's t Net Position of Governmtntaly`Activities $ 10,717,637 483,008 162,015,067 2,003,830 2,962,798 3,502,807 49,109, 575 429,113 [56,004,293] The notes to the basic financial statements are an integral part of this statement. 17 $ 119,215,249 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Flood & Tourism Drainage and Special General Improvement Convention Gas REVENUES: Taxes Real estate taxes $ 8,104,969 $ - $ - $ - Delinquent taxes 167,378 108 - - Motor vehicle taxes 852,832 - - - General sales taxes 12,165,281 - - - Selective sales taxes - - - - Othertaxes 5,057,100 - 1,428,760 - Intergovernmental 1,080,291 - ���ti,,y - 1,540,622 Special assessments - Licenses and permits Charges for services 7,678,288 - Investment revenue 9,000 �, .. 4%, �` '� 272 3,554 Reimbursements Miscellaneous 425,970 - Total revenues 35,541,109 08 1,429,032 1,544,176 EXPENDITURES: Current General government 3,574,62. - Public safety 1,8,564f988 - - - Public works X6,641848 - - 461,936 Public health and sanitation 1,�88,836 - - - Culture and recreation~. x,157,195 - - - Planning and development 21267,262 - 745,875 - Miscellaneous 44 44 - - Capital outlay„ 721,079 - - 1,124,808 Debt service Principal retirement k, Interest and other charges-f-- Deposit to escrow account - - - - Total expenditures 35,015,834 - 745,875 1,586,744 Excess [deficiency] of revenue and other sources over [under] expenditures and other [uses] 525,275 108 683,157 [42,568] OTHER FINANCING SOURCES [USES] Issuance of bonds - - - - Bond premium - - - - Transfers in 444,955 - - - Transfers [out] [979,358] [1,015] [604,125] - Total other financing sources [uses] [534,403] [1,015] [604,125] - Net change in fund balance [9,128] [907] 79,032 [42,568] Fund balance - Beginning of year 3,836,238 907 340,473 1,417,743 Restatement of prior year fund balance - - - - FUND BALANCE - Beginning of year, as restated 3,836,238 907 340,473 1,417,743 Fund balance - End of year $ 3,827,110 $ - $ 419,505 $ 1,375,175 [1,062,718] 2,362,568 [6,032,967] [2,182,787) 84,194 [5,665,738] - - 3,785,000 2,365,000 Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Proiects Funds Funds $ - $ - $ 2,361,078 $ - $ - $ 10,466,047 - - 77,709 - - 245,195 - - 299,935 - - 1,152, 767 - - - - - 12,165,281 - 3,882,314 - - 327,575 4,209,889 - - - - - 6,485,860 - - - 492,219 1,373,584 4,4867l,6� - - 1,650,053 664,452 - �x ,.wa. 2,314,Bg5, - - - - 7,700700 "W`F,. 186,418 - - - 619,782 &48 ,48`8 618 5,791 10,740 9,202 7,706,,x;; . `�_ 4F 883 - - - 35,500 '� - 3 5,500 650 - 5 - ��� 110 457,E 537,082 187,686 3,888,105 4,399,520 1,201,373 2,446,804 50,637,913 - - - - - 3,574,626 � 18,564,988 - - - - - 7,003,784 - 154,012 1,342,848 1,250,404 - -_ - 1,041,098 4,448,697 242,888 3,256,025 - 1,525,537 - 3,330,021 35 625,126 35 7,326,571 145,000 8,591,802 - - s �'L894;098 54,139 154,451 2,102,688 91,587 - - 91,587 1,250,404 1,525,537 10,432,487 3,384,160 2,362,610 56,303,651 [1,062,718] 2,362,568 [6,032,967] [2,182,787) 84,194 [5,665,738] - - 3,785,000 2,365,000 - 6,150,000 - - 51,011 9,370 - 60,381 1,002,975 - 1,551,150 - 489,358 3,488,438 [80,000] [1,750,000] - [43,940] - [3,458,438] 922,975 [1,750,000] 5,387,161 2,330,430 489,358 6,240,381 [139,743] 612,568 [645,806] 147,643 573,552 574,643 142,881 1,397,571 1,285,130 390,852 2,792,546 11,604,341 - - - [1,461,347] - [1,461,347] 142,881 1,397,571 1,285,130 [1,070,495] 2,792,546 10,142,994 $ 3,138 $ 2,010,139 $ 639,324 $ [922,852] $ 3,366,098 $ 10,717,637 The notes to the basic financial statements are an integral part of this statement. 18 CITY OF SALINA, KANSAS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE WITH THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 Total Net Change In Fund Balances - Governmental Funds $ 574,643 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 position and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the , r�� amount by which capital outlays exceeds depreciation in the period.;, `r Gain on sale of assets "'` 33,756 Proceeds from sale of assets t� [52,503] Capital outlays �,;� 2,642,629 Depreciation expense [5,283,853] [2,659,971] 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 use40tcurrent financial resources. In the statement of activities, howeverjntarest expense is recognized as the interest accrues, regardless ofwhentif issue: CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2012 Total liabilities $2,702,682 $27,341,934 $ 187,344 $ 111,883 $ 30,343,843 $1,118,417 Net Position Invested in capital assets, net of related debt $2,117,302 $47,849,287 $ 545,071 $ 345,229 $ 50,856,889 $ 23,092 Restricted Restricted for bond retirement - 1,553,016 - - 1,553,016 - Unrestricted 2,636,899 18,148,680 635,635 20,738 21,400,476 1,980,738 Total net position $4,754,201 $67,550,983 $1,180,706 $ 324,491 $ 73,810,381 $2,003,830 The notes to the basic financial statements are an integral part of this statement 20 Business -Type Activities Enterprise Funds Total Internal Solid Waste Water and Enterprise Service ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Disposal Sewer Sanitation Golf Course Funds Funds Current assets- Cash and investments $4,259,781 $20,444,868 $ 685,735 $ 68,691 $ 25,459,075 $2,972,281 Receivables (net of allowance for uncollectibles) Accounts 263,944 1,056,391 137,244 - 1,457,579 Interest 16 - - - 16 - Inventory and prepaid supplies - 564,114 - 22,454 586,568 126,874 Total current assets 4,523,741 22,065,373 822,979 91,145 27,503,238 3,099,155 Capital assets- q Nondepreciable capital assets- Construction in progress - 20,962,212 p. _: at 20,962,212 Land 682,000 844,806 615000 1,541,806 Depreciable capital assets-. . Capital assets 8,344,630 91,663,027 1,558 813 X036k ,473 102,602,443 861,298 Less, accumulated depreciation 6,093,488 40,972 444 ,�Of 3, 2 `"706,244 48,785,418 838,206 Total capital assets 2,933,142 72,497,601h', 545;071 ' 345,229 76,321,043 23,092 Deferred outflows of resources- Deferred charge on bond issuance - 329,943 329,943 - Total deferred outflows of resources - 329,943 Total assets and deferred outflows of resources $7, 456, 883,` $94,892,917a $1,368,050 $ 436,374 $104,154,224 $3,122,247 Liabilities: � z °I Current liabilities ° Accounts payable $ 6%5 $ 329,462 $ 13,836 $ 5,774 $ 415,671 $ 163,622 Retainage payable „_� "� - 1,364,869 - 1,364,869 Interest payable 51751 194,427 200,178 Meter deposits payable ` "� _ - 161,252 161,252 Current portion of compensated absences paypble�. 33,734 194,255 50,304 40,780 319,073 47,934 Current portion of accrued claims payable 499,216 Current portion of general obligation bonds payable, Qaya 403,881 901,048 1,304,929 - Current portion of revenue bonds payable 623,696 - 623,696 - Total current liabilities car' A >xF., ` 509,965 3,769,009 64,140 46,554 4,389,668 710,772 Noncurrent liabilities. ` Compensated absences 32,561 187,500 paya Accrued claims payable - - - 48,555 - 39,362 - 307,978 - 46,267 361,378 Net OPEB Obligation 54,829 261,855 74,649 25,967 417,300 - Payable from restricted assets General obligation bonds payable 411,959 7,897,038 - - 8,308,997 Revenue bonds payable - 15,226,532 15,226,532 Landfill post - closure care liabilities 1,693,368 - __123,204 1,693,368 - Total noncurrent liabilities 2,192,717 23,572,925 65 329 25 954 175 407,645 Total liabilities $2,702,682 $27,341,934 $ 187,344 $ 111,883 $ 30,343,843 $1,118,417 Net Position Invested in capital assets, net of related debt $2,117,302 $47,849,287 $ 545,071 $ 345,229 $ 50,856,889 $ 23,092 Restricted Restricted for bond retirement - 1,553,016 - - 1,553,016 - Unrestricted 2,636,899 18,148,680 635,635 20,738 21,400,476 1,980,738 Total net position $4,754,201 $67,550,983 $1,180,706 $ 324,491 $ 73,810,381 $2,003,830 The notes to the basic financial statements are an integral part of this statement 20 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31. 2012 Business -Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Operating revenues 1,248,846 4,751,425 [50,976] 111,567 6,060,862 [323,518] Charges for services $ 3,137,035 $19,098,626 $ 2,461,965 $ 783,169 $ 25,480,795 $ 9,049,963 Federal grants - - - - - - Miscellaneous 28,303 356,848 69 48,722 433,942 140,082 Total operating revenues 3,165,338 19,455,474 2,462,034 831,891 25,914,737 9,190,045 ;> Operating expenses f General government 9,518,987 Public works 1,473,883 12,184,195 2,405,401,, 16,063,479 - Recreation - - ";= ;,88,711 688,711 - Depreciation 560,092 1,779,746 . *`1 0;35�z„ 32,596 2,482,791 4,698 Total operating expenses 2,033,975 13,963,941 "12,515,758 721,307 19,234,981 9,523,685 Operating income [loss] 1,131,363 5,491,533, [53,724] 110,584 6,679,756 333,640 Nonoperating revenues [expenses]. Investment revenue 12,302 ° ;- ,64;'800 < 2,293 96 79,491 10,122 Debt service [21 472] [893,911] - - [914,383] - Gain /[loss] on disposal of fixed assets 2,653, <'i�;,485 455 887 5,480 - Accretion of bond premium `_. 11,560 - - 11,560 - Amortization of bond issuance costs -` . [45,236] - - [45,236] - Total nonoperatmg revenues [expenses] [6;517]° [860,302] 2,748 983 [863,088] 10,122 Income [loss] before transfers 'A,, 124,846 t� 4,631,231 [50,976] 111,567 5,816,668 [323,518] Transfers from [to] other funds Transfers [out] = - [30,000] [30,000] - Total transfers " "' 'al., - [30,000] [30,000] - Capital contributions 124,000 150,194 - 274,194 - Change in net position 1,248,846 4,751,425 [50,976] 111,567 6,060,862 [323,518] Net position, January 1 3,709,743 65,168,435 1,222,584 212,924 70,313,686 2,327,348 Restatement [204,388] [2,368,877] 9,098 - [2,564,167] - Net position, January 1, restated 3,505,355 62,799,558 1,231,682 212,924 67,749,519 2,327,348 Net position, December 31 $ 4,754,201 $ 67,550,983 $ 1,180,706 $ 324,491 $ 73,810,381 $ 2,003,830 The notes to the basic financial statements are an integral part of this statement. 21 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2012 Business -Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Cash flows from operating activities Cash received from customers and users $3,104,214 $19,065,947 $2,463,893 $ 783,168 $25,417,222 $9,197,593 Cash paid to suppliers of goods or services [1,288,458] [8,393,905] [1,744,666] [378,901] [11,805,930] [8,832,087] Cash paid to employees [472,279] [2,916,093] [657,992] [325,374] [4,371,738] [632,635] Other operating receipts 28,303 356,848 69 48,722 433,942 140,082 Net cash provided by [used in] operating activities 1,371,780 8,112,797 61,304 127,615 9,673,496 [127,047] Cash flows from capital and related financing activities �,, Purchase and construction of capital assets [91,429] [11,114,179] - ,?,1�8. 3 ,863] [11,269,471] - Capital contributions 124,000 150,194 �]7r 274,194 Proceeds from sale of capital assets 7,800 1,485 45ary ` 887 10,627 Principal payments - general obligation bonds [519,963] [1,002,432] „ - r [1,522,395] Principal payments - revenue bonds - [340,000] �' � � ` - [340,000] Interest paid [24.235] [901,261]7,' [925,496] Net cash provided by [used in] capital a'a and related financing activities [503,827] [13,206,193 455 [62,976] [13,772,541] Cash flows from investing activities e, �U Interest received 12,302 464,800 2,293 97 79,492 10,121 Cash flows from noncapital financing activities Transfers [out] - " " "n [30,000] - [30,000] Net cash provided by [used in] noncapital financing activities [30,000] [30,000] - a fit,.., Net increase [decrease] in cash and cash equivalents T 8803255 [5,058,596] 64,052 64,736 [4,049,553] [116,926] Cash and cash equivalents, January 1 '3;,379,526 24,042,117 621,683 3,955 28,047,281 3,089,207 Restatement <, 1,461,347 - - 1,461 347 - Cash and cash equivalents, January 1, restate­--N 3,379,526 25,503,464 621,683 3,955 29,508,628 3,089,207 Cash and cash equivalents, December, 3` ,, `` � � $4,259,781 $20,444,868 $ 685,735 $ 68,691 $ 25,459,075 $ 2,972,281 The notes to the basic financial statements are an integral part of this statement. 22 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2012 Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss] Adjustments to reconcile operating income [loss] 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 retainage payable Increase [decrease] in accrued compensated absences Increase [decrease] in claims payable Increase [decrease] in landfill postclosure liabilities Increase [decrease] in net OBEB obligation Increase [decrease] in meter deposits payable Net cash provided by [used in] operating activities Business -Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $ 1,131,363 $ 5,491,533 $ [53,724] $ 110,584 $ 6,679,756 $ [333,640] 560,092 1,779,746 110,357 `32,596 2,482,791 4,698 [32,821] [30,027] 1,928 �1 - [60,920] - - [20,062] - x- 0 t [14,866] [11,180] 44,407 67,018 6,977' 2,820 121,222 63,568 - 756,650 1 f"=,' �° 756,650 6,740 18,608 y11 [28,736] [22,441] 1,878 - 147,629 [348,8861 - [348,886] 10,885 51,983a�111 4,819 5,155 82,842 - _22,652]' [2,652] $ 1,371,780 Si 8,11`2;797 $ 61,304 $ 127,615 $ 9,673 496 $ [127,047 ] e The notes to the basic financial statements are an integral part of this statement. 23 CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS December 31, 2012 ASSETS Cash and investments Total assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Total liabilities $ 322,790 $ 322,790 ev 322,790 322,790 The notes to the basic financial statements are an integral part of this statement. 2 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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. Discretely Presented Component Units City of Salina Airport Authority - The Salina Airport Authority was create ., forhe purpose of accepting as surplus property portions of the former Schilling A.F.B that was closed byy lie - _Dratted States Department of Defense in June 1965. One of the primary functions of the Airport Au"�hoa to facilitate the continued growth of jobs and payroll at the Airport Industrial Center. The Airport A�utt °p i y is managed and controlled by a five - member Board of Directors appointed by the Salina City „�.rrit sign. Any director may be removed by a majority vote of the Salina City Commission. The Ai' rt Acl hority's basic mill levy (up to 3 mills) requires the approval of the City Commission. The Commiss also approve the issuance of general obligation debt by the Airport Authority. The Airport Authority has '"'"December 31 fiscal year end. Housing Authority of the City of Salina - The Authority) is to administer Public Housing Pr The Mayor of the City of Salina appoints commissioners of the Housing Authority. The financial liability of the Housing Authority is,;--, received under contract from the Federal #&Y, Information in the accompanying financial�sta, Complete financial statements,jo"irkeiak administrative offices., Salina Airport Authority 3237 Arnnold' Ave' =` Salina, KS Joint Ventures fof tf zHousing Authority of the City of Salina (Housing of by the United States Housing Act of 1937. Kerning board. The City Commission may remove ast issue revenue bonds for the Housing Authority. The supported by the operating and debt service subsidies The Housing Authority has a June 30 fiscal year end. covers the fiscal year ended June 30, 2012. of the individual component units may be obtained at the entity's Housing Authority of the City of Salina 469 S. 5th Salina, KS 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. Total net position /unencumbered cash, December 31, 2012 Total change in net position /change in unencumbered cash, year ended December 31, 2012 Total revenues /cash receipts, year ended December 31, 2012 Total revenues /cash receipts from City of Salina 25 (GAAP Basis) (Kansas Regulatory Basis) Board of Building Health Authority (Audited) (Audited) $ 1,697,636 $ 975,862 (62,456] 44,822 3,856,055 865,855 1,018,101 821,033 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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. Salina - Saline County Board of Health Salina County -City 125 West Elm Street Building Authority Salina, KS 300 West As�f,,Street Salina, KS:`a�Y B. Government -wide and fund financial statements, The statement of net position and the statement of activities,s�rep`ort information on all of the nonfiduciary activities of the primary government and its component units. tor the !most part, the effect of interfund activity has been removed from these statements. Exceptions to this geaeral rule are charges between the City's governmental and business -type activities. Elimination of`1hese charges would distort the direct costs and program revenues reported for the various functions coriberp, ed. Governmental activities, which normally are supported by taxes and intergovernmental revenues, ~ere reported separately from business -type activities, which rely to a significant extent on fees and charges�#or support. Likewise, the primary government is reported separately from certain legally separatez onent units for which the primary government is financially accountable..,' . TM The statement of activities demonstratesx--#hea4egree 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 thereforei ,clearly identifiable to a particular function. Program revenues include charges paid by the recipient of tgobds or services offered by the program and grants and contributions that are restricted to meetingkffie operational requirements of a particular program. Taxes and other items, which are not classified as°p "rogram revenues, are presented as general revenues of the city. Separate financiatstatements are provided for governmental funds, proprietary funds and fiduciary funds, even though the Iatte 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. 26 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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. Expenditure - driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. The City applies all applicable Governmental Accounting Standards Board ,(GGASB) pronouncements as well as the following pronouncements issued on or before November 30, 1989nless those pronouncements conflict with or contradict GASB pronouncements: FASB Statements and ,,Ine��u�retations, APB Opinions, and ARBs.4, �f ` a ` Proprietary fund type operating statements present increases,: revenues and decreases (expenses) in net position. Proprietary funds distinguish operating revenue_ andexpenses 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. Operating4Wpenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All .,z revenue and expenses not meeting this definition are r ported,as nonoperating revenues and expenses. The internal service funds account for risk lrr ariagement, 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- reimbursef'anbasis. Agency funds are custodial i 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 'A assets held as an agent for individuals, other governmental units, private organizations and /or other funds. The City reports the followng major governmental funds: General fund - 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. 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. Sales tax capital fund - To account for 87.5% of the 1/4 cent sales tax designated for capital, debt, and human services purposes. Debt service fund - 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. 27 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Capital projects fund - 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 City's landfill." Golf course fund -To account for the operations of the municipal golf crse. Water and sewer fund - To account for the activities of the Cityfv water and sewer operations. Nk r D. Assets, Liabilities, Fund Balance, and Net Position " 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 t'he�1financial statements as "Cash and Investments." The city's cash and cash equivalents are consi ered�ao 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 farrC�aJue: Cash balances from all funds, are tinvested to the extent available in certificates of deposit and other authorized investments. Invest with maturity dates greater than three months are stated separately. Earnings from these investrr e'ijts N nless specifically designated, are allocated monthly to the investing fund based on the percent agefof firndsAnvested to total investments. All investments are carried at fair value. 2. Receivables and Parables Transactions between funds that are representative of lending /borrowing 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 to /from other funds" (i.e., the non - current portion of interfund loans). All other outstanding balances between funds are reported as "due to /from other funds." Accounts Receivable. The City records revenues when services are provided. All receivables are shown net of an allowance for 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 2013. 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. 28 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 2. Receivables and Pavables (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,t©fbe 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. Paymentioare ue November 1, becoming delinquent, with penalty, December 21. Payments of 50% are accep end l rough 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 priort6 the,Lt eginning of each fiscal year. The City Treasurer draws down all available funds from the County Treasure ?s office in two -month intervals. Taxes remaining due and unpaid at February 15 and July 1 are subject49 collection procedures prescribed in state statutes. Via, 3. Inventories and Prepaid Items Inventories are valued at cost using the first- in', - out(FIFO) method. The costs of governmental fund -type inventories are recorded as expendituresWhen c ed. Certain payments to vendors reflect cosh, applicable to future accounting periods and are recorded as prepaid items. 4. Capital Assets Capital assets, which inclut_e" property, plant, equipment and infrastructure assets, are reported in the applicable governmental` "ar business -type activities columns in the government -wide financial statements. Capital assets ar4efin6d by the government as assets with an initial, individual cost of more than $5,000 and an estimated usaful 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. 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 Years Buildings 50 Other equipment 5-15 Vehicles 6-10 Infrastructure 30-50 29 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 5. 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 terri„ipation of employment in good standing. n 2001, a limited buy back policy was instituted. ` 9 • Y p Y . All regular employees are entitled to paid vacation time. Such leave is granted each year of employment. Employees must use 50% of leave accrued each calendar year and' anetnployee's maximum accrued vacation leave balance cannot exceed 250 hours (or 350 hour* for: employees working 24 hour shifts). Employees are paid for all accumulated vacation leave at ,41heir current wage scale upon termination of employment. Vested or accumulated vacation leave that is expected A4to be liquidated with expendable available financial resources is reported as an expenditure and a fund liatiili" the government fund financial statements that will pay it. A liability for these amounts is reportedtingovernmental funds only if they have matured, for example, as a result of employee resignations and Treftrer"ents. Vested or accumulated vacation leave of the business -type funds and government wide finan id�atatements are recorded as an expense and liability of those funds as the benefits accrue to employes `A liability is recorded for accumulated rights to receive sick pay benefits that are payable upon terminatio n � employment. The General Fund, Bicentennial Cerrfer Fund, Central Garage Fund, Information Systems Fund, Sanitation Fund, Solid Waste Fund, GoI&1d6urse„ Fund, and Water and Sewer Fund have been used in prior years to liquidate the liability for compensqdakisences. 6. Temporary Notes ` f , Upon authorizatiW, for 'the..issuance of general obligation bonds for certain improvements, Kansas law permits the tempoin" "'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. 7. Long -term Obligations 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 position. 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. 30 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 8. Fund Balances In the fund financial statements, governmental funds report fund balance in the following classifications: nonspendable, restricted, committed, assigned and unassigned. Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Restricted fund balance indicates that constraints have been placed on the use of resources either by being externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions o, e�iyabling legislation. Committed fund balances include amounts that can only be used for specific purposes$'p4rs0ant to constraints imposed by formal action of the city commission. Assigned fund balances include "thbun #s that are constrained by the City management's intent to be used for specific purposes, but ar �' Alikher restricted nor committed. Unassigned fund balance represents fund balance that has no,- eeih ss'igeed to other funds and that has not been restricted, committed, or assigned to specific purposes, within the General Fund. When an expenditure is incurred for purposes for which both restricted ain "unrestricted fund balance is available restricted amounts are considered to be spent first. When an expenditure is incurred for purposes for which committed, assigned, or unassigned fund balance is available, the following is the order in which resources will be expended: committed, assigned and unassignedd " [ The following is the detail for fund balance classifications, in the financial statements: c• , ' <Mator'Governmental Funds Tourism, Other Total and ,'" "',,Speetal Bicentennial Sales Tax Debt Capital Governmental Governmental General Convent_ "Gas Center Capital Service Proiects Funds Funds Fund Balances4,ja, Nonspendable foru'tr`�,. Inventory $ 115,900 $ .. g - $ - $ $ $ $ $ $ 115,900 .n Restricted �- for Public works" 1,160,305 1,160,305 Public health and sanitation '; 21 21 Culture and recreation 88,145 88,145 Planning and development., 419,505 289,897 709,402 Debt payments;,. 639,324 721,691 1,361,015 Committed for Public safety - 381,466 381,466 Culture and recreation 2,158 591,307 593,465 Planning and development - - - - - - - 33,655.00 33,655 Cemetery 436,787 436,787 Capital improvements 1,766,357 [4,474,792] 746,914 [1,961,521] Assigned for General government 24,635 - - 24,635 Public safety 1,029 - - - - - - - 1,029 Public works 19,664 - 214,870 - - - - - 234,534 Culture and recreation 13,035 - 980 14,015 Planning and development 68,410 - 68,410 Capital improvements 412,883 - - - 243,782 - 3,551,940 76,215 4,284,820 Unassigned 3,171,554 3,171.554 Total Fund Balances $ 3,827,110 $ 419.505 $ 1,375.175 $ 3,138 $ 2,010,139 $ 639.324 $ [922,8521 $ 3,366,098 $ 10,717,637 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 9. 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. 10. Net Position Net position represents the difference between assets and liabilities. Net osition invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciationc ''�reduced by the outstanding balances of any borrowings used for the acquisition, constructionpr improvement of those assets. Net position is reported as restricted when there are limitations imp,, heir use either through the enabling legislation adopted by the City or through external restricti,4` 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 operaltng gfidget be legally adopted for the general fund, special revenue funds (unless specifically exemptedoy sta)ite), debt service fund, and enterprise funds. The statutes provide for the following,s ",sequence and and timetable in the adoption of the legal annual operating g budget: C, t44N 1. Preparation of the budget for` , 6— 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 5t4 3. Public hearing okor 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 2012 budget was amended for the Water and Sewer Fund, Risk Management Fund, Solid Waste Disposal Fund and Tourism and Convention Fund. 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budgetary Information (Continued) 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 fuC"re' payments and are supported by a document evidencing the commitment, such as a purchase orderorontract. All unencumbered appropriations (legal budget expenditure authority) lapse at year end. �V• " A legal operating budget is not required for capital projects funt's, non4 ajor debt service funds, trust funds, and the following special revenue funds: Flood &Drainage l". rovement, Bicentennial Center Event, HUD Communit� Development, Community Development Revolving,'Her�tage Commission, HOME 2012, KDOT Signals 9` Street, CDBG ED, HPRP, Special Law Enforcement, Police Grants, DARE Donations, War Memorial Maintenance, Federal Care Grant and Po16&,i3Oepartment Federal Forfeiture Funds. A legal operating budget is not required for the following Enterprise finds: Solid Waste Disposal, Water and Sewer, Sanitation and Golf Course funds. A legal ope�ratih'g, Udget is also not required for the Internal Service funds. Actual to budget comparisons for these; #un�s that present budgets to the Commissioners are shown ,a strictly for informational purposes. Spending in funds, which are not subjedfi6- ,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. B. Legal Debt Margin's y The City is subject tofte rr'unicipal finance law of the state of Kansas which limits the bonded debt (exclusive of revenue bonft-- 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, 2012, the statutory limit for the City was $134,928,191, providing a debt margin of 81,275,477. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 3. RESTATEMENT OF EQUITY Following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or recorded incorrectly. Additionally, it was discovered that accounts receivable had not been properly recorded. Accordingly, the beginning net position balances were restated, the effects of which are as follows: Net Assets /Fund Balance, December 31, 2011, Restated $ 119,987,385 $ ,, ]1,67b,495) $ 3,505,355 $ 62,799,558 $ 1,231,682 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 inta., ounty adjacent to the City and the banks provide an acceptable rate for active funds. V vac. Various City investments are considered to be idle funds by management and are invested according to KSA iw 12 -1675. The stat%ite, quires that the City invest its idle funds in only temporary notes of the City, bank certificates of deposrepurchase 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 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 U.S. 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, 2012, the City has the following investments: Investment Type Kansas Municipal Investment Pool U.S. Government Securities Total fair value 34 Fair Value Rating $ 305,237 S &P AAAf /S1+ 21,027,849 N/A $ 21,333,086 Capital Solid Waste Water and Governmental Projects Disposal Sewer Sanitation Activities Fund Fund �� Fund Fund Net Assets /Fund Balance,; "lip December 31, 2011 $ 1177334,142 $ 390,852 $ 3,709, b43 $ 65,168,435 $ 1.222,584 Capital Asset Adjustment 188,314 - 0. J, x[87,695] [20,643] 9,098 Fund Reclassification [1,461,347] [1,461,3471 _ - 1,461,347 - General Obligation Bonds;, Payable Adjustment 3,926,276 ,jL [116,695] [3,809,581] - Net Assets /Fund Balance, December 31, 2011, Restated $ 119,987,385 $ ,, ]1,67b,495) $ 3,505,355 $ 62,799,558 $ 1,231,682 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 inta., ounty adjacent to the City and the banks provide an acceptable rate for active funds. V vac. Various City investments are considered to be idle funds by management and are invested according to KSA iw 12 -1675. The stat%ite, quires that the City invest its idle funds in only temporary notes of the City, bank certificates of deposrepurchase 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 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 U.S. 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, 2012, the City has the following investments: Investment Type Kansas Municipal Investment Pool U.S. Government Securities Total fair value 34 Fair Value Rating $ 305,237 S &P AAAf /S1+ 21,027,849 N/A $ 21,333,086 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A. Deposits and Investments (Continued) 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. e, The City's investment policy provides direction on concentration risk. Thel;Cifypoiicy 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 , V of assets in a specific maturity sector. Liquidity, free of market Al iisk %shall be assured through practices insuring that the next disbursement date and payroll dateRare covered through maturing investments, marketable U.S. Treasury Bills, the Municipal Investment Pool, or'rndney market accounts. 0 Jill, Default risk shall be minimized by requiring that all secutit". chases occur on a delivery vs. payment basis, and that all securities are adequately collateralized.._ Risk of market price volatility shall be controlle_, through the adoption of a "buy and hold" strategy whereby L{ the City holds each investment to maturity, ou �; with maintenance of an adequate liquidity position to insure the ability to meet normal anticipatedkCa "sI flow needs. When advantageous, it is allowable fo`sell nvestments to realize a gain due to price fluctuations; however, such transactions shall not be aTt ��. bf the'`normal course of business. The City recognizes that inye ertt risks can result from issuer defaults, market price changes or various E technical complications Ieadi "J'o temporary illiquidity. Portfolio diversification is employed as a way to control risk due to issuer efaulf. In the event of a default by a specific issuer, the Director of Finance and Administration shad 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. 35 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: C. Interfund Receivables and Payables The composition of interfund balances as of December 31, 2012, is as follows: Fund Types General Fund Other Government Funds Due From Due To $ 31,049 $ - - 31,049 $ 31,049 $ 31,049 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. 36 Tourism and Special Debt Other General Convention Gas Service Governmental Subtotal Primary Government Receivables:1 „� "Z,, Accounts $ 3,299,591 $ 390,720 $ - $' Tik $ 56,973 $ 3,747,284 Taxes 8,335,679 - 298,952 2459tD08""' - 11,093,639 Interest 33,497 33,497 Gross receivables 11,668,767 390,720 298,952, `' k 2459b08 56,973 14,874,420 Less: allowance for uncollectibles [2,590,353] - - [1,873] [2,592,226] Total $ 9,078,414 $ 390,720 IS X298,952 $ 2,459,008 $ 55,100 $ 12,282,194 Solid Water yA, Waste and 'Sanitation Disposal Sewer Total Primary Government ' Receivables: Accounts �M.,� g� ;. $ 209,309 $ 263,944 $ 1,611,089 $ 5,831,626 Taxes - - - 11,093,639 Interest '',_ 16 - 33,513 Gross receivables 209,309 263,960 1,611,089 16,958,778 Less: allowance for uncollectibles [72,065] [554,698] [3,218,989] Total $ 137,244 $ 263,960 $ 1,056,391 $ 13,739,789 Component Units Salina Airport Authority Accounts $ 135,370 Less- allowance for uncollectibles [984] Total Salina Airport Authority” "I 134,386 Salina Housing Authority Accounts 13,689 Other 1,559 Total Salina Housing Authority 15,248 Total $ 149,634 C. Interfund Receivables and Payables The composition of interfund balances as of December 31, 2012, is as follows: Fund Types General Fund Other Government Funds Due From Due To $ 31,049 $ - - 31,049 $ 31,049 $ 31,049 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. 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2012, was as follows: City governmental activities: Governmental activities - Capital assets, not being depreciated Construction in progress Land Capital assets, being depreciated Infrastructure Buildings and improvements Vehicles Equipment, furniture and fixtures Total capital assets Balance Adj. Bal. 12/31/2011 Adiustments 12/31/2011 $ 32,554,357 $ 63,285 $ 32,617,642 22,477,191 163,284 22,640,475 146,145,697 86,866 146,232, 36,233,800 [18,097] 36;24,N 8,330,055 384,707 8,714, 5,457,201 [517,975] NJ,939, 251,198, 301 162,070 Balance Additions Retirements 12/31/2012 $ 22,1i,$ 27,049,694 $ 9,190,083 22,640,475 22,398,049 - 168,630,612 '985,633 39,201, 336 478,676 407,972 8,785,466 207,830 141,446 5,005,610 29,692,323 27,599,112 253,453,582 Less accumulated depreciation for 113,911,476 5,479 113,916,955 11,995,391 805,885 125,106,461 Infrastructure 63,537,634 x`86,65963,624,293 Less accumulated depreciation for 3,397,201 67,021,494 Buildings and improvements 13,643,237 g, 16 88 y'2 ] 13,626,949 1,099,311 54,521 14,726,260 Vehicles 5,333,63,@ ';Y 4440 5,748,076 561,532 395,781 5,913,827 Equipment, furniture and fixtures 4469 281 [511,055] 3,658,226 230,506 134,890 3,753,842 2,192,250 166,306 31,877 2,326,679 Equipment, furniture and fixtures 2,705,192 31,632 2,736,824 314,410 42,942 3,008,292 Total accumulated depreciation 46,272,729 104,717 Total accumulated depreciation 86',683,78B, [26,244] 86,657,544 5,288,550 530,671 91,415,423 Business -type activities capital assets, net $ 67,638,747 $ [99,238] $ 67,539,509 Governmental activities capital assets, net 4 11 164,61 #,513 $ 188,314 $ 164,702,827 $ 24,403,773 $ 27,068,441 $ 162,038,159 Business -type activities. Capital assets, not being depreciated " fr �, Construction in progress t��"� $ 11,062,055 $ - $ 11,062,055 $ 10,626,076 $ 725,919 $ 20,962,212 Land „.,�y�y 1,541,002 804 1,541,806 - - 1,541,806 Capital assets, being de reaatied Infrastructure 71,303,594 - 71,303,594 736,188 72,039,782 Buildings and improveme*1 22,587,106 [7,173] 22,579,933 - 22,579,933 Vehicles 2,983,160 - 2,983,160 47,037 31,877 2,998,320 Equipment, furniture and fixtures 4,434,559 11,848 4,446,407 586,090 48,089 4 984 408 Total capital assets 113,911,476 5,479 113,916,955 11,995,391 805,885 125,106,461 Less accumulated depreciation for Infrastructure 30,713,404 54,521 30,767,925 1,577,942 - 32,345,867 Buildings and improvements 10,683,173 [2,726] 10,680,447 424,133 - 11,104,580 Vehicles 2,170,960 21,290 2,192,250 166,306 31,877 2,326,679 Equipment, furniture and fixtures 2,705,192 31,632 2,736,824 314,410 42,942 3,008,292 Total accumulated depreciation 46,272,729 104,717 46,377,446 2,482,791 74,819 48,785,418 Business -type activities capital assets, net $ 67,638,747 $ [99,238] $ 67,539,509 $ 9,512,600 $ 731,066 $ 76,321,043 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets (Continued) The City's depreciation expense was charged to governmental functions as follows: Governmental Activities: Total $ 61,714,804 $ [3,926,276] $ 57,788,528 $ 9,209,425 $ 13,346,379 $ 53,651,574 $ 8,161,980 Business -type activities General government $ 7,975 Public safety 571,333 General obligation bonds Public works 3,686,903 $ 11,144,183 $ $ Public health 39,747 $ 1,304,929 Revenue bonds Culture and recreation 876,475"'ap,r� 16,193,925 Planning and development 106,1, �1�%`,, 623,696 Accrued compensation Total depreciation 649,491 296,633 319,073 627,051 319,073 Total Business -type Activities: $ 3,926,276 $ 27,987,599 $ 296,633 $ Solid Waste Disposal 4� ,60,092 $ 2,247,698 Component Units Water and Sewer 1,779,746 General obligation bonds Sanitation P"' 110,357 r° $ 26,170,000 $ - $ Golf Course Divisio n ��= 32,596 $ 895,000 Less unamortized discount Total depreciation ,'����� � 2,482,791 [342,123] ay. ..1i [323,231] - Financing lease 0` 1%, 11 245,558 E. Long -Term Debt 42,941 202,617 45,826 Following is a summary of changes in,.,lvng"ferrn debt for fiscal year 2012: 125,013 21,066 103 947 21,876 aft, Restated $ 26,198,448 $ $ 26,198,448 Balance,e Balance 1,135,115 Balance Amounts $ 962,702 Januai'1, January 1, December 31, Due Within i `2012 Restatements 2012 Additions Deletions 2012 One Year Governmental activities %lx . General obligation bonds,, aa, ` $ 55,225,670 $ [3,926,276] $ 51,299,394 $ 6,201,011 $ 8,390,830 $ 49,109,575 $ 5,121,431 Accrued compensation 3,089,134 3,089,134 1,523,414 1,555,549 3,056,999 1,555,549 Temporary notes 3,400,000 3,400,000 1,485,000 3,400,000 1,485,000 1,485,000 Total $ 61,714,804 $ [3,926,276] $ 57,788,528 $ 9,209,425 $ 13,346,379 $ 53,651,574 $ 8,161,980 Business -type activities General obligation bonds $ 7,217,907 $ 3,926,276 $ 11,144,183 $ $ 1,530,257 $ 9,613,926 $ 1,304,929 Revenue bonds 16,193,925 - 16,193,925 343,697 15,850,228 623,696 Accrued compensation 649,491 649,491 296,633 319,073 627,051 319,073 Total $ 24,061,323 $ 3,926,276 $ 27,987,599 $ 296,633 $ 2,193,027 $ 26,091,205 $ 2,247,698 Component Units General obligation bonds $ 26,170,000 $ - $ 26,170,000 $ - $ 1,090,000 $ 25,080,000 $ 895,000 Less unamortized discount [342,123] [342,123] [18,892] [323,231] - Financing lease 245,558 245,558 42,941 202,617 45,826 Special assessment debt 125,013 125,013 21,066 103 947 21,876 Total component units $ 26,198,448 $ $ 26,198,448 $ $ 1,135,115 $ 25,063,333 $ 962,702 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 Govemment Original Interest General Obligation Bonds Issue Rates Internal Improvements 2003A, due 10/1/2018 4,350,000 2a °1� to 3.85% Refunding 2004A, due 8/1/2015 5,585,000 26%0.00% Internal Improvements 2005A, due 10/1/2020 4,210,000 - 295 %,to 4.25% e Internal Improvements 2006A, due 10/1/2026 2,200,000. �N -, 3t�'55% to 5.50% Internal Improvements 2006B, due 10/1/2021 8;OOi. 0% to 4.50% 4�4.25% Internal Improvements 2007A, due 10/1/2027 6, 45, 000� to 4.625% Internal Improvements 2008A, due 10/1/2023 3,720,0 %b 3.25% to 4.00% Internal Improvements 2008B, due 7/1/2028 4,;3,52§000 3.65% to 5.00% Internal Improvements 2009A, due 10/1/2029 �, 23,695,000 2.00% to 5.00% Internal Improvements 2010A, due 10/1/2025 x'6;.916,592 2.00% to 3.875% Internal Improvements 2010B, due 10/1/2023., "w,,, �����. 71973,044 0.50% to 3.00% Internal Improvements 2011A, due 10/1/203' - 61587,985 2.00% to 5.00% +hk, Internal Improvements 2012A, due 1,0/112027. `_" 2,383,903 1.00% to 2.45% Refunding 2012B, due 10/1/2020 tt, 3,817,108 1.00% to 1.40% Total general obligation bonds u" Revenue Bonds Revenue 2011, due 10 /113rl � 4 Total revenue bondsi�r1 " Temporary Note, X Series 2012 -1, i uie 8/1/2013 Total temporary notes c Bonds Outstanding $ 320,000 760,000 330,000 1,540,000 465,000 4,725,000 2,750,000 3,295,000 20,123,956 5,271, 046 6,605,652 6,336,836 2,383,903 3,817,108 $ 58,723,501 $ 16,193,925 2.00% to 4.60% $ 15,850,228 $ 15,850,228 $ 1,485,000 1.00% $ 1,485,000 $ 1,485,000 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long -Term Debt (Continued) Component Unit Salina Airport Authority General Obligation Bonds General Obligation 2005A, due 2020 General Obligation 2007A, due 2022 General Obligation 2009A, due 2029 General Obligation 2009B, due 2026 General Obligation 2011A, due 2030 General Obligation 2011 B, due 2031 Less unamortized bond discount Total general obligation bonds Special Assessment Debt Airport Industrial Center, due 2016 Hangar 600 Sanitary Sewer, due 2021` N"__ Total special assessment debt Financing Lease due 2016. Original Interest Bonds Issue Rates Outstanding k, $ 3,635,000 47 5.25% $ 2,675,000 1,005,000 44� O to't.00% 745,000 2,025,000, ri�, j�4.31% 2,025,000 J2,, 6,08ptDOOk 3:00% to 5.50% 5,310,000 11- $20,00,0 4.64% 11,820,000 2,50� 000 4.28% 2,505,000 ti [323,231] W 24,756,769 General Obligation - Primary Government 565,235 3.79% 85,281 27,599 4.47% 18,666 Year 103,947 425 000 6609% 202,617 40 Total 14 e" $ 25,063,333 el Annual debt service requir6mentslo maturity for general obligation bonds to be paid with tax levies: General Obligation - Primary Government Bonds Interest Year Outstandinq Due Total 2013 $ 6,426,360 $ 1,988,727 $ 8,415,087 2014 6,111,360 1,756,057 7,867,417 2015 5,331,360 1,586,570 6,917,930 2016 5,166,360 1,429,056 6,595,416 2017 4,941,359 1,271,396 6,212,755 2018 -2022 18,653,766 3,985,209 22,638,975 2023 -2027 9,866,399 1,459,252 11,325,651 2028 -2031 2,226,537 170,205 2,396,742 Total $ 58,723,501 $ 13,646,472 $ 72,369,973 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long -Term Debt (Continued) Annual debt service requirements to maturity for reveaueibondd10 be paid with utility revenues: a� rA Revenueonds - Primary Government Year Outstanding 2013 �$_, General Obligation - Component Units 2014 Bonds Interest 643,696 Year Outstandinq Due Total 2013 $ 895,000 $ 1,096,914 $ 1,991,914 2014 925,000 1,067,866 t, 1,992,866 2015 955,000 1,036,2644.,; 1,991,264 2016 990,000 1,001,531 ��, 1,991,531 2017 1,030,000 963,87G« 1,993,874 2018 -2022 5,840,000 4,�1r521 9,969,521 2023 -2027 7,290,000 X2,683,322 9,973,322 2028 -2031 7,155,000 x"841,9" ^200 7,974,200 Total $ 25,080,000 $ \,,12,798,492 $ 37,878,492 Annual debt service requirements to maturity for reveaueibondd10 be paid with utility revenues: a� rA Revenueonds - Primary Government Year Outstanding 2013 �$_, ` , 623,696 2014 633,696 2015 F == :__ y 643,696 2016x 663,696 :2017 678,696 ,,201 &-'2022 3,758,480 2023 -2027 4,498,480 26 -2031 4,349,788 Total $ 15,850,228 Interest Due Total $ 590,191 $ 1,213, 887 577,791 1,211,487 565,191 1,208, 887 549,191 1,212, 887 529,391 1,208, 087 2,318,619 6,077,099 1,563,177 6,061,657 504,816 4,854,604 $ 7,198,367 $ 23,048,595 Annual debt service requirements to maturity for temporary notes - to be paid through the issuance of general obligation bonds: Temporary Notes - Primary Government Bonds Interest Year Outstanding Due Total 2012 $ 1,485,000 $ 15,510 $ 1,500,510 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 Year Outstandinq Due Total 2013 $ 45,826 $ 12,646 58,472 2014 48,905 9,567 Nxt �'�,� 58,472 2015 52,190 6,282,E ,k_,, 58,472 2016 55,696 2,776''= 58,472 Total $ 202,617 $ 233,888 Annual debt service requirement to maturity for Special Assessm6rttebt to be paid from rental revenue: Special Assess"Meot Debt - Component Units Assessment.." Interest Year A �w Outstanding° °:� Due Total 2013 $ " 4 = 21,876 $ 4,067 $ 25,943 2014 3,226 25,943 2015.. °' 23,590 2,352 25,942 2016 24,497 1,446 25,943 2017 2,061 504 2,565 2018 - 20217," "' ' 9,205 1,051 10,256 i 1 $ 103,946 $ 12,646 $ 116,592 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 defaults,4thich have historically been immaterial. Conduit debt. The City has entered into several conduit debt arrangement'sAh, eYein the City issues industrial revenue bonds to finance a portion of the construction of facilities by private yenterprises. In return, the private enterprises have executed mortgage notes or leases with the CiN. it is not responsible for payment of the original bonds, but rather the debt is secured only by the csh p nests agreed to be paid by the private enterprises under the terms of the mortgage or lease agreeme4ii 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, 2012, total outstanding conopi Aebt was $72,370,000. Defeased debt. July 15, 2012, the City issued $3,786j00 Hof Series 2012B General Obligation Refunding and Improvement Bonds with interest ranging from t{to 1.40% to current refund all $1,010,000 of the outstanding Series 2004B General Obligation,, n In1e a1.D % l�"irmprovement Bonds with interest rates ranging from of 3.40% to 4.00% and to advance refundk,. 1iJ25;000 of the Series 2003A General Obligation Internal Improvement Bonds with interest rates rangmg'from 3.40% to 3.85% and $1,535,000 of the Series 2005A General Obligation Internal Improvement Borids with interest rates ranging from 3.45% to 4.00 %. The net h proceeds were used to establis ,ahL es &ow account invested in U.S. Government Securities to pay the outstanding principal of the Serer 2�063A General Obligation Internal Improvement Bonds, the outstanding principal of the Series 2005A4Ge'6ral Obligation Internal Improvement Bonds and the interest due on the refunding general obligations;- rids. As a result, these portions of the 2003A and 2005A bonds were considered to be defeasedand a liability for the defeased bonds has been removed from the City's financial _ statements. The c riibiri'ed refunding transactions resulted in an economic gain of $236,475 and a reduction of $308,436 in future�Odbt payments. F. Reconciliation of Transfers A reconciliation of interfund transfers follows: Major Funds: General fund Flood and drainage improvement fund Tourism and convention fund Bicentennial center fund Sales tax capital fund Debt service Capital projects fund Other governmental funds Water and sewer fund Total Transfers Transfer In Transfer Out 444,955 $ 979,358 - 1,015 - 604,125 1,002,975 80,000 - 1,750,000 1,551,150 - - 43,940 489,358 - - 30,000 $ 3,488,438 $ 3,488,438 The City uses interfund transfers to share administrative costs between funds. 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 (KP &F). Both are cost - sharing multiple - employer defined benefit pension plans as provided by Kansas statutes (KSA 74 -4901 et seq). KPERS and KP &F 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 611 South Kansas, Suite 100; Topeka, Kansas 66603 or by calling 1- 888 - 275 -5737. Funding Policy. K.S.A. 74 -4919 establishes the KPERS member - employee'"contribution rate at up to 6% of covered salary. K.S.A. 74 -4975 establishes the KP &F member - employee Atrib`btfon rate at 7% of covered salary. The employer collects and remits member - employee contributidn`s,,according to the provisions of section 414 (h) of the Internal Revenue Code. State law provides trail 'eemployer contribution rates be determined annually based on the results of an annual actuarial val�aa�on.'PERS 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 7.54% from January 1 to December _, 2012. The City employer contributions to KPERS for the years ending December 31, 2012, 2011, ari '=2010 were $1,081,438, $987,826 and $1,039,728, respectively, equal to the required contributions for each year. The KP &F employer rate dnryw established for fiscal years beginning in 2012 is 12:81 %at,,iEmployers participating in KP &F also make contributions to amortize the liability for past service ,.costs, if any, which are determined separately for each participating employer. The City's contributions to P, F,.isor the years ended December 31, 2012, 2011, and 2010 were $2,007,908, $1,787,801 and $1,663a6,lrespectively, equal to the required contributions for each year. � B. Deferred Compensation Plan ,, N,_ The City offers its employees alideferred %compensation plan ( "Plan ") created in accordance with Internal Revenue Code Section 457. Tk6,,Pla -, - ailable to all City employees, permits them to defer a portion of their salary until future years. The; - defetred 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 availa . e to they laims of the City's general creditors. el C. Flexible Benefit PIr1: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. 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. 44 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) 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 arid, ounts of payouts and other economic and social factors. The liability for claims and judgments is reported:ir` he Workers' Compensation Reserve Fund because it is expected to be liquidated with expendable availai'le fnancial resources. Of the f� liability, $131,792 is considered to be due within one year. Changeswi rttle I balances of claims liabilities during the past two years are as follows: .20121- 2011 Unpaid claims, January 1 $ 3244��90 $ 425,582 Incurred claims (including IBNRs) 677,862 126,625 Claim payments 4`[506,482] 230,417 Unpaid claims, December�31 $ 493,170 $ 321,790 The City established a limited risk managementprogram for employee health and dental insurance in 1997. The program covers eligible City emplo°�ees,kPremiums 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 �indivvual claims in excess of $50,000. Incurred claims, including incurred but not reported claims, have beer,, accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the 4 ects�{,of inflation, recent claim settlement trends including frequency and amounts of payouts and other-'eco'nomic and social factors. The liability for claims and judgments is reported in the Health Insurance�Fu4 ecause it is expected to be liquidated with expendable available financial resources. Theref6re, ail cAhe liability is considered to be due within one year. Changes in the balances of claims liabilities durn j,the past two years are as follows: 2012 2011 Unpaid claims, January 1 $ 391,175 $ 382,502 Incurred claims (including IBNRs) 4,014,478 4,229,571 Claim payments 4,038,229 4,220,898 Unpaid claims, December 31 $ 367,424 $ 391,175 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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, 2012. Proeect Authorization Expenditures N Ohio Grade Separation Structure Demolition $ 6,617,581 $ 6,523,887 Markley, Magnolia, Valleyview Sanitary Sewer Improvements and Manhole and Wastewater Pump Station Rehabilitation; 5';x;50 000 1,071,877 South 9th Corridor, Phase IV . ( 6 „00,000 6,240,715 Stone Lake ,460,979 10,220 East Magnolia Road Replacement 4,500,000 3,294,853 Aviation Service Center ? 5,500,000 4,225,450 Fire Station # 1 2,265,206 1,929,031 Quail Meadows Estates, IV i 408,745 2,000 Downtown Wellfield Improvements 4e, ° . 9,330,000 1,473,998 Advanced Meter Infrastructure 39,850,000 14,714,908 Downtown Lighting Replacement ,��''��� 3,110,000 3,108,534 Project overages in the Bicentennial Improvernentslproject 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 ass, - through aid. The disbursement of funds received under these programs '4”, generally requires compliance witkNerms and conditions specified in the grant agreements and is subject to audit. Any disallowed claims- 4esulting 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 °gray- of the"financial statements of the City at December 31, 2012. 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 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 $1,693,368 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 28.8% of the estimated capacity of the landfill. 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 $4,181,503 as the remaining estimated capacity is filled over the remaining life expectancy of 141.8 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2012. 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 post -cloy re` are costs will be provided through the normal budgeting and rate setting process, including the issuance general obligation bonds, if necessary. H. Environmental Matters The Kansas Department of Health and Environment (KDHE) issued4- report in 1994 indicating the presence of volatile organic compounds at levels requiring remediatiop at the Salina Public Water Supply Wells Site. The City adopted a proactive Policy and Action Plan to `Qediate the groundwater contamination, and on December 7, 1994, the City and KDHE entered into a b°onsenbOrder and Settlement Agreement under which the City assumed primary responsibility for the auHher iinvestigation 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 undetefmmied c�s`f to the City's Water and Sewer Fund. Win" �,,i The U.S. Department of Defense transfefretlr roperty located at the former Schilling Air Force Base (the Base or Site) to the City on or about Sept The property is now known to contain areas of extensive soil and groundwater contaminatio- is "is a result of the use and disposal of chlorinated solvents during military operations at the Base fro `;` until Base closure in 1965. ,I4�� i ? The U.S. Department of Defenses responsible for the investigation and remediation of contamination caused by military activities „ur`rnt arid former military bases. The U.S. Army Corps of Engineers (Corps) is the lead agency for the -1 - Department at formerly used defense sites. The Corps has investigated the soil and groundwater contain fikion at the Site under the regulatory oversight of the U.S. Environmental Protection Agency (EPA) and the Kansas Department of Health and Environment (KDHE). The Site is not designated as a National Priority List Superfund site, but investigation and remediation are required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act ( CERCLA). Potential liability for contamination under CERCLA 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 Site, the City is potentially liable under CERCLA, although the City believes that it has meritorious defenses to such liability. The City is considered to be a Potentially Responsible Party (PRP) for the Site, primarily due to its status as a property owner. The Salina Airport Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University at Salina) (collectively Salina Public Entities) currently own over 90% of the nearly 4,000 acres of the Base property. No third party has asserted any claim for bodily injury or property damage. 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Beginning in August 2007, the Salina Public Entities initiated settlement negotiations with the U.S. Federal Government. The negotiation objectives at that time included transferring the responsibility for completing the cleanup from the U.S. to the Salina Public Entities. The local objective was to reach a settlement agreement with the U.S. 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, by and through its envirdhmental consultant, prepared a detailed Cost to Complete Estimate (CTC). The CTC preparation includedXbon'sultation with the EPA and KDHE. The Salina Public Entities' CTC was completed in June of 2008 anoap b fitted to the Corps. Subsequently, on January 23, 2009, the Salina Public Entities delivered ai_r mand letter to the Corps. The � 7- letter demanded that settlement negotiations begin immediatev- ith"the�'U.S. Department of Justice. On May 14, 2009 the City was notified that the Corp referred the Base ilandletter to the U.S. Department of Justice on May 12, 2009. The Salina Public Entities delivered on or about May 10; „"2010, a settlement offer and a draft of a lawsuit complaint to the attorney for the U.S. Department of Justice' he Salina Public Entities planned to file suit against the U.S. if the matter was not settled by thexz hdlof� ay, 2010. The Salina Public Entities did not intend to cut off settlement negotiations by the filing,,.;pfsuit nd this has been communicated to the U.S. No remedial action plan or record of decision has eei ,._q lopted by the EPA or KDHE. On or about May 27, 2010, the Salina`Public Entities filed their Complaint against the United States of America, the United States Department, bsDefense and Secretary of Defense, Robert M. Gates, in his official capacity (collectively, "Defendants'. On or about September 22, 2010, the Salina Public Entities filed their First Amended Complaint in four`cout s -Count I Citizen Suit Claim Pursuant to, 42 U.S.C.§ 9659(a)(2), Count II Citizen Suit Claim Pursuant "t& 42; <0.S.C.§ 9659(a)(1), Count III Claim for Recovery of Response Costs Pursuant to 42 U.S.C.§ 960a)�and Count IV Claim for Declaratory Judgment Pursuant to 42 U.S.C.§ 9613(8)(2)- °;F,� _ On or about October'6, F2010, Defendants filed their motion to dismiss and to strike, primarily with respect to the citizen suit claims. On or about March 25, 2011, Judge Murguia entered his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I and II (citizen suit claims) for lack of subject matter jurisdiction. He also granted the Defendants' motion to dismiss the Salina Public Entities' requests for attorney fees, with the exception of non - litigation attorney fees. He denied the Defendants' motion to strike the Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims under Counts III and IV for response costs under CERCLA 9607(x) are not affected by the Judge's rulings. The Salina Public Entities disagree with most of the Judge's filings and, if necessary, plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings. On or about April 22, 2011, Defendants filed their Answer to First Amended Complaint and Counterclaim against the Salina Public Entities. Count I of the Counterclaim alleges a claim for contribution under CERCLA, 42 U.S.C.§ 9613(f)(1). Count II of the Counterclaim alleges a claim for cost recovery under CERCLA, 42 U.S.C.§ 9607(a)(1). Count II alleges costs incurred by the U.S. Environmental Protection Agency of approximately $1,838,241 as of September 30, 2007, and alleges costs incurred by the Corps of approximately $14,915,228 as of April 17, 2009. The Salina Public Entities intend to vigorously contest the claims brought against them and will assert, among other defenses, the third party defense under 42 U.S.C.§ 9607(b)(3). 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) The parties agreed on a mediation to discuss settlement. The mediation sessions occurred in October 2011, and the mediation discussions continued for over a year. The parties have now agreed upon a partial settlement. The partial settlement includes payment by the U.S. in exchange for performance by the Salina Public Entities of a remedial investigation /feasibility study through entry of a Corrective Action Decision by KDHE (the "Work "). The present cost estimate of the Work is less than $10,000,000. The agreement is that the U.S. will pay 90% of the cost of the Work with the Salina Public Entities responsible for payment of the remaining 10 %. It is anticipated that the agreed share of the Salina PublicgE`ntities will be paid by the City. Also, the claims and counterclaims in the lawsuit have been dismissed witho W rejudice with provisions tolling any and all statutes of limitation. No party is obligated under the settlement greement to implement the Corrective Action Decision upon its entry by KDHE, and the parties,,wf1l either negotiate an agreement to implement such Corrective Action Decision or refile their claims in i ou�� Xi e Salina Public Entities have entered into a Consent Agreement and Final Order ( "CAFO ") Witt i KDHEIkwhich is conditioned upon the U.S.'s payment to the City. On May 2, 2013, the U.S. District Court gr the"District of Kansas entered its Consent Decree. City of Salina, Kansas, et al. v. United States of America;:.et al., Case No. 1 0 -CV -2298 CM /DJW. The Court's Consent Decree approved the settlement among.the parties. The current status is that the City is waiting for the U.S. to wire transfer $8,426,700 to the Cityefore the City is required to fulfill its obligations under KDHE's CAFO. �. Although the claims and counterclaims in the. Iavusuft have been dismissed without prejudice, the City intends to vigorously pursue its claims that the O'S `should implement the Corrective Action Decision upon its entry by KDHE and its defenses agarnste any claims brought against it. Based on presently known information, the City has determined that;' w le-a possible liability exists, at this time no reasonable estimate of the possible liability can be made Th refore no liability related to that matter has been recorded. ,n Postemployment Health Care Plan= =� Plan Description. The City op rates a single employer defined benefit healthcare plan administered by the City. The Employee�fbih ' it,Plan (the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KS � 12 040yrequires all local governmental entities in the state that provide a group health care plan to make padicipation 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 $229,000 to the Plan (approximately 100% of total premiums) through their required contribution of $425 per month for retiree -only coverage and $1,141 for family 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. 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) I. Postemployment Health Care Plan (Continued) 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 $ 961,335 Interest on Net OPEB Obligation 125,675 Adjustment to Annual Required Contribution 79,786 Annual OPEB cost (expense) 1, ,2� Benefit payments , 90 Change in net OPEB obligation ,224 Net OPEB obligation - beginning ofyear,;r �, .3,141,883 Net OPEB obligation - end of year $ 3,920,107 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, 2012 was as foj of ws: (;. "" .;r$1 ` Annual Fiscal : ` Annual OPEB Net Year ;� PEB Cost OPEB � Ended Cost Contributed Obligation December 31% 200 $ 910,418 $ 96,672 $ 813,746 December, 2009 957,353 100,000 1,671,099 December 31 2010 921,492 199,000 2,393,591 it � RC Deceii ber431, 2011 977,292 229,000 3,141,883 ��e ber 31, 2012 1,007,224 229,000 3,920,107 Funding Status and Funding Progress. As of the year ended December 31, 2012, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $9,019,806 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $9,019,806. The covered payroll (annual payroll of active employees covered by the plan) was $21,937,142, and the ratio of the UAAL to the covered payroll was 41.12 %. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statement, presents multiyear trend information about whether the actuarial value of plan assets (if any) are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) I. Postemployment Health Care Plan (Continued) Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan participants) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan participants to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short -term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long -term perspective of the calculations. In the year ended December 31, 2012, actuarial valuation, the projected unity retf'V} actuarial cost method was used. The actuarial assumptions include a 4.00% investment rate ofi� r$to�,, which is the rate of the employer's own investments as there are no plan assets and an initial an'nualxnedical and dental healthcare cost trend of 9.30 %, reduced by decrements to an ultimate rate 4J,Kv afNAighty -two years. The UAAL is �; being amortized as a level dollar over an open thirty -year period:'' `T_ J. Subsequent Events In February, 2013, the City issued Series 2013 -A general `obligation internal improvement bonds in the amount of $1,360,000. The bond proceeds will be used to fuAd „various capital projects. The City will make the first payment on bonds on April 1, 2014 and the last pawffiept'bn October 1, 2028. The interest rate on the bonds ranges from 0.60% to 3.65 %. i >s , rt pn'v 51 CERTIFICATE DEEMING PRELIMINARY OFFICIAL STATEMENT FINAL June 10, 2013 To: Robert W. Baird & Co. Winston - Salem, NC Jeffries LLC New York, NY Re: Approximately $4,330,000 General Obligation Internal Improvement Bonds, Series 2013 -B and $3,800,000 General Obligation Temporary Notes, Series 2013 -1 - The undersigned 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(s) (the "Purchaser(s) ") on behalf of the Issuer. The Issuer has heretofore caused to be delivered to the Purchaser(s) copies of the Preliminary Official Statement (the "Preliminary Official Statement ") relating to the above- referenced notes and bonds (the "Obligations "). For the purpose of enabling the Purchaser(s) 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 underwriters and other terms of the Obligations depending on such matters. CITY OF SALINA, KANSAS By: / Title: Mp or By: L �4_ Title: Clerk Publisher's Affidavit I. Christy Fink , being duly sworn declare that I am a Legal Coordinator 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 Bond Sale Series 2013 -B Notice has been correctly published in the entire issue of said newspaper one time, publication being given in the issue of Tune 20, 2013 Subscribed and sworn to before me, this day of A.D. 20 Notary Public Printer's Fee $321.00 W mMEUS SAWNDHOLZ "," AA* (Published in the Salina Journal June 20, 2013) SUMMARY NOTICE OF BOND SALE $6,3301000* CITY OF SALINA, ' KANSAS GENERAL OBLIGATION INTERNAL IMPROVE-' MENT BONDS, SERIES 2013.8 (GENERAL OBLIGATION BONDS PAYABLE FROM UNLIMITED AD VALOREM TAXES) Aide. Subject to the No- tice of Sale dated June 10,' 2013, written ,and elec- ironic 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 ad dress set forth below, and in the case of electronic bids, through PARITY® until 1:00, p.m. Central Time, on JULY 8, 2013 for the purchase of the above- referenced bonds (the "Bonds "). No bid of less than 100% of the �rincipal amount of the e�i ds and accrued Inter - thereon to the date of d0livery will be consid- ered. Bond Details. The Bands will consist of fully registered bonds in the denomination of $5,00 or any integral mufiip a thereof. The Bon0s'.Will be dated July 15, 400, and will be- come,&e on October 1 in•the' 4l9I asfollows: Oct4�i.1 A� 2014 $240,000 2015 y 280,000 2016 ! 280,000 2017 qvl; 285,000 2018 cT 290,000.. 2019:, 295,000 2020 305,000 2021 S 315,000 2022 320,000 2023 320,000 2024 330,000 2025 '340,000 2026 350,000 2027 365,000 8028 370,000 X029 120,000 2030 125,000 2031 130,000 2032 135,000 2033 135,000 „The Bonds will bear in- terest from the date thereof at rates to be de- termined when the Bonds are sold as hereinafter provided, which interest will be payable semiannu- ally on April 1 and Octo• ber 1 in each year, begin- ning Book-Entry-Only System. The Bonds shall be registered under a book - entry -only system administered through DTC. Paying Agent and Bond Registrar. Treas- urer of the State of Kan ass, Topeka, Kansas. Good Faith - Deposit Each bid shall be accom- panied by a good faith de- posit In the form of a cash- ier's or certified check . drawn,on a bank located'. in the United States of , America; a qualified finan- cjal surety bond'or's wire transfer in Federal Re. serve'funds Immediately available for use by the Is- suer in the amount of $106,600. . Denvery. the lssper will pay for preparation, of the Bonds and will deliver, the same properly pro. ,pared, executed and reg- istered without cost to the successful bidder on or about July 25, 2013, to pTC for the account of the successful bidder. f Assessed Valuation and Indebtedness. The ; Equalized Assessed Tan- ' gible Valuation for Compu- tation of Bonded Debt Limitations' for the year I 201 "2 is $451,404,026. The total general obliga•@@ tion indebtedness of the 4 Issuer as of the delivery date, including the Bonds being sold, , is I $67,715,000. Approval of Bonds. " The Bonds will be sold ; subject to the legal opinion ' of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel, whose ap- proving legal opinion as to the validity of the Bonds will be furnished and paid for by the Issuer, printed on the Bonds and deliv• ered to the successful bid- der as and when the Bonds are delivered. Additional Informa- tion. Additional Informa. tion regarding the Bonds may be obtained from the undersgned, or from the Financial Advisor at the addressee set forth below, DATED: June 20 2013 *Preliminary; eu6ject to change as provided In the Notice of Sale, Written and Facsimile Bid and Good Faith Deposit Delivery Address: Rod Franz, Financial Director 300 West Ash Salina, Ke 67402 Phone No. (786) 309 -6736 Fax No.: (785) 309 -5738 Email: rod.franzOsalina.org Financial Advisor. George K. Baum & Company 4801 Main Street, Suite 500 Kansas City, Missouri 64112 Attrr. David Arteberry Phone No.: (816)474 -1100 Fax No.: (816)283 -5326 Email: arteberry0gkbaum.com (1t) STATE OF KANSAS OFFICE OF SECRETARY OF STATE I, KRIS W. KOBACx, Kansas Secretary of State, certify that the records of this office reveal the following: Affidavit of Publication I am the publisher of the Kansas Register, a newspaper published pursuant to K.S.A. 75 -430, and the attached is a true copy of the notice that appeared therein on the date given below: June 20, 2013 In Testimony Whereof: I hereto set my hand and cause to be affixed my official seal. Done at the City of Topeka this 20th day of June, A.D. 2013. r, KRIS W. KOBACH KANSAS SECRETARY OF STATE Bond Sale Kansas Register for Bid. For times and actual locations call 316- o to the following website: http. ww.kshealthyhomes.org,� The above - reference docume can be down- loaded at the website listed �Ro Moser, M.D. Doc. No. and Environment (Published in the Kansas Register June 20, 2013 ) Summary Notice of Bond Sale City of Salina, Kansas $5,330,000* General Obligation Internal Improvement Bonds Series 2013 -B (General obligation bonds payable from unlimited ad valorem taxes) Bids Subject to the Notice of Sale dated June 10, 2013, 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. (CDT) July 8, 2013, for the purchase of the above- refer- enced bonds. No bid of less than 100 percent of the prin- cipal amount of the 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 July 15, 2013, and will become due on October 1 in the years as follows: Principal Year Amount* 2014 $240,000 2015 280,000 2016 280,000 2017 285,000 2018 290,000 2019 295,000 2020 305,000 2021 315,000 2022 320,000 2023 320,000 2024 330,000 2025 340,000 2026 350,000 2027 365,000 2028 370,000 2029 120,000 2030 125,000 2031 130,000 2032 135,000 2033 135,000 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- 611 nually on April 1 and October 1 in each year, beginning April 1, 2014. Book -Entry-Only System The bonds shall be registered under a book -entry -only system administered through DTC. Paying Agent and Bond Registrar Kansas State Treasurer, Topeka, Kansas. Good Faith Deposit Each bid shall be accompanied by a good faith deposit in the form of a cashier's or certified check drawn on a bank located in the United States, a qualified financial surety bond or a wire transfer in Federal Reserve funds immediately available for use by the issuer in the amount of $106,600. Delivery The issuer will pay for preparation of the bonds and will deliver the same properly prepared, executed and registered without cost to the successful bidder on or about July 25, 2013, to DTC for the account of the suc- cessful bidder. Assessed Valuation and Indebtedness The equalized assessed tangible valuation for compu- tation of bonded debt limitations for the year 2012 is $451,404,026. The total general obligation indebtedness of the issuer as of the delivery date, including the bonds being sold, is $67,715,000. 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 Additional information regarding the bonds may be obtained from the undersigned, or from the financial ad- visor, at the addresses set forth below. Written and Facsimile Bid and Good Faith Deposit Delivery Address: George K. Baum & Company 4801 Main St., Suite 500 Kansas City, MO 64112 Attn: David Arteberry 816- 474 -1100 Fax: 816- 283 -5326 arteberry @gkbaum.com Financial Advisor: Rod Franz, Finance Director 300 W. Ash Salina, KS 67402 785- 309 -5735 Fax: 785 - 309 -5738 rod.franz @salina.org Dated June 20, 2013. *Preliminary; subject to change as provided in the Notice of Sale. Doc. No. 041653 City of Salina, Kansas Vol. 32, No. 25, June 20, 2013 C Kansas Secretary of State 2013 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 "Code"): (1) the interest on the Notes (including any original issue discount properly allocable to an owner thereof) and Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, (2) the interest on the Notes and Bonds is exempt from income taxation by the State of Kansas, and (3) the Notes and Bonds are "qualified tax - exempt obligations" within the meaning of Code Section 265(b)(3). See TAX MATTERS — "Opinion of Bond Counsel" herein. New Issues Book -Entry Only Bank Qualified CITY OF SALINA, KANSAS Moody's Ratings: Bonds- "Aa3" Notes- "MIG 1" $3,800,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2013 -1 $4,330,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B Dated: July 15, 2013 Due: As Shown Herein - The Series 2013 -1 Notes (the "Notes ") will be issued as fully registered notes in the denomination of $5,000 or any integral multiple thereof. The Notes shall be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company ( "DTC "), New York, New York, to which payment of principal and interest will be made. Individual purchases of Notes will be made in book -entry form. Purchasers will not receive certificates representing their interest in the Notes purchased. Interest on the Notes will be payable at maturity. Principal and interest on the Notes will be payable by check, draft, or wire transfer from the Treasurer of the State of Kansas (the "Note Paying Agent "). The Notes are not subject to redemption prior to maturity. The Series 2013 -B 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, 2014. The principal of and interest on the Bonds will be payable by check, draft, or wire transfer from the Treasurer of the State of Kansas (the "Bond Paying Agent "). The Bonds are subject to redemption at the option of the City as further described herein. MATURITY 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 of DTC on or about July 25, 2013. The date of this Official Statement is July 8, 2013 THIS COVER PAGE CONTAINS INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THE ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. MATURITY SCHEDULES $3,800,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2013 -1 Base CUSIPM Maturity Amount Rate Yield 794743 08 -01 -14 $3,800,000 1.000% 0.451% 4B7 The Notes are not subject to redemption prior to maturity. $4,330,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B TERM BOND Base CUSIP(1) Maturity Amount Rate Yield 794743 10- 01 -33* $350,000 4.000% 4.000% 4X9 *The Bonds maturing on or after October 1, 2022, will be subject to redemption prior to maturity at the option of the City on October 1, 2021, 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 Bonds are also subject to mandatory redemption. See THE BONDS - "Redemption Provisions" herein. I �1CUSIP numbers have been assigned to this issue by Standard & Poor's CUSIP Service Bureau, a division of the McGraw -Hill Financial., and are included solely for the convenience of the Owners of the Notes and Bonds. Neither the City nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth above. SERIAL BONDS Base CUSIPM Maturity Amount Rate Yield 794743 10 -01 -14 $205,000 3.000% 0.400% 4C5 10 -01 -15 235,000 3.000 0.700 4D3 10 -01 -16 235,000 3.000 1.000 4E1 10 -01 -17 240,000 3.000 1.200 4F8 10 -01 -18 245,000 3.000 1.500 4G6 10 -01 -19 250,000 3.000 1.800 4H4 10 -01 -20 260,000 3.000 2.050 4.10 10 -01 -21 265,000 3.000 2.350 4K7 10- 01 -22* 270,000 3.000 2.550 41-5 10- 01 -23* 275,000 3.000 2.750 4M3 10- 01 -24* 285,000 3.000 2.875 4N1 10- 01 -25* 290,000 3.500 3.000 4P6 10- 01 -26* 300,000 3.500 3.150 4Q4 10- 01 -27* 310,000 3.500 3.300 4R2 10- 01 -28* 315,000 3.500 3.450 4S0 TERM BOND Base CUSIP(1) Maturity Amount Rate Yield 794743 10- 01 -33* $350,000 4.000% 4.000% 4X9 *The Bonds maturing on or after October 1, 2022, will be subject to redemption prior to maturity at the option of the City on October 1, 2021, 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 Bonds are also subject to mandatory redemption. See THE BONDS - "Redemption Provisions" herein. I �1CUSIP numbers have been assigned to this issue by Standard & Poor's CUSIP Service Bureau, a division of the McGraw -Hill Financial., and are included solely for the convenience of the Owners of the Notes and Bonds. Neither the City nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth above. CITY OF SALINA, KANSAS City /County Building - Room 206 300 West Ash P. O. Box 736 Salina, Kansas 67402 -0736 CITY COMMISSION Barbara Shirley, Mayor Aaron Householter, Vice Mayor Kaye Crawford, Commissioner Jon Blanchard, Commissioner Randall Hardy, Commissioner CITY STAFF Jason Gage, City Manager Mike Schrage, Deputy City Manager Rodney Franz, Director of Finance and Administration 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 the 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 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 the 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 THENOTES ........................................................................................................... ............................... 2 THEBONDS .......................................................................................................... ............................... 5 THE DEPOSITORY TRUST COMPANY .................................................................... ............................... 10 THE FINANCING PLAN .......................................................................................... ............................... 11 SOURCES AND USES OF FUNDS ........................................................................... ............................... 12 RISK FACTORS AND INVESTMENT CONSIDERATIONS .......................................... ............................... 12 LEGALMATTERS .................................................................................................. ............................... 14 TAXMATTERS ...................................................................................................... ............................... 14 RATINGS............................................................................................................... ............................... 16 FINANCIALADVISOR ............................................................................................ ............................... 16 UNDERWRITING.................................................................................................. ............................... 17 ABSENCE OF MATERIAL LITIGATION .................................................................... ............................... 17 CONTINUING DISCLOSURE .................................................................................. ............................... 17 CERTIFICATION OF OFFICIAL STATEMENT ........................................................... ............................... 18 APPENDIX A: INFORMATION CONCERNING THE CITY FINANCIAL OVERVIEW OF THE CITY ............................................................... ............................... A -1 GENERAL INFORMATION CONCERNING THE CITY ......................................... ............................... A -2 ECONOMIC INFORMATION CONCERNING THE CITY ...................................... ............................... A -6 DEBT SUMMARY OF THE CITY ........................................................................ ............................... A -9 FINANCIAL INFORMATION CONCERNING THE CITY ....................................... ............................... A -12 APPENDIX B: OMNIBUS CONTINUING DISCLOSURE UNDERTAKING APPENDIX C: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2011 APPENDIX D: UNAUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2012 OFFICIAL STATEMENT CITY OF SALINA, KANSAS $3,800,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2013 -1 $4,330,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B 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 $3,800,000 General Obligation Temporary Notes, Series 2013 -1 (the "Notes "), and its $4,330,000 General Obligation Internal Improvement Bonds, Series 2013 -B (the "Bonds ", and together with the Notes, the "Securities "). The Notes and the Bonds are being issued to provide funds to finance certain public improvements within the City and to retire the City's Series 2012 -1 Notes. 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 Notes and Bonds as the same becomes due. See THE NOTES - "Security" and THE BONDS - "Security" herein. The Appendices are an integral part of this Official Statement and should be read in their 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 — OMNIBUS CONTINUING DISCLOSURE UNDERTAKING 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 ordinance and resolution of the governing body of the City authorizing the Bonds (the "Bond Resolution "), as applicable. Copies of the Note Resolution and the Bond Resolution are available upon request to the City, the Financial Advisor, or Bond Counsel. Additional Information Additional information regarding the City, the Notes, or the Bonds may be obtained from George K. Baum & Company, 4801 Main Street, Kansas City, Missouri 64112, telephone 816 - 474 -1100. THE NOTES 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 -685 et seq., all as amended, and a resolution adopted by the governing body of the City on July 8, 2013, 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 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 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. Description The Notes shall consist of fully registered book - entry-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 July 15, 2013, shall become due in the amounts on the 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) 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. Redemption Provisions The Notes are not subject to redemption and payment prior to maturity. Designation of Note Paving Agent and Note Registrar The City will at all times maintain a paying agent and note registrar meeting the qualifications set forth in the Note Resolution. The City 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 City 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 City 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. 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 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 2 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 provisions of the Note Resolution. The City 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 City 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 City 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 City and the Note Registrar such security or indemnity as may be required by each of them, then, in the absence of notice to the City or the Note Registrar that such Note has been acquired by a bona fide purchaser, the City shall execute and, upon the City'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 City, in its discretion, may pay such Note instead of issuing a new Note. Upon the issuance of any new Note, the City 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. Nonaresentment 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 City 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 City 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 City, and the Owner thereof shall be entitled to look only to the City for payment, and then only to the extent of the amount so repaid to it by the Note Paying Agent, and the City shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Method and Place of Payment 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. 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 City 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 of the proposed payment. The Note Paying Agent shall notify the City 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 -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 Depository 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 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 4 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 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)(1) or (a)(2) of this paragraph, the City, 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 City, 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 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 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 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. and K.S.A. 12 -6a01 et seq., all as amended, and an ordinance and resolution adopted by the governing body of the City on July 8, 2013, authorizing the issuance of the Bonds (the `Bond Resolution "). Security 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 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 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. 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 July 15, 2013, 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. Redemption Provisions Optional Redemption. At the option of the City, Bonds or portions thereof maturing on October 1, 2022 and thereafter may be called for redemption and payment prior to their Stated Maturity on October 1, 2021, 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 City 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 Bonds maturing October 1, 2033 (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 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: Principal Amount Year 65,000 2029 65,000 2030 70,000 2031 70,000 2032 80,000 2033* *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 City 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 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 City shall call any Bands for redemption and payment prior to the Stated Maturity thereof, the City shall give written notice of its intention to call and pay said Bonds to the State Treasurer and the Purchaser. In addition, the City 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 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 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 City 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 from and after the Redemption Date (unless the City 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 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. In addition to the foregoing notice, the City 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. Designation of Bond Paving Agent and Bond Registrar The City will at all times maintain a paying agent and bond registrar meeting the qualifications set forth in the Bond Resolutions. The City 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 City 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 City 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. 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 City 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 City 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 from the City of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest. 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 City 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 City 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. Book -Entry 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 from 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)(1) 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 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 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 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 (collectively, 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 maturity of such series of the Securities, 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 3.5 million issues of U.S. 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 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 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 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 a Standard & Poor's rating of AA +. 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 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 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 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 the Securities, except in the event that use of the book -entry system for the Securities is discontinued. 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. 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. 10 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 Securities unless authorized by a Direct Participant in accordance with DTC's MMI 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 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 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, 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 Securities purchased or tendered, through its Participant, to the Note Paying Agent and the Bond Paying Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to the Note Paying Agent and the Bond Paying Agent. The requirement for physical delivery of the 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 the Note Paying Agent's or Bond Paying Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Securities 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 to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. THE FINANCING PLAN The Note Projects Proceeds from the sale of the Notes will be used to provide construction period financing for improvements to certain main trafficways in the City and to pay the costs associated with the issuance of the Notes. 11 The projects to be financed with the Notes are as follows: Improvement Project Ordinance/ Fund Description Resolution No. Authority Deposit Downtown Street Lighting Res. 13 -6987 K.S.A. 12 -685 et seq. $3,150,000.00 Ninth and Cloud Improvements Res._13 -7007 K.S.A. 12 -685 et seq. 650.000.00 $3,800,000.00 The Bond Projects Proceeds from the sale of the Bonds will be used to provide long term financing for certain public improvements within the City and to pay the costs associated with the issuance of the Bonds. The projects to be financed with the Bonds are as follows: Improvement Project Ordinance/ Fund Description Resolution No. Authority Deposit Magnolia Hills Subdivision Ord. 13 -10687 K.S.A. 12 -6a01 et seq. $ 262,704.31 Fire Station #1 Res. 09 -6681 K.S.A. 12 -1736 et seq. 825,000.00 East Magnolia Road Res. 11 -6812 K.S.A. 12 -685 et seq. 2,127,295.69 Bicentennial Center Res. 13 -6988 K.S.A. 12 -1736 et seq. 1,010,000.00 North Ohio Grade Separation Res. 06 -6237 K.S.A. 12 -685 et seq. 105,000.00 $4,330,000.00 A portion of the cost of these improvements was originally financed by the issuance of the City's Series 2012 -1 General Obligation Temporary Notes (the "Series 2012 -1 Notes "), which will be retired with proceeds from the sale of the Bonds, 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. Notes Sources of Funds: Note and Bond Proceeds $3,800,000.00 Plus Reoffering Premium 21,128.00 Plus Prepaid Assessments 0.00 Total Sources of Funds $3,821,128.00 Uses of Funds: Deposit to Improvement Fund and Retire Series 2012 -1 Notes $3,798,067.00 Costs of Issuance (includes underwriter's discount) 23.061.00 Total Application of Funds $3,821,128.00 RISK FACTORS AND INVESTMENT CONSIDERATIONS Bonds $4,330,000.00 155,073.25 16.000.00 $4,501,073.25 $4,391,130.31 109,942.94 $4,501,073.25 A PROSPECTIVE PURCHASER OF THE NOTES AND BONDS (COLLECTIVELY, THE "SECURITIES ") DESCRIBED HEREIN SHOULD BE AWARE THAT THERE ARE CERTAIN RISKS ASSOCIATED WITH THE SECURITIES WHICH MUST BE RECOGNIZED. THE FOLLOWING STATEMENTS REGARDING CERTAIN RISKS ASSOCIATED WITH THE OFFERING SHOULD NOT BE CONSIDERED AS A COMPLETE DESCRIPTION OF ALL RISKS TO BE CONSIDERED IN THE DECISION TO PURCHASE THE SECURITIES. PROSPECTIVE PURCHASERS OF THE SECURITIES SHOULD ANALYZE CAREFULLY 12 THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT AND ADDITIONAL INFORMATION IN THE FORM OF THE COMPLETE DOCUMENTS SUMMARIZED HEREIN, COPIES OF WHICH ARE AVAILABLE AND MAYBE OBTAINED FROM THE CITY OR THE UNDERWRITER. Legal Matters Various state and federal laws, regulations and constitutional provisions apply to the obligations created by the Securities. There is no assurance that there will not be any change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have a material effect, either directly or indirectly, on the City or the taxing authority of the City. Limitations on Remedies Available to Owners of Securities The enforceability of the rights and remedies of the owners of Securities, and the obligations incurred by the City in issuing the Securities, are subject to the following: the federal Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the United States Constitution; and the reasonable and necessary exercise, in certain unusual situations, of the police power inherent in the State of Kansas and its governmental subdivisions in the interest of serving a legitimate and significant public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Securities to judicial discretion and interpretation of their rights in bankruptcy and otherwise, and consequently may involve risks of delay, limitation or modification of their rights. Premium on Bonds The initial offering prices of certain maturities of the Bonds that are subject to optional redemption are in excess of the respective principal amounts thereof. Any person who purchases a Bond in excess of its principal amount, whether during the initial offering or in a secondary market transaction, should consider that the Bonds are subject to redemption at par under the various circumstances described under "THE BONDS — Redemption Provisions." No Additional Interest or Mandatory Redemption upon Event of Taxability Neither the Bond Resolution nor the Note Resolution provide for the payment of additional interest or penalty on the Securities or the mandatory redemption thereof if the interest thereon becomes includable in gross income for federal income tax purposes. Likewise, neither the Bond Resolution nor the Note Resolution provide for the payment of any additional interest or penalty on the Securities if the interest thereon becomes includable in gross income for Kansas income tax purposes. Suitability of Investment The tax exempt feature of the Securities is more valuable to high tax bracket investors than to investors who are in low tax brackets, and so the value of the interest compensation to any particular investor will vary with individual tax rates. Each prospective investor should carefully examine this Official Statement, including the Appendices hereto, and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Securities are an appropriate investment. 13 Market for the Securities Ratings. The Securities have been assigned the financial ratings set forth in the section hereof titled RATINGS. There is no assurance that a particular rating will remain in effect for any given period of time or that it will not be revised, either downward or upward, or withdrawn entirely, if in the judgment of the agency originally establishing such rating, circumstances so warrant. Any downward revision or withdrawal of any rating may have an adverse affect on the market price of the Securities. Secondary Market. There is no assurance that a secondary market will develop for the purchase and sale of the Securities. Prices of securities traded in the secondary market, though, are subject to adjustment upward and downward in response to changes in the credit markets. From time to time it may be necessary to suspend indefinitely secondary market trading in the Securities as a result of financial condition or market position of broker - dealers, prevailing market conditions, lack of adequate current financial information about the City, or a material adverse change in the financial condition of the City, whether or not the Securities are in default as to principal and interest payments, and other factors which may give rise to uncertainty concerning prudent secondary market practices. Recent Legislative Proposals Congress and the President are working on various proposals to increase income taxes and to reduce tax deductions and expenditures. These discussions have made it clear that the tax exemption of municipal bonds is considered a tax expenditure and as such there is no guaranty that the tax exempt status on municipal bonds will remain unchanged as a result of these discussions. If a legislative change is enacted which results in all, or a portion, of the interest on the Bonds being subjected to Federal income taxes, such legislation or proposals could affect the value or marketability of the Bonds. Prospective purchasers of the Bonds should consult their own tax advisers regarding the impact of any change in law on the Bonds. LEGAL MATTERS All matters incident to the authorization and issuance of the Securities by the City are subject to the approval of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel. The factual and financial information appearing herein has been supplied or reviewed by certain officials of the City and its certified public accountants, as referred to herein. Bond Counsel has participated in the preparation of the matters appearing in the sections of this Official Statement captioned INTRODUCTORY STATEMENT, THE NOTES, THE BONDS, LEGAL MATTERS, TAX MATTERS, CONTINUING DISCLOSURE, and APPENDIX B — OMNIBUS CONTINUING DISCLOSURE UNDERTAKING. TAX MATTERS General The following is a summary of the material federal and State of Kansas income tax consequences of holding and disposing of the Notes and the Bonds (collectively referred to herein as 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. 14 Opinion of Bond Counsel In the opinion of Bond Counsel, under the law existing as of the issue date of the Securities: Federal Tax Exemption: The interest on the Securities is excluded from gross income for federal income tax purposes. Alternative Minimum Tax. Interest on the Securities is not an item of tax preference for purposes of computing 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. Bank Qualification. The Securities are "qualified tax - exempt obligations" for purposes of Code §265(b)(3. Kansas Tax Exemption. The interest on the Securities is exempt from income taxation by the State of Kansas. No Other Opinions. Bond Counsel's opinions are provided as of the date of the original issue of the Securities, subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Securities in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Securities in gross income for federal income tax purposes retroactive to the date of issuance of the Securities. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Securities. Other Tax Consequences Original Issue Discount. For Federal income tax purposes, original issue discount ( "CID ") is the excess of the stated redemption price at maturity of a security over its issue price. The issue price of a security is the first price at which a substantial amount of the security of that maturity has been sold (ignoring sales to bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers). 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 "). Since the August 1, 2014, interest payment on the Notes will be paid more than one year after the Notes are issued, none of the interest payments on the Notes constitute qualified stated interest, and the stated redemption price of each Note includes all payments on the Note. Under Code §§ 1272 and 1288, OID on tax - exempt obligations accrues on a compound basis. The amount of OID that accrues to an owner during any accrual period generally equals: (a) the issue price of such Note plus the amount of OID accrued in all prior accrual periods; multiplied by (b) the yield to maturity on such Note (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period); minus (c) any interest payable on such Note during such accrual period. The amount of OID so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excludable from gross income for federal income tax purposes, and will increase the owner's tax basis in such Note. Prospective investors should consult their own tax advisors concerning the calculation and accrual of OID. Original Issue Premium. If a Security is issued at a price that exceeds the stated redemption price at maturity of the Security, the excess of the purchase price over the stated redemption price at maturity constitutes "premium" on that Security. Under Code § 171, the purchaser of that Security must amortize the premium over the term of the Security using constant yield principles, based on the purchaser's yield to maturity. As premium is amortized, the owner's basis in the Security and the amount of tax - exempt interest received will be reduced by the 15 amount of amortizable premium properly allocable to the owner. This will result in an increase in the gain (or decrease in the loss) to be recognized for Federal income tax purposes on sale or disposition of the Security prior to its maturity. Even though the owner's basis is reduced, no Federal income tax deduction is allowed. Prospective investors should consult their own tax advisors concerning the calculation and accrual of bond premium. Sale, Exchange 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 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 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. Collateral Federal Income 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. RATINGS 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 ( "Moody's "). 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. FINANCIAL ADVISOR George K. Baum & Company, Kansas City, Missouri, has acted as Financial Advisor to the City in connection with the sale of the Securities. The Financial Advisor has assisted the City in the preparation of this Official Statement and in other matters relating to the issuance of the Securities. The fees of the Financial Advisor are contingent upon the issuance of the Securities. 16 UNDERWRITING The Notes were purchased at public sale on July 8, 2013, by Jefferies LLC, New York, New York (the "Notes Underwriter") at a price equal to the principal amount of the Notes, plus a bid premium of $16,492.00, plus accrued interest to the date of closing. The Bonds were purchased at public sale on July 8, 2013, by Robert W. Baird & Co., Winston - Salem, North Carolina (the "Bonds Underwriter") at a price equal to the par amount of the Bonds, plus a bid premium of $105,209.50, 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 15c2 -12 (the "Rule "), requiring continuous secondary market disclosure. The Issuer has adopted an Omnibus Continuing Disclosure Undertaking (the "Disclosure Undertaking ") wherein 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 the Municipal Securities Rulemaking Board. In the Note Resolution and the Bond Resolution, the Issuer has covenanted with the Underwriter and the Beneficial Owners to apply the provisions of the Disclosure Undertaking to the Securities. This covenant is for the benefit of and is enforceable by the Beneficial Owners of the Securities. For more information regarding the Issuer's continuing disclosure undertaking, see APPENDIX B — OMNIBUS CONTINUING DISCLOSURE UNDERTAKING. The City filed with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access system ( "EMMA ") the annual financial information and operating data required pursuant to its existing continuing disclosure undertakings and complied in a timely manner with its obligations for the fiscal years ending December 31, 2011 and December 31, 2012. During prior years the City did not always file the annual financial information and operating data within 180 days of the end of its fiscal year as required. Past failures to file the annual financial information was primarily the result of not having audited financial statements completed within 180 days of the end of the fiscal year. The required operating data was made available to the public through the City's filing of certain official statements with the MSRB in April 2011 and 2010, July 2009 and 2008, and June 2007. The City has put into place procedures to assist in continued compliance with all undertakings with respect to the City's note and bond issues including the formal adoption of a post issuance compliance policy and adoption of an omnibus continuing disclosure undertaking. 17 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. ATTEST: /s/ Lieu Ann Elsev City Clerk CITY OF SALINA, KANSAS 18 By /s/ Rod Franz Director of Finance and Administration APPENDIX A INFORMATION CONCERAANG THE CITY APPENDIX A FINANCIAL OVERVIEW OF THE CITY 2012 Estimated Actual Valuation (1) $ 2,884,188,981 2012 Assessed Valuation $ 451,404,026 Outstanding General Obligation Bonds (2) $ 62,915,000 Population -2011 U.S. Census Bureau Estimate 47,910 General Obligation Debt Per Capita $ 1,313 Ratio of General Obligation Debt to Estimated Actual Valuation 2.18% Ratio of General Obligation Debt to Estimated Assessed Valuation 13.94% Outstanding Temporary Notes (3) $ 3,800,000 Outstanding Lease Purchase Obligations $ 0.00 Outstanding Revenue Bonds $ 15,780,000 Overlapping General Obligation Debt (4) $ 60,033,027 Direct and Overlapping General Obligation Debt (5) $ 126,748,027 Direct and Overlapping Debt Per Capita $ 2,646 Ratio of Direct and Overlapping Debt to Estimated Actual Valuation 4.39% Ratio of Direct and Overlapping Debt to Estimated Assessed Valuation 28.08% (1) For a further description of how Estimated Actual Valuation is calculated and additional historical figures see the section titled FINANCIAL INFORMATION CONCERNING THE CITY— "Estimated Actual Valuation ". (2) Includes the Bonds. (3) Includes the Notes. Does not include notes to be retired with proceeds from the sale of the Bonds. (4) For a more detailed explanation of the overlapping debt of the other jurisdictions, see DEBT SUMMARY OF THE CITY - "Overlapping Debt ". (5) Includes outstanding general obligation bonds and temporary notes of the City and overlapping jurisdictions. A -1 GENERAL INFORMATION CONCERNING THE CITY 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 2011 U.S. Census Bureau estimate of 47,910. The City is the county seat for Saline County which had an estimated 2011 U.S. Census Bureau population of 55,844. 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 23 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 Title Term Expires Barb Shirley Mayor 2015 Aaron Householter Vice Mayor 2015 Kaye Crawford Commissioner 2017 Jon Blanchard Commissioner 2017 Randall Hardy Commissioner 2015 Population The City of Salina has a population that is approaching metropolitan area status. This is defined by the U.S. Census Bureau as cities with 50,000 inhabitants or more. According to the U. S. Census Bureau, the City's citizens had a median age of 36.4 years in 2010. The following table and graph show the population for the City for selected years as provided by the U.S. Census Bureau. A -2 U.S. Census Year Bureau Population 2010 47,707 2009 46,180 2008 45,998 2007 46,025 2006 45,898 A -2 Police and Fire Protection The City of Salina provides police and fire protection services to residents of the City and surrounding areas. Firefighting 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 81 full -time police officers and operates 37 police vehicles, including patrol vehicles, motorcycles, and Cushmans. Educational Facilities 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. Current enrollment is over 7,000. The District also operates alternative education, vocational - technical, and special education schools. 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. Kansas State University at Salina. The University offers a variety of two- and four -year aviation and technology degree programs. 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 716 students are currently enrolled in the school. 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. Transportation In addition to 1 -70 and 1 -135, US -81 and US -40 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 Regional Airport and scheduled air service is provided by SeaPort Airlines, offering weekday and weekend flights to Kansas City and Denver. 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 for the Airport. SBC provides telephone service. Two cellular phone companies provide service to the City. A -3 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 Ten banks operating a total of 24 different facilities are located in the City. Four banks are headquartered in the City and reported combined deposits in excess of $1.99 billion as of December 31, 2012. A savings bank has a branch office in the City. Pension and Employee Retirement Plans The City participates in the Kansas Public Employees Retirement System ( KPERS) established in 1962, as an instrumentality of the State, pursuant to K.S.A. 74 -4901 et seq., to provide retirement and related benefits to public employees in Kansas. KPERS is governed by a board of trustees consisting of nine members, including four members appointed by the Governor subject to confirmation by the State Senate, one appointed by the President of the Senate, one appointed by the Speaker of the House of Representatives, two elected by members and retirants of the retirement system, who must be members of such system, and the State Treasurer. Members of the board of trustees serve four -year terms and elect a chairperson annually. The board of trustees appoints an Executive Director to serve as the managing officer of KPERS and employs a staff of approximately 95 people. As of June 30, 2012, KPERS serves about 281,000 members and 1,500 participating employers, including the State, school districts, counties, cities, public libraries, hospitals and other governmental units. KPERS administers the following three statewide, defined benefit retirement plans for public employees: (a) Kansas Public Employees Retirement System; (b) Kansas Police and Firemen's Retirement System; and (c) Kansas Retirement System for Judges. These three plans are separate and distinct with different membership groups, actuarial assumptions, experience, contribution rates and benefit options. The Kansas Public Employees Retirement System is the largest of the three plans, accounting for more than 95% of the members. The Kansas Public Employees Retirement System is further divided into two separate groups, as follows: (a) State /School Group - includes members employed by the State, school districts, community colleges, vocational - technical schools and educational cooperatives. The State of Kansas makes all employer contributions for this group, 85% of which comes from the State General Fund. State legislation enacted in 2003 made certain pre -1962 Board employees (which are part of a small group of pre -1962 Board and University of Kansas Hospital Authority employees known as the "TIAA Group "), special members of the State /School Group. (b) Local Group - all participating cities, counties, library boards, water districts and political subdivisions are included in this group. Local employers contribute at a different rate than the State /School Group rate. State legislation enacted in 2003 made certain pre -1962 employees of the University of Kansas Hospital Authority (which are a part of a small group of pre -1962 Board and University of Kansas Hospital Authority employees known as the "TIAA Group "), special members of the Local Group. A -4 KPERS is currently a qualified, governmental, § 401(a) defined benefit pension plan, and has received IRS determination letters attesting to the plan's qualified status dated October 14, 1999 and March 5, 2001. KPERS is also a "contributory" defined benefit plan, meaning that employees make contributions to the plan. This contrasts it from noncontributory pension plans, which are funded solely by employer contributions. The City's employees currently annually contribute: (a) 4% of their gross salary to the plan if such employees are KPERS Tier 1 members (covered employment prior to July 1, 2009), or (b) 6% of their gross salary to the plan if such employees are KPERS Tier 2 members (covered employment on or after July 1, 2009). In 2012, the Kansas legislature created a new KPERS Tier 3 category (covered employment on or after January 1, 2015) based on a cash balance plan. Each Tier 3 participant shall have a retirement annuity account to which such participant shall contribute 6% of their gross salary to the plan. The employer or State contribution varies based on longevity of participant service: (1) 3% for less than 5 years; (2) 4% for at least 5 years but less than 12 years; (3) 5% for at least 12 years but less than 24 years; and (4) 6% for 24 or more years. Such account shall receive an interest credit of 5.25% per annum, and under certain circumstances, shall receive additional interest credits. Subject to certain exceptions, a Tier 3 participant, upon retirement, shall receive a single life annuity benefit. The 2012 Kansas legislature adopted a number of other changes to KPERS including: (a) increasing the statutory maximum employer contribution annual increase from 0.6% per year (status quo) to 0.9% per year in 2014, 1.0% in 2015, 1.1% in 2016 and 1.2% per year by 2017, (b) providing additional contribution flexibility for Tier 1 participants with corresponding benefit adjustments (effective January 1, 2014), (c) eliminating COLA adjustments for Tier 2 participants with corresponding benefit adjustments (effective January 1, 2014) and (d) providing additional flexibility for alternative investments for the plan. According to the Valuation Report as of December 31, 2011 (the "Valuation Report") the KPERS Local Group, of which the Issuer is a member, carried an unfunded accrued actuarial liability ( "UAAL ") of $1.542 billion at the end of 2011. KPERS' actuaries identified that an employer contribution rate of 9.77% of covered payroll would be necessary, in addition to statutory contributions by covered employees, to eliminate the UAAL by 2033, the end of the actuarial period. Because the annual growth in employer contribution rates is limited by State law, the actual contribution rate permitted at the time of calculation was only 8.84 %. As a result, members of the Local Group are underfunding their projected actuarial liabilities and the UAAL can be expected to grow over time. KPERS' actuaries project the required employer contribution rate to increase by the maximum statutorily allowed rate, which is currently 0.6% per year, then 0.9% in fiscal year 2014, 1.0% in fiscal year 2015, 1.1% in fiscal year 2016 and 1.2% in fiscal year 2017, until such time as the permitted rate equals the actuarial rate. The authors of the Valuation Report expect this to occur in approximately 2017 based upon the actuarial assumptions made by the authors.] The City has established membership in the Kansas Police and Fire Retirement System ( "KPFRS ") for its police and fire personnel. KPFRS is a division of and is administered by KPERS. Annual contributions are adjusted annually based on actuarial studies, subject to legislative caps on percentage increases. Commencing with the first payroll period on or after July 1, 2013, employees contribute 7.15% of gross compensation and the City contributes 21.03% of employees' gross compensation. The 2013 Kansas Legislature adopted a number of changes to the KPFRS which included (a) raising the cap on maximum KPFRS benefits from 80% to 90% of final average salary and (b) permitting certain active KPFRS members to pay a lump sum amount prior to or on their retirement date to enhance the individual retirement benefit at their own cost. Other Information Public recreation facilities available to city residents include 27 parks, a public golf course, baseball /softball fields, the Kenwood Cove Aquatic Park, the Stifel Theatre for the Performing Arts, the Salina Community Theater, two museums, tennis courts, and ice and roller skating facilities. Two private clubs provide additional recreational opportunities for residents of the City. A -5 The Bicentennial Center, a 7,500 -seat facility, with over 40,000 square feet of exhibit space, nicknamed "Mid- America's Meeting Place ", provides a venue for the region's 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. One public library with over 230,000 volumes, two college libraries, a medical library, and a law library are located within the City. ECONOMIC INFORMATION CONCERNING THE CITY 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 Schwan's Global Supply Chain, Inc., Salina Vortex, GeoProbe, Bergkamp, Kasa Industrial Controls, Premier Pneumatics, Great Plains Manufacturing, PKM Steel, Crestwood Cabinets, McShares, Inc., Pepsi Cola, ElDorado Bus, Exide Battery, Advance Auto Parts Distribution Center, 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 24- county regional trade center for north central Kansas. Many individuals and businesses within a 70 -mile radius travel to the City to purchase consumer goods and services. This designation as a regional trade center is supported by the fact that the City had the third highest "trade pull factor" of all Kansas first class cities in 2012 according to Kansas State University. City trade pull factor is computed by dividing the per capita sales tax of a city by the statewide per capita sales tax. 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. 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 College 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. Several major commercial projects are currently under construction in Salina. Dillon Companies, Inc., a subsidiary of Kroger Company, recently completed and opened a 77,000 square foot facility. Dick's Sporting Goods is in the process of rehabilitating a facility formerly occupied by Sutherland Lumber Company. The location will be shared with a Marshalls clothing store. In addition, several new restaurants have either opened or are under construction, including Olive Garden, Longhorn Steakhouse, Starbucks and Taco Bell. Daimaru steakhouse doubled in size at a new location. Unified School District No. 305 has completed construction of a new maintenance and school service facility, consolidating operations from 3 separate locations. The community has 1,200 acres of industrial sites available in North Salina, the South Industrial District, and the Airport Industrial Center. Sites range in size from 1 -to 240 acres, and are available for aviation, manufacturing, and distribution and warehouse businesses. A -6 The Salina Airport Authority 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 Air Force Base, 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. In 2012, the Salina Municipal Airport was renamed the Salina Regional Airport. The Salina Regional Airport is the only commercial service airport serving Salina /Saline County and the 24- 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 adjacent to the Airport. The University offers degrees in professional flight training, airframe and power plant maintenance, and avionics technology. Scheduled air service is provided by SeaPort Airlines. The airline offers weekday and weekend flights to the Kansas City International hub. In 2012, the Airport enplaned 2,723 passengers and also accommodates a wide variety of aircraft including business jets, military, flight training and general aviation aircraft. In 2012, the Salina Air Traffic Control Tower logged over 97,338 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 2.59 million gallons of fuel to the wide variety of aircraft utilizing the Airport in 2012. As of December 31, 2011, over 70 businesses and organizations at the Salina Regional Airport and Airport Industrial Center employed over 3,700 employees with a combined payroll in excess of $140 million. 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, and the Kansas Department of Commerce for the retention of existing business and industry and the recruitment of new business and industry. 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. Name Schwan's Global Supply Chain, Inc. Unified School District No. 305 Salina Regional Health Center Exide Technologies Blue Philips Lighting Company City of Salina Walmart Dillon Stores Solomon Corporation Great Plains Manufacturing El Dorado National Crestwood, Inc. Advance Auto Parts Source: Salina Chamber of Commerce A -7 Estimated Product /Business Employment Frozen Pizza 1,800 School System 1,659 Health Care 1,300 Battery Manufacturer 750 Fluorescent Lamps 490 City Government 465 Discount Retail 421 Grocery 343 Electrical Equipment 324 Agricultural & Landscaping Equipment 258 Transit and Shuttle Busses 221 Wooden Cabinets 219 Distribution Center 195 A -7 Income The following table shows the per capita personal income for residents of Saline County and the State during the years indicated: Unemployment Saline State of Year County Kansas 2010 $39,384 $38,977 2009 38,752 38,301 2008 40,675 40,466 2007 36,781 37,663 2006 35,759 35,678 Source: Kansas Statistical Abstract, 2011 Labor Force The following tables show the labor force figures for the City of Salina and the State of Kansas. City of Salina: Unemployment Year Labor Force Total Unemployed Rate Unemployment Year Labor Force Employed Unemployed Rate 2013 (May) 25,974 24,515 1,459 5.6% 2012 25,808 24,241 1,567 6.1 2011 26,004 24,349 1,655 6.4 2010 26,156 24,434 1,722 6.6 2009 26,765 25,153 1,612 6.0 State of Kansas: Source: Kansas Department of Labor REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY A -8 Total Unemployment Year Labor Force Employed Unemployed Rate 2013 (May) 1,491,745 1,405,036 86,709 5.8% 2012 1,489,320 1,403,866 85,454 5.7 2011 1,498,872 1,401,055 97,817 6.5 2010 1,506,229 1,399,805 106,424 7.1 2009 1,509,447 1,401,704 107,743 7.1 Source: Kansas Department of Labor REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY A -8 DEBT SUMMARY OF THE CITY 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: Date Amount Final Amount Issued Series Purpose of Issue Maturity Outstanding 07 -15 -03 2003 -A Internal Improvements $ 4,350,000 10 -01 -13 $ 320,000 05 -01 -04 2004 -A Refunding 5,585,000 08 -01 -15 760,000 07 -15 -05 2005 -A Internal Improvements 4,210,000 10 -01 -13 330,000 03 -15 -06 2006 -A Internal Improvements 2,200,000 10 -01 -26 1,540,000 07 -15 -06 2006 -B Internal Improvements 885,000 10 -01 -21 465,000 06 -15 -07 2007 -A Internal Improvements 6,545,000 10 -01 -27 4,725,000 07 -15 -08 2008 -A Internal Improvements 3,720,000 10 -01 -23 2,750,000 12 -15 -08 2008 -B Internal Improvements 3,525,000 07 -01 -28 3,165,000 07 -15 -09 2009 -A Internal Improvements 23,695,000 10 -01 -29 18,960,000 05 -01 -10 2010 -A Refunding & Improvement 6,875,000 10 -01 -25 5,235,000 10 -15 -10 2010 -B Refunding 7,860,000 10 -01 -23 6,510,000 07 -15 -11 2011 -A Internal Improvements 6,565,000 10 -01 -31 6,315,000 07 -15 -12 2012 -A Internal Improvements 2,365,000 10 -01 -27 2,365,000 07 -15 -12 2012 -B Refunding 3,785,000 10 -01 -20 3,785,000 02 -15 -13 2013 -A Taxable Improvements 1,360,000 10 -01 -28 1,360,000 07 -15 -13 2013 -B Improvements 4,330,000 10 -01 -33 4,330,000 $62,915,000 A portion of the City's outstanding general obligation bonds are payable from special assessments levied upon properties benefited by certain internal improvement projects, local option sales tax and transfers from enterprise funds of the City. If such payments are not provided in a timely manner, the principal of and interest on the bonds must then be paid from the City's ability to levy unlimited ad valorem taxes. See FINANCIAL INFORMATION - "Special Assessments" for a further description of special assessment financing. Temporary Notes: Final Original Date Maturity Note Amount Project Series Issued Date Amount Outstanding Street, Water, and Sewer 2012 -1 07 -15 -12 08 -01 -13 $1,485,000 $ 0* Street 2013 -1 07 -15 -13 08 -01 -14 3,800,000 3,800,000 $3,800,000 *Entire amount outstanding ($1,485,000) to be retired with proceeds from the sale of the Bonds. Revenue Bonds: Revenue bonds are payable solely from the net revenues derived by the City from the operation of its combined water and sewage system. Revenue bonds do not represent a general obligation indebtedness of the City for which the City's taxing ability has been pledged. Date Amount Final Amount Issued Purpose of Issue Maturity Outstanding 04 -15 -11 Improvements $16,120,000 10 -01 -31 $15,780,000 A -9 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 31, 2012. Amount Jurisdiction Outstanding Salina Airport Authority $25,080,000 Unified School District No. 305 37,335,000 Saline County 0 Annual Debt Payments Estimated Share of the Ci Amount Percentage $25,080,000 100.00% 34,953,027 93.62 0 $60,033,027 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. A -10 Outstanding Bonds Series 2013 -B Bonds Year Principal Interest Principal Interest Total 2013 $ 6,210,000 $ 1,831,356 $ 0 $ 0 $ 8,041,356 2014 6,070,000 1,809,182 205,000 168,920 8,253,102 2015 5,320,000 1,618,936 235,000 133,325 7,307,261 2016 5,160,000 1,460,974 235,000 126,275 6,982,249 2017 4,935,000 1,302,434 240,000 119,225 6,596,659 2018 5,015,000 1,124,416 245,000 112,025 6,496,441 2019 4,895,000 935,369 250,000 104,675 6,185,044 2020 3,070,000 784,524 260,000 97,175 4,211,699 2021 2,830,000 686,909 265,000 89,375 3,871,284 2022 2,870,000 588,779 270,000 81,425 3,810,204 2023 2,640,000 485,386 275,000 73,325 3,473,711 2024 2,340,000 386,372 285,000 65,075 3,076,447 2025 2,000,000 295,909 290,000 56,525 2,642,434 2026 1,660,000 216,312 300,000 46,375 2,222,687 2027 1,370,000 149,019 310,000 35,875 1,864,894 2028 1,065,000 93,685 315,000 25,025 1,498,710 2029 625,000 47,878 65,000 14,000 751,878 2030 250,000 21,675 65,000 11,400 348,075 2031 260,000 11,050 70,000 8,800 349,850 2032 0 0 70,000 6,000 76,000 2033 0 0 80.000 3,200 83,200 $58,585,000 $13,850,165 $4,330,000 $1,378,020 $78,143,185 A -10 Historical Debt Information The following table shows historical balances of outstanding general obligation bonds for the City during the most recent five -year period. 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 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 typically undertakes such projects after receiving and reviewing a valid petition from property owners. See FINANCIAL INFORMATION — "Special Assessments ". The City has been involved with civil litigation concerning environmental contamination in certain areas within the boundaries of the Salina Airport Industrial Center. The contamination was caused by military activity that occurred between 1942 and 1966 when the site was operated as the Schilling Air Force Base. The City, the Salina Airport Authority, Unified School District No. 305, and Kansas State University (the "Salina Public Entities ") sued the Unites States seeking federal funds to clean up federal agency (DoD) caused contamination. The Salina Public Entities have reached a settlement agreement with the U.S. Department of Justice (DOJ) and the terms of the settlement are detailed in a Consent Decree filed in U.S. District Court on May 2nd, 2013. The Consent Decree provides for a 10% local share of initial project costs to be paid by the City. 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 supply wells. The exact timing and amount, if any, of such borrowing cannot be determined at this time. If City borrowing is necessary for the project, it is anticipated that utility revenue bonds will be the final type of debt considered. Debt Payment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. Leval 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. A -11 Bonds Debt to Debt to U.S. Debt Outstanding Assessed Estimated Actual Census Per Year December 31 Valuation Valuation Population Capita 2012 $57,355,000 12.71% 1.99% 47,910 $1,197.14 2011 61,045,000 13.57 2.11 47,707 1,279.58 2010 60,280,000 13.44 2.09 47,707 1,263.55 2009 52,900,000 11.81 1.83 46,180 1,145.52 2008 31,645,000 7.01 1.09 45,998 687.96 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 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 typically undertakes such projects after receiving and reviewing a valid petition from property owners. See FINANCIAL INFORMATION — "Special Assessments ". The City has been involved with civil litigation concerning environmental contamination in certain areas within the boundaries of the Salina Airport Industrial Center. The contamination was caused by military activity that occurred between 1942 and 1966 when the site was operated as the Schilling Air Force Base. The City, the Salina Airport Authority, Unified School District No. 305, and Kansas State University (the "Salina Public Entities ") sued the Unites States seeking federal funds to clean up federal agency (DoD) caused contamination. The Salina Public Entities have reached a settlement agreement with the U.S. Department of Justice (DOJ) and the terms of the settlement are detailed in a Consent Decree filed in U.S. District Court on May 2nd, 2013. The Consent Decree provides for a 10% local share of initial project costs to be paid by the City. 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 supply wells. The exact timing and amount, if any, of such borrowing cannot be determined at this time. If City borrowing is necessary for the project, it is anticipated that utility revenue bonds will be the final type of debt considered. Debt Payment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. Leval 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. A -11 FINANCIAL INFORMATION CONCERNING THE CITY Financial Statement Summary The following is a summary of the combined revenues, expenditures, and fund balances for the City's General Fund for the most recent years as shown in the City's Comprehensive Annual Financial Reports. This summary has not been prepared or reviewed by the City's auditor. Assessed Valuation According to the Saline County Clerk's Office, the following table gives the November 1 assessed valuation of the City, unless otherwise noted, in the years indicated. Audited Audited Audited Revenues: 2009 2010 2011 Property Taxes $ 9,909,912 $ 8,764,040 $ 8,671,423 Sales Tax 11,668,987 11,117,078 11,767,400 Other Taxes 4,789,524 4,965,601 5,083,919 Intergovernmental 1,227,486 1,008,482 813,185 Charges for Services 5,375,308 7,193,831 7,822,307 Investment Revenue 0 0 28,972 Miscellaneous 356,249 352,308 501,260 Total Revenues $33,327,466 $33,401,340 $34,688,466 Expenditures: 447,800,878 2008 356,678,712 General Government $ 3,007,751 $ 3,549,487 $ 3,461,488 Public Safety 17,883,362 18,228,881 18,117,827 Public Works 6,345,981 6,245,355 6,132,020 Public Health and Sanitation 1,176,096 1,176,743 1,176,082 Culture and Recreation 2,294,894 2,599,921 2,734,957 Planning and Development 2,381,797 2,428,900 2,319,300 Capital Outlay 887,449 560,129 555,048 Total Expenditures $33,977,330 $34,789,416 $34,496,722 Revenues Over (Under) Expenditures $ (649,864) $(1,388,076) $ 191,744 Other Sources (Uses) (292,278) (82,124) (129,111) Net Change in Fund Balance $ (942,142) $(1,470,200) $ (62,633) Fund Balance January 1 $ 6,029,523 $ 5,087,381 $ 3,617,181 Restatement of Prior Year Balance - - 156,424 Fund Balance December 31 $ 5,087,381 $ 3,617,181 $ 3,836,238 Assessed Valuation According to the Saline County Clerk's Office, the following table gives the November 1 assessed valuation of the City, unless otherwise noted, in the years indicated. (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 ". A -12 State Total Real Personal Assessed Motor Assessed Year Estate Property (1) Utilities Vehicle Valuation 2012 $369,416,422 $18,654,394 $15,779,466 $47,553,744 $451,404,026 2011 367,750,803 19,918,188 14,685,585 47,406,062 449,760,638 2010 364,544,771 21,488,933 14,214,579 48,184,331 448,432,614 2009 358,979,211 24,760,806 13,730,609 50,330,252 447,800,878 2008 356,678,712 28,373,980 14,929,456 51,351,656 451,333,804 2007 342,045,389 34,507,464 16,175,634 50,548,706 443,277,193 (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 ". A -12 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 November 1 estimated actual valuations for the City in the years indicated. 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. 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. 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. A -13 Residential Real Estate Estimated Year Equalization Ratio Actual Value 2012 11.95% (prel) $2,884,188,981 2011 12.04 2,891,461,447 2010 11.89 2,888,659,004 2009 11.67 2,893,359,541 2008 11.66 2,914,775,730 2007 11.68 2,833,709,391 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. 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. 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. A -13 Personal property taxes are assessed, due and may be paid in the same manner as real estate taxes. Motor vehicle property taxes are based on valuations provided by the Kansas Department of Revenue and the county average tax rate for the county in which the vehicle is registered. Motor vehicle taxes are payable to the county treasurer at the time of the vehicle's annual registration. Vehicle registration dates are assigned by the State in a manner such as to equal registration over a twelve -month period. Motor vehicle taxes are distributed by the county to the state, city and other taxing jurisdictions based on their proportionate tax levies. Delinquent personal and motor vehicle taxes are penalized at the same rate as delinquent real property taxes. The following is a summary of tax collections for the years shown. *Collections as of May 31, 2013 Tax Levies Nov Nov Current Nov Current and Delinquent Levy Tax Taxes Tax Collections Tax Collections Year Rate Levied Amount % Amount % 2012* 26.190 $10,588,130 $ 9,845,384 93.0% $ 9,954,860 94.0% 2011 26.272 10,582,043 10,276,937 97.1 10,522,106 99.4 2010 26.022 10,425,260 9,823,578 94.2 10,118,285 97.1 2009 25.855 10,289,701 9,831,289 95.5 10,126,228 98.4 2008 25.886 10,369,087 9,825,122 94.8 10,119,876 97.6 2007 23.959 9,432,248 8,941,650 94.8 9,209,900 97.6 *Collections as of May 31, 2013 Tax Levies Largest Taxpayers According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their November 2012 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. Company Schwan's Sales (Tony's Pizza) Westar Energy Garrison Salina Owner LLC Salina Regional Health Centers Kansas Gas Service Menard Inc. Gateway Adams Inc. (Midstate Plaza) Wal -Mart Stores (includes Sam' s) Southwestern Bell Telephone Great Plains Manufacturing Nov Nov Nov Nov Nov Business 2008 2009 2010 2011 2012 Utility Levy Levy Levy Levy Levy City of Salina 25.886 25.855 26.022 26.272 26.190 Salina Library 5.419 5.413 5.372 5.292 5.452 State Education & Other 1.500 1.500 1.500 1.500 1.500 Unified School District No. 305 58.547 58.495 58.913 58.820 58.649 Airport Authority 2.877 4.315 4.055 4.007 4.007 Central Kansas Extension District 1.175 1.173 1.204 1.179 1.176 Saline County 29.347 31.303 31.432 32.576 34.823 Total 124.751 128.054 128.498 129.646 131.797 Largest Taxpayers According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their November 2012 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. Company Schwan's Sales (Tony's Pizza) Westar Energy Garrison Salina Owner LLC Salina Regional Health Centers Kansas Gas Service Menard Inc. Gateway Adams Inc. (Midstate Plaza) Wal -Mart Stores (includes Sam' s) Southwestern Bell Telephone Great Plains Manufacturing of Type of Assessed Total Business Valuation Valuation Manufacturing $ 8,050,871 1.78% Utility 7,852,360 1.74% Regional Shopping Center 6,160,267 1.36% Hospital and Medical Offices 4,317,497 0.96% Utility 3,352,360 0.74% Home Improvement Store 3,552,249 0.79% Shopping Center 3,551,440 0.79% Discount Retail 3,458,708 0.77% Utility 2,464,079 0.55% Manufacturing 2,346,169 0.52% $45,106,000 10.00% A -14 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 Value 2012 $54,863,040 2011 19,752,335 2010 52,358,547 2009 12,192,481 2008 18,276,022 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 8.20 %, which consists of 6.3% 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 .50% citywide sales tax for purposes of helping fund general operations expenditures of the City. In November 1998, voters within the City approved an additional .25% restricted local option sales tax to be collected through June 1, '2004 and distributed to Unified School District No. 305 to fund educational technology. The 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 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. (1) The 2008.40% sales tax became effective April 1, 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 A -15 2008 1992 City's Portion of .40% Citywide .50% Citywide 1% Countywide Local Option Local Option Local Option Year Sales Tax Receipts Sales Tax Receipts Sales Tax Receipts 2009 $3,379,938 (1) $4,987,415 $6,703,839 2010 3,861,809 4,818,398 6,339,236 2011 4,080,342 5,076,751 6,690,649 2012 4,244,974 5,306,218 6,992,853 2013 (thru May) 1,083,085 2,253,857 2,916,200 (1) The 2008.40% sales tax became effective April 1, 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 A -15 Budeetine Procedures Applicable Kansas statutes require that budgets be legally adopted for all funds (including debt service and enterprise funds) unless exempted by a specific statute. All budgets are prepared utilizing the modified accrual basis further modified by the encumbrance method of accounting. For example, commitments such as purchase orders and contracts, in addition to disbursements and accounts payable, are recorded as expenditures. The statutes provide that the budget for the succeeding calendar year must be prepared on or before August 1 and published on or before August 5 of each year. A public hearing is required to be held on or before August 15, with the final budget being adopted on or before August 25 of each year. Original appropriations may be modified by supplemental appropriations and transfers among budget categories. The City Commission must approve all significant changes. Kansas law prohibits cities and other governmental units from creating indebtedness unless there is money on hand in the proper fund and unencumbered by previous commitments with which to pay the indebtedness. The execution of a contract, or the issuing of a purchase order, automatically encumbers the money in the fund for the payment of the amount represented by the commitment. It makes no difference that the amount may not have to be paid until more moneys are in the fund or until the following year. An exception to this cash basis law is the issuance of debt, in the form of bonds, notes, or warrants, pursuant to statutory authority, referendum or by the State Board of Tax Appeals. In the event debt is issued, funds need not be on hand for future payments. Appraisal and Assessment Procedures The determination of appraised and assessed valuation and the collection of property taxes for all political subdivisions in the State of Kansas are the responsibility of the various counties. The Saline County appraiser annually determines the appraised valuation of property located in the City. The appraiser's determination is based on a number of criteria established by Kansas's statute. All property, with the exception of agricultural land, is appraised based on estimated fair market value. Agricultural property is appraised based on productivity value. Kansas statutes require that each parcel of real property be reviewed and inspected by the 'county appraiser once every four years for taxation purposes. Once appraised valuations have been determined, they are multiplied by the applicable statutory assessment rates to arrive at the assessed valuations. The total assessed valuation is then used to establish property tax rates. Property Assessment Rates In order to determine the assessed valuation of a parcel of property for taxation purposes, the county appraiser multiplies the appraised value of the parcel by the applicable assessment rate. Current property assessment rates were established in 1986, effective in 1989, and slightly modified in 1992. The most significant 1992 modifications involved lowering the assessment rate on commercial and industrial real property from 30% to 25% and on residential property from 12% to 11.5 %. The following table shows the current assessment rates for the different classes of taxable tangible property within the State of Kansas. Real Property: Residential 11.5% Commercial and Industrial- Real Property 25.0 Agricultural Land (1) 30.0 Agricultural Improvements 25.0 Vacant Lots 12.0 Not - for - Profit (2) 12.0 All Other 30.0 A -16 Personal Property: (3 Mobile Homes 11.5% Mineral Leaseholds (large) 30.0 Mineral Leaseholds (small) 25.0 Commercial & Industrial Machinery & Equipment 25.0 All Other 30.0 Utilities: Railroads federally mandated rate All Other Public Utilities 33.0% Motor Vehicles: 20.0% Property Exempt: Property used for the following purposes, or portions thereof, are exempt from taxation provided certain statutory requirements are met: religious, educational, literary, scientific, benevolent, alumni associations, veterans' organizations, or charitable purposes, including parsonages and community service organizations providing humanitarian services. (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 from 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 2012 Preliminary Kansas Appraisal /Sales Ratio Study, the equalization ratio for residential real property in Saline County was 11.95 %, and commercial and industrial property was 25.20 %. REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY A -17 APPENDIX B Omnibus Continuing Disclosure Undertaking EXECUTION COPY CITY OF SALINA, KANSAS OMNIBUS CONTINUING DISCLOSURE UNDERTAKING DATED AS OF JULY 15, 2013 OMNIBUS CONTINUING DISCLOSURE UNDERTAKING THIS OMNIBUS CONTINUING DISCLOSURE UNDERTAKING (the "Disclosure Undertaking "), dated as of July 15, 2013, is executed and delivered by the City of Salina, Kansas (the "Issuer "). RECITALS 1. This Disclosure Undertaking is executed and delivered by the Issuer, pursuant to a resolution adopted by the governing body of the Issuer to consolidate the continuing disclosure obligations of the Issuer with respect to the Bonds and the Prior Undertakings, both as defined below, to enhance efficiency of the administration of Prior Undertakings and promote timely disclosure by the Issuer. 2. The Issuer is executing this Disclosure Undertaking for the benefit of the Beneficial Owners of the Bonds and in order to assist each Participating Underwriter in complying with the SEC Rule, as defined below. The Issuer is the only "obligated person," as defined in the SEC Rule, with responsibility for continuing disclosure hereunder. 3. This Disclosure Undertaking shall apply with respect to any series of Bonds issued prior to the effective date hereof and subject to the SEC Rule. In consideration of the foregoing, the Issuer covenants and agrees as follows: Section 1. Definitions. In addition to the definitions set forth in the Bond Resolution, which apply to any capitalized term used in this Disclosure Undertaking, unless otherwise defined herein, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report filed by the Issuer pursuant to, and as described in, Section 2 of this Disclosure Undertaking, which may include the Issuer's CAFR, so long as the CAFR contains the Financial Information and Operating Data. "Beneficial Owner" means, with respect to a series of Bonds, any registered owner of any Bonds of such series 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 of such series (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds of such series for federal income tax purposes. "Bond Insurer" means the provider of the bond insurance policy, if any, for any series of Bonds. "Bond Resolution" means collectively the ordinance(s) and /or resolution(s) of the governing body of the Issuer authorizing the issuance of each series of the Bonds. "Bonds" means all bonds, notes, installment sale agreements, leases or certificates intended to be a debt obligation of the Issuer identified on Schedule I as such schedule may be supplemented and amended and, as context may require, the Bonds of any particular series identified on Schedule I. The Issuer may make future series of Bonds subject to this Disclosure Undertaking by incorporating by reference in a Bond Resolution or executing a certificate to such effect in conjunction with the issuance of such series of Bonds. "Business Day" means a day other than: (a) a Saturday, Sunday or legal holiday; (b) a day on which banks located in any city in which the principal corporate trust office or designated payment office of the trustee, any paying agent or a Dissemination Agent, as applicable, is located are required or authorized by law to remain closed; or (c) a day on which the Securities Depository or the New York Stock Exchange is closed. "CAFR" means the Issuer's Comprehensive Annual Financial Report, if any. "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 this Disclosure Undertaking. "Dissemination Agent" means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to this Disclosure Undertaking and which has filed with the Issuer a written acceptance of such designation substantially in the form attached hereto as Exhibit C. "EMMA" means the Electronic Municipal Market Access system for municipal securities disclosures established and maintained by the MSRB, which can be accessed at www.emma.msrb.ora. "Financial Information" means the financial information of the Issuer described in Section 2(a)(1) 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. "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 of Salina, Kansas, 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, or any successor repository designated as such by the Securities and Exchange Commission in accordance with the SEC Rule. "Official Statement" means collectively the Issuer's Official Statement(s) for each series of the Bonds, including all appendices and exhibits thereto. "Operating Data" means the operating data of the Issuer described in Section 2(a)(2) hereof. "Participating Underwriter" means each of the original underwriters of a series of Bonds required to comply with the SEC Rule in connection with the offering of such Bonds. "Prior Undertakings" means the prior continuing disclosure undertakings of the Issuer under the SEC Rule. "Repository" means the MSRB via EMMA. "SEC" means the Securities and Exchange Commission of the United States. 2 "SEC Rule" means Rule 15c2 -12 adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. "System" means the entire combined waterworks plant and system and sewerage plant and system owned and operated by the Issuer for the production, storage, treatment and distribution of water, and for the collection, treatment and disposal of sewage, to serve the needs of the Issuer and its inhabitants and others, including all appurtenances and facilities connected therewith or relating thereto, together with all extensions, improvements, additions and enlargements thereto hereafter made or acquired by the Issuer. 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 2013, file with the Repository the Issuer's Annual Report, consisting of the Financial Information and Operating Data described as follows: (1) Financial Information. The financial statements of the Issuer and the System 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 of 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 summary unaudited financial information 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(b) hereof. (2) Operating Data. Updates as of the end of the Fiscal Year of certain financial information and operating data described in Exhibit A, with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer; provided, any substantive change to information provided shall be effected only in accordance with Section 6 hereof. 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 Repository. 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). (b) From and after such time that Section (b)(5) of the SEC Rule applies to any series of Bonds, if the Annual Report is not filed within the time period specified in subsection (a) hereof, the Issuer shall send a notice to the Repository in a timely manner, in substantially the form attached as Exhibit B. (c) Pursuant to Section (d)(3) of the SEC Rule, the provisions of Section 2(a)(1) hereof shall not apply to any Bonds with a stated maturity of 18 months or less. Section 3. Reporting of Material Events. (a) No later than 10 Business Days after the occurrence of any of the following Material Events, the Issuer shall give, or cause to be given, to the Repository notice of the occurrence of any of the following Material Events with respect to the Bonds, with copies to the Bond Insurer, if any: (1) principal and interest payment delinquencies; (2) non - payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of bondholders, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the Issuer or System (which shall be deemed to occur as provided in the SEC Rule); (13) the consummation of a merger, consolidation, or acquisition involving the Issuer or System or the sale of all or substantially all of the assets of the Issuer or System, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional paying agent or trustee or the change of name of the paying agent or trustee, if material. (b) 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 this Disclosure Undertaking, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign as Dissemination Agent hereunder at any time upon 30 days prior written notice to the Issuer. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report (including without limitation the Annual Report) prepared by the Issuer pursuant to this Disclosure Undertaking. (b) Annual Reports. Except as provided in Section 2(c) hereof, 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 filed pursuant to this Disclosure Undertaking, stating the date it was filed, or that the Issuer has certified to the Dissemination Agent that the Issuer has filed the Annual Report with the Repository. Except as provided in Section 2(b) hereof, if the Dissemination Agent has not received an Annual Report or has not received a written notice from the Issuer that it has filed an Annual Report with the Repository, by the date required in Section 2(a), 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) Whenever the Issuer obtains knowledge of the occurrence of an event, because of a notice from the Dissemination Agent pursuant to Section 4(c)(1) or otherwise, the Issuer shall promptly determine if such event constitutes a Material Event and shall promptly notify the Dissemination Agent of such determination. If appropriate, such writing shall instruct the Dissemination Agent 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 pursuant to Section 4(c)(2), the Dissemination Agent shall promptly file a notice of such Material Event with the Repository and provide a copy thereof to the Issuer and the Bond Insurer. 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 this Disclosure Undertaking, 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 this Disclosure Undertaking. (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 this Disclosure Undertaking. 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 this Disclosure Undertaking. 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 this Disclosure Undertaking for a particular series of Bonds shall terminate upon the legal defeasance, prior redemption or payment in full of that series of 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 this Disclosure Undertaking in the same manner as if it were the Issuer, and the Issuer shall have no further responsibility hereunder. If such termination or assumption occurs prior to the final maturity of such Bonds, the Issuer shall give notice of such termination or assumption in the same manner as for a Material Event under Section 3(b). Section 6. Bonds Subject to this Disclosure Undertaking; Amendment; Waiver. (a) All outstanding Bonds as of the date of this Disclosure Undertaking shown on Schedule 1 are hereby made subject to this Disclosure Undertaking. The Issuer may make any future series of Bonds subject to this Disclosure Undertaking by incorporating by reference in a Bond Resolution or executing a certificate to such effect in conjunction with the issuance of such series of Bonds. (b) All references to the "Bonds" in this Disclosure Undertaking shall apply separately to each series of Bonds that are or become subject to this Disclosure Undertaking, without further amendment hereto. (c) Notwithstanding the provisions of subsection (d) or anything else contained in this Disclosure Undertaking to the contrary, in conjunction with the public offering of any series of Bonds, the Issuer and the Dissemination Agent may amend the categories of Operating Data to be updated as set forth in Section 2(a)(2) and Exhibit A to conform to the operating data included in the final Official Statement for such series of Bonds, in conformance with the requirements and interpretations of the SEC Rule as of the date of such final Official Statement, without further amendment to this Disclosure Undertaking. Thereafter, the Operating Data to be filed by the Issuer with the Repository with respect to the Bonds (and all other series of Bonds then subject to this Disclosure Undertaking) shall be deemed to be amended to reflect the requirements of the revised Exhibit for the new series of Bonds. (d) Except as otherwise provided in subsection (c), the Issuer may amend this Disclosure Undertaking and any provision of this Disclosure Undertaking may be waived, provided that Bond Counsel or other counsel experienced in federal securities law matters provides the Issuer with its written 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 rel thereof that are applicable to this Disclosure Undertaking; provided, however, that this Disclosure Undertaking, including Schedule I hereto, may be amended for the purpose of (1) extending the coverage of this Disclosure Undertaking to any additional series of Bonds or (2) removing reference to any series of Bonds for which the Issuer's reporting obligations have terminated in accordance with Section S hereof, each without the provision of a written opinion as otherwise required by this paragraph. (e) If a provision of this Disclosure Undertaking is amended or waived with respect to a series of Bonds pursuant to subsection (d), the Issuer shall describe such amendment or waiver 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: (1) notice of such change shall be given in the same manner as for a Material Event under Section 3(b); and (2) 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 this Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Undertaking 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 this Disclosure Undertaking. 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 this Disclosure Undertaking, the Issuer shall have no obligation under this Disclosure Undertaking 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 this Disclosure Undertaking with respect to a series of Bonds, any 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 this Disclosure Undertaking. Noncompliance with the provisions of this Disclosure Undertaking shall not be deemed an Event of Default under the Bond Resolution or the Bonds, and the sole remedy under this Disclosure Undertaking in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with this Disclosure Undertaking shall be an action to compel performance. Section 9. Notices. Any notices or communications to or among the parties referenced in this Disclosure Undertaking shall be given the Notice Representatives at the Notice Addresses set forth in the Bond Resolution for each series of Bonds; provided notice to the Dissemination Agent shall be given at the Notice Address set forth on Exhibit C hereto. Section 10. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. Section 11. Beneficiaries. This Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, each Participating Underwriter and Beneficial Owners from time to time with respect to a series of Bonds, and shall create no rights in any other person or entity. Section 12. Severability. If any provision in this Disclosure Undertaking, the Bond Resolution or the Bonds relating hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Disclosure Undertaking shall not in any way be affected or impaired thereby. Section 13. Governing Law. This Disclosure Undertaking shall be governed by and construed in accordance with the laws of the State of Kansas. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Issuer has caused this Disclosure Undertaking to be executed as of July 15, 2013. (SEAL) Clerk CITY OF SALINA, KANSAS Mayor (Signature Page to Continuing Disclosure Undertaking) SCHEDULE I DESCRIPTION OF BONDS SUBJECT TO DISCLOSURE UNDERTAKING General Obligation Bonds (Base CUSIP No.: 794743) Description of Dated Final Indebtedness Date Maturi General Obligation Internal Improvement Bonds, Series 2003 -A 07 -15 -03 10 -01 -13 General Obligation Refunding Bonds, Series 2004 -A 05 -01 -04 08 -01 -15 General Obligation Internal Improvement Bonds, Series 2005 -A 07 -15 -05 10 -01 -13 General Obligation Internal Improvement Bonds, Series 2006 -A 04 -01 -06 10 -01 -26 General Obligation Internal Improvement Bonds, Series 2006 -B 07 -15 -06 10 -01 -21 General Obligation Internal Improvement Bonds, Series 2007 -A 06 -15 -07 10 -01 -27 General Obligation Internal Improvement Bonds, Series 2008 -A 07 -15 -08 10 -01 -23 General Obligation Internal Improvement Bonds, Series 2008 -B 12 -15 -08 07 -01 -28 General Obligation Internal Improvement Bonds, Series 2009 -A 07 -15 -09 10 -01 -29 General Obligation Refunding and Improvement Bonds, Series 2010 -A 05 -01 -10 10 -01 -25 General Obligation Refunding Bonds, Series 2010 -B 10 -15 -10 10 -01 -23 General Obligation Internal Improvement Bonds, Series 2011 -A 07 -15 -11 10 -01 -31 General Obligation Internal Improvement Bonds, Series 2012 -A 07 -15 -12 10 -01 -27 General Obligation Refunding Bonds, Series 2012 -B 07 -15 -12 10 -01 -20 General Obligation Taxable Improvement Bonds, Series 2013 -A 02 -15 -13 10 -01 -28 General Obligation Internal Improvement Bonds, Series 2013 -B 07 -15 -13 10 -01 -33 Temporary Notes (Base CUSIP No.: 794743) Description of Dated Final Indebtedness Date Maturity General Obligation Temporary Notes, Series 2012 -1 07 -15 -12 08 -01 -13 General Obligation Temporary Notes, Series 2013 -1 07 -15 -13 08 -01 -14 Revenue Bonds (Base CUSIP No.: 794811) Description of Indebtedness Water and Sewage System Revenue Bonds, Series 2011 S -1 Dated Final Date Maturitv 04 -15 -11 10 -01 -31 EXHIBIT A OPERATING DATA TO BE INCLUDED IN ANNUAL REPORT The Operating Data in the sections and tables contained in the most recent Official Statement (with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer) generally described as follows: Operating Data for General Obligation Bonds, Temporary Notes, Lease Obligations Financial Overview Tax Levies Assessed Valuation Estimated Actual Valuation Tax Collections Largest Taxpayers Operating Data for Revenue Bonds User Characteristics (number of users; percentage split between residential and other customers) Largest Users (top ten; name; business type; total cf billed; total dollars billed) User Trends (gallons of water metered; gallons of sewage treated; average number of customers) Current Water Rate Structures Current Sewage Rate Structure Historical and Projected Financials (but only updating historical financials) Outstanding System Indebtedness (Net Income, Debt Service, Bond Coverage, Additional Utility Debt Payments) Additionally, the Issuer shall provide updates as of the end of the Fiscal Year for any material adverse changes in the portions of the final Official Statement concerning Property Valuations and Pension and Employee Retirement Plans. A -1 EXHIBIT B NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series r 1, dated as of [Bonds Dated Date] Name of Obligated Person: City of Salina, Kansas Date of Issuance: [Bonds Closing Date] 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 Issuer's Omnibus Continuing Disclosure Undertaking. The Issuer anticipates that the Annual Report will be filed by Dated: cc: City of Salina, Kansas M. CITY OF SALINA, KANSAS Dissemination Agent EM EXHIBIT C ACCEPTANCE OF DISSEMINATION AGENT Name of Issuer: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series [ 1, dated as of [Bonds Dated Date] 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 Disclosure Undertaking, to which this acceptance is attached, accepts such duties and responsibilities set forth therein. Dated: C -1 APPENDIX C December 31, 2011 Audited 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 31, 2011, prepared by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. MI ZE ' HOUSER OOMPANYPA. 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, 2011, which collectively comprise the City's basic financial statements as listed in the table of contents. These 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 $55,525,038 as of December 31, 2011 and total revenues of $4,588,747 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets of $8,034,589 as of June 30, 2011 and total revenues of $2,442,060 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 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 opinions. In our opinion, based on our audit and the reports 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, 2011, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund, Flood & Drainage Improvement Fund, Tourism and Convention Fund, Special Gas Fund, Bicentennial Center Fund and the Sales Tax Capital Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. www_mmzehoticer.com ■ mhco @mizehouser.com 534 S Kansas Ave, Suite 700 ■ Topeka, KS 66603 -3465 ■ 785.233.0536 p ■ 785.233.1078 f 534 S Kansas Ave, Suite 400 ■ Topeka, KS 66603 -3454 ■ 785.234.5573 p ■ 785.234.1037 f 7101 College Blvd, Suite 900 ■ Overland Park, KS 66210 -1984 ■ 913.451.1882 p ■ 913.451.2211f 120 E Ninth ■ Lawrence, KS 66044 -2682 ■ 785.842.8844 p ■ 785.842.9049 f 900 Massachusetts, Suite 3010 Lawrence, KS 66044 -2868 ■ 785.749.5050 p ■ 785.749.5061 f Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 through 13 and the schedules of funding progress on page 52 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole. 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 combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. October 24, 2012 2 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) 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, 2011. 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 $5,912,298. Governmental Net Assets declined by $463,769, while Business Type Net Assets increased by $6,376,067. (After prior year adjustments) ♦ Liabilities also increased substantially due to the issuance of $16,120,000 in Revenue Bonds. ♦ Sales taxes grew modestly (4.1 %), a reversal of the previous two years of decline. ♦ In Business Type Activities, the Water and Sewer fund saw asset growth, despite increases in operating expenditures, due to good revenue production. ♦ The multi -year decline in fund balance for the General Fund was halted, with a slight recovery. ♦ Tax delinquency rates have declined to a relatively normal level of 2.7 %. ♦ Personal property taxes continued to decline as a result of the exemption of business equipment from the tax rolls. ♦ Investment revenues continue to be very minimal, but levels have stabilized. ♦ The unemployment rate declined from 6.4% to 6.3 %. 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 providing 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. 3 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) 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 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, 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 Systems 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 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 Information 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. CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) 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 (36 %) and Business -type (64 %) activities. Charges for Services account for about 46% ($37,249,107) 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 illustrates service volume and rate adjustments for some of the more significant services for the year ending December 31, 2011. Description Golf Course: Rounds, 18 Hole Rounds, Par 3 Annual Golf Members River Festival Gate Count Development Services Inspections Performed Permits Issued Finance /Administration EMS Runs Billed Licenses Issued Water Billings Issued Water Metered (in Billion Gallons) Parks and Recreation Kenwood Cove Attendance Youth Teams Adult Teams Special Pops Programs Trips/Tours offered Youth Tournament Teams Adult Tournament Teams Public Works Sanitation Customers Landfill Tonnage Street Cut and Excavation Permits Concrete Permits Water and Wastewater 2010 Volume 2011 Volume Change Rate Comments 30,420 26,782 (3,638) No fee increase 3,707 3,368 (339) No fee increase 33 18 (15) No fee increase 64,835 72,664 7,829 $2.00 per button increase 6,391 5,473 (918) 3,031 2,678 (353) 3,473 4,003 530 Five percent increase 1,296 1,358 62 238,635 239,448 813 1.97 NA 119,000 111,063 (7,937) No fee increase 164 178 14 300 308 8 109 114 5 31 54 23 424 388 (36) 140 164 24 14,520 14,604 84 3% fee increase 94,907 96,178 1,271 No fee increase 181 201 20 155 143 (12) $2.00 per month per Water Treated (Billion Gallons) 2.30 2.30 - typical user $2.00 per month per Wastewater Treated (Billion Gallons) 1.50 1.45 (0.05) typical user * *In general, if not specified in the table, rates were adjusted an average of about 2% for most services. Sales taxes are the next largest component of the revenue mix, providing 20% ($15,847,742) of the total revenues. This is a slightly smaller portion than 2010 (21 %). The City receives a .90% City -wide sales tax, and also a portion of the County -wide 1 % sales tax. Forty-four percent, (a rate of .4 %) 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 2011 was $ 15,847,742, up from $ 15,224,888 in 2010. This 4.1 % increase follows a 4.7% decline (after adjustment for a change in rate) for 2010. A CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) A number of factors affect the sales tax. First are the regional and local economic conditions and relationships. These are most directly reflected in the proceeds of the City -wide tax, which grew by 5.8 %. The City was unfavorably 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 2011, the City's allocated portion of the County -wide sales tax was decreased from 63.3% in 2010 61.85% in 2011. Total Countywide taxes received in 2011 were approximately $6,755,629. The change in formula thus resulted in a shift of about $158,000 from the City of Salina to Saline County in 2011. 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% ($11,711,254) 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 assessed value increased by 2.4 %. The total City mill levy was increased slightly, by .2 %, while the overlapping levy increased by .3% Tax delinquency decreased from 5.6% to 2.7 %. Personal property value continued to slide, presumably as a result of removing business equipment from the tax base. Personal property value has now dropped to $19.9 million from it's peak of $39.7 million in 2007. At the 2011 tax rate, this exemption is equivalent to $514,546 in lost revenue for 2011. Motor Vehicle value decreased by 5.8 %. 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: Comparative Property Values and Tax Levy Rates Fiscal (Budget) Year 2010 2011 Change Real Estate and Personal Property Assessed Valuation $ 397,470,626 $ 402,354,576 $ 4,883,950 City Mill Levy ($ per $1,000) Operating (General Fund) Debt Service Total City Rate Total Overlapping Levy Percent of Total Taxes Collected Ratio of Total Taxes (including delinquent collections) to taxes Ii Motor Vehicle Valuation $ 20.082 19.236 [0.846] 5.773 6.786 1.013 25.855 26.022 0.167 124.707 128.498 3.791 94.4% 97.3% 2.9% 97.1% 99.9% 2.8% 50,334;252 $ 47,406,072 $ [2,924,180] The unemployment rate in Saline County declined very slightly from 6.4% in 2010 to 6.3% in 2011, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force increased to 26,656, a change of 1.5 %. In 2011, the top ten property taxpayers accounted for 11.22% of total assessed value. This is slightly more concentrated than ten years ago (at 11.18 %) A CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) 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 $187,641,000 at December 31, 2011. This represents an increase in net assets of $6,519,000 over 2010. A comparative condensed Statement of Net Assets at December 31, 2010 and 2011: The largest segment of the City's net assets (82 %) 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. A small portion of net assets (2 %) is restricted for debt service. The remainder (unrestricted) of net assets (16 %) may be used to meet the City's obligations to citizens and creditors. This is comparable to previous years. In 2011, the amount invested in capital assets net of related debt decreased by $7,564,000. Unrestricted net assets increased by $12,573,000. These represent diverse changes throughout the financial statement: Increases in cash in both Governmental and Business type activities, a decrease in Capital assets in Governmental Activities and an increase in Capital Assets in Business type activities. Total liabilities remained much the same in Governmental Activities, but increased significantly in Business Type Activities, attributable to the issuance of Revenue Bonds to finance the Advanced Meter Infrastructure project. During the year ended December 31, 2011, there were several significant events that changed the balance of net assets. Governmental Activities. 2011 saw an increase in cash and investments in Governmental funds. This is due to controlled expenditures for both capital and operating requirements as well as improved revenues from the Sales Tax. Governmental Business -Type Activities Activities Total Primary Government % of % of 2011 2010 2011 2010 2011 2010 Total 2011 Total Change Cash and Investments $ 13,935 $ 17,475 $17,530 $ 28,047 $ 31,465 12% $ 45,522 16% $ 14,057 Other Current Assets $ 12,309 $ 12,670 $ 2,025 $ 2,344 $ 14,334 5% $ 15,014 5% $ 680 Noncurrent (Capital) Asset: $166,122 $164,515 $ 58,273 $ 67,639 $ 224,395 83% $ 232,154 79% $ 7,759 Total Assets $192,366 $194,660 $ 77,828 $ 98,030 $ 270,194 p° $ 292,690 JQp( $ 22,496 Current Liabilities $ 21,918 $ 21,687 $ 3,352 $ 2,944 $ 25,270 29% $ 24,631 23% $ (639) Noncurrent Liabilities $ 52,650 $ 55,639 $10,538 $ 24,772 $ 63,188 71% $ 80,411 77% $ 17,223 Total Liabilities $ 74,568 $ 77,326 $13,890 $ 27,716 $ 88,458 100% $105,042 IM $ 16,584 Net Assets: Invested in capital assets, net of related debt $113,001 $109,289 $ 48,079 $ 44,227 $161,080 89% $153,516 82% $ (7,564) Restricted for Permanent Funds $ 417 $ 427 $ - $ - $ 417 0% $ 427 0% $ 10 Restricted for Debt Service $ 572 $ 1,285 $ 1,553 $ 1,553 $ 2,125 1% $ 2,838 2% $ 713 Unrestricted $ 3,808 $ 6,333 $14,306 $24,534 $ 18,114 10% $ 30,867 16% $ 12,753 Total Net Assets $117,798 $117,334 $ 63,938 $ 70,314 $181,736 100% $187,648 J 00% $ 5,912 Percent of Total Assets 65% 63% 35% 37% 100% 100% Cash and Investments as a percentage of current liabilities 64% 81% 523% 953% 125% 185% The largest segment of the City's net assets (82 %) 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. A small portion of net assets (2 %) is restricted for debt service. The remainder (unrestricted) of net assets (16 %) may be used to meet the City's obligations to citizens and creditors. This is comparable to previous years. In 2011, the amount invested in capital assets net of related debt decreased by $7,564,000. Unrestricted net assets increased by $12,573,000. These represent diverse changes throughout the financial statement: Increases in cash in both Governmental and Business type activities, a decrease in Capital assets in Governmental Activities and an increase in Capital Assets in Business type activities. Total liabilities remained much the same in Governmental Activities, but increased significantly in Business Type Activities, attributable to the issuance of Revenue Bonds to finance the Advanced Meter Infrastructure project. During the year ended December 31, 2011, there were several significant events that changed the balance of net assets. Governmental Activities. 2011 saw an increase in cash and investments in Governmental funds. This is due to controlled expenditures for both capital and operating requirements as well as improved revenues from the Sales Tax. CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Business -type Activities: The Water and Wastewater fund has a dominant influence on the Business Type Activities net assets. The increase in net assets is due to good revenue production and controlled expenses. Statement of Activities A condensed statement of activities is shown below. Condensed Comparitive Statement of Activities, 2010 and 2011 (In $000's) Governmental Activities. Total expenses for Governmental Activities for the year ending December 31, 2011 were $55,213,000 compared to $53,128,000 in 2010. Governmental activities represent 74% of the City's total expenses. The largest element of Governmental Activity expense was Public Safety, accounting for 34% of the total. Charges for service attributable to Governmental Activities totaled $13,470,000 and operating grants for those purposes were $2,907,000. The balance was funded by general revenues. Sales taxes accounted for $15,848,000 of the general revenues, with property taxes providing $11,712,000. Net assets decreased by $1,576,000 as a result of Governmental Activities. Business Type Activities. Total expenses for Business -type Activities for the year were $19,628,000, or 26% of the City's total expense. The majority of this expense ($13,597,000) is attributable to Water and Sewer operations, with the other activities (Solid Waste Disposal, Sanitation, and Golf Course) costing a combined total of $6,031,000. These activities are primarily supported by user charges, with only $413,000 coming from general revenues, representing largely the interest earned on fund balances held by the City. Net assets increased by $6,407,000 as a result of Business -type Activity operations. Governmental Activities Business -Type Total Primary Government 2010 2011 2010 2011 2010 % 2011 % 2010 -2011 Program Revenues: Change Charges for Services $ 12,306 $ 13,470 $ 22,419 $ 23,779 $ 34,725 48% $ 37,249 47% $ 2,524 Operating Grants and Contributions $ 3,415 $ 2,907 $ 202 $ 3,415 5% $ 3,109 4% $ (306) Capital Grants and Contributions $ 3,804 $ - 0% $ 3,804 5% $ 3,804 General Revenues: Property Taxes $ 11,179 $ 11,712 $ 11,179 16% $ 11,712 15% $ 533 Sales Taxes $ 15,225 $ 15,848 $ 15,225 21% $ 15,848 20% $ 623 Other Taxes $ 6,298 $ 6,389 $ 6,298 9% $ 6,389 8% $ 91 Investment Revenue $ 81 $ 77 $ 67 $ 83 $ 148 0% $ 160 0% $ 12 Other Miscellaneous $ 565 $ 872 $ 341 $ 330 $ 906 1 % $ 1,202 2% $ 296 Total Revenues: $ 49,069 $ 51,275 $ 22,827 $ 28,198 $ 71,896 100% $ 79,473 100% $ 7,577 Expenses: $ - General Government $ 10,845 $ 13,615 $ 10,845 15% $ 13,615 18% $ 2,770 Public Safety $ 18,592 $ 18,579 $ 18,592 25% $ 18,579 25% $ (13) Public Works $ 9,782 $ 9,858 $ 9,782 13% $ 9,858 13% $ 76 Public Health and Sanitation $ 1,365 $ 1,368 $ 1,365 2% $ 1,368 2% $ 3 Culture and Recreation $ 6,572 $ 6,693 $ 6,572 9% $ 6,693 9% $ 121 Planning and Development $ 3,715 $ 3,450 $ 3,715 5% $ 3,450 5% $ (265) Solid Waste Disposal $ 2,925 $ 2,945 $ 2,925 4% $ 2,945 4% $ 20 Water and Sewer $14,050 $13,597 $ 14,050 19% $ 13,597 18% $ (453) Sanitation $ 2,261 $ 2,261 $ 2,261 3% $ 2,261 3% $ - Golf Course $ 817 $ 825 $ 817 1% $ 825 1% $ 8 Interest on Long Tenn Debt $ 2,257 $ 1,650 $ 2,257 3% $ 1,650 2% $ 607 Total Expenses $ 53,128 $ 55,213 $20,053 $19,628 $ 73,181 100% $ 74,841 100% $ 1,660 Increase in net assets before transfers $ (4,059) $ (3,938) $ 2,774 $ 8,570 $ (1,285) $ 4,632 $ 5,917 Transfers and other extraordinary items $ 92 $ 2,362 $ (92) $ (2,163) $ - $ 199 $ 199 Increase in Net Assets $ 3,967 $ 1,576 $ 2,682 $ 6,407 $ (1,285) $ 4,831 $ 6,116 Net Assets, January 1 $119,854 $ 117,798 $ 61,270 $ 63,938 $181,124 $181,736 $ 612 Prior Period Adjustment $ 1,911 $ 1,112 $ 14 $ 31 $ 1,897 $ 1,081 $ (816) Net Assets, January 1, restated $121,765 $ 118,910 $ 61,256 $ 63,907 $183,021 $182,817 $ (204) Net Assets December 31 $117,798 $ 117,334 $ 63,938 $ 70,314 $181,736 $187,648 $ 5,912 Governmental Activities. Total expenses for Governmental Activities for the year ending December 31, 2011 were $55,213,000 compared to $53,128,000 in 2010. Governmental activities represent 74% of the City's total expenses. The largest element of Governmental Activity expense was Public Safety, accounting for 34% of the total. Charges for service attributable to Governmental Activities totaled $13,470,000 and operating grants for those purposes were $2,907,000. The balance was funded by general revenues. Sales taxes accounted for $15,848,000 of the general revenues, with property taxes providing $11,712,000. Net assets decreased by $1,576,000 as a result of Governmental Activities. Business Type Activities. Total expenses for Business -type Activities for the year were $19,628,000, or 26% of the City's total expense. The majority of this expense ($13,597,000) is attributable to Water and Sewer operations, with the other activities (Solid Waste Disposal, Sanitation, and Golf Course) costing a combined total of $6,031,000. These activities are primarily supported by user charges, with only $413,000 coming from general revenues, representing largely the interest earned on fund balances held by the City. Net assets increased by $6,407,000 as a result of Business -type Activity operations. CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds for the years ended December 31, 2010 and December 31, 2011. Governmental Fund Balances, 2010 and 2011 Fund $ 2010 2011 35,494,671 Change General $ 3,617,181 $ 3,836,238 $ 219,057 Flood and Drainage $ 188,526 $ 907 $ (187,619) Tourism and Convention $ 367,197 $ 340,473 $ (26,724) Special Gas $ 1,484,641 $ 1,417,743 $ (66,898) Bicentennial Center $ 46,048 $ 142,881 $ 96,833 Sales Tax Capital $ 2,154,367 $ 1,397,571 $ (756,796) Debt Service $ 571,873 $ 1,285,130 $ 713,257 Capital Projects $ (2,610,001) $ 390,852 $ 3,000,853 Other Governmental Funds $ 2,981,652 $ 2,792,546 $ (189,106) Total $ 8,801,484 $ 11,604,341 $ 2,802,857 Total Governmental Fund balances increased by $2,802,857. The reasons for these changes are varied. The most significant change is in the Capital Projects Fund, and is largely the result of Project financing activities. General Fund balances stabilized and grew slightly in 2011. The Flood and Drainage Fund was scheduled for depletion in 2011. The Special Sales Tax Capital Outlay Fund shows a significant reduction in fund balance due to an aggressive capital improvements program, most notably the reconstruction of Marymount Road. 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, 2010 and 2011. Consolidated Statement of Revenues and Expenditures for Major Funds, 2010 and 2011 Modified Accrual Basis Fund $ 2010 2011 35,494,671 Change Revenues (Including Other Financing Sources) Flood and Drainage Improvement $ 3,223 $ 206,092 General $ 34,303,574 $ 35,557,304 $ 1,253,730 Flood and Drainage Improvement $ 1,312 $ 18,473 $ 17,161 Tourism and Convention $ 1,332,671 $ 1,306,102 $ (26,569) Special Gas $ 1,569,648 $ 1,546,045 $ (23,603) Bicentennial Center $ 1,702,066 $ 1,656,762 $ (45,304) Sales Tax Capital $ 3,815,966 $ 3,777,286 $ (38,680) Debt Service $ 7,943,865 $ 6,844,521 $ (1,099,344) Capital Projects $ 5,552,906 $ 9,896,198 $ 4,343,292 Other Governmental Funds' $ 2,954,257 $ 2,800,508 $ (153,749) Total Revenues $ 59,176,265 $ 63,403,199 $ 4,226,934 Less Other Sources $ 12,157,284 $ 14,581,655 $ 2,424,371 Revenues, net of other sources $ 47,018,981 $ 48,821,544 $ 1,802,563 Expenditures (Including Other Financing Uses) General $ 35,773,774 $ 35,494,671 $ (279,103) Flood and Drainage Improvement $ 3,223 $ 206,092 $ 202,869 Tourism and Convention $ 1,228,789 $ 1,332,826 $ 104,037 Special Gas $ 2,138,057 $ 1,612,943 $ (525,114) Bicentennial Center $ 1,768,246 $ 1,559,929 $ (208,317) Sales Tax Capital $ 3,289,009 $ 4,534,082 $ 1,245,073 Debt Service $ 8,107,283 $ 6,131,264 $ (1,976,019) Capital Projects $ 15,936,269 $ 6,895,345 $ (9,040,924) Other Governmental Funds' $ 2,829,609 $ 2,989,614 $ 160,005 Total Expenditures $ 71,074,259 $ 60,756,766 $ (10,317,493) Less Other Uses $_ 4,983,834 $ 5,692,077 $ 708,243 Expenditures, net of other uses $ 66,090,425 $ 55,064,689 $ (11,025,736) 0 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Total revenues and other sources increased by $4,226,934 from 2010 to 2011. The largest component of this change was in the Capital Projects accounts, and is related to Construction activities. Other changes include an increased General supplement for the Bi- Centennial Center and changes in temporary note activity. Expenditures generally declined, with the notable exception of the Sales Tax Capital Fund, which was committed to the Marymount Road reconstruction, along with some smaller projects. 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: Comparative Summary Statement of Net Assets; 2010 - 2011 (in $000's) Solid Waste Disposal Water and Sewer 2010 2011 Change 2010 2011 Change Current Assets $ 3,887 $ 3,611 $ (276) $ 14,755 $ 25,988 $ 11,233 Capital Assets $ 4,211 $ 3,495 $ (716) $ 53,075 $ 63,184 $ 10,109 Total Assets $ 8,098 $ 7,106 $ 992 $ 67,830 $ 89,172 $ 21,342 Current Liabilities $ 1,010 $ 528 $ (482) $ 2,091 $ 2,363 $ 272 Noncurrent Liabilities $ 3,192 $ 2,868 $ (324) $ 7,161 $ 21,640 $ 14,479 Total Liabilities $ 4,202 $ 3,396 $ 806 $ 9,252 $ 24,003 $ 14,751 Assets Invested in Capital, net of related debt $ 2,294 $ 2,276 $ (18) $ 45,567 $ 40,991 $ (4,576) Restricted Net Assets $ - $ - $ - $ 1,553 $ 1,553 $ - Unrestricted Net Assets $ 1,602 $ 1,434 $ 168 $ 11,458 $ 22,625 $ 11,167 Total Net Assets $ 3,896 $ 3,710 $ 186 $ 58,578 $ 65,169 $ 6,591 Current Assets as a percentage of current liabilities 385% 684% 706% 1100% Sanitation Golf Course 2010 2011 Change 2010 2011 Change Current Assets $ 846 $ 761 $ (85) $ 66 $ 32 $ (34) Capital Assets $ 639 $ 646 $ 7 $ 348 $ 314 $ (34) Total Assets $ 1,485 $ 1,407 $ (78) $ 414 $ 346 $ 68 Current Liabilities $ 203 $ 29 $ (174) $ 48 $ 24 $ (24) Noncurrent Liabilities $ 123 $ 156 $ 33 $ 61 $ 109 $ 48 Total Liabilities $ 326 $ 185 $ 109 $ 133 $ 24 Assets Invested in Capital, net of related debt $ 639 $ 646 $ 7 $ 348 $ 314 $ (34) Restricted Net Assets $ - $ - $ - $ - $ - $ - Unrestricted Net Assets $ 520 $ 576 $ 56 $ (43) $ (101) $ (58) Total Net Assets $ 1,159 $ 1,222 $ 63 $ 305 $ 213 $ (92) Current Assets as a percentage of current liabilities 417% 2624% 138% 133% 10 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) 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 $101,000 deficit balance, up from $43,000 a year ago. The Solid Waste fund shows decreases in assets as well as liabilities, the result of constructing an additional cell. The Water and Sewer fund shows a significant increase in long term liabilities as a result of a Revenue Bond Issue. Both Current and Capital assets increase significantly within this fund. Revenues, Expenses, and Changes in Net Assets The Water and Wastewater Funds, showed healthy results from operations, with net assets increasing significantly due to a good revenue flow (attributable to both adequate rates and favorable weather conditions) and controlled expenses. The Golf Course showed a very significant loss on the year, requiring increased transfers from the General Fund to maintain cash liquidity. The Sanitation Fund is stable. Net assets declined slightly in the Solid Waste fund. Comparative Summary of Revenues, Expenses and Changes in l' (In $000's) Solid Waste Disposal 2010 2011 Change Operating Revenues $ 2,878 $ 2,929 $ 51 Operating Expenses $ 2,852 $ 2,829 $ 23 Operating Income $ 26 $ 100 $ 74 Jet Assets, 2010 and 2011 Water and Sewer 2010 2011 Change $ 16,789 $ 18,361 $ 1,572 $ 13,571 $ 12,964 $ 607 $ 3,218 $ 5,397 $ 2,179 Non - operating revenues (expenses) $ 55 $ 107 $ 52 $ (433) $ 561 $ 128 Income (Loss) before Transfers $ (29) $ (7) $ 22 $ 2,785 $ 4,836 $ 2,051 Transfers in (out) $ (139) $ (180) $ (41) $ 77 $ (2,030) $ (2,107) Capital Contributions $ - $ - $ - $ - $ 3,804 $ 3,804 Change in Net Assets $ (168 $ 187 $ (14 $ 2,862 $ 6,610 $ 3,748 $ 1,159 Net Assets, January 1 $ 4,121 $ 3,896 $ (225) $ 55,668 $ 58,578 $ 2,910 Restatement $ 57 $ 1 $ 58 $ 48 $ 19 $ 67 Net Assets, January 1, restated $ 4,064 $ 3,897 $ (167) $ 55,716 $ 58,559 $ 2,843 Net Assets, December 31 $ 3,896 $ 3,710 $ 186 $ 58,578 $ 65,169 $ 6,591 Sanitation Golf Course 2010 2011 Change 2010 2011 Change Operating Revenues $ 2,311 $ 2,335 $ 24 $ 783 $ 687 $ (96) Operating Expenses $ 2,276 $ 2,292 $ 16 $ 817 $ 825 $ 8 Operating Income $ 35 $ 43 $ 8 $ (34) $ (138) $ (104) Non - operating revenues (expenses) $ 18 $ 32 $ 14 $ - $ - $ Income (Loss) before Transfers $ 53 $ 75 $ 22 $ (34) $ (138) $ (104) Transfers in (out) $ (50) $ - $ 50 $ 20 $ 47 $ 27 Capital Contributions $ - $ - $ - $ - $ - $ - Change in Net Assets $ 3 $ 75 $ 72 $ (14 $ 91 $ (77) Net Assets, January 1 $ 1,166 $ 1,159 $ (7) $ 314 $ 305 $ (9) Restatement $ 10 $ 12 $ (2) $ 5 $ (1) $ (6) Net Assets, January 1, restated $ 1,156 $ 1,147 $ (9) $ 319 $ 304 $ 15 Net Assets, December 31 $ 1,159 $ 1,222 $ 63 $ 305 $ 213 $ (92) 11 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Budgetary Highlights 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, 2011. 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 result of these transfers, the original budget and the final budgets may not be the same for departments within a fund. There were a number of funds in which the budgets were amended, including the Flood and Drainage Improvement Fund, Sales Tax Capital Fund, Risk Management Fund, Central Garage Fund and the Water and Sewer Fund. The City experienced a number of significant variances from budgeted items in the General Fund, however, the total fund was within budgeted expenses. Motor vehicle taxes fell short of budget due to a delayed distribution from the County. Public Safety charges for service were significantly short of budget. This includes Court Revenues and EMS fees due from Saline County. Sales taxes exceeded budgetary levels slightly. Several expenditure items were also significantly over or under budget. Several Departments exceeded budgeted expenditures. In general, retirement system contributions exceeded budget Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31, 2011 was $232,153,260 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2010 and 2011: Capital Asset Balances Net of Depreciation, (In 000's) Governmental Activity 2010 2011 Equipment, Furniture and Fixtures $ 1,314 $ 1,288 Vehicles $ 2,445 $ 2,996 Buildings and Improvements $ 23,625 $ 22,591 Land $ 22,477 $ 22,477 Infrastructure $ 83,712 $ 82,609 Construction in Progress $ 32,549 $ 32,554 Total $ 166,122 $ 164,515 * Net of Accumulated Depreciation 12 12/31/2010 and 12/31/2011 Business -type Activity Total 2010 2011 2010 2011 $ 1,982 $ 1,729 $ 3,296 $ 3,017 $ 903 $ 812 $ 3,348 $ 3,808 $ 12,345 $ 11,904 $ 35,970 $ 34,495 $ 1,541 $ 1,541 $ 24,018 $ 24,018 $ 39,985 $ 40,591 $ 123,697 $ 123,200 $ 1,517 $ 11,062 $ 34,066 $ 43,616 $ 58,273 $ 67,639 $ 224,395 $ 232,154 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Changes to capital assets may be summarized as follows: Changes to Capital Assets, 2011 (in 000's) Additional information on the City's capital assets can be found in Note 4,D. of the notes to the basic financial statements. 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 for Governmental activities at December 31, 2011 totaled $55,225,670. In addition, there were temporary notes outstanding in the amount of $3,400,000. Business -type activities had $16,193,925 in Revenue Bonds outstanding, as well as $7,217,907 in General Obligation Bonds. 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 2011. On August 1st, the City issued $6,565,000 in internal improvement bonds. The bulk of the proceeds ($3,765,836) were used to finance an industrial fire protection system located at the Salina Airport Industrial Center. The balance of the proceeds were used to finance several residential subdivisions. Also on August 1S`, the City issued $3,400,000 in temporary notes to finance public facilities to serve a commercial subdivision development. These note will be refinanced into a long term bond issue in August, 2012. 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. 13 Governmental Business -Type Activity Activity Total Additions $ 547 $ 10,633 $ 11,180 Retirements $ (3,110) $ (1,236) $ (4,346) Adjustments $ 956 $ (31) $ 925 Net Additions $ (1,607 $ 9,366 $ 7,759 Depreciation Expense Applied $ 4,730 $ 2,653 $ 7,383 Additional information on the City's capital assets can be found in Note 4,D. of the notes to the basic financial statements. 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 for Governmental activities at December 31, 2011 totaled $55,225,670. In addition, there were temporary notes outstanding in the amount of $3,400,000. Business -type activities had $16,193,925 in Revenue Bonds outstanding, as well as $7,217,907 in General Obligation Bonds. 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 2011. On August 1st, the City issued $6,565,000 in internal improvement bonds. The bulk of the proceeds ($3,765,836) were used to finance an industrial fire protection system located at the Salina Airport Industrial Center. The balance of the proceeds were used to finance several residential subdivisions. Also on August 1S`, the City issued $3,400,000 in temporary notes to finance public facilities to serve a commercial subdivision development. These note will be refinanced into a long term bond issue in August, 2012. 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. 13 CITY OF SALINA, KANSAS STATEMENT OF NET ASSETS December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 14 Primary Government Component Units Total Total Total Salina Salina Governmental Business -type Primary Housing Airport Activities Activities Government Authority Authority ASSETS Current assets: Cash and investments $ 17,475,299 $ 28,047,281 $ 45,522,580 $1,549,189 $ 5,308,083 Receivables (net of allowance for uncollectibles) Accounts 1,122,221 1,396,659 2,518,880 39,676 106,659 Taxes 10,848,090 - 10,848,090 - 1,638,423 Interest 35,877 16 35,893 - - Inventory 205,410 571,702 777,112 15,828 1,722 Restricted cash and investments - - - 196,148 - Prepaid expenses - - - 33,224 945 Deferred charges 458,315 375,179 833,494 - 205,317 Total current assets 30,145,212 30,390,837 60,536,049 1,834,065 7,261,149 Noncurrent assets: Notes receivable - - - 3,304 - Capital assets, nondepreciable Construction in progress 32,554,357 11,062,055 43,616,412 516,945 1,570,190 Land 22,477,191 1,541,002 24,018,193 1,456,891 10,818,059 Capital assets, depreciable 196,166,753 101,308,419 297,475,172 7,357,626 62,449,020 Less: Accumulated depreciation 86,683,788 46,272,729 132,956,517 3,134,242 26,573,380 Total noncurrent assets 164,514,513 67,638,747 232,153,260 6,200,524 48,263,889 Total assets $ 194,659,725 $ 98,029,584 $ 292,689,309 $ 8,034,589 $ 55,525,038 Liabilities: Current liabilities: Accounts payable $ 788,731 $ 294,449 $ 1,083,180 $ 14,447 $ 221,039 Retainage payable 468,309 608,219 1,076,528 - - Accrued liabilities 563,720 - 563,720 46,395 169,143 Matured bond principal and interest 5,145 - 5,145 - - Accrued Interest payable 512,680 211,291 723,971 - 404,167 Deposits payable - 163,904 163,904 84,154 - Uneamed revenue 10,315,524 - 10,315,524 29,165 1,720,237 Due to other governments - - - 25,115 - Current portion of compensated absences 581,694 122,301 703,995 16,811 Current portion of temporary notes payable 3,400,000 - 3,400,000 - Current portion of revenue bonds payable - 343,696 343,696 - Current portion of financing leases payable - - 42,941 Current portion of special assessment debt payable - - - 21,066 Current portion of general obligation bonds payable 5,051,038 1,200,048 6,251,086 1,090,000 Total current liabilities 21,686,841 2,943,908 24,630,749 216,087 3,668,593 Noncurrent liabilities: Accrued liabilities 149,245 - 149,245 50,090 - Compensated absences 2,507,440 527,190 3,034,630 4,203 Net OPEB obligation 2,807,425 334,458 3,141,883 - Revenue bonds payable - 15,850,229 15,850,229 - Financing leases payable - - 202,617 Temporary notes payable - Special assessment debt payable - - - 103,946 General obligation bonds payable 50,174,632 6,017,859 56,192,491 24,718,985 Landfill post - closure care liabilities - 2,042,254 2,042,254 Total noncurrent liabilities 55,638,742 24,771,990 80,410,732 54,293 25,025,548 Total liabilities $ 77,325,583 $ 27,715,898 $ 105,041,481 $ 270,380 $28,694,141 Net Assets Invested in capital assets, net of related debt $ 109,288,843 $ 44,226,915 $ 153,515,758 $ 6,197,219 $ 22,084,333 Restricted for: Permanent funds: Expendable 426,741 426,741 146,058 - Debt service 1,285,130 1,553,016 2,838,146 - - Unrestricted 6,333,428 24,533,755 30,867,183 1,420,932 4,746,564 Total net assets $ 117,334,142 $ 70,313,686 $ 187,647,828 $ 7,764,209 $ 26,830,897 The notes to the basic financial statements are an integral part of this statement. 14 CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 15 Net [Expenses] Revenue and Changes in Net Assets Program Revenues Primary Government Component Units Operating Capital Total Total Total Salina Salina Charges for Grants and Grants and Governmental Business -type Primary Housing Airport Expenses Services Contributions Contributions Activities Activities Government Authority Authority Governmental activities: General government $ 13,614,508 $ 6,106,067 $ 359,148 $ $ [7,149,293] $ $ (7,149,293] $ $ Public safety 18,579,041 3,766,156 631,417 [14,181,468] (14,181,468] Public works 9,858,199 261,707 1,368,577 [8,227,915] [8,227,915] Public health and sanitation 1,367,825 42,729 153,566 [1,171,530] [1,171,530] Culture and recreation 6,693,341 3,140,025 177,048 [3,376,268] [3,376,268] Planning and development 3,450,078 153,675 217,643 [3,078,760] [3,078,760] Interest on long -term debt 1,650,426 [1,650,426] [1,650,426] Total governmental activities 55,213,418 13,470,359 2,907,399 [38,835,660] [38,835,660] Business -type activities: Solid Waste Disposal 2,944,765 2,904,371 [40,394] [40,394] - Water and Sewer 13,596,918 17,904,056 201,700 3,803,565 8,312,403 8,312,403 Sanitation 2,261,462 2,334,119 - - 72,657 72,657 Golf Course 825,057 636,202 - [188,855] [188,855] Total business -type activities 19,628,202 23,778,748 201,700 3,803,565 8,155,811 8,155,811 Total primary government $ 74,841,620 $37,249,107 $ 3,109,099 $ 3,803,565 [38,835,660] 8,155,811 [30,679,849] Component units: Salina Housing Authority $ 2,256,924 $ 624,322 $ 1,629,627 $ 168,427 - 165,452 Salim Airport Authority 5,548,077 2,273,000 - 457,227 [2,817,850] Total component units $ 7,805,001 $ 2,897,322 $ 1,629,627 $ 625,654 165,452 [2,817,8501 General Revenues: Property taxes levied for General purposes 7,782,768 7,782,768 - 1,795,660 Debt service 2,778,845 2,778,845 - Motor vehicle tax General purposes 1,149,641 1,149,641 Sales tax General purposes 11,767,400 11,767,400 Selective purposes 4,080,342 4,080,342 Othertaxes General purposes 6,389,878 6,389,878 - - Investment revenues 77,095 83,399 160,494 19,684 9,856 Miscellaneous 871,904 330,351 1,202,255 - 53,004 Transfers, net 2,361,593 [2,162,772] 198,821 Subtotal general revenues 37,259,466 [1,749,022] 35,510,444 19,684 1,858,520 Change in net assets [1,576,194] 6,406,789 4,830,595 185,136 [959,330] Netassets - beginning 117,797,911 63,937,619 181,735,530 7,580,003 27,790,227 Prior period adjustment 1,112,425 [30,722] 1,081,703 [930] Netassets - beginning, restated 118,910,336 63,906,897 182,817,233 7,579,073 27,790,227 Netassets - ending $ 117,334,142 $ 70,313,686 $ 187,647,828 $7,764,209 $26,830,897 The notes to the basic financial statements are an integral part of this statement. 15 CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2011 Flood & Tourism Drainage and Special General Improvement Convention Gas ASSETS Cash and investments $ 3,153,960 $ 907 $ 2,202 $ 1,195,840 Receivables (net) Accounts 677,815 - 338,271 - Taxes 8,094,093 - - 312,648 Interest 35,877 - - - Inventory 89,716 - - - Due from other funds 9,375 - - - Cash with fiscal agent - - - - Total assets LIABILITIES AND FUND BALANCE Liabilities: Accounts payable Retainage payable Deferred revenue Due to other funds Matured principal and interest Temporary notes payable Total liabilities Fund balance: Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities and fund balance $ 12,060,836 $ 907 $ 340,473 $ 1,508,488 $ 301,319 $ - $ - $ 46,356 - - - 44,389 7,923,279 - - - 8,224,598 - - 90,745 89,716 - - - - - 340,473 1,094,720 292,816 907 - 323,023 3,453,706 - - - 3,836,238 907 340,473 1,417,743 $ 12,060,836 $ 907 $ 340,473 $ 1,508,488 Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Projects Funds Funds $ 117,993 $ 1,397,571 $ 1,236,026 $ 4,503,053 $ 2,773,395 $ 14,380,947 54,966 - - - 51,169 1,122,221 - - 2,441,349 - - 10,848,090 - - - 35,877 - - - - 89,716 - - - 9,375 - 5,145 - - 5,145 $ 172,959 $ 1,397,571 $ 3,682,520 $ 4,503,053 $ 2,824,564 $ 26,491,371 $ 30,078 $ - $ - $ 288,281 $ 22,643 $ 688,677 - - - 423,920 - 468,309 2,392,245 - - 10,315,524 - - 9,375 9,375 5,145 - - 5,145 - - 3,400,000 - 3,400,000 30,078 - 2,397,390 4,112,201 32,018 14,887,030 89,716 - - 1,285,130 - 891,254 3,611,577 142,881 610,134 - [2,477,564] 1,851,292 126,743 - 787,437 - 2,868,416 50,000 4,322,599 - - - - - 3,453,706 142,881 1,397,571 1,285,130 390,852 2,792,546 11,604,341 $ 172,959 $ 1,397,571 $ 3,682,520 $ 4,503,053 $ 2,824,564 $ 26,491,371 The notes to the basic financial statements are an integral part of this statement. 16 CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET ASSETS OF GOVERNMENTAL ACTIVITIES December 31, 2011 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 $ 11,604,341 458,315 The cost of capital assets is 250,331,663 Accumulated depreciation is 85,844,940 164,486,723 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. 2,327,348 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 2,996,810 Net OPEB obligation 2,807,425 Bonds payable 55,225,670 Accrued interest on the bonds 512,680 [61,542,585] Net Assets of Governmental Activities $ 117,334,142 The notes to the basic financial statements are an integral part of this statement. 17 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31, 2011 Flood & Tourism Drainage and Special General Imorovement Convention Gas REVENUES: Taxes Real estate taxes $ 7,564,508 $ - $ - $ - Delinquent taxes 212,244 6,016 - - Motor vehicle taxes 894,671 - - - General sales taxes 11,767,400 - - - Selective sales taxes - - - - Othertaxes 5,083,919 - 1,305,959 - Intergovernmental 813,185 - - 1,362,327 Special assessments - - - - Licenses and permits - - - - Charges for services 7,822,307 - - - Investment revenue 28,972 - 143 3,718 Reimbursements - - - - Miscellaneous 501,260 11,550 - - Total revenues 34,688,466 17,566 1,306,102 1,366,045 EXPENDITURES: Current General government 3,461,488 - - - Public safety 18,117,827 - - - Public works 6,132,020 9,784 - 427,429 Public health and sanitation 1,176,082 - - - Culture and recreation 2,734,957 - - - Planning and development 2,319,300 - 736,386 - Miscellaneous - - - - Capital outlay 555,048 196,308 - 1,183,678 Debt service Principal retirement - - - - Interest and other charges - - - - Total expenditures 34,496,722 206,092 736,386 1,611,107 Excess [deficiency] of revenue and other sources over [under] expenditures and other [uses] 191,744 [188,526] 569,716 [245,062] OTHER FINANCING SOURCES [USES] Issuance of bonds - - - - Bond premium - - - - Transfers in 868,838 907 - 180,000 Transfers [out] [997,949] - [596,440] [1,836] Total other financing sources [uses] [129,111] 907 [596,440] 178,164 Net change in fund balance 62,633 [187,619] [26,724] [66,898] Fund balance - Beginning of year 3,617,181 188,526 367,197 1,484,641 Restatement of prior year fund balance 156,424 - - - FUND BALANCE - Beginning of year, as restated 3,773,605 188,526 367,197 1,484,641 Fund balance - End of year $ 3,836,238 $ 907 $ 340,473 $ 1,417,743 - - - - - 3,461,488 - - 18,117,827 - - - 6,569,233 - - - - 153,730 1,329,812 1,548,901 - - - 1,616,170 5,900,028 - - - - 288,275 3,343,961 - - - - 35 35 11,028 1,032,526 - 6,338,741 529,401 9,846,730 - - 4,276,195 - 135,000 4,411,195 - - 1,771,581 151,055 161,744 2,084,380 1,559,929 1,032,526 6,047,776 6,489,796 2,884,355 55,064,689 [776,016] 2,736,202 [1,451,805] [6,448,162] [631,236] [6,243,145] - - - 6,565,000 Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Proiects Funds Funds $ - $ - $ 2,723,262 $ - $ - $ 10,287,770 - - 55,583 - - 273,843 - - 254,970 - - 1,149, 641 - - - - - 11,767,400 - 3,763,045 - - 317,297 4,080,342 - - - - - 6,389,878 - - - - 725,637 2,901,149 - - 1,535,487 - - 1,535,487 - - - - 6,250 6,250 783,028 - - - 1,125,022 9,730,357 193 5,683 13,686 9,634 6,620 68,649 - - - 32,000 - 32,000 692 - 12,983 - 72,293 598,778 783,913 3,768,728 4,595,971 41,634 2,253,119 48,821,544 - - - - - 3,461,488 - - 18,117,827 - - - 6,569,233 - - - - 153,730 1,329,812 1,548,901 - - - 1,616,170 5,900,028 - - - - 288,275 3,343,961 - - - - 35 35 11,028 1,032,526 - 6,338,741 529,401 9,846,730 - - 4,276,195 - 135,000 4,411,195 - - 1,771,581 151,055 161,744 2,084,380 1,559,929 1,032,526 6,047,776 6,489,796 2,884,355 55,064,689 [776,016] 2,736,202 [1,451,805] [6,448,162] [631,236] [6,243,145] - - - 6,565,000 - 6,565,000 - - 22,985 - - 22,985 872,849 8,558 2,225,565 3,289,564 547,389 7,993,670 - [3,501,556] [83,488] [405,549] [105,259] [5,692,077] 872,849 [3,492,998] 2,165,062 9,449,015 442,130 8,889,578 96,833 [756,796] 713,257 3,000,853 [189,106] 2,646,433 46,048 2,154,367 571,873 [2,610,001] 2,981,652 8,801,484 - - - - - 156,424 46,048 2,154,367 571,873 [2,610,001] 2,981,652 8,957,908 $ 142,881 $ 1,397,571 $ 1,285,130 $ 390,852 $ 2,792,546 $ 11,604,341 The notes to the basic financial statements are an integral part of this statement. 18 CITY OF SALINA, KANSAS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE WITH THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2011 Total Net Change In Fund Balances - Governmental Funds $ 2,646,433 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 [77,143] Proceeds from sale of assets [10,070] Capital outlays 2,254,765 Depreciation expense [4,725,361] [2,557,809] 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 decreased. 314,150 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. 584,822 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. [523,988] 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. [6,570,801] 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. 4,530,999 Changes In Net Assets of Governmental Activities $ [1,576,194] The notes to the basic financial statements are an integral part of this statement. 19 CITY OF SALINA, KANSAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 20 Business -Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service ASSETS Disposal Sewer Sanitation Golf Course Funds Funds Current assets: Cash and investments $ 3,379,526 $ 24,042,117 $ 621,683 $ 3,955 $ 28,047,281 $ 3,089,207 Receivables (net of allowance for uncollectibles) Accounts 231,123 1,026,364 139,172 - 1,396,659 Interest 16 - - - 16 - Inventory and prepaid supplies - 544,052 27,650 571,702 115,694 Deferred charges - 375,179 - 375,179 - Total current assets 3,610,665 25,987,712 760,855 31,605 30,390,837 3,204,901 Capital assets: Nondepreciable capital assets: Construction in progress - 11,062,055 - - 11,062,055 - Land 682,000 844,002 - 15,000 1,541,002 - Depreciable capital assets: Capital assets 8,278,501 90,480,372 1,557,447 992,099 101,308,419 866,638 Less: accumulated depreciation 5,465,856 39,202,619 911,117 693,137 46,272,729 838,848 Total capital assets 3,494,645 63,183,810 646,330 313,962 67,638,747 27,790 Total assets $ 7,105,310 $ 89,171,522 $1,407,185 $ 345,567 $ 98,029,584 $ 3,232,691 Liabilities: Current liabilities Accounts payable $ 22,192 $ 262,444 $ 6,859 $ 2,954 $ 294,449 $ 100,054 Retainage payable - 608,219 - - 608,219 - Interest payable 8,514 202,777 - 211,291 - Meter deposits payable - 163,904 - - 163,904 - Current portion of compensated absences payable 11,215 68,382 22,203 20,501 122,301 17,384 Current portion of accrued claims payable - - - - - 563,720 Current portion of general obligation bonds payable 486,302 713,746 1,200,048 - Current portion of revenue bonds payable - 343,696 343,696 - Total current liabilities 528,223 2,363,168 29,062 23,455 2,943,908 681,158 Noncurrent liabilities: Compensated absences payable 48,340 294,765 95,709 88,376 527,190 74,940 Accrued claims payable - - - - - 149,245 Net OPEB Obligation 43,944 209,872 59,830 20,812 334,458 - Payable from restricted assets General obligation bonds payable 732,806 5,285,053 - - 6,017,859 - Revenue bonds payable - 15,850,229 - - 15,850,229 - Landfill post - closure care liabilities 2,042,254 - - 2,042,254 - Total noncurrent liabilities 2,867,344 21,639,919 155,539 109,188 24,771,990 224,185 Total liabilities $ 3,395,567 $ 24,003,087 $ 184,601 $ 132,643 $ 27,715,898 $ 905,343 Net Assets Invested in capital assets, net of related debt $ 2,275,537 $ 40,991,086 $ 646,330 $ 313,962 $ 44,226,915 $ 27,790 Restricted Restricted for bond retirement - 1,553,016 - - 1,553,016 - Unrestricted 1,434,206 22,624,333 576,254 1[ 01,038] 24,533,755 2,299,558 Total net assets $ 3,709,743 $ 65,168,435 $1,222,584 $ 212,924 $ 70,313,686 $ 2,327,348 The notes to the basic financial statements are an integral part of this statement. 20 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31, 2011 Operating expenses General government - Business -Type Activities: - - - 9,611,278 Enterprise Funds 2,088,843 11,205,114 2,170,663 - 15,464,620 Total Internal - Solid Waste Water and Enterprise Service - Disposal Sewer Sanitation Golf Course Funds Funds Operating revenues 2,653,192 4,698 Total operating expenses 2,828,890 Charges for services $ 2,904,371 $17,904,056 $ 2,334,119 $ 636,202 $ 23,778,748 $ 9,881,156 Federal grants - 201,700 - - 201,700 - Miscellaneous 24,491 255,256 424 50,180 330,351 251,196 Total operating revenues 2,928,862 18,361,012 2,334,543 686,382 24,310,799 10,132,352 Operating expenses General government - - - - - 9,611,278 Public works 2,088,843 11,205,114 2,170,663 - 15,464,620 - Recreation - - - 791,488 791,488 - Depreciation 740,047 1,758,777 120,799 33,569 2,653,192 4,698 Total operating expenses 2,828,890 12,963,891 2,291,462 825,057 18,909,300 9,615,976 Operating income [loss] 99,972 5,397,121 43,081 [138,675] 5,401,499 516,376 Nonoperating revenues [expenses] Investment revenue 9,072 72,452 1,839 36 83,399 8,446 Debt service [115,875] [632,390] - - [748,265] - Gain /[loss] on disposal of fixed assets - 2,550 30,000 - 32,550 1,129 Accretion of bond premium - 7,864 - - 7,864 - Amortization of bond issuance costs - [11,051] - - [11,051] - Total nonoperating revenues [expenses] [106,803] [560,575] 31,839 36 [635,503] 9,575 Income [loss] before transfers [6,831] 4,836,546 74,920 [138,639] 4,765,996 525,951 Transfers from [to] other funds Transfers in - - - 47,228 47,228 60,000 Transfers [out] [180,000] [2,030,000] - - [2,210,000] - Total transfers [180,000] [2,030,000] - 47,228 [2,162,772] 60,000 Capital contributions - 3,803,565 - - 3,803,565 - Change in net assets 1[ 86,831] 6,610,111 74,920 [91,411] 6,406,789 585,951 Net assets, January 1 3,895,812 58,578,036 1,159,149 304,622 63,937,619 1,737,815 Restatement 762 [19,712] [11,485] [287] [30,722] 3,582 Net assets, January 1, restated 3,896,574 58,558,324 1,147,664 304,335 63,906,897 1,741,397 Net assets, December 31 $ 3,709,743 $ 65,168,435 $1,222,584 $ 212,924 $ 70,313,686 $ 2,327,348 The notes to the basic financial statements are an integral part of this statement. 21 Cash flows from operating activities Cash received from customers and users Cash paid to suppliers of goods or services Cash paid to employees Other operating receipts Net cash provided by [used in] operating activities Cash flows from capital and related financing activities Purchase and construction of capital assets Capital contributions Debt issuance costs incurred Proceeds from sale of capital assets Principal payments - general obligation bonds Principal payments - revenue bonds Proceeds from issuance of revenue bonds Interest paid Net cash provided by [used in] capital and related financing activities Cash flows from investing activities CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2011 Business -Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $ 2,948,382 $17,850,055 $ 2,332,281 $ 636,201 $ 23,766,919 $ 9,786,038 [1,722,492] [7,552,182] [1,616,344] [391,100] [11,282,118] [8,955,819] [454,426] [2,945,574] [696,074] [386,401] [4,482,475] [631,488] 24,491 456,956 424 50,180 532,051 251,196 795,955 7,809,255 20,287 91,120 8,534,377 449,927 [23,446] [11,886,827] [139,452] - [12,049,725] - 3,803,565 - 3,803,565 [315,426] - [315,426] - 2,550 30,000 - 32,550 1,129 [697,396] [691,410] - [1,388,806] - - [1,580,000] [1,580,000] - 16,193,925 16,193,925 [136,908] [496,760] - [633,668] - [857,750] 5,029,617 109,452 4,062,415 1,129 Interest received 9,072 72,453 1,839 37 83,401 8,445 Cash flows from noncapital financing activities Transfers in 47,228 47,228 60,000 Transfers [out] 180,000 [2,030,000] - [2,210,000] - Net cash provided by [used in] noncapital financing activities [180,000] [2,030,0001 47,228 [2,162,772] 60,000 Net increase [decrease] in cash and cash equivalents [232,723] 10,881,325 [87,326] [43,855] 10,517,421 519,501 Cash and cash equivalents, January 1 3,612,249 13,160,792 709,009 47,810 17,529,860 2,569,706 Cash and cash equivalents, December 31 $ 3,379,526 $ 24,042,117 $ 621,683 $ 3,955 $ 28,047,281 $ 3,089,207 The notes to the basic financial statements are an integral part of this statement. 22 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2011 Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income Voss] Adjustments to reconcile operating income Voss] 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 retainage payable Increase [decrease] in accrued compensated absences Increase [decrease] in claims payable Increase [decrease] in landfill postclosure liabilities Increase [decrease] in net OBEB obligation Increase [decrease] in meter deposits payable Net cash provided by [used in] operating activities Business -Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $ 99,972 $ 5,397,121 $ 43,081 $ [138,675] $ 5,401,499 $ 516,376 740,047 1,758,777 120,799 33,569 2,653,192 4,698 44,011 [79,017] [1,838] - [36,844] - - 31,950 - [9,113] 22,837 6,646 [218,286] 35,620 [120,339] [1,394] [304,399] 14,032 [12,979] 591,610 - - 578,631 - [342] [1,806] [35,666] 19,536 [18,278] 3,294 - - - - - [95,119] 133,066 - - - 133,066 - 10,466 49,984 14,250 4,957 79,657 - - 25,016 - 25,016 - $ 795,955 $ 7,809,255 $ 20,287 $ [91,120 ] $ 8,534,377 $ 449,927 The notes to the basic financial statements are an integral part of this statement. 23 CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS December 31, 2011 ASSETS Cash and investments Total assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Total liabilities The notes to the basic financial statements are an integral part of this statement. 24 $ 313,300 $ 313,300 $ 313,300 $ 313,300 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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. 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 A.F.B that was closed by the United States Department of Defense in June 1965. One of the primary functions of the Airport Authority is to facilitate the continued growth of jobs and payroll at the Airport Industrial Center. The Airport Authority is managed and controlled by a five- member Board of Directors appointed by the Salina City Commission. Any director may be removed by a majority vote of the Salina City Commission. The Airport Authority's basic mill levy (up to 3 mills) requires the approval of the City Commission. The Commission must also approve the issuance of general obligation debt by the Airport Authority. The Airport Authority 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, 2011. Complete financial statements for each of the individual component units may be obtained at the entity's administrative offices. Salina Airport Authority Housing Authority of 3237 Arnold Ave. the City of Salina Salina, KS 469 S. 5th Salina, KS Joint Ventures The City of Salina also participates with Saline County in two joint ventures. The Salina - Saline County Board of Health was organized by the City and County to promote public health. The 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. Total net assets /unencumbered cash, December 31, 2011 Total change in net assets /change in unencumbered cash, year ended December 31, 2011 Total revenues /cash receipts, year ended December 31, 2011 Total revenues /cash receipts from City of Salina 25 (GAAP Basis) (Kansas Prescribed Basis) Board of Building Health Authority (Audited) (Audited) $ 1,697,636 $ 931,040 [62,456] [247,094] 3,856,055 748,166 1,018,101 278,756 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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. Salina - Saline County Board of Health Salina County -City 125 West Elm Street Building Authority Salina, KS 300 West Ash Street Salina, KS 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. 26 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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. Expenditure - driven grants are recognized as revenue when the qualifying 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 and /or other funds. The City reports the following major governmental funds: General fund - 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. 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. Sales tax capital fund - To account for 87.5% of the 1/4 cent sales tax designated for capital, debt, and human services purposes. Debt service fund - 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. 27 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Capital projects fund - 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 City'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, Fund Balance, and Net Assets 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 Pavables Transactions between funds that are representative of lending /borrowing 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 to /from other funds" (i.e., the non - current portion of interfund loans). All other outstanding balances between funds are reported as "due to /from other funds." Accounts Receivable. The City records revenues when services are provided. All receivables are shown net of an allowance for 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 2012. 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. 28 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 2. Receivables and Pavables (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 -in /first -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. 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. 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 Years Buildings 50 Other equipment 5-15 Vehicles 6-10 Infrastructure 30-50 29 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Assets (Continued) 5. 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. Employees must use 50% of leave accrued each calendar year and an employee's maximum accrued vacation leave balance cannot exceed 250 hours (or 350 hours for employees working 24 hour shifts). 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. 6. 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. 7. Long -term Obligations 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. 30 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Assets (Continued) 8. Fund Balances In the fund financial statements, governmental funds report fund balance in the following classifications: nonspendable, restricted, committed, assigned and unassigned. Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Restricted fund balance indicates that constraints have been placed on the use of resources either by being externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Committed fund balances include amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the city commission. Assigned fund balances include amounts that are constrained by the City management's intent to be used for specific purposes, but are neither restricted nor committed. Unassigned fund balance represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available restricted amounts are considered to be spent first. When an expenditure is incurred for purposes for which committed, assigned, or unassigned fund balance is available, the following is the order in which resources will be expended: committed, assigned and unassigned. The following is the detail for fund balance classifications in the financial statements: Fund Balances. Nonspendable for. Inventory Restricted for: Public works Public health and sanitation Culture and recreation Planning and development Debt payments Committed for, Public safety Culture and recreation Planning and development Cemetery Capital improvements Assigned for: General government Public works Planning and development Capital improvements Unassigned: Total Fund Balances Major Governmental Funds Flood & Tourism Other Total Drainage and Special Bicentennial Sales Tax Debt Capital Governmental Governmental General Improvement Convention Gas Center Capital Servic Proiects Funds Funds $ 89,716 $ $ $ . $ $ $ $ $ $ 89,716 - - - 1,094,720 - - - - - 1,094,720 - - - - - - - - 4 4 45,236 45,236 340,473 298,015 638,488 - 1,285,130 547,999 1,833,129 [7,8661 [7,8661 - - - - 142,881 - - - 524,907 667,788 6,102 6,102 421,037 421,037 - - - - - 610,134 - [2,477,5641 907,112 [960,3181 18,450 - 18,450 36,755 907 323,023 360,685 11,376 - - - - - - - - 11,376 226,235 787,437 2,868,416 50,000 3,932,088 3,453,706 - - 3,453,706 $ 3,836,238 $ 907 $ 340,473 $ 1,417,743 $ 142,881 $ 1,397,571 $ 1,285,130 $ 390,852 $ 2,792,546 $ 11,604,341 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Assets (Continued) 9. 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. 10. 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 extemal 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. 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 2011 budget was amended for the Flood & Drainage Improvement Fund, Sales Tax Capital Fund, Water and Sewer Fund, Risk Management Fund and Central Garage Fund. 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budgetary Information (Continued) 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, non -major debt service 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 Federal Care Grant. 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. B. Statutory Violations Actual exceeded budgeted expenditures at December 31, 2011 in the Flood & Drainage Improvement Fund and Sales Tax Economic Development Fund, which violates KSA 79 -2935. C. 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, 2011, the statutory limit for the City was $133,379,948, providing a debt margin of 75,990,305. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 3. RESTATEMENT OF EQUITY The implementation of GASB 54 required the reclassification of the governmental fund balances. The following is the reclassification of fund balance as of December 31, 2010. Governmental Fund: General Fund Flood & Drainage Improvement Fund Tourism and Convention Fund Special Gas Fund Bicentennial Center Fund Sales Tax Capital Fund Debt Service Fund Capital Projects Fund Other Governmental Funds Total Governmental Funds Governmental Fund: General Fund Flood & Drainage Improvement Fund Tourism and Convention Fund Special Gas Fund Bicentennial Center Fund Sales Tax Capital Fund Debt Service Fund Capital Projects Fund Other Governmental Funds Total Governmental Funds Fund Balance Classification As of December 31, 2010 Unreserved Reserved Total $ 3,517,895 $ 99,286 187,350 1,176 367,197 - 986,224 498,417 46,048 - 1,572,216 582,151 - 571,873 [6,654,370] 4,044,369 2,365,603 616,049 $ 2,388,163 $ 6,413,321 $ 3,617,181 188,526 367,197 1,484,641 46,048 2,154,367 571,873 [2,610,001] 2,981,652 $ 8,801,484 Fund Balance Classification As of December 31, 2010, Reclassified Nonsoendable Restricted Committed Assigned Unassigned Total $ 87,238 $ - $ - $ 99,286 $ 3,430,657 $ 3,617,181 - - 187,350 1,176 - 188,526 367,197 - - 367,197 986,224 - 498,417 1,484,641 - 46,048 - 46,048 - - 1,572,216 582,151 - 2,154,367 - 571,873 - - 571,873 - [6,654,370] 4,044,369 [2,610,001] - 944,240 2,031,076 6,336 2,981,652 $ 87,238 $ 2,869,534 $ [2,817,680] $ 5,231,735 $ 3,430,657 $ 8,801,484 Following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or recorded incorrectly. Additionally, it was discovered that accounts receivable had not been properly recorded. Accordingly, the beginning net assets balances were restated, the effects of which are as follows: Solid Waste Water and Golf Central Governmental General Disposal Sewer Sanitation Course Garage Activities Fund Fund Fund Fund Fund Fund Net Assets /Fund Balance, $ 117,797,911 $ 3,617,181 $ 3,895,812 $ 58,578,036 $ 1,159,149 $ 304,622 $ 205,887 December 31, 2010 Capital Asset Adjustment 956,001 - 762 [19,712] [11,485] [287] 3,582 Accounts Receivable Adjustment 156,424 156,424 - Net Assets /Fund Balance, December 31, 2010, Restated $ 118,910,336 $ 3,773,605 $ 3,896,574 $ 58,558,324 $ 1,147,664 $ 304,335 $ 209,469 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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 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 U.S. 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, 2011, the City has the following investments: Investment Type Kansas Municipal Investment Pool U.S. Government Securities Total fair value Fair Value Rating $ 305,158 S &P AAAf /S1+ 22,063,739 N/A $ 22,368,897 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 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. 35 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A. 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. B. Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: Tourism and Special Bicentennial Debt General Convention Gas Center Service Subtotal Primary Government Receivables: Accounts $ 2,889,545 $ 338,271 $ - $ 54,966 $ - $ 3,282,782 Taxes 8,094,093 - 312,648 - 2,441,349 10,848,090 Interest 35,877 - 35,877 Gross receivables 11,019,515 338,271 312,648 54,966 2,441,349 14,166,749 Less: allowance for uncollectibles [2,211,730] - - - [2,211,730] Total $ 8,807,785 $ 338,271 $ 312,648 $ 54,966 $ 2,441,349 $ 11,955,019 Solid Water Other Waste and Governmental Sanitation Disposal Sewer Total Primary Government Receivables: Accounts $ 52,151 $ 201,973 $ 231,123 $ 1,489,511 $ 5,257,540 Taxes - - - - 10,848,090 Interest 16 35,893 Gross receivables 52,151 201,973 231,139 1,489,511 16,141,523 Less: allowance for uncollectibles [9821 [62,801] - [463,1471 [2,738,660] Total $ 51,169 $ 139,172 $ 231,139 $ 1,026,364 $ 13,402,863 Component Units Salina Airport Authority Accounts $ 107,643 Less: allowance for uncollectibles [984] 106,659 Taxes 1,638,423 Total Salina Airport Authority 1,745,082 Salina Housing Authority Accounts 37,957 Other 1,719 Total Salina Housing Authority 39,676 Total $ 1,784,758 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) C. Interfund Receivables and Payables The composition of interfund balances as of December 31, 2011, is as follows: Fund Types General Fund Other Government Funds Due From Due To $ 9,375 $ - - 9,375 $ 9,375 $ 9,375 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. 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2011, was as follows: Business -type activities capital assets, net $ 58,272,937 $ 30,722 $ 58,242,215 $ 10,632,563 $ 1,236,031 $ 67,638,747 38 Balance Add. Bal Balance 12/31/2010 Adiustments 12/31/2010 Additions Retirements 12/31/2011 City governmental activities: Governmental activities: Capital assets, not being depreciated Construction in progress $ 32,549,155 $ 81,670 $ 32,630,825 $ 2,945,099 $ 3,021,567 $ 32,554,357 Land 22,477,191 - 22,477,191 - - 22,477,191 Capital assets, being depreciated Infrastructure 144,316,296 144,316,296 1,829,401 146,145,697 Buildings and improvements 36,233,800 36,233,800 - 36,233,800 Vehicles 7,480,033 810,889 8,290,922 255,156 216,023 8,330,055 Equipment, furniture and fixtures 5,353,682 92,755 5,446,437 246,676 235,912 5,457,201 Total capital assets 248,410,157 985,314 249,395,471 5,276,332 3,473,502 251,198,301 Less accumulated depreciation for: Infrastructure 60,603,797 [30,296] 60,573,501 2,964,133 - 63,537,634 Buildings and improvements 12,609,132 10,741 12,619,873 1,023,364 - 13,643,237 Vehicles 5,035,374 [40,529] 4,994,845 513,718 174,927 5,333,636 Equipment, furniture and fixtures 4,039,705 89,397 4,129,102 228,844 188,665 4,169,281 Total accumulated depreciation 82,288,008 29,313 82,317,321 4,730,059 363,592 86,683,788 Governmental activities capital assets, net $ 166,122,149 $ 956,001 $ 167,078,150 $ 546,273 $ 3,109,910 $ 164,514,513 Business -type activities: Capital assets, not being depreciated Construction in progress $ 1,516,604 $ - $ 1,516,604 $ 10,781,482 $ 1,236,031 $ 11,062,055 Land 1,541,002 - 1,541,002 - - 1,541,002 Capital assets, being depreciated Infrastructure 68,957,665 11,932 68,969,597 2,333,997 71,303,594 Buildings and improvements 22,587,106 - 22,587,106 - 22,587,106 Vehicles 2,987,740 [41,385] 2,946,355 139,452 102,647 2,983,160 Equipment, furniture and fixtures 4,376,725 27,010 4,403,735 30,824 - 4,434,559 Total capital assets 101,966,842 [2,443] 101,964,399 13,285,755 1,338,678 113,911,476 Less accumulated depreciation for. Infrastructure 28,973,288 [34,750] 28,938,538 1,774,866 - 30,713,404 Buildings and improvements 10,241,870 17,027 10,258,897 424,276 - 10,683,173 Vehicles 2,084,391 9,460 2,093,851 179,756 102,647 2,170,960 Equipment, furniture and fixtures 2,394,356 36,542 2,430,898 274,294 2,705,192 Total accumulated depreciation 43,693,905 28,279 43,722,184 2,653,192 102,647 46,272,729 Business -type activities capital assets, net $ 58,272,937 $ 30,722 $ 58,242,215 $ 10,632,563 $ 1,236,031 $ 67,638,747 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets (Continued) The City's depreciation expense was charged to governmental functions as follows: Governmental Activities: General government $ 8,990 Public safety 507,826 Public works 3,265,341 Public health 38,013 Culture and recreation 803,772 Planning and development 106,117 Total depreciation $ 4,730,059 Business -type Activities: Solid Waste Disposal $ 740,047 Water and Sewer 1,758,777 Sanitation 120,799 Golf Course Division 33,569 Total depreciation $2,653,192 E. Long -Term Debt Following is a summary of changes in long -term debt for fiscal year 2011: Governmental activities: General obligation bonds Accrued compensation Temporary notes Total Business -type activities: General obligation bonds Revenue bonds Accrued compensation Total Component Units: General obligation bonds Financing lease Temporary notes Special assessment debt Total component units Balance Balance Amounts January 1, December 31, Due Within 2011 Additions Deletions 2011 One Year $ 53,120,953 $ 6,587,986 $ 4,483,269 $ 55,225,670 $ 5,051,038 3,230,488 440,340 581,694 3,089,134 581,694 2,500,000 3,400,000 2,500,000 3,400,000 3,400,000 $ 58,851,441 $ 10,428,326 $ 7,564,963 $ 61,714,804 $ 9,032,732 $ 8,614,577 $ - $ 1,396,670 $ 7,217,907 $ 1,200,048 1,580,000 16,193,925 1,580,000 16,193,925 343,696 667,768 104,025 122,302 649,491 122,301 $ 10,862,345 $ 16,297,950 $ 3,098,972 $ 24,061,323 $ 1,666,045 $ 12,792,154 $ 14,056,831 $ 1,040,000 $ 25,808,985 $ 1,090,000 285,796 - 40,238 245,558 42,941 11,652,467 - 11,652,467 - - 145,299 - 20,287 125,012 21,066 $ 24,875,716 $ 14,056,831 $ 12,752,992 $ 26,179,555 $ 1,154,007 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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 Internal Improvements 20028, due 10/1/2017 Internal Improvements 2003A, due 10/1/2018 Refunding 2004A, due 8/1/2015 Internal Improvements 20048, due 10/1/2019 Internal Improvements 2005A, due 10/1/2020 Internal Improvements 2006A, due 10/1/2026 Internal Improvements 2006B, due 10/1/2021 Internal Improvements 2007A, due 10/1/2027 Internal Improvements 2008A, due 10/1/2023 Internal Improvements 20088, due 7/1/2028 Internal Improvements 2009A, due 10/1/2029 Internal Improvements 2010A, due 10/1/2025 Internal Improvements 2010B, due 10/1/2023 Internal Improvements 2011A, due 10/1/2031 Total general obligation bonds Revenue Bonds Revenue 2011, due 10/1/31 Total revenue bonds Temporary Notes Series 2011 -1, due 8/1/2012 Total revenue bonds 40 Original Interest Bonds Issue Rates Outstanding $ 1,980,000 2.70% to 4.50% $ 165,000 4,350,000 2.13% to 3.85% 1,765,000 5,585,000 2.10% to 4.00% 1,170,000 4,053,000 3.00% to 4.00% 1,390,000 4,210,000 2.95% to 4.25% 2,200,000 2,200,000 3.55% to 5.50% 1,650,000 885,000 4.00% to 4.50% 535,000 6,545,000 4.25% to 4.625% 5,085,000 3,720,000 3.25% to 4.00% 3,000,000 3,525,000 3.65% to 5.00% 3,415,000 23,695,000 2.00% to 5.00% 21,877,424 6,916,592 2.00% to 3.875% 6,138,819 7,973,044 0.50% to 3.00% 7,464,348 6,587,985 2.00% to 5.00% 6,587,986 $ 62,443,577 $ 16,193,925 2.00% to 4.60% $ 16,193,925 $ 16,193,925 $ 3,400,000 0.40% $ 3,400,000 $ 3,400,000 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long -Tenn Debt (Continued) 41 Original Interest Bonds Issue Rates Outstanding Component Unit Salina Airport Authority General Obligation Bonds General Obligation 2001 A, due 2012 $ 1,385,000 4.45% to 5.60% $ 175,000 General Obligation 2002A, due 2012 2,635,000 2.45% to 3.70% 305,000 General Obligation 2005A, due 2020 3,635,000 4.75% to 5.25% 2,935,000 General Obligation 2007A, due 2022 1,005,000 4.60% to 6.00% 800,000 General Obligation 2009A, due 2029 2,025,000 4.20% to 4.25% 1,932,154 General Obligation 2009B, due 2026 6,080,000 3.00% to 5.50% 5,605,000 General Obligation 2011 A, due 2030 11,820,000 4.64% 11,603,309 General Obligation 2011 B, due 2031 2,505,000 4.28% 2,453,522 Total general obligation bonds 25,808,985 Special Assessment Debt Airport Industrial Center, due 2016 565,235 3.79% 104,691 Hangar 600 Sanitary Sewer, due 2021 27,599 4.47% 20,321 Total special assessment debt 125,012 Financing Lease, due 2015 425,000 6.609% 245,558 Total $ 26,179,555 Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: General Obligation - Primary Government Bonds Interest Year Outstanding Due Total 2012 $ 6,251,086 $ 2,299,881 $ 8,550,967 2013 6,286,086 2,026,639 8,312,725 2014 5,961,086 1,802,699 7,763,785 2015 5,161,086 1,611,107 6,772,193 2016 5,001,086 1,440,080 6,441,166 2017 -2021 19,865,428 4,617,544 24,482,972 2022 -2026 10, 541,564 1,805,185 12,346,749 2027 -2031 3,376,155 307,047 3,683,202 Total $ 62,443,577 $ 15,910,181 $ 78,353,758 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long -Term Debt (Continued) Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: General Obligation - Component Units Bonds Interest Year Outstanding Due Total 2012 $ 1,090,000 $ 1,169,829 $ 2,259,829 2013 895,000 1,096,914 1,991,914 2014 925,000 1,067,866 1,992,866 2015 955,000 1,036,264 1,991,264 2016 990,000 1,001,531 1,991, 531 2017 -2021 5,600,000 4,370,941 9,970,941 2022 -2026 6,965,000 3,006,746 9,971,746 2027 -2031 8,750,000 1,218,234 9,968,234 Total $ 26,170,000 $ 13,968,325 $ 40,138,325 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: Temporary Notes - Primary Government Bonds Interest Year Outstanding Due Total 2012 $ 3,400,000 $ 14,204 $ 3,414,204 42 Revenue Bonds - Primary Government Bonds Interest Year Outstanding Due Total 2012 $ 343,696 $ 596,991 $ 940,687 2013 623,696 590,191 1,213,887 2014 633,696 577,791 1,211,487 2015 643,696 565,191 1,208,887 2016 663,696 549,191 1,212,887 2017 -2021 3,638,480 2,433,862 6,072,342 2022 -2026 4,323,480 1,738,821 6,062,301 2027 -2031 5,323,485 743,320 6,066,805 Total $ 16,193,925 $ 7,795,358 $ 23,989,283 Annual debt service requirements to maturity for temporary notes - to be paid through the issuance of general obligation bonds: Temporary Notes - Primary Government Bonds Interest Year Outstanding Due Total 2012 $ 3,400,000 $ 14,204 $ 3,414,204 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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: Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: Financing Lease - Component Units Assessment Lease Interest Year Year Outstandinq Due Total 2012 $ 42,941 $ 15,531 $ 58,472 2013 45,826 12,646 58,472 2014 48,905 9,567 58,472 2015 52,190 6,282 58,472 2016 55,696 2,776 58,472 Total $ 245,558 $ 46,802 $ 292,360 Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: 43 Special Assessment Debt - Component Units Assessment Interest Year Outstanding Due Total 2012 $ 21,066 $ 4,876 $ 25,942 2013 21,876 4,067 25,943 2014 22,717 3,226 25,943 2015 23,590 2,352 25,942 2016 24,497 1,446 25,943 2017 -2021 11,266 1,555 12,821 Total $ 125,012 $ 17,522 $ 142,534 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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 defaults, which have historically been immaterial. Conduit debt. The City has entered into several conduit debt arrangements wherein the City issues industrial revenue bonds to finance a portion of the construction of facilities by private enterprises. In return, the private enterprises have executed mortgage notes or leases with the City. The City is not responsible for payment of the original bonds, but rather the debt is secured only by the cash payments agreed to be paid by the private enterprises under the 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, 2011, total outstanding conduit debt was $86,472,423. 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, 2011, the City had $325,000 of outstanding defeased debt. F. Reconciliation of Transfers A reconciliation of interfund transfers follows: The City uses interfund transfers to share administrative costs between funds. 44 Transfer In Transfer Out Major Funds: General fund $ 868,838 $ 997,949 Flood and drainage improvement fund 907 - Tourism and convention fund - 596,440 Special gas fund 180,000 1,836 Bicentennial center fund 872,849 - Sales tax capital fund 8,558 3,501,556 Debt service 2,225,565 83,488 Capital projects fund 3,289,564 405,549 Other governmental funds 547,389 105,259 Agency funds - 198,821 Solid waste disposal fund - 180,000 Water and sewer fund - 2,030,000 Golf course fund 47,228 - Central garage fund 60,000 - Total Transfers $ 8,100,898 $ 8,100,898 The City uses interfund transfers to share administrative costs between funds. 44 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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 (KP &F). Both are cost - sharing multiple - employer defined benefit pension plans as provided by Kansas statutes (KSA 74 -4901 et seq). KPERS and KP &F 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 611 South Kansas, Suite 100; Topeka, Kansas 66603 or by calling 1- 888 - 275 -5737. Funding Policy. K.S.A. 74 -4919 establishes the KPERS member - employee contribution rate at up to 6% of covered salary. K.S.A. 74 -4975 establishes the KP &F member - employee contribution rate at 7% of covered salary. The employer collects and remits member - employee contributions according to the provisions of section 414 (h) of the Internal Revenue Code. State law provides that the employer contribution rates be determined annually based on the results of an annual actuarial valuation. KPERS and KP &F are funded on an actuarial reserve basis. State law sets a limitation on annual increases in the employer contribution rates. The KPERS employer rate was 6.96% from January 1 to December 31, 2011. The City employer contributions to KPERS for the years ending December 31, 2011, 2010, and 2009 were $987,826, $1,039,728 and $831,493, respectively, equal to the required contributions for each year. The KP &F employer rate established for fiscal years beginning in 2011 is 17.68 %. Employers participating in KP &F also make contributions to amortize the liability for past service costs, if any, which are determined separately for each participating employer. The City's contributions to KP &F for the years ended December 31, 2011, 2010, and 2009 were $1,787,801, $1,664,356 and $1,769,379, 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. 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. 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. 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) 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, $172,545 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2011 2010 Unpaid claims, January 1 $ 425,582 $ 372,610 Incurred claims (including IBNRs) 126,625 409,801 Claim payments 230,417 356,829 Unpaid claims, December 31 $ 321,790 $ 425,582 The City established a limited risk management program for employee health and dental insurance in 1997. The program covers eligible City employees. Premiums are paid into the health insurance fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $50,000. Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments 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: 2011 2010 Unpaid claims, January 1 $ 382,502 $ 421,530 Incurred claims (including IBNRs) 4,229,571 4,198,012 Claim payments 4,2[ 20,8981 4,237,040 Unpaid claims, December 31 $ 391,175 $ 382,502 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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, 2011. Project N Ohio Grade Separation Bicentennial Improvements Markley, Magnolia, Valleyview Sanitary Sewer Improvements and Manhole and Wastewater Pump Station Rehabilitation Grand Prairie Addition Magnolia Commons - South 9th Corridor, Phase IV Scoular Addition Waterline Imp. Stone Creek Addition Riffel # 2 Infrastructure East Magnolia Road Replacement Aviation Service Center Fire Station # 1 Authorization $ 6,617,581 2,500,000 5,150,000 1,618,096 3,415,564 6,500,000 75,453 440,193 977,917 4,500,000 5,500,000 1,787,000 Expenditures $ 6,523,786 2,505,636 1,070,277 1,479,406 3,003,051 6,201,014 48,673 324,404 893,024 432,128 3,737,322 226,131 Project overages in the Bicentennial Improvements project 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, 2011. 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 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 $2,042,254 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 29.5% of the estimated capacity of the landfill. NU CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 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 $4,891,330 as the remaining estimated capacity is filled over the remaining life expectancy of 68.8 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2011. 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 post - closure 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 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. Department of Defense transferred property located at the former Schilling Air Force Base (the Base or Site) to the City on or about September 9, 1966. The property is now known to contain areas of extensive soil and groundwater contamination, which is a result of the use and disposal of chlorinated solvents during military operations at the Base from 1942 until Base closure in 1965. The U.S. 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 (Corps) is the lead agency for the Department at formerly used defense sites. The Corps has investigated the soil and groundwater contamination at the Site under the regulatory oversight of the U.S. Environmental Protection Agency (EPA) and the Kansas Department of Health and Environment (KDHE). The Site is not designated as a National Priority List Superfund site, but investigation and remediation are required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act ( CERCLA). Potential liability for contamination under CERCLA 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 Site, the City is potentially liable under CERCLA, although the City believes that it has meritorious defenses to such liability. The City is under no administrative orders from the EPA or KDHE. The City is considered to be a Potentially Responsible Party (PRP) for the Site, primarily due to its status as a property owner. The Salina Airport Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University at Salina) (collectively Salina Public Entities) currently own over 90% of the nearly 4,000 acres of the Base property. 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Beginning in August 2007, the Salina Public Entities initiated settlement negotiations with the U.S. Federal Government. The negotiation objectives at that time included transferring the responsibility for completing the cleanup from the U.S. to the Salina Public Entities. The local objective was to reach a settlement agreement with the U.S. 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, by and through its environmental consultant, 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 Corps. Subsequently, on January 23, 2009, the Salina Public Entities delivered a demand letter to the Corps. The letter demanded that settlement negotiations begin immediately with the U.S. Department of Justice. On May 14, 2009 the City was notified that the Corp referred the Base demand letter to the U.S. Department of Justice on May 12, 2009. The Salina Public Entities delivered on or about May 10, 2010, a settlement offer and a draft of a lawsuit complaint to the attorney for the U.S. Department of Justice. The Salina Public Entities planned to file suit against the U.S. if the matter was not settled by the end of May, 2010. The Salina Public Entities did not intend to cut off settlement negotiations by the filing of suit, and this has been communicated to the U.S. No remedial action plan or record of decision has been adopted by the EPA or KDHE. On or about May 27, 2010, the Salina Public Entities filed their Complaint against the United States of America, the United States Department of Defense and Secretary of Defense, Robert M. Gates, in his official capacity (collectively, "Defendants "). On or about September 22, 2010, the Salina Public Entities filed their First Amended Complaint in four counts: Count I Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(2), Count II Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(1), Count III Claim for Recovery of Response Costs Pursuant to 42 U.S.C.§ 9607(a) and Count IV Claim for Declaratory Judgment Pursuant to 42 U.S.C.§ 9613(g)(2). On or about October 6, 2010, Defendants filed their motion to dismiss and to strike, primarily with respect to the citizen suit claims. On or about March 25, 2011, Judge Murguia entered his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I and II (citizen suit claims) for lack of subject matter jurisdiction. He also granted the Defendants' motion to dismiss the Salina Public Entities' requests for attorney fees, with the exception of non - litigation attorney fees. He denied the Defendants' motion to strike the Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims under Counts III and IV for response costs under CERCLA 9607(a) are not affected by the Judge's rulings. The Salina Public Entities disagree with most of the Judge's filings and, if necessary, plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings. On or about April 22, 2011, Defendants filed their Answer to First Amended Complaint and Counterclaim against the Salina Public Entities. Count I of the Counterclaim alleges a claim for contribution under CERCLA, 42 U.S.C.§ 9613(f)(1). Count II of the Counterclaim alleges a claim for cost recovery under CERCLA, 42 U.S.C.§ 9607(a)(1). Count II alleges costs incurred by the U.S. Environmental Protection Agency of approximately $1,838,241 as of September 30, 2007, and alleges costs incurred by the Corps of approximately $14,915,228 as of April 17, 2009. The Salina Public Entities intend to vigorously contest the claims brought against them and will assert, among other defenses, the third parry defense under 42 U.S.C.§ 9607(b)(3). 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Since the lawsuit remains pending without a final settlement, the City intends to vigorously pursue its claims and contest the claims brought against it. Based on presently known information, the City has determined that while a possible liability exists, at this time no reasonable estimate of the possible liability can be made. Therefore, no liability related to that matter has been recorded. 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 $229,000 to the Plan (approximately 100% of total premiums) through their required contribution of $425 per month for retiree -only coverage and $1,141 for family 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 $ 961,335 Interest on Net OPEB Obligation 95,743 Adjustment to Annual Required Contribution 79,786 Annual OPEB cost (expense) 977,292 Benefit payments 229,000 Change in net OPEB obligation 748,292 Net OPEB obligation - beginning of year 2,393,591 Net OPEB obligation - end of year $ 3,141,883 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) I. 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, 2011 was as follows: Funding Status and Funding Progress. As of the year ended December 31, 2011, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $9,019,806 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $9,019,806. The covered payroll (annual payroll of active employees covered by the plan) was $21,942,428, and the ratio of the UAAL to the covered payroll was 41.11 %. 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 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, 2011, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 4.00% investment rate of return, which is the rate of the employer's own investments as there are no plan assets and an initial annual medical and dental healthcare cost trend of 9.30 %, reduced by decrements to an ultimate rate 4.70% after eighty-two years. The UAAL is being amortized as a level dollar over an open thirty-year period. 51 Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2008 $ 910,418 $ 96,672 $ 813,746 December 31, 2009 957,353 100,000 1,671,099 December 31, 2010 921,492 199,000 2,393,591 December 31, 2011 977,292 229,000 3,141,883 Funding Status and Funding Progress. As of the year ended December 31, 2011, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $9,019,806 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $9,019,806. The covered payroll (annual payroll of active employees covered by the plan) was $21,942,428, and the ratio of the UAAL to the covered payroll was 41.11 %. 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 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, 2011, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 4.00% investment rate of return, which is the rate of the employer's own investments as there are no plan assets and an initial annual medical and dental healthcare cost trend of 9.30 %, reduced by decrements to an ultimate rate 4.70% after eighty-two years. The UAAL is being amortized as a level dollar over an open thirty-year period. 51 APPENDIX D December 31, 2012 Unaudited Financial Statements The City's 2012 audited financial statements were not completed as of the date of this Official Statement. The following is a portion of the report on examination of the City of Salina, Kansas for the fiscal year ended December 31, 2012, prepared by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. MIZE HOUSER C. OMPANYPA. INDEPENDENT AUDITOR'S REPORT ON THE BASIC FINANCIAL STATEMENTS Mayor and City Commissioners City of Salina, Kansas Report on the Financial Statements We have audited the accompanying financial statements of the governmental actiViti, the business -type activities, the aggregate discretely presented component units, each major fund, and - regate remaining fund information of the City of Salina, Kansas, as of and for the year ended Decemb %12, and the related notes to the financial statements, which collectively comprise the City's basic financial' terlients as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair pres taibn of these financial statements in accordance with accounting principles generally accepted in the U ed tes of America; this includes the design, implementation, and maintenance of internal control rel q th preparation and fair presentation of financial statements that are free from material misstatement, wheilk a to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on e a cial statements based on our audit. We conducted our audit in accordance with auditing standards gen m Ily cepted in the United States of America and the "Kansas Municipal Accounting and Audit Guide." Thes t s require that we plan and perform the audit to obtain reasonable assurance about whether the financ ents are free of material misstatement. We did not audit the financial statements of the Salina Airport A . t . ich statements reflect total assets of $52,209,963 as of December 31, 2012 and total revenues of , 8, or the year then ended, and the Housing Authority of the City of Salina which statements reflect al "s of $7,900,623 as of June 30, 2012 and total revenues of $2,074,377 for the year then ended, which a cretely presented component units in the accompanying financial statements. Those financial statements were a ited 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. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. www.mizehouser.com ■ mhco@mizehouser.com 534 S Kansas Ave, Suite 700 ■ Topeka, KS 66603 -3465 ■ 785.233.0536 p ■ 785.233.1078 f 534 S Kansas Ave, Suite 400 ■ Topeka, KS 66603 -3454 ■ 785.234.5573 p ■ 785.234.1037 f 7101 College Blvd, Suite 900 ■ Overland Park, KS 66210 -1984 ■ 913.451.1882 p ■ 913.451.2211 f 211 E Eighth Suite AN Lawrence, KS 66044 -2771 ■ 785.842.8844 p ■ 785.842.9049 f Opinions In our opinion, based on our audit and the reports 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, as of December 31, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 through 13 and the schedules of funding progress on page 52 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in a I nce with auditing standards generally accepted in the United States of America, which consisted of inquiries o a ment about the methods of preparing the information and comparing the information for consistency wi gement's responses to our inquiries, the basic financial statements, and other knowledge we obtained r audit of the basic financial statements. We do not express an opinion or provide any assuran th formation because the limited procedures do not provide us with sufficient evidence to express an o io vide any assurance. Other Information Our audit was conducted for the purpose of forming opinions financial statements that collectively comprise the City's financial statements as a whole. The introdu t sec Fn, combining and individual nonmajor fund financial statements and schedules, and statistical to *ste in the table of contents are presented for purposes of additional analysis and are not a requir the basic financial statements. The combining and individual nonmajor fund financial statements and, s e are the responsibility of management and were derived from and relate directly to the underlying accounti a other records used to prepare the financial statements. The information has been subjected to the auditin res applied in the audit of the financial statements and certain additional procedures, including compan ec nciling such information directly to the underlying account and other records used to prepare the c s tements or to the financial statements themselves, and other additional procedures in accordance w a i g standards generally accepted in the United States of America. In our opinion, the information is fairly all material respects in relation to the financial statements as a whole. The introductory and statistical s s ave not been subjected to the auditing procedures applied in the audit of the basic financial stateme n ccordingly, we do not express an opinion or provide any assurance on them. October 24, 2013 2 BASIC FINANCIAL STATEMENTS ASSETS AND DEFERRED OUTLFOWS OF RESOURCES Current assets. Cash and investments Receivables (net of allowance for uncollectibles) Accounts Taxes Interest Inventory Restricted cash and investments Prepaid expenses Total current assets Noncurrent assets: Notes receivable Capital assets, nondepreciable Construction in progress Land Capital assets, depreciable Less: Accumulated depreciation Total noncurrent assets Total assets Deferred outflows of resources: CITY OF SALINA, KANSAS STATEMENT OF NET POSITION December 31, 2012 Primary Government Component Units Total Total Total Salina Salina Governmental Business -type Primary Housing Airport Activities Activities Government Authority Authority $ 14,512,406 $ 25,459,075 $ 39,971,481 $1,618,067 $ 1,660,132 1,155,058 1,457,579 2,612,637 15,248 134,386 11,093,639 - 11,093,639 - - 33,497 16 33,513 - - 242,774 586,568 829,342 17,474 3,260 - - - 162,930 - 32,620 8,936 27,037,374 27,503,238 54,540,612 1,846,339 1,806,714 - - - 2,138 - 9,190,083 20,962,212 5 &4* 482,494 734,309 22,640,475 1,541,806 2, 81 1,456,891 9,872,183 221,623,024 102,602,44 5,467 7,452,363 68,884,724 91,415,423 48,785, 1 ,200,841 3,339,602 29,087,967 162,038,159 3 38,359,202 6,054,284 50,403,249 189,075,533 4103,82 8 292,899,814 7,900,623 52,209,963 Deferred charge on bond issuance 483,00 9,943 Total deferred outflows of resources 4 329,943 Total assets and deferred outflows of resources $ 189, 541 104,154,224 Liabilities: Current liabilities: 812,951 812,951 $ 293,712,765 Accounts payable 93,800 $ 415,671 $ 1,409,471 Retainage payable 328,811 1,364,869 1,693,680 Accrued liabilities 499,216 - 499,216 Matured bond principal and interest 145 - 145 Accrued interest payable 429,113 200,178 629,291 Deposits payable - 161,252 161,252 Unearned revenue 10,576,448 - 10,576,448 Current portion of compensated absences 1,555,549 319,073 1,874,622 Current portion of temporary notes payable 1,485,000 - 1,485,000 Current portion of revenue bonds payable - 623,696 623,696 Current portion of financing leases payabl - - - Current portion of special assessm It able - - - Current portion of general oblig n bo pa le 5,121,431 1,304,929 6,426,360 Total current liabilities 20,989,513 4,389,668 25,379,181 Noncurrent liabilities: Accrued liabilities 361,378 - 361,378 Compensated absences 1,501,450 307,978 1,809,428 Net OPEB obligation 3,502,807 417,300 3,920,107 Revenue bonds payable - 15,226,532 15,226,532 Financing leases payable - - - Special assessment debt payable - - - General obligation bonds payable 43,988,144 8,308,997 52,297,141 Landfill post - closure care liabilities - 1,693,368 1,693,368 Total noncurrent liabilities 49,353,779 25,954,175 75,307,954 Total liabilities $ 70,343,292 $ 30,343,843 $ 100,687,135 Net Position Invested in capital assets, net of related debt $ 112,928,584 $ 50,856,889 Restricted for: Permanent funds. Expendable 442,509 - Debt service 639,324 1,553,016 Unrestricted 5,204,832 21,400,476 Total net position $ 119,215,249 $ 73,810,381 $7,900,623 $52,209,963 $ 41,427 $ 76,611 38,532 147,323 - 370,102 83,935 - 8,530 41,127 13,352 - - 45,826 - 21,876 895,000 185,776 1,597,865 48,642 3,338 - 156,791 - 82,071 - 23,861,769 51,980 24,100,631 $ 237,756 $ 25,698,496 $ 163,785,473 $ 6,052,146 $ 25,339,916 442,509 114,288 - 2,192,340 - - 26,605,308 1,496,433 1,171,551 $ 193,025,630 $7,662,867 $26,511,467 The notes to the basic financial statements are an integral part of this statement. 14 Governmental activities: General government Public safety Public works Public health and sanitation Culture and recreation Planning and development Interest on long -tens debt Total governmental activities Business -type activities: Solid Waste Disposal Water and Sewer Sanitation Golf Course Total business -type activities Total primary government Component units: Salina Housing Authority Salina Airport Authority Total component units CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 The notes to the basic financial statements are an integral part of this statement. 15 Net [Expenses] Revenue and Changes in Net Assets Program Revenues Primary Government Component Units Operating Capital Total Total Total Salina Salina Charges for Grants and Grants and Governmental Business -type Primary Housing Airport Expenses Services Contributions Contributions Activities Activities Government Authority Authority $ 11,584,628 $ 6,327,712 $ 1,091,708 $ $ [4,165,208] $ $ [4,165,208] $ $ 19,065,686 4,290,288 1,284,505 [13,490,893] [13,490,893] 10,956,931 305,965 1,548,322 [9,102,644] [9,102,644] 1,382,595 46,250 154,001 [1,182,344] [1,182,344] 5,338,344 1,728,259 155,343 [3,454,742] [3,454,742] 3,362,142 158,010 260,538 [2,943,594] [2,943,594] 1,914,286 - - [1,914,2861 [1,914,286] 53,604,612 12,856,484 4,494,417 [36,253,711] [36,253,711] 2,052,794 3,137,035 - 124,000 1,208,241. 1,208,241 14,889,043 19,098,626 150,194 4,359,77 359,777 2,515,303 2,461,965 - [53,33 58,338] 720,420 783,169 62, , 2,749 20,177,560 25,480795 274,194 5197 ,4�9 5,577,429 $ 73,782,172 $ 38,337,279 $ 4$494,417 $ 274,194 36,253 _ X529 [30,676,282] $ 2,177,417 $ 375,357 $ 1,572,748 $ 87,759 [141,553] 5,804,008 2,103,416 1,779,827 [1,920,765] $ 7,981,425 $ 2,478,773 $ 1,572,748 $ 1,867,586 _ 1[ 41,5531 [1,920,765] General Revenues: Property taxes levied for General purposes 8,272,455 8,272,455 1,767,338 Debt service Motor vehicle tax 2,438,787 2,438,787 - General purposes 1,152,767 1,152,767 Sales tax General purposes 12,165,281 12,165,281 Selective purposes 4,209,889 4,209,889 Othertaxes General purposes 6,485,860 6,485,860 - - Investment rekreve!es 66,375 79,491 145,866 15,275 1,500 Miscellaneou 660,161 433,942 1,094,103 24,936 56,752 Transfers, net 30,000 [30,000] - - - Subtot- genet i 35,481,575 483,433 35,965,008 40,211 1,825,590 Change in position [772,136] 6,060,862 5,288,726 1[ 01,3421 [95,175] Net position - beginning 117,334,142 70,313,686 187,647,828 7,764,209 26,606,642 Prior period adjustment 2,653,243 [2,564,167] 89,076 Net position- beginning, restated 119,987,385 67,749,519 187,736,904 7,764,209 26,606,642 Net position - ending $ 119,215,249 $ 73,810,381 $ 193,025,630 $ 7,662,867 $ 26,511,467 The notes to the basic financial statements are an integral part of this statement. 15 CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2012 Flood & Tourism Drainage and Special General Improvement Convention Gas ASSETS Cash and investments $ 3,120,342 $ Receivables (net) Accounts 709,238 Taxes 8,335,679 Interest 33,497 Inventory 115,900 Due from other funds 31,049 Cash with fiscal agent - - Total assets $ 12,345,705 Deferred inflows of resouft $ 419,505 $ 1,496,001 $ - $ 118,806 2,020 - - 120,826 Unavailable revenue - pr rty taxes 8,174,352 - Total deferred inflows of reso rces 8,174,352 - Fund balance: Nonspendable 115,900 - - - Restricted - - 419,505 1,160,305 Committed - - - - Assigned 539,656 - - 214,870 Unassigned 3,171,554 - - - Total fund balances 3,827,110 - 419,505 1,375,175 Total liabilities, deferred inflows of resources and fund balances $ 12,345,705 $ - $ 419,505 $ 1,496,001 Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Projects Funds Funds $ 14,057 $ 2,043,802 $ 582,412 $ 1,163,487 $ 3,390,046 $ 11,539,980 55,100 1,155, 058 2,459,008 - - 093,639 - - - 3,497 115,900 31,049 145 - jn& 145 $ 14,057 $ 2,043,802 $ 3,041,565 $ 1,163,487 3, ,146 $ 23,969,268 115,900 - - 639,324 - 1,099,754 3,318,888 2,158 1,766,357 - [4,474,792] 2,190,129 [516,148] 980 243,782 - 3,551,940 76,215 4,627,443 - - - - - 3,171, 554 3,138 2,010,139 639,324 [922,852] 3,366,098 10,717,637 $ 14,057 $ 2,043,802 $ 3,041,565 $ 1,163,487 $ 3,445,146 $ 23,969,268 The notes to the basic financial statements are an integral part of this statement. 16 CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES December 31, 2012 Total Governmental Fund Balances Amounts reported for governmental activities in the statement of net position are different because Bond issuance costs are shown as current year expenditures in the funds. $ 10,717,637 483,008 162,015,067 2,003,830 2,962,798 3,502,807 49,109, 575 429,113 [56,004,293] The notes to the basic financial statements are an integral part of this statement. 17 $ 119,215,249 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 Total other financing sources [uses] Net change in fund balance Fund balance - Beginning of year Restatement of prior year fund balance FUND BALANCE - Beginning of year, as restated Fund balance - End of year [534,403] [1,015] [604,125] - [9,128] [907] 79,032 [42,568] 3,836,238 907 340,473 1,417,743 3,836,238 907 340,473 1,417,743 $ 3,827,110 $ - $ 419,505 $ 1,375,175 Flood & Tourism Drainage and Special General Improvement Convention Gas REVENUES: Taxes Real estate taxes $ 8,104,969 $ - $ - $ - Delinquent taxes 167,378 108 - - Motor vehicle taxes 852,832 - - - General sales taxes 12,165,281 - - - Total other financing sources [uses] Net change in fund balance Fund balance - Beginning of year Restatement of prior year fund balance FUND BALANCE - Beginning of year, as restated Fund balance - End of year [534,403] [1,015] [604,125] - [9,128] [907] 79,032 [42,568] 3,836,238 907 340,473 1,417,743 3,836,238 907 340,473 1,417,743 $ 3,827,110 $ - $ 419,505 $ 1,375,175 [1,062,718] 2,362,568 [6,032,967] [2,182,787] 84,194 [5,665,738] - - 3,785,000 2,365,000 Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Proiects Funds Funds $ - $ - $ 2,361,078 $ - $ - $ 10,466,047 - - 77,709 - - 245,195 - - 299,935 - - 1,152,767 - - - - - 12,165,281 - 3,882,314 - - 327,575 4,209,889 - - - - - 6,485,8 - - - 492,219 1,373,584 4,48 6 - - 1,650,053 664,452 - 2,314, - - - - 7,700 0 186,418 - - - 619,782 A, 4,4 618 5,791 10,740 9,202 7,70 4 83 - - - 35,500 5,500 650 - 5 - 110,4 537,082 187,686 3,888,105 4,399,520 1,201,373 2,4 e 804 50,637,913 - - - - 3,574,626 - - - - - 18,564,988 - - - - - 7,003,784 - - - - 154,012 1,342,848 1,250,404 - - - 1,041,098 4,448,697 - - - - 242,888 3,256,025 - - 35 35 - 1,525,537 - 3,330,021 625,126 7,326,571 - - 82 - 145,000 8,591,802 - 89 98 54,139 154,451 2,102,688 - - 1,587 - - 91,587 1,250,404 1,525,537 10,432,487 3,384,160 2,362,610 56,303,651 [1,062,718] 2,362,568 [6,032,967] [2,182,787] 84,194 [5,665,738] - - 3,785,000 2,365,000 - 6,150,000 - - 51,011 9,370 - 60,381 1,002,975 - 1,551,150 - 489,358 3,488,438 [80,000] [1,750,000] - [43,940] - [3,458,438] 922,975 [1,750,000] 5,387,161 2,330,430 489,358 6,240,381 [139,743] 612,568 [645,806] 147,643 573,552 574,643 142,881 1,397,571 1,285,130 390,852 2,792,546 11,604,341 - - - [1,461,347] - [1,461,347] 142,881 1,397,571 1,285,130 [1,070,495] 2,792,546 10,142,994 $ 3,138 $ 2,010,139 $ 639,324 $ [922,852] $ 3,366,098 $ 10,717,637 The notes to the basic financial statements are an integral part of this statement. 18 CITY OF SALINA, KANSAS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE WITH THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 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 position 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 & 40 33,756 Proceeds from sale of assets [52,503] Capital outlays 2,642,629 Depreciation expense [5,283,853] Interest on long -term debt in the statement of activities differs from t e a reported in the governmental funds because interest is recorded as n expenditure in the funds when it is due, and thus requires the rrent financial resources. In the statement of activities, however ' st a ense ok is recognized as the interest accrues, regardless of when i This is the amount by which interest decreased. An internal service fund is used by the city's costs of certain activities to the individual fu of certain internal service fund is reported v Some expenses reported in the absences and other post emplc financial resources and ther governmental funds. eft to charge the avenues and expenses mental activities. ivities, such as compensated do not require the use of current ed as expenditures in Bond and temporary note pro eds are other financing sources in the governmental funds, but they increase long -term liabilities in the statement of net position 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 position and does not affect the statement of activities. Changes In Net Position of Governmental Activities The notes to the basic financial statements are an integral part of this statement. 19 574,643 [2,659,971] 83,567 [323,518] [661,369] [6,482,126] 8,696,638 $ [772,136] CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31. 2012 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Current assets: Cash and investments Receivables (net of allowance for uncollectibles) Accounts Interest Inventory and prepaid supplies Total current assets Capital assets: Nondepreaable capital assets: Construction in progress Land Depreciable capital assets. Capital assets Less. accumulated depreciation Total capital assets Deferred outflows of resources. Deferred charge on bond issuance Total deferred outflows of resources Total assets and deferred outflows of resources Business -Type Activities Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $4,259,781 $20,444,868 $ 685,735 $ 68,691 $ 25,459,075 $2,972,281 263,944 1,056,391 137,244 - 1,457,579 16 - - 16 - - 564,114 22,454 586,568 126,874 4,523,741 22,065,373 822,979 91,145 27,503,238 3,099,155 Interest payable 51 194,427 - 200,178 - 20,962,212 - 20,962,212 - 682,000 844,806 - 00 1,541,806 - 8,344,630 91,663,027 1,55 - 13 ,473 V706,244 102,602,443 861,298 6,093,488 40,972,444 3, - 48,785,418 838,206 2,933,142 72,497,60!' �54!�!O�D7P 345,229 76,321,043 23,092 Total current liabilities - 329, 94° 3 329,943 - A3214 ° " 329 943 $7,456,88 91 $1,368,050 $ 436,374 $104,154,224 $3,122,247 Liabilities Current liabilities Accounts payable $ 99 $ 329,462 $ 13,836 $ 5,774 $ 415,671 $ 163,622 Retainage payable - 1,364,869 - - 1,364,869 - Interest payable 51 194,427 - 200,178 Meter deposits payable - 161,252 - 161,252 Current portion of compensated absences pa 33, 734 194,255 50,304 40,780 319,073 47,934 :bA_,,, Current portion of accrued claims payable - - - - - 499,216 Current portion of general obligation bonds 403,881 901,048 1,304,929 - Current portion of revenue bonds payable - 623,696 623,696 - Total current liabilities 509,965 3,769,009 64,140 46,554 4,389,668 710,772 Noncurrent liabilities: Compensated absences paya Accrued claims payable Net OPEB Obligation Payable from restricted assets General obligation bonds payable Revenue bonds payable Landfill post - closure care liabilities Total noncurrent liabilities Total liabilities Net Position Invested in capital assets, net of related debt Restricted Restricted for bond retirement Unrestricted Total net position 32,561 187,500 48,555 39,362 307,978 46,267 - - - - - 361,378 54,829 261,855 74,649 25,967 417,300 - 411,959 7,897,038 8,308,997 - 15,226,532 15,226,532 1,693,368 - - - 1,693,368 - 2,192,717 23,572,925 123,204 65,329 25,954,175 407,645 $2,702,682 $27,341,934 $ 187,344 $ 111,883 $ 30,343,843 $1,118,417 $2,117,302 $47,849,287 $ 545,071 $ 345,229 $ 50,856,889 $ 23,092 - 1,553,016 - - 1,553,016 - 2,636,899 18,148,680 635,635 [20,738] 21,400,476 1,980,738 $4,754,201 $67,550,983 $1,180,706 $ 324,491 $ 73,810,381 $2,003,830 The notes to the basic financial statements are an integral part of this statement. 20 Operating revenues Charges for services Federal grants Miscellaneous Total operating revenues Operating expenses General government Public works Recreation Depreciation Total operating expenses Operating income [loss] CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2012 Business -Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $ 3,137,035 $19,098,626 $ 2,461,965 $ 783,169 $ 25,480,795 $ 9,049,963 28,303 356,848 69 48,722 433,942 140,082 3,165,338 19,455,474 2,462,034 8 1,891 25,914,737 9,190,045 96 79,491 10,122 Debt service - - - - 9,518,987 1,473,883 12,184,195 2,405,40 - 16,063,479 - - - 8,711 688,711 - 560,092 1,779,746 32,596 2,482,791 4,698 2,033,975 13,963,941 515,7 721,307 19,234,981 9,523,685 1,131,363 5,491,533 [5 ,724] 110,584 6,679,756 [333,640] Nonoperating revenues [expenses] Investment revenue 12,302 4, 0 2,293 96 79,491 10,122 Debt service [21,472] 11] - - [914,383] - Gain /[loss] on disposal of fixed assets 2,65 485 455 887 5,480 - Accretion of bond premium 11,560 - - 11,560 - Amortization of bond issuance costs 45,236 - - [45,236] - Total nonoperating revenues [expenses] (860,302] 2,748 983 [863,088] 10,122 Income [loss] before transfers 12 ,846 4,631,231 [50,976] 111,567 5,816,668 [323,518] Transfers from [to] other funds Transfers [out] - [30,000] - - [30,000] - Total transfers - [30,000] - - [30,000] - Capital contributions 124,000 150,194 - - 274,194 - Change in net position 1,248,846 4,751,425 [50,976] 111,567 6,060,862 323,518 Net position, January 1 3,709,743 65,168,435 1,222,584 212,924 70,313,686 2,327,348 Restatement [204,388] [2,368,877] 9,098 [2,564,167] Net position, January 1, restated 3,505,355 62,799,558 1,231,682 212,924 67,749,519 2,327,348 Net position, December 31 $ 4,754,201 $ 67,550,983 $1,180,706 $ 324,491 $ 73,810,381 $ 2,003,830 The notes to the basic financial statements are an integral part of this statement. 21 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31. 2012 Cash flows from operating activities Cash received from customers and users Cash paid to suppliers of goods or services Cash paid to employees Other operating receipts Net cash provided by [used in] operating activities Cash flows from capital and related financing activities Purchase and construction of capital assets Capital contributions Proceeds from sale of capital assets Principal payments - general obligation bonds Principal payments - revenue bonds Interest paid Net cash provided by [used in] capital and related financing activities Cash flows from investing activities Interest received Cash flows from noncapital financing activities Transfers [out] Net cash provided by [used in] noncapital financing activities Net increase [decrease] in cash and cash equivalents Cash and cash equivalents, January 1 Business -Type Activities. Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $3,104,214 $19,065,947 $2,463,893 $ 783,168 $25,417,222 $9,197,593 [1,288,458] [8,393,905] [1,744,666] [378,901] [11,805,930] [8,832,087] [472,279] [2,916,093] [657,992] [325,374] [4,371,738] [632,635] 28,303 356,848 69 48,722 433,942 140,082 1,371,780 8,112,797 61,304 127,615 9,673,496 127,047 0,000 [30,000] - 30,000 - [30,000] - 8 X55 [5,058,596] 64,052 64,736 [4,049,553] [116,926] 3 9,526 24,042,117 621,683 3,955 28,047,281 3,089,207 - 1,461,347 - - 1,461,347 3,379,526 25,503,464 621,683 3,955 29,508,628 3,089,207 $4,259,781 $20,444,868 $ 685,735 $ 68,691 $25,459,075 $2,972,281 The notes to the basic financial statements are an integral part of this statement. 22 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2012 Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss] Adjustments to reconcile operating income [loss] 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 retainage payable Increase [decrease] in accrued compensated absences Increase [decrease] in claims payable Increase [decrease] in landfill postclosure liabilities Increase [decrease] in net OBEB obligation Increase [decrease] in meter deposits payable Net cash provided by [used in] operating activities Business -Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds $ 1,131,363 $ 5,491,533 $ [53,724] $ 110,584 $ 6,679,756 $ [333,640] The notes to the basic financial statements are an integral part of this statement. 23 CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCYFUNDS December 31, 2012 ASSETS Cash and investments Total assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable The notes to the basic financial statements are an integral part of this statement. 24 $ 322,790 $ 322,790 $ 322,790 $ 322,790 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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. Discretely Presented Component Units City of Salina Airport Authority -The Salina Airport Authority was create a purpose of accepting as surplus property portions of the former Schilling A.F.B that was closed b d States Department of Defense in June 1965. One of the primary functions of the Airport A to facilitate the continued growth of jobs and payroll at the Airport Industrial Center. The Airpo r' is managed and controlled by a five- member Board of Directors appointed by the Salina Cit si . Any director may be removed by a majority vote of the Salina City Commission. The Ai ort A ity's basic mill levy (up to 3 mills) requires the approval of the City Commission. The Commissi also approve the issuance of general obligation debt by the Airport Authority. The Airport Authority has ecember 31 fiscal year end. Housing Authority of the City of Salina - The purpose R using Authority of the City of Salina (Housing Authority) is to administer Public Housing Progra izd by the United States Housing Act of 1937. The Mayor of the City of Salina appoints th g board. The City Commission may remove commissioners of the Housing Authority. The issue revenue bonds for the Housing Authority. The financial liability of the Housing Authority is en ly supported by the operating and debt service subsidies received under contract from the Federa ent. The Housing Authority has a June 30 fiscal year end. Information in the accompanying finan 1 ents covers the fiscal year ended June 30, 2012. Complete financial st administrative offices. Salina Airpo ty 3237 I v D. Sali Joint Ventures 1< the individual component units may be obtained at the entity's Housing Authority of the City of Salina 469 S. 5th Salina, KS 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. Total net position /unencumbered cash, December 31, 2012 Total change in net position /change in unencumbered cash, year ended December 31, 2012 Total revenues /cash receipts, year ended December 31, 2012 Total revenues /cash receipts from City of Salina 25 (GAAP Basis) (Kansas Regulatory Basis) Board of Building Health Authority (Audited) (Audited) ^$ 1,697,636 $ 975,862 [62,456] 44,822 3,856,055 865,855 1,018,101 821,033 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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. Salina - Saline County Board of Health Salina County -City 125 West Elm Street Building Authority Salina, KS 300 West treet Salina, K$;!' B. Government -wide and fund financial statements The statement of net position and the statement of activities ep reformation on all of the nonfduciary activities of the primary government and its component units. _ r I ost 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 ofiese urges would distort the direct costs and program revenues reported for the various functions c d. Governmental activities, which normally are supported by taxes and intergovernmental revenues, a re ,; rted separately from business -type activities, which rely to a significant extent on fees and c s or support. Likewise, the primary government is reported separately from certain legally sepp to ponent units for which the primary government is financially accountable. The statement of activities demons t" h egree to which the direct expenses of a given function are offset by program revenues. Dire I 'e es are those that are specifically associated with a service, program or department and ter Qtly r rly identifiable to a particular function. Program revenues include charges paid by the recipient of o "ds or services offered by the program and grants and contributions that are restricted to meetin rational requirements of a particular program. Taxes and other items, which are not classified a w11 r v revenues, are presented as general revenues of the city. Separate financia to en are provided for governmental funds, proprietary funds and fiduciary funds, even though the la are excluded from the government -wide financial statements. Major individual funds are reported as sepa a 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. 26 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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. Expenditure - driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. The City applies all applicable Governmental Accounting Standards Board B) pronouncements as well as the following pronouncements issued on or before November 30, 19 ss those pronouncements conflict with or contradict GASB pronouncements: FASB Statements an e e tions, APB Opinions, and ARBs. P Proprietary fund type operating statements present increase and decreases (expenses) in net position. Proprietary funds distinguish operating revenu an expenses from nonoperating items. Operating revenues and expenses generally result from pro vi ods and services in connection with a proprietary fund's ongoing operations. The princi re enues of the City's proprietary funds are charges to customers for sales and services. Oses for enterprise funds and internal service funds include the cost of sales and services, adminses, and depreciation on capital asset s. All revenue and expenses not meeting this definition s nonoperating revenues and expenses. The internal service funds account for rik n er's compensation, health insurance, central garage and information services that are p v d o other departments or agencies of the government, or to other governments, on a cost- reimburs is. Agency funds are custodial i u a do not measure results of operations or have a measurement focus. Agency funds do howe accrual basis of accounting. Agency funds are used to account for assets held as an agent for i Is, other governmental units, private organizations and /or other funds. The City reports the g or governmental funds: General fund - To ount for resources traditionally associated with government, which are not required legally, or by sound fi cial management to be accounted for in another fund. 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. Sales tax capital fund - To account for 87.5% of the 1/4 cent sales tax designated for capital, debt, and human services purposes. Debt service fund - 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. 27 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Capital projects fund - 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 City's landfill. Golf course fund -To account for the operations of the municipal golf cep rs Water and sewer fund -To account for the activities of the Ci Da,blid sewer operations. D. Assets, Liabilities, Fund Balance, and Net Position 1. Pooled cash and investments The City maintains a cash and investment pool Each fund type's portion of this pool is display city's cash and cash equivalents are cqn en investments with original maturities of thre Kansas Municipal Pool are carried at fa lu A vaild le for use by all funds managed by the city. i Vinancial statements as "Cash and Investments." The be cash on hand, demand deposits and short-term or less from the date of acquisition. Investments in the Cash balances from all funds a ° vested to the extent available in certificates of deposit and other authorized investments. Inves with maturity dates greater than three months are stated separately. Earnings from these invest less specifically designated, are allocated monthly to the investing fund based on the percentage of d nvested to total investments. All investments are carried at fair value. 2. Receivables a _ Pay abl Transactions between" unds that are representative of lending /borrowing 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 to /from other funds" (i.e., the non - current portion of interfund loans). All other outstanding balances between funds are reported as "due to /from other funds." Accounts Receivable. The City records revenues when services are provided. All receivables are shown net of an allowance for 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 2013. 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. 28 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 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 sourc Me used to finance the budget of the ensuing year. Property taxes are levied and liens against property Vd on November 1 of the year prior to the fiscal year for which they are budgeted. Payment a ue November 1, becoming delinquent, with penalty, December 21. Payments of 50% are acc ugh December 20, with the second 50% then being due on or before May 10 of the followin procedure eliminates the need to issue tax anticipation notes since funds will be on hand pri inning of each fiscal year. The City Treasurer draws down all available funds from the County T sure office in two -month intervals. Taxes remaining due and unpaid at February 15 and July 1 are subjec ollection procedures prescribed in state statutes. 3. Inventories and Prepaid Items Inventories are valued at cost using the first -in i= u IFO) method. The costs of governmental fund -type inventories are recorded as expendituresoh c med. Certain payments to vendors reflect plicable to future accounting periods and are recorded as prepaid items. 4. Capital Assets Capital assets, which inglu perry, plant, equipment and infrastructure assets, are reported in the applicable goverRefi bu iness -type activities columns in the government -wide financial statements. Capital assets ar d the government as assets with an initial, individual cost of more than $5,000 and an estimated ife in excess of two years. Such assets are recorded at historical cost or estimated historical cost if ed 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. 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 Years Buildings 50 Other equipment 5-15 Vehicles 6-10 Infrastructure 30-50 29 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 5. 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 to ation 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 i tl each year of employment. Employees must use 50% of leave accrued each calendar year ae� mployee's maximum accrued vacation leave balance cannot exceed 250 hours (or 350 h fo , a oyees working 24 hour shifts). Employees are paid for all accumulated vacation leave at eir c r t wage scale upon termination of employment. Vested or accumulated vacation leave that is expe resources is reported as an expenditure and a fund will pay it. A liability for these amounts is report example, as a result of employee resignations an -r business -type funds and government wide f i� those funds as the benefits accrue to emplo S. pay benefits that are payable upon termini en to liquidated with expendable available financial the government fund financial statements that ✓e mental funds only if they have matured, for its. Vested or accumulated vacation leave of the ents are recorded as an expense and liability of is recorded for accumulated rights to receive sick The General Fund, BicentennialC �%um, Central Garage Fund, Information Systems Fund, Sanitation Fund, Solid Waste Fund, Golf o :r d, and Water and Sewer Fund have been used in prior years to liquidate the liability for compens ences. 6. Temporary Notes Upon authorizati for h suance of general obligation bonds for certain improvements, Kansas law permits the tempo financing of such improvements by the issuance of temporary notes. Temporary notes issued may no xceed 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. 7. Long -term Obligations 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 position. 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. 30 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 8. Fund Balances In the fund financial statements, governmental funds report fund balance in the following classifications: nonspendable, restricted, committed, assigned and unassigned. Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Restricted fund balance indicates that constraints have been placed on the use of resources either by being externally imposed by creditors, grantors, co ributors, or laws or regulations of other governments or imposed by law through constitutional provisions bling legislation. Committed fund balances include amounts that can only be used for speck purpose silt to constraints imposed by formal action of the city commission. Assigned fund balances include that are constrained by the City management's intent to be used for specific purposes, but a er restricted nor committed. Unassigned fund balance represents fund balance that has in ss ed to other funds and that has not been restricted, committed, or assigned to specific pose hin the General Fund. When an expenditure is incurred for purposes for which both restricte n nrestricted fund balance is available restricted amounts are considered to be spent first. When n ex diture is incurred for purposes for which committed, assigned, or unassigned fund balance is av 'la e, the following is the order in which resources will be expended: committed, assigned and unassign The following is the detail for fund balance classifia ' I the financial statements: ajor vemmental Funds Tourism Other Total and I Bicentennial Sales Tax Debt Capital Governmental Governmental General Conv s Center Caoital Service Proiects Funds Funds Fund Balances: Nonspendable for: Inventory $ 115,90 $ - $ $ $ $ $ $ 115,900 Restricted for: Public works 1,160,305 1,160,305 Public health and sanitati0 - 21 21 Culture and recreation 88,145 88,145 Planning and developme 419,505 289,897 709,402 Debt payments - 639,324 721,691 1,361,015 Committed for: Public safety - 381,466 381,466 Culture and recreation 2,158 591,307 593,465 Planning and development - 33,655.00 33,655 Cemetery 436,787 436,787 Capital improvements 1,766,357 [4,474,792] 746,914 [1,961,521] Assigned for: General government 24,635 - - 24,635 Public safety 1,029 1,029 Public works 19,664 214,870 - 234,534 Culture and recreation 13,035 - 980 14,015 Planning and development 68,410 - 68,410 Capital improvements 412,883 243,782 3,551,940 76,215 4,284,820 Unassigned 3,17.1,554 3,171,554 Total Fund Balances $ 3,827,110 $ 419,505 $ 1,375,175 $ 3,138 $ 2,010,139 $ 639,324 $ [922,852 1 $ 3,366,098 $ 10,717,637 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 -Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 9. 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. 10. Net Position Net position represents the difference between assets and liabilities. Net io vested in capital assets, net of related debt consists of capital assets, net of accumulated depri n, educed by the outstanding balances of any borrowings used for the acquisition, construction i vement of those assets. Net position is reported as restricted when there are limitations im - heir use either through the enabling legislation adopted by the City or through external restricti s i� se by creditors, grantors or laws or regulations of other governments. Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABI T A. Budgetary Information Kansas statutes require that an annual oper u et be legally adopted for the general fund, special revenue funds (unless specifically exempod y si u e), debt service fund, and enterprise funds. The statutes provide for the following and timetable in the adoption of the legal annual operating budget: 1. Preparation of the budget fo u ceeding year on or before August 1. 2. Publication in local neyv of the proposed budget and notice of public hearing on the budget on or before August 5 3. Public hearing o r 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 2012 budget was amended for the Water and Sewer Fund, Risk Management Fund, Solid Waste Disposal Fund and Tourism and Convention Fund. 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budgetary Information (Continued) 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 disbur nts, accounts payable, and encumbrances. Encumbrances are commitments by the municipality for fu5 n&% ents and are supported by a document evidencing the commitment, such as a purchase ord n ract. All unencumbered appropriations (legal budget expenditure authority) lapse at year end. A legal operating budget is not required for capital projects fu s, - jor debt service funds, trust funds, and the following special revenue funds: Flood & Drainage rov ent, Bicentennial Center Event, HUD CommunV Development, Community Development Revolving, age Commission, HOME 2012, KDOT Signals 9` Street, CDBG ED, HPRP, Special Law En fo emen , Police Grants, DARE Donations, War Memorial Maintenance, Federal Care Grant and P artment Federal Forfeiture Funds. A legal operating budget is not required for the following E e ise ds: Solid Waste Disposal, Water and Sewer, Sanitation and Golf Course funds. A legal ope i dge't is also not required for the Internal Service funds. Actual to budget comparisons for thes at present budgets to the Commissioners are shown strictly for informational purposes. Spending in funds, which are not subje legal annual operating budget requirements are controlled by federal regulations, other statutes, th use of internal spending limits established by the governing body. B. Legal Debt Margin The City is subject nicipal finance law of the state of Kansas which limits the bonded debt (exclusive of revenue bond n spe 'al assessment bonds) the city may have outstanding to 30 percent of the assessed value of tangible taxable property within the city, as certified to the county clerk on the proceeding August 25. At December 31, 2012, the statutory limit for the City was $134,928,191, providing a debt margin of 81,275,477. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 3. RESTATEMENT OF EQUITY Following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or recorded incorrectly. Additionally, it was discovered that accounts receivable had not been properly recorded. Accordingly, the beginning net position balances were restated, the effects of which are as follows: Capital Solid Waste Water and Governmental Projects Disposal Sewer Sanitation Activities Fund Fund Fund Fund Net Assets /Fund Balance, December 31, 2011 $ 117,334,142 $ 390,852 $ 3,7Y $ 65,168,435 $ 1,222,584 Capital Asset Adjustment 188,314 -] [20,643] 9,098 Fund Reclassification [1,461,347] [1,461, - 1,461,347 - General Obligation Bonds Payable Adjustment 3,926,276 116,695 [3,809,581] Net Assets /Fund Balance, December 31, 2011, Restated $ 119,987,385 $ eA.4951 $ 3,505,355 $ 62,799,558 $ 1,231,682 Note 4. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments The City's cash is considered to be A ds by management and is invested according to KSA 9 -1401. The statute requires that ban a e hold active funds have a main or branch bank in the county in which the City is located or in adjacent to the City and the banks provide an acceptable rate for active funds. Various City investrfa„ �Ofel sid ered to be idle funds by management and are invested according to KSA 12 -1675. The st to s that the City invest its idle funds in only temporary notes of the City, bank certificates of depo epurchase agreements, and if eligible banks do not offer an acceptable rate for the funds: U.S. Treasury ills 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 U.S. 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, 2012, the City has the following investments: Investment Type Kansas Municipal Investment Pool U.S. Government Securities Total fair value 34 Fair Value Rating $ 305,237 S &P AAAf /S1+ 21,027,849 N/A $ 21,333,086 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A. Deposits and Investments (Continued) 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. T i olicy states that funds shall be diversified to reduce the extent of losses due to having an unbaw, olio in terms of maturities, instrument type, and issuers. Therefore, portfolio maturities shal e g d to avoid undue concentration of assets in a specific maturity sector. Liquidity, free of m e , hall be assured through practices insuring that the next disbursement date and payroll date re c ered through maturing investments, marketable U.S. Treasury Bills, the Municipal Investment Pool, o ey market accounts. Default risk shall be minimized by requiring that all sec rchases occur on a delivery vs. payment basis, and that all securities are adequately collateralized. Risk of market price volatility shall be controll t the adoption of a "buy and hold" strategy whereby the City holds each investment to maturity, ou with maintenance of an adequate liquidity position to insure the ability to meet normal anticipate da flow needs. When advantageous, it is allowbl II investments to realize a gain due to price fluctuations; however, such transactions shall not be dpi h normal course of business. The City recognizes that in e'1 risks can result from issuer defaults, market price changes or various technical complications I Pin temporary illiquidity. Portfolio diversification is employed as a way to control risk due to ,0 r f the event of a default by a specific issuer, the Director of Finance and Administration she&re*w,'%nd, if appropriate, proceed to liquidate securities having comparable credit risks. Custodial credit risk is he 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. 35 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: Tourism and Special Debt Other General Convention Gas Service Governmental Subtotal Primary Government Receivables: Accounts $ 3,299,591 $ 390,720 $ - $ $ 56,973 $ 3,747,284 Taxes 8,335,679 - 298,952 D8 - 11,093,639 Interest 33,497 - 33,497 Gross receivables 11,668,767 390,720 298,952, , "' V5 ""b08 56,973 14,874,420 Less: allowance for uncollectibles [2,590,353] - [1,873] [2,592,226] Total $ 9,078,414 $ 390,720 $ 8,952 -$ 2,459,008 $ 55,100 $ 12,282,194 Solid Water Waste and nitation Disposal Sewer Total Primary Government Receivables: Accounts $ 209,309 $ 263,944 $ 1,611,089 $ 5,831,626 Taxes - - - 11,093,639 Interest - 16 - 33,513 Gross receivables 209,309 263,960 1,611,089 16,958,778 Less: allowance for uncollectibles [72,065] - [554,698] [3,218,989] Total $ 137,244 $ 263,960 $ 1,056,391 $ 13,739,789 Component Units Salina Airport Authority Accounts $ 135,370 Less- allowance for u of 'toil es [984] Total Salina Airport A d 134,386 Salina Housing Authority Accounts 13,689 Other 1,559 Total Salina Housing Authority 15,248 Total $ 149,634 C. Interfund Receivables and Payables The composition of interfund balances as of December 31, 2012, is as follows: Fund Types General Fund Other Government Funds Due From Due To $ 31,049 $ - - 31,049 $ 31,049 $ 31,049 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. 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2012, was as follows: City governmental activities. Governmental activities Capital assets, not being depreciated Construction in progress Land Capital assets, being depreciated Infrastructure Buildings and improvements Vehicles Equipment, furniture and fixtures Total capital assets Less accumulated depreciation for: Infrastructure Buildings and improvements Vehicles Equipment, furniture and fixtures Total accumulated depreciation Balance Add. Bal. Balance 12/31/2011 Justments 12/31/2011 Additions Retirements 12/31/2012 $ 32,554,357 $ 63,285 $ 22,477,191 163,284 146,145,697 86,866 36,233,800 [18,097] 8,330,055 384,707 5,457,201 [517,975] 251,198,301 29,692,323 27,599,112 253,453,582 63,537,634 &511,055) 463,624,293 3,397,201 67,021,494 13,643,237 13,626,949 1,099,311 14,726,260 5,333,63 5,748,076 561,532 395,781 5,913,827 4,69, 3,658,226 230,506 134,890 3,753,842 [26,244] 86,657,544 5,288,550 530,671 91,415,423 Governmental activities capital assets, ne *-&64,%4,513 $ 188,314 $ 164,702,827 $ 24,403,773 $ 27,068,441 $ 162,038,159 Business -type activities: Capital assets, not being depreciated Construction in progress $ 11,062,055 $ - $ 11,062,055 $ 10,626,076 $ 725,919 $ 20,962,212 Land 1,541,002 804 1,541,806 - - 1,541,806 Capital assets, being reci d Infrastructure 71,303,594 - 71,303,594 736,188 72,039,782 Buildings and improveme 22,587,106 [7,173] 22,579,933 - - 22,579,933 Vehicles 2,983,160 - 2,983,160 47,037 31,877 2,998,320 Equipment, furniture and fixtures 4,434,559 11,848 4,446,407 586,090 48,089 4,984,408 Total capital assets 113,911,476 5,479 32,617,642 $ !!*2, $ 27,049,694 $ 9,190,083 22,640,475 - 22,640,475 146,232,511 2 8,049 168,630,612 3 ,985,633 39,201,336 8,714, 478,676 407,972 8,785,466 939,2 207,830 141,446 5,005,610 29,692,323 27,599,112 253,453,582 63,537,634 &511,055) 463,624,293 3,397,201 67,021,494 13,643,237 13,626,949 1,099,311 14,726,260 5,333,63 5,748,076 561,532 395,781 5,913,827 4,69, 3,658,226 230,506 134,890 3,753,842 [26,244] 86,657,544 5,288,550 530,671 91,415,423 Governmental activities capital assets, ne *-&64,%4,513 $ 188,314 $ 164,702,827 $ 24,403,773 $ 27,068,441 $ 162,038,159 Business -type activities: Capital assets, not being depreciated Construction in progress $ 11,062,055 $ - $ 11,062,055 $ 10,626,076 $ 725,919 $ 20,962,212 Land 1,541,002 804 1,541,806 - - 1,541,806 Capital assets, being reci d Infrastructure 71,303,594 - 71,303,594 736,188 72,039,782 Buildings and improveme 22,587,106 [7,173] 22,579,933 - - 22,579,933 Vehicles 2,983,160 - 2,983,160 47,037 31,877 2,998,320 Equipment, furniture and fixtures 4,434,559 11,848 4,446,407 586,090 48,089 4,984,408 Total capital assets 113,911,476 5,479 113,916,955 11,995,391 805,885 125,106,461 Less accumulated depreciation for: Infrastructure 30,713,404 54,521 30,767,925 1,577,942 - 32,345,867 Buildings and improvements 10,683,173 [2,726] 10,680,447 424,133 - 11,104,580 Vehicles 2,170,960 21,290 2,192,250 166,306 31,877 2,326,679 Equipment, furniture and fixtures 2,705,192 31,632 2,736,824 314,410 42,942 3,008,292 Total accumulated depreciation 46,272,729 104,717 46,377,446 2,482,791 74,819 48,785,418 Business -type activities capital assets, net $ 67,638,747 $ [99,238] $ 67,539,509 $ 9,512,600 $ 731,066 $ 76,321,043 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets (Continued) The City's depreciation expense was charged to governmental functions as follows: Governmental Activities General government $ 7,975 Public safety 571,333 Public works 3,686,903 Public health 39,747 Culture and recreation 876,475 Planning and development 106,? Total depreciation Business -type Activities: Total $ 61,714,804 $ [3,926,276] $ 57,788,528 $ 9,209,425 $ 13,346,379 $ 53,651,574 $ 8,161,980 Business -type activities: General obligation bonds $ 7,217,907 $ 3,926,276 $ 11,144,183 $ $ 1,530,257 $ 9,613,926 $ 1,304,929 Revenue bonds 16,193,925 - 16,193,925 343,697 15,850,228 623,696 Accrued compensation 649,491 649,491 296,633 319,073 627,051 319,073 Total $ 24,061,323 $ 3,926,276 $ 27,987,599 $ 296,633 $ 2,193,027 $ 26,091,205 $ 2,247,698 Component Units General obligation bonds $ 26,170,000 $ - $ 26,170,000 $ - $ 1,090,000 $ 25,080,000 $ 895,000 Less unamortized discount [342,123] [342,123] - [18,892] [323,231] - Financing lease 245,558 245,558 - 42,941 202,617 45,826 Special assessment debt 125,013 125,013 21,066 103,947 21,876 Total component units $ 26,198,448 $ - $ 26,198,448 $ - $ 1,135,115 $ 25,063,333 $ 962,702 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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: 5W CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long -Term Debt (Continued) 40 Original Interest Bonds Issue Rates Outstanding Component Unit Salina Airport Authority General Obligation Bonds General Obligation 2005A, due 2020 $ 3,635,000 4 5 o 5.25% $ 2,675,000 General Obligation 2007A, due 2022 1,005,000 to`6.00% 745,000 General Obligation 2009A, due 2029 2,025,00 .31 % 2,025,000 General Obligation 20098, due 2026 6,0,E % to 5.50% 5,310,000 General Obligation 2011A, due 2030 1 20,0 4.64% 11,820,000 General Obligation 2011 B, due 2031 2, 4.28% 2,505,000 Less unamortized bond discount [323,231] Total general obligation bonds 24,756,769 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long -Term Debt (Continued) Annual debt service requirements to maturity for &inonds ndto be paid with utility revenues: RO - Primary Government Year in General Obligation - Component Units Total Bonds Interest 590,191 $ Year Outstanding Due Total 2013 $ 895,000 $ 1,096,914 $ 1,991,914 2014 925,000 1,067,866 1,992,866 2015 955,000 1,036,264 1,991,264 2016 990,000 1,001,531 991,531 2017 1,030,000 963,8 1,993,874 2018 -2022 5,840,000 A 9,969,521 2023 -2027 7,290,000 683, 2 9,973,322 2028 -2031 7,155,000 00 7,974,200 Total $ 25,080,000 12,798,492 $ 37,878,492 Annual debt service requirements to maturity for &inonds ndto be paid with utility revenues: RO - Primary Government Year in Due Total 2013 623,696 $ 590,191 $ 1,213,887 2014 633,696 577,791 1,211,487 2015 643,696 565,191 1,208,887 201§, 663,696 549,191 1,212,887 678,696 529,391 1,208,087 01 20 3,758,480 2,318,619 6,077,099 -2027 4,498,480 1,563,177 6,061,657 20 -2031 4,349,788 504,816 4,854,604 Total $ 15,850,228 $ 7,198,367 $ 23,048,595 Annual debt service requirements to maturity for temporary notes - to be paid through the issuance of general obligation bonds: Temporary Notes - Primary Government Bonds Interest Year Outstanding Due Total 2012 $ 1,485,000 $ 15,510 $ 1,500,510 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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: 42 Financing Lease - Component Units Lease Interest Year Outstanding Due Total 2013 $ 45,826 $ 12,646 58,472 2014 48,905 9,567 58,472 2015 52,190 6,282 58,472 2016 55,696 2,776 58,472 Total $ 202,617 $ '- 233,888 Annual debt service requirement to maturity for Special Assessm ebt to be paid from rental revenue: Special Asseq, _, ;' Debt - Component Units Assessment I rest Year Outstandin Due Total 2013 $ 1, $ 4,067 $ 25,943 2014 717 3,226 25,943 2015 23,590 2,352 25,942 2016 24,497 1,446 25,943 2017 2,061 504 2,565 2018 -2 9,205 1,051 10,256 $ 103,946 $ 12,646 $ 116,592 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 defaul V ch have historically been immaterial. Conduit debt. The City has entered into several conduit debt arrangeme s elfin the City issues industrial revenue bonds to finance a portion of the construction of facilities by a erprises. In return, the private enterprises have executed mortgage notes or leases with the C' ity is not responsible for payment of the original bonds, but rather the debt is secured only by the h pa a is agreed to be paid by the private enterprises under the terms of the mortgage or lease agreemen G erally, the conduit debt is arranged so that payments required by the private enterprises are equal V the rtgage payments schedule related to the original debt. At December 31, 2012, total outstanding cqp&itLdebt was $72,370,000. Defeased debt. July 15, 2012, the City issued $3,7 101Y Stries 2012B General Obligation Refunding and Improvement Bonds with interest ranging from o 1.40% to current refund all $1,010,000 of the outstanding Series 2004B General Obligation provement Bonds with interest rates ranging from of 3.40% to 4.00% and to advance refun 2 , 00 of the Series 2003A General Obligation Internal Improvement Bonds with interest rates om 3.40% to 3.85% and $1,535,000 of the Series 2005A General Obligation Internal Improve B s with interest rates ranging from 3.45% to 4.00 %. The net proceeds were used to establish es w account invested in U.S. Government Securities to pay the outstanding principal of the Se General Obligation Internal Improvement Bonds, the outstanding principal of the Series 2005 enIrliability a Obligation Internal Improvement Bonds and the interest due on the refunding general obligati As a result, these portions of the 2003A and 2005A bonds were considered to be defe for the defeased bonds has been removed from the City's financial statements. The c bi d unding transactions resulted in an economic gain of $236,475 and a reduction of $308,436 in futur t payments. F. Reconciliation of Transfers A reconciliation of interfund transfers follows: Major Funds: General fund Flood and drainage improvement fund Tourism and convention fund Bicentennial center fund Sales tax capital fund Debt service Capital projects fund Other governmental funds Water and sewer fund Total Transfers Transfer In Transfer Out $ 444,955 $ 979,358 - 1,015 - 604,125 1,002,975 80,000 - 1,750,000 1,551,150 - - 43,940 489,358 - - 30,000 $ 3,488,438 $ 3,488,438 The City uses interfund transfers to share administrative costs between funds. 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 (KP &F). Both are cost - sharing multiple - employer defined benefit pension plans as provided by Kansas statutes (KSA 74 -4901 et seq). KPERS and KP &F 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 611 South Kansas, Suite 100; Topeka, Kansas 66603 or by calling 1- 888 - 275 -5737. Funding Policy. K.S.A. 74 -4919 establishes the KPERS member - employee N-ording ribution rate at up to 6% of covered salary. K.S.A. 74 -4975 establishes the KP &F member - employee c n rate at 7% of covered salary. The employer collects and remits member - employee contribu to the provisions of section 414 (h) of the Internal Revenue Code. State law provides �t,I� e ployer contribution rates be determined annually based on the results of an annual actuarial _ • aitb ERS and KP &F are funded on an actuarial reserve basis. State law sets a limitation on ann incr s in the employer contribution rates. The KPERS employer rate was 7.54% from January 1 to Dece3 2012. The City employer contributions to KPERS for the years ending December 31, 2012, 2041, aMW2010 were $1,081,438, $987,826 and $1,039,728, respectively, equal to the required contrib ti s for each year. The KP &F employer rate established for fiscal years beginning in 2012 is 1 _ mployers participating in KP &F also make contributions to amortize the liability for past servic o if ny, which are determined separately for each participating employer. The City's contributions to or the years ended December 31, 2012, 2011, and 2010 were $2,007,908, $1,787,801 and $1,66 pectively, equal to the required contributions for each year. B. Deferred Compensation Plan The City offers its employees a e %_'r�e5lkcompensation plan ( "Plan ") created in accordance with Internal Revenue Code Section 457. Th " ailable to all City employees, permits them to defer a portion of their salary until future years. T e ed compensation is not available to employees until termination, retirement, death, or unfor emergency. Plan assets are transferred to a plan agent in a custodial trust and are not avail th ims of the City's general creditors. C. Flexible Benefit PI C. ection 125) The City Commission h adopted by resolution a salary reduction flexible benefit plan ( "Plan ") under Section 125 of the Internal Revenue Code. All City employees working more than 20 hours per week are eligible to participate in the Plan beginning after two full months of employment. Each participant may elect to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the Plan include various insurance and disability benefits. 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. 44 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) 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 ounts of payouts and other economic and social factors. The liability for claims and judgments is repo 311 Workers' Compensation Reserve Fund because it is expected to be liquidated with expendable rnancial resources. Of the liability, $131,792 is considered to be due within one year. Chang alances of claims liabilities during the past two years are as follows: e 2011 Unpaid claims, January 1 $ 0 $ 425,582 Incurred claims (including IBNRs) A677,862 126,625 Claim payments 6,482 2[ 30,417Unpaid claims, Decem 3,170 $ 321,790 The City established a limited risk manqM rogram for employee health and dental insurance in 1997. The program covers eligible City empl are paid into the health insurance fund by all other funds and are available to pay alai reserves and administrative costs of the program. An excess coverage insurance policy cov s laims in excess of $50,000. Incurred claims, including incurred but not reported claims, have be ed based primarily upon subsequent payments. Claim liabilities are calculated considering the f inflation, recent claim settlement trends including frequency and amounts of payouts and nomic and social factors. The liability for claims and judgments is reported in the Health Insur n ecause it is expected to be liquidated with expendable available financial resources. Ther e I o e liability is considered to be due within one year. Changes in the balances of claims liabilities duri the past two vears are as follows: 2012 2011 Unpaid claims, January 1 $ 391,175 $ 382,502 Incurred claims (including IBNRs) 4,014,478 4,229,571 Claim payments 4,0[ 38,2291 4,2[ 20,8981 Unpaid claims, December 31 $ 367,424 $ 391,175 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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, 2012. Project Authorization Expenditures N Ohio Grade Separation Structure Demolition $ 6617,581 $ 6,523,887 Markley, Magnolia, Valleyview Sanitary Sewer Improvements and Manhole and Wastewater Pump Station Rehabilitation 0,000 1,071,877 South 9th Corridor, Phase IV 00,000 6,240,715 Stone Lake 460,979 10,220 East Magnolia Road Replacement 4,500,000 3,294,853 Aviation Service Center 5,500,000 4,225,450 Fire Station # 1 2,265,206 1,929,031 Quail Meadows Estates, IV 408,745 2,000 Downtown Wellfield Improvements 9,330,000 1,473,998 Advanced Meter Infrastructure 39,850,000 14,714,908 Downtown Lighting Replacement 3,110,000 3,108,534 Project overages in the Bicentennial Improyeftnts roject will be reimbursed by special sales tax proceeds. F. Contingent Liabilities The City receives significant fin n ssistance from numerous federal and state governmental agencies in the form of grants and state pa t . ugh aid. The disbursement of funds received under these programs generally requires complian, rms and conditions specified in the grant agreements and is subject to audit. Any disallowed cl ' . ting from such audits could become a liability of the General Fund or other applicable funds. , *4 in the opinion of management, any such disallowed claims would not have a material effect on toy fthe nancial statements of the City at December 31, 2012. 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 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 $1,693,368 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 28.8% of the estimated capacity of the landfill. 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 $4,181,503 as the remaining estimated capacity is filled over the remaining life expectancy of 141.8 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2012. Actual cost may be higher due to inflation, changes, in technology or changes in regulations. The City is required by State and Federal laws and regulations to provide assurances of financial responsibility for closure and post - closure care. The City has elected to utilize the Local Government Financial test promulgated by the U.S. Environmental Protection Agency (at 40 CFR 258.74(f)) and the Ka Keeneral epartment of Health and Environment to provide these assurances. Any future closure or post -clo e costs will be provided through the normal budgeting and rate setting process, including the iss g obligation bonds, if necessary. H. Environmental Matters lk The Kansas Department of Health and Environment (KDHE iss report in 1994 indicating the presence of volatile organic compounds at levels requiring remediati � at the Salina Public Water Supply Wells Site. The City adopted a proactive Policy and Action Plan diate the groundwater contamination, and on December 7, 1994, the City and KDHE entered into sen rder and Settlement Agreement under which the City assumed primary responsibility for the ve tigation and remediation of the groundwater contamination. Field testing work has been c The necessary remediation work will be conducted over the next several years at a yet undete$m' d o the City's Water and Sewer Fund. The U.S. Department of Defense trans f perty located at the former Schilling Air Force Base (the Base or Site) to the City on or about Sept 9, 966. The property is now known to contain areas of extensive soil and groundwater contamin i is is a result of the use and disposal of chlorinated solvents during military operations at the Base fr until Base closure in 1965. The U.S. Department of D responsible for the investigation and remediation of contamination caused by military activities t and former military bases. The U.S. Army Corps of Engineers (Corps) is the lead agency for t D art nt at formerly used defense sites. The Corps has investigated the soil and groundwater contam tion at the Site under the regulatory oversight of the U.S. Environmental Protection Agency (EPA) and the nsas Department of Health and Environment (KDHE). The Site is not designated as a National Priority List Superfund site, but investigation and remediation are required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act ( CERCLA). Potential liability for contamination under CERCLA 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 Site, the City is potentially liable under CERCLA, although the City believes that it has meritorious defenses to such liability. The City is considered to be a Potentially Responsible Party (PRP) for the Site, primarily due to its status as a property owner. The Salina Airport Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University at Salina) (collectively Salina Public Entities) currently own over 90% of the nearly 4,000 acres of the Base property. No third parry has asserted any claim for bodily injury or property damage. 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Beginning in August 2007, the Salina Public Entities initiated settlement negotiations with the U.S. Federal Government. The negotiation objectives at that time included transferring the responsibility for completing the cleanup from the U.S. to the Salina Public Entities. The local objective was to reach a settlement agreement with the U.S. 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, by and through its env'ental consultant, prepared a detailed Cost to Complete Estimate (CTC). The CTC preparation include: 06 Cation with the EPA and KDHE. The Salina Public Entities' CTC was completed in June of 2008 a itted to the Corps. Subsequently, on January 23, 2009, the Salina Public Entities d iv d mand letter to the Corps. The letter demanded that settlement negotiations begin immediately! it a S. Department of Justice. On May 14, 2009 the City was notified that the Corp referred the Base c1i' and etter to the U.S. Department of Justice on May 12, 2009. The Salina Public Entities delivered on or about I - 10, a settlement offer and a draft of a lawsuit complaint to the attorney for the U.S. Department o tice. he Salina Public Entities planned to file suit against the U.S. if the matter was not settled by th ay, 2010. The Salina Public Entities did not intend to cut off settlement negotiations by the filin s i and this has been communicated to the U.S. No remedial action plan or record of decision qas a opted by the EPA or KDHE. On or about May 27, 2010, the Salin ntities filed their Complaint against the United States of America, the United States Departm D ense and Secretary of Defense, Robert M. Gates, in his official capacity (collectively, "Defend s' - o about September 22, 2010, the Salina Public Entities filed their First Amended Complaint in four - u ount I Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(2), Count II Citizen Suit Claim Pursua U.S.C.§ 9659(a)(1), Count III Claim for Recovery of Response Costs Pursuant to 42 U.S.C.§ nd Count IV Claim for Declaratory Judgment Pursuant to 42 U.S.C.§ 9613(g)(2). On or about Octobe 2010, Defendants filed their motion to dismiss and to strike, primarily with respect to the citizen suit claims. or about March 25, 2011, Judge Murguia entered his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I and II (citizen suit claims) for lack of subject matter jurisdiction. He also granted the Defendants' motion to dismiss the Salina Public Entities' requests for attorney fees, with the exception of non - litigation attorney fees. He denied the Defendants' motion to strike the Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims under Counts III and IV for response costs under CERCLA 9607(a) are not affected by the Judge's rulings. The Salina Public Entities disagree with most of the Judge's filings and, if necessary, plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings. On or about April 22, 2011, Defendants filed their Answer to First Amended Complaint and Counterclaim against the Salina Public Entities. Count I of the Counterclaim alleges a claim for contribution under CERCLA, 42 U.S.C.§ 9613(f)(1). Count II of the Counterclaim alleges a claim for cost recovery under CERCLA, 42 U.S.C.§ 9607(a)(1). Count II alleges costs incurred by the U.S. Environmental Protection Agency of approximately $1,838,241 as of September 30, 2007, and alleges costs incurred by the Corps of approximately $14,915,228 as of April 17, 2009. The Salina Public Entities intend to vigorously contest the claims brought against them and will assert, among other defenses, the third party defense under 42 U.S.C.§ 9607(b)(3). 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) The parties agreed on a mediation to discuss settlement. The mediation sessions occurred in October 2011, and the mediation discussions continued for over a year. The parties have now agreed upon a partial settlement. The partial settlement includes payment by the U.S. in exchange for performance by the Salina Public Entities of a remedial investigation /feasibility study through entry of a Corrective Action Decision by KDHE (the "Work "). The present cost estimate of the Work is less than $10,000,000. The agreement is that the U.S. will pay 90% of the cost of the Work with the Salina Public Entities responsible for payment of the remaining 10 %. It is anticipated that the agreed share of the Salina Publi ies will be paid by the City. Also, the claims and counterclaims in the lawsuit have been dismissed witho r ' ice with provisions tolling any and all statutes of limitation. No party is obligated under the se reement to implement the Corrective Action Decision upon its entry by KDHE, and the parties I i r negotiate an agreement to implement such Corrective Action Decision or refile their claim n u e Salina Public Entities have entered into a Consent Agreement and Final Order ( "CAFO ") ' hich is conditioned upon the U.S.'s payment to the City. On May 2, 2013, the U.S. District Court the istrict of Kansas entered its Consent Decree. City of Salina, Kansas, et al. v. United States of Arne ri al., Case No. 1 0 -CV -2298 CM /DJW. The Court's Consent Decree approved the settlement amon the parties. The current status is that the City is waiting for the U.S. to wire transfer $8,426,700 to the ore the City is required to fulfill its obligations under KDHE's CAFO. Although the claims and counterclaims in t have been dismissed without prejudice, the City intends to vigorously pursue its claims that t ould implement the Corrective Action Decision upon its entry by KDHE and its defenses a a ny claims brought against it. Based on presently known information, the City has determined tha ' e possible liability exists, at this time no reasonable estimate of the possible liability can be made;,Th e, o liability related to that matter has been recorded. I. Postemployment Health Care Pla Plan Description. The Cit r s a single employer defined benefit healthcare plan administered by the City. The Employee a Ian (the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KS 1 04 equires all local governmental entities in the state that provide a group health care plan to make p ipation available to all retirees and dependents until the retiree reaches the age of 65 years. No separate fin ial 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 $229,000 to the Plan (approximately 100% of total premiums) through their required contribution of $425 per month for retiree -only coverage and $1,141 for family 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. 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) I. Postemployment Health Care Plan (Continued) 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 $ 961,335 Interest on Net OPEB Obligation 125,675 Adjustment to Annual Required Contribution [7g,186 Annual OPEB cost (expense) 1, Benefit payments 0 Change in net OPEB obligation ,224 Net OPEB obligation - beginning of yea Net OPEB obligation - end of year December, 31201 $ 910,418 $ 96,672 $ 813,746 31,1 9 957,353 100,000 1,671,099 010 921,492 199,000 2,393,591 31, 2011 977,292 229,000 3,141, 883 31, 2012 1,007,224 229,000 3,920,107 Funding Status and F* ing Progress. As of the year ended December 31, 2012, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $9,019,806 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $9,019,806. The covered payroll (annual payroll of active employees covered by the plan) was $21,937,142, and the ratio of the UAAL to the covered payroll was 41.12 %. 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. 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) I. Postemployment Health Care Plan (Continued) 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, 2012, actuarial valuation, the projected uniq effUctuarial cost method was used. The actuarial assumptions include a 4.00% investment rate which is the rate of the employer's own investments as there are no plan assets and an initial edical and dental healthcare cost trend of 9.30 %, reduced by decrements to an ultimate rate a ighty -two years. The UAAL is being amortized as a level dollar over an open thirty -year perio 51 EXECUTION COPY CITY OF SALINA, KANSAS OMNIBUS CONTINUING DISCLOSURE UNDERTAKING DATED AS OF JULY 15, 2013 OMNIBUS CONTINUING DISCLOSURE UNDERTAKING THIS OMNIBUS CONTINUING DISCLOSURE UNDERTAKING (the "Disclosure Undertaking "), dated as of July 15, 2013, is executed and delivered by the City of Salina, Kansas (the "Issuer "). 1. This Disclosure Undertaking is executed and delivered by the Issuer, pursuant to a resolution adopted by the governing body of the Issuer to consolidate the continuing disclosure obligations of the Issuer with respect to the Bonds and the Prior Undertakings, both as defined below, to enhance efficiency of the administration of Prior Undertakings and promote timely disclosure by the Issuer. 2. The Issuer is executing this Disclosure Undertaking for the benefit of the Beneficial Owners of the Bonds and in order to assist each Participating Underwater in complying with the SEC Rule, as defined below. The Issuer is the only "obligated person," as defined in the SEC Rule, with responsibility for continuing disclosure hereunder. 3. This Disclosure Undertaking shall apply with respect to any series of Bonds issued prior to the effective date hereof and subject to the SEC Rule. In consideration of the foregoing, the Issuer covenants and agrees as follows: Section 1. Definitions. In addition to the definitions set forth in the Bond Resolution, which apply to any capitalized term used in this Disclosure Undertaking, unless otherwise defined herein, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report filed by the Issuer pursuant to, and as described in, Section 2 of this Disclosure Undertaking, which may include the Issuer's CAFR, so long as the CAFR contains the Financial Information and Operating Data. "Beneficial Owner" means, with respect to a series of Bonds, any registered owner of any Bonds of such series 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 of such series (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds of such series for federal income tax purposes. "Bond Insurer" means the provider of the bond insurance policy, if any, for any series of Bonds. "Bond Resolution" means collectively the ordinance(s) and/or resolution(s) of the governing body of the Issuer authorizing the issuance of each series of the Bonds. "Bonds" means all bonds, notes, installment sale agreements, leases or certificates intended to be a debt obligation of the Issuer identified on Schedule I as such schedule may be supplemented and amended and, as context may require, the Bonds of any particular series identified on Schedule 1. The Issuer may make future series of Bonds subject to this Disclosure Undertaking by incorporating by reference in a Bond Resolution or executing a certificate to such effect in conjunction with the issuance of such series of Bonds. "Business Day" means a day other than: (a) a Saturday, Sunday or legal holiday; (b) a day on which banks located in any city in which the principal corporate trust office or designated payment office of the trustee, any paying agent or a Dissemination Agent, as applicable, is located are required or authorized by law to remain closed; or (c) a day on which the Securities Depository or the New York Stock Exchange is closed. "CAFR" means the Issuer's Comprehensive Annual Financial Report, if any. "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 this Disclosure Undertaking. "Dissemination Agent" means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to this Disclosure Undertaking and which has filed with the Issuer a written acceptance of such designation substantially in the form attached hereto as Exhibit C. "EMMA" means the Electronic Municipal Market Access system for uanicipal securities disclosures established and maintained by the MSRB, which can be accessed at www.emma.msrb.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. "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 of Salina, Kansas, 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, or any successor repository designated as such by the Securities and Exchange Commission in accordance with the SEC Rule. "Official Statement" means collectively the Issuer's Official Statement(s) for each series of the Bonds, including all appendices and exhibits thereto. "Operating Data" means the operating data of the Issuer described in Section 2(a) (2) hereof. "Participating Underwriter" means each of the original underwriters of a series of Bonds required to comply with the SEC Rule in connection with the offering of such Bonds. "Prior Undertakings" means the prior continuing disclosure undertakings of the Issuer under the SEC Rule. "Repository" means the MSRB via EMMA. "SEC" means the Securities and Exchange Commission of the United States. V "SEC Rule" means Rule 15c2 -12 adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. "System" means the entire combined waterworks plant and system and sewerage plant and system owned and operated by the Issuer for the production, storage, treatment and distribution of water, and for the collection, treatment and disposal of sewage, to serve the needs of the Issuer and its inhabitants and others, including all appurtenances and facilities connected therewith or relating thereto, together with all extensions, improvements, additions and enlargements thereto hereafter made or acquired by the Issuer. 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 2013, file with the Repository the Issuer's Annual Report, consisting of the Financial Information and Operating Data described as follows: (1) Financial Information. The financial statements of the Issuer and the System 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 of 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 summary unaudited financial information 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(b) hereof. (2) Operating Data. Updates as of the end of the Fiscal Year of certain financial information and operating data described in Exhibit A, with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer; provided, any substantive change to information provided shall be effected only in accordance with Section 6 hereof. 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 Repository. 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). (b) From and after such time that Section (b)(5) of the SEC Rule applies to any series of Bonds, if the Annual Report is not filed within the time period specified in subsection (a) hereof, the Issuer shall send a notice to the Repository in a timely manner, in substantially the form attached as Exhibit B. (c) Pursuant to Section (d)(3) of the SEC Rule, the provisions of Section 2(a)(1) hereof shall not apply to any Bonds with a stated maturity of 18 months or less. Section 3. Reporting of Material Events. (a) No later than 10 Business Days after the occurrence of any of the following Material Events, the Issuer shall give, or cause to be given, to the Repository notice of the occurrence of any of the following Material Events with respect to the Bonds, with copies to the Bond Insurer, if any: (1) principal and interest payment delinquencies; (2) non- payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (RS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of bondholders, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the Issuer or System (which shall be deemed to occur as provided in the SEC Rule); (13) the consummation of a merger, consolidation, or acquisition involving the Issuer or System or the sale of all or substantially all of the assets of the Issuer or System, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional paying agent or trustee or the change of name of the paying agent or trustee, if material. M (b) 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 this Disclosure Undertaking, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign as Dissemination Agent hereunder at any time upon 30 days prior written notice to the Issuer. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report (including without limitation the Annual Report) prepared by the Issuer pursuant to this Disclosure Undertaking. (b) Annual Reports. Except as provided in Section 2(c) hereof, 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 filed pursuant to this Disclosure Undertaking, stating the date it was filed, or that the Issuer has certified to the Dissemination Agent that the Issuer has filed the Annual Report with the Repository. Except as provided in Section 2(b) hereof, if the Dissemination Agent has not received an Annual Report or has not received a written notice from the Issuer that it has filed an Annual Report with the Repository, by the date required in Section 2(a), 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) Whenever the Issuer obtains knowledge of the occurrence of an event, because of a notice from the Dissemination Agent pursuant to Section 4(c)(1) or otherwise, the Issuer shall promptly determine if such event constitutes a Material Event and shall promptly notify the Dissemination Agent of such determination. If appropriate, such writing shall instruct the Dissemination Agent 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 pursuant to Section 4(c)(2), the Dissemination Agent shall promptly file a notice of such Material Event with the Repository and provide a copy thereof to the Issuer and the Bond Insurer. 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 this Disclosure Undertaking, 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 this Disclosure Undertaking. (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 this Disclosure Undertaking. 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 this Disclosure Undertaking. 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 this Disclosure Undertaking for a particular series of Bonds shall terminate upon the legal defeasance, prior redemption or payment in full of that series of 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 this Disclosure Undertaking in the same manner as if it were the Issuer, and the Issuer shall have no further responsibility hereunder. If such termination or assumption occurs prior to the final maturity of such Bonds, the Issuer shall give notice of such termination or assumption in the same manner as for a Material Event under Section 3(b). Section 6. Bonds Subject to this Disclosure Undertaking; Amendment; Waiver. (a) All outstanding Bonds as of the date of this Disclosure Undertaking shown on Schedule I are hereby made subject to this Disclosure Undertaking. The Issuer may make any future series of Bonds subject to this Disclosure Undertaking by incorporating by reference in a Bond Resolution or executing a certificate to such effect in conjunction with the issuance of such series of Bonds. (b) All references to the "Bonds" in this Disclosure Undertaking shall apply separately to each series of Bonds that are or become subject to this Disclosure Undertaking, without further amendment hereto. (c) Notwithstanding the provisions of subsection (d) or anything else contained in this Disclosure Undertaking to the contrary, in conjunction with the public offering of any series of Bonds, the Issuer and the Dissemination Agent may amend the categories of Operating Data to be updated as set forth in Section 2(a)(2) and Exhibit A to conform to the operating data included in the final Official Statement for such series of Bonds, in conformance with the requirements and interpretations of the SEC Rule as of the date of such final Official Statement, without further amendment to this Disclosure Undertaking. Thereafter, the Operating Data to be filed by the Issuer with the Repository with respect to the Bonds (and all other series of Bonds then subject to this Disclosure Undertaking) shall be deemed to be amended to reflect the requirements of the revised Exhibit A for the new series of Bonds. (d) Except as otherwise provided in subsection (c), the Issuer may amend this Disclosure Undertaking and any provision of this Disclosure Undertaking may be waived, provided that Bond Counsel or other counsel experienced in federal securities law matters provides the Issuer with its written 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 rol thereof that are applicable to this Disclosure Undertaking; provided, however, that this Disclosure Undertaking, including Schedule I hereto, may be amended for the purpose of (1) extending the coverage of this Disclosure Undertaking to any additional series of Bonds or (2) removing reference to any series of Bonds for which the Issuer's reporting obligations have terminated in accordance with Section 5 hereof, each without the provision of a written opinion as otherwise required by this paragraph. (e) If a provision of tlus Disclosure Undertaking is amended or waived with respect to a series of Bonds pursuant to subsection (d), the Issuer shall describe such amendment or waiver 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: (1) notice of such change shall be given in the same manner as for a Material Event under Section 3(b); and (2) 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 this Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Undertaking 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 this Disclosure Undertaking. 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 this Disclosure Undertaking, the Issuer shall have no obligation under this Disclosure Undertaking 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 this Disclosure Undertaking with respect to a series of Bonds, any 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 this Disclosure Undertaking. Noncompliance with the provisions of this Disclosure Undertaking shall not be deemed an Event of Default under the Bond Resolution or the Bonds, and the sole remedy under this Disclosure Undertaking in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with this Disclosure Undertaking shall be an action to compel performance. Section 9. Notices. Any notices or communications to or among the parties referenced in this Disclosure Undertaking shall be given the Notice Representatives at the Notice Addresses set forth in the Bond Resolution for each series of Bonds; provided notice to the Dissemination Agent shall be given at the Notice Address set forth on Exhibit C hereto. Section 10. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. Section 11. Beneficiaries. This Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, each Participating Underwriter and Beneficial Owners from time to time with respect to a series of Bonds, and shall create no rights in any other person or entity. 7 Section 12. Severability. If any provision in this Disclosure Undertaking, the Bond Resolution or the Bonds relating hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Disclosure Undertaking shall not in any way be affected or impaired thereby. Section 13. Governing Law. This Disclosure Undertaking shall be governed by and construed in accordance with the laws of the State of Kansas. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Issuer has caused this DisclosUre Undertaking to be executed as cifJu€ ,- t� l3. S'Q�j CITY OF SALIVA, KANSAS c� 1870 Mayor Shandi Wicks, CMC, Deputy City Clerk (Signature Page to Continuing Disclosure Undertaking) SCHEDULE 1 DESCRIPTION OF BONDS SUBJECT TO DISCLOSURE UNDERTAKING General Obligation Bonds Base CUSIP No.: 794743) Description of Dated Final Indebtedness Date Maturity General Obligation Internal Improvement Bonds, Series 2003 -A 07 -15 -03 10 -01 -13 General Obligation Refunding Bonds, Series 2004 -A 05 -01 -04 08 -01 -15 General Obligation Internal Improvement Bonds, Series 2005 -A 07 -15 -05 10 -01 -13 General Obligation Internal Improvement Bonds, Series 2006 -A 04 -01 -06 10 -01 -26 General Obligation Internal Improvement Bonds, Series 2006 -B 07 -15 -06 10 -01 -21 General Obligation Internal Improvement Bonds, Series 2007 -A 06 -15 -07 10 -01 -27 General Obligation Internal Improvement Bonds, Series 2008 -A 07 -15 -08 10 -01 -23 General Obligation Internal Improvement Bonds, Series 2008 -B 12 -15 -08 07 -01 -28 General Obligation Internal Improvement Bonds, Series 2009 -A 07 -15 -09 10 -01 -29 General Obligation Refunding and Improvement Bonds, Series 2010 -A 05 -01 -10 10 -01 -25 General Obligation Refunding Bonds, Series 2010 -B 10 -15 -10 10 -01 -23 General Obligation Internal Improvement Bonds, Series 2011 -A 07 -15 -11 10 -01 -31 General Obligation Internal Improvement Bonds, Series 2012 -A 07 -15 -12 10 -01 -27 General Obligation Refunding Bonds, Series 2012 -B 07 -15 -12 10 -01 -20 General Obligation Taxable Improvement Bonds, Series 2013 -A 02 -15 -13 10 -01 -28 General Obligation Internal Improvement Bonds, Series 2013 -B 07 -15 -13 10 -01 -33 Temporary Notes (Base CUSIP No.: 794743 Description of Dated Final Indebtedness Date Maturi General Obligation Temporary Notes, Series 2012 -1 07 -15 -12 08 -01 -13 General Obligation Temporary Notes, Series 2013 -1 07 -15 -13 08 -01 -14 Revenue Bonds (Base CUSIP No.: 7948 11) Description of Indebtedness Water and Sewage System Revenue Bonds, Series 2011 S -1 Dated Final Date Maturity 04 -15 -11 10 -01 -31 EXHIBIT A OPERATING DATA TO BE INCLUDED IN ANNUAL REPORT The Operating Data in the sections and tables contained in the most recent Official Statement (with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer) generally described as follows: Operating Data for General Obligation Bonds, Temporary Notes, Lease Obligations Financial Overview Tax Levies Assessed Valuation Estimated Actual Valuation Tax Collections Largest Taxpayers Operating Data for Revenue Bonds User Characteristics (number of users; percentage split between residential and other customers) Largest Users (top ten; name; business type; total cf billed; total dollars billed) User Trends (gallons of water metered; gallons of sewage treated; average number of customers) Current Water Rate Structures Current Sewage Rate Structure Historical and Projected Financials (but only updating historical financials) Outstanding System Indebtedness (Net Income, Debt Service, Bond Coverage, Additional Utility Debt Payments) Additionally, the Issuer shall provide updates as of the end of the Fiscal Year for any material adverse changes in the portions of the final Official Statement concerning Property Valuations and Pension and Employee Retirement Plans. A -1 EXHIBIT B NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series r dated as of [Bonds Dated Date] Name of Obligated Person: City of Salina, Kansas Date of Issuance: [Bonds Closing Date] 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 Issuer's Omnibus Continuing Disclosure Undertaking. The Issuer anticipates that the Annual Report will be filed by Dated: cc: City of Salina, Kansas C CITY OF SALINA, KANSAS LIZ 3 Dissemination Agent as EXHIBIT C ACCEPTANCE OF DISSEMINATION AGENT Name of Issuer: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series ��, dated as of [Bonds Dated Date] 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 Disclosure Undertaking, to which this acceptance is attached, accepts such duties and responsibilities set forth therein. Dated: C -1 CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS June 10, 2013 4:00 p.m. The City Commission convened at 2:30 p.m. in a Study Session on 2014 Budget and Greeley Bridge. The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City- County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of silence. Those present and comprising a quorum: Mayor Barbara V. Shirley (presiding), Commissioners Jon R. Blanchard, Kaye J. Crawford, Randall R. Hardy, and Aaron Householter ADMINISTRATION (8.3) General Obligation Notes and Bonds, Series 2013 -1 and 2013 -B. (8.3b) First reading Ordinance No. 13 -10701 authorizing the issuance and delivery of general obligation bonds. 13 -0185 Moved by Commissioner Crawford, seconded by Commissioner Blanchard, to pass Ordinance No. 13 -10701 on first reading. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT 13 -0190 Moved by Commissioner Householter, seconded by Commissioner Blanchard, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 6:09 p.m. [SEAL] ATTEST: /y/Lr ',004 n4111 LLC�v Lieu Ann Elsey, CMC, City Clerk /y/�3aylray�v 1/. Shr%�'Z� Barbara V. Shirley, Mayor I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting on June 10, 2013 regarding Ordinance No. 13- 10701. ° GML2 . s 1870 dam-. A Lieu Ann Elsey, City Clerk Page 1 EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON JULY 8, 2013 The governing body met in regular session at the usual meeting place in the City, at 4:00 p.m., the following members being present and participating, to -wit: Barbara Shirley, Mayor and Aaron Householter, Kaye Crawford, Jon Blanchard and Randall Hardy, 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 General Obligation Internal Improvement Bonds, Series 2013 -13, dated July 15, 2013, 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 Robert W. Baird & Co., Winston - Salem, North Carolina 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 THE ISSUANCE OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2013 -B, OF THE CITY 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. Thereupon, Commissioner Householter moved that said Ordinance be passed. The motion was seconded by Commissioner Hardy. Said Ordinance, having been approved by a first reading on June 10, 2013, was duly read and considered, and upon being put, the motion for the passage of said Ordinance was carried by the vote of the governing body, the vote being as follows: Yea: Shirley, Householter, Crawford, Blanchard and Hardy. Nay: None. Thereupon, the Mayor declared said Ordinance duly passed and the Ordinance was then duly numbered Ordinance No. 13 -10701 was signed and approved by the Mayor and attested by the Clerk and the Ordinance or a summary thereof 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 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2013 -B, OF THE CITY OF SALINA, KANSAS, PREVIOUSLY AUTHORIZED BY ORDINANCE NO. 13 -10701 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 Householter moved that said Resolution be adopted. The motion was seconded by Commissioner Hardy. 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: Shirley, Householter, Crawford, Blanchard and Hardy. Nay: None. Thereupon, the Mayor declared said Resolution duly adopted and the Resolution was then duly numbered Resolution No. 13 -7020 and was signed by the Mayor and attested by the Clerk. * * * * * * * * * * * * ** (Other Proceedings) [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] On motion duly made, seconded and carried, the meeting thereupon adjourned. CERTIFICATE I hereby certify that the foregoing Excerpt of Minutes is a true and correct excerpt of the proceedings of the governing body of the City of Salina, Kansas, held on the date stated therein, and that the official minutes of such proceedings are on file in my L(i (SEAL) Clerk (Signature Page to Excerpt of Minutes — July 8, 2013 — Series B) EXHIBIT A BID TABULATION CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B A -1 PARITY Result Screen 09:48:33 a.m. CDST N!rxa±slenslai Bid Results https : / /www.newissuehome.i - deal.com /Parity /asp /Main.asp ?frame =co... Salina $4,330,000 General Obligation Internal Improvment Bonds, Series 2013 -B The following bids were submitted using PARITA and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bid Award* Bidder Name TIC is Robert W Baird & Co.. Inc. 3.032467 IN Commerce Bank 3.121637 0 Sterne. Aaee & Leach. Inc 3.152677 In Hutchinson, Shockey Erlev & Co. 3.254557 L7 Raymond James & Associates. Inc 3.337683 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields ®1981 -2M2 i -Deal LLC. Al rights reserved, Trademarks I of 1 7/12/2013 9:48 AM EXHIBIT B BID OF PURCHASER I: J PARITY Bid Form Robert W. Baird & Co., Inc. - Red Bank, NJ's Bid https: / /www.new issuehom e. i- deal.com/Parity /asp /main.asp ?frame =co... Salina $4,330,000 General Obligation Internal Improvment Bonds, Series 2013 -B For the aggregate principal amount of $4,330,000.00, we will pay you $4,435,209.50, plus accrued interest from the date of issue to the date of delivery The Bonds are to bear interest at the following rate(s): Maturity Date Amount $ Coupon Insurance 10/01/2014 205M 3.0000 3032467 10/01/2015 235M 3.0000 10/01/2016 235M 3.0000 10/01/2017 240M 3.0000 10/01/2018 245M 30000 10/01/2019 250M 30000 10/01/2020 260M 3.0000 10/01/2021 265M 3.0000 10/01/2022 270M 3.0000 10/01/2023 275M 3.0000 10/01/2024 285M 3.0000 10101/2025 290M 3.5000 10/01/2026 300M 35000 10/01/2027 310M 3.5000 10/01/2028 315M 3.5000 10/01/2029 10101/2030 10/01/2031 —10/01/2032 10/01/2033 350M 4.0000 Total Interest Cost: $1,378,019.72 Premium- $105,209.50 Net Interest Cost- $1,272,810 22 TIC: 3032467 Total Insurance Premium. $000 Time Last Bid Received On.D7/0812013 12 55 32 CDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder Robert W. Baird & Co, Inc., Red Bank, NJ Contact: Rich Hasel Title: Telephone 336 - 631 -5800 Fax: 336 -631 -5850 Issuer Name: City of Salina Accepted By: 9W A— Date: Company Name. Accepted By Date 1 of 2 7/8/2013 1:20 PM ORDINANCE NO. 13 -10701 OF THE CITY OF SALINA, KANSAS PASSED JULY 8, 2013 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B (PUBLISHED IN THE SALINA JOURNAL ON JULY 12, 2013) ORDINANCE NO. 13 -10701 AN ORDINANCE AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2013 - B, OF THE CITY 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. WHEREAS, the City of Salina, Kansas (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 -685 et seq. and K.S.A. 12 -1736 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: Ordinance/ Allocable Principal Proiect Description Resolution No. Authori Amount of Bonds Magnolia Hills Subdivision Ord. 13 -10687 K.S.A. 12 -6a01 etseq. $262,704.31 Fire Station #1 Res. 09 -6681 K.S.A. 12 -1736 et seq. 825,000.00 East Magnolia Road Res. 11-6812 K.S.A. 12 -685 et seq. 2,127,295.69 Bicentennial Center Res. 13 -6988 K.S.A. 12 -1736 et seq. 1,010,000.00 North Ohio Grade Separation Res. 06 -6237 K.S.A. 12 -685 et seq. 105,000.00 Total: $4,330,000.00 and WHEREAS, the governing body of the City is authorized by law to issue general obligation bonds of the City to pay a portion of the costs of the Improvements; and WHEREAS, the governing body of the City has advertised the sale of the Bonds in accordance with the law and at a meeting held in the City on 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. Definitions 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 natural persons. "Act" means the Constitution and statutes of the State including K.S.A. 10 -101 to 10 -125, inclusive, K.S.A. 12 -6a01 et seq., K.S.A. 12 -685 et seq. and K.S.A. 12 -1736 et seq., all as amended and supplemented from 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 Bonds, Series 2013 -B, dated July 15, 2013, 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 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 of the City or, in the Mayor's absence, the duly appointed and/or elected Vice Mayor or Acting Mayor of the City. "Ordinance" means this Ordinance authorizing the issuance of the Bonds. "Refunded Notes" means the Series 2012 -1 Notes maturing on August 1, 2013 in the aggregate principal amount of $1,485,000. "Series 2012 -1 Notes" means the City's General Obligation Temporary Notes, Series 2012 -1, dated July 15, 2012. "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. Section 2. Authorization of the Bonds. There shall be issued and hereby are authorized and directed to be issued the General Obligation Internal Improvement Bonds, Series 2013 -B, of the City in the principal amount of $4,330,000, for the purpose of providing funds to: (a) pay a portion of the costs of the Improvements; (b) pay costs of issuance of the Bonds; and (c) retire the Refunded Notes. 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 interest 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 carry 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. 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] PASSED by the governing body of the City on July 8, 2013 and APPROVED AND SIGNED by the Mayor. (SEAL) ATTEST: Cle k (Signature Page to Bond Ordinance) Mayor Publisher's Affidavit I. Christy Fink , being duly sworn declare that I am a L gal Cnnrdinator 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 platter in said county, and continuously and uninterruptedly published for five consecutive years prior to first publication of attached notice, and that the Bond Summary Notice has been correctly published in the entire issue of said newspaper one tittle, publication being given in the issue of Tuly 12, 2013 Subscribed and sworn to before me, this day of A.D. 20 f Notary Public i Painter's Fee $94.50 �,r r MEMA "NDViOLZ My APPL r PUBLICATION SUMMARY OF ORDINANCE NO. � � PASSED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS ON THE 8TH DAY OF JULY, 2013 SUMMARY On July 8, 2013, the Governing Body of the City of Salina, Kansas, adopted Ordinance No.13 -I o j, authorizing and providing for the issuance of $ 33 p, ^Q principal amount of General Obligation Improvement Bonds, Series 2013 -B, of the City of Salina, Kansas. The purpose of the issuance of the bonds is to provide funds to finance certain public improvements in and retire a portion of previously issued temporary notes of the City. In addition, the Ordinance provides for security of the bonds, terms, details and conditions for the issuance of the bonds and the rate covenants for the bonds. The complete text of this ordinance may be obtained or viewed free of charge at the office of the City Clerk, 300 West Ash Street, Salina, Kansas, or on the City's official website address, www.salina - ks.gov, where a reproduction of the original ordinance will be available for a minimum of one week following this summary publication. This s mary is certified this 9t" day of July, 2013. 4 Gr . Bengtso ty ttorney Publish one time and return one Proof of Publication to the City Clerk and one to the City Attorney. RESOLUTION NO. 13 -7020 OF THE CITY OF SALINA, KANSAS ADOPTED JULY 8, 2013 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B TABLE OF CONTENTS ARTICLE I DEFINITIONS Section 101. Definitions of Words and Terms ..................................................... ..............................1 ARTICLE II AUTHORIZATION AND DETAILS OF THE BONDS Section 201. Authorization of the Bonds ............................................................. ..............................8 Section 202. Description of the Bonds ................................................................. ..............................8 Section 203. Designation of Paying Agent and Bond Registrar ........................... ..............................9 Section 204. Method and Place of Payment of the Bonds .................................... ..............................9 Section 205. Payments Due on Saturdays, Sundays and Holidays ..................... .............................10 Section 206. Registration, Transfer and Exchange of Bonds .............................. .............................10 Section 207. Execution, Registration, Authentication and Delivery of Bonds ... .............................11 Section 208. Mutilated, Lost, Stolen or Destroyed Bonds .................................. .............................12 Section 209. Cancellation and Destruction of Bonds Upon Payment ................. .............................12 Section 210. Book -Entry Bonds; Securities Depository ..................................... .............................12 Section 211. Nonpresentment of Bonds ............................................................... .............................14 Section 212. Preliminary and Final Official Statement ....................................... .............................14 Section 213. Sale of the Bonds ............................................................................ .............................14 ARTICLE III REDEMPTION OF BONDS Section 301. Redemption by Issuer ..................................................................... .............................14 Section 302. Selection of Bonds to be Redeemed ............................................... .............................15 Section 303. Notice and Effect of Call for Redemption ...................................... .............................16 ARTICLE IV SECURITY FOR BONDS Section 401. Security for the Bonds .................................................................... .............................18 Section 402. Levy and Collection of Annual Tax; Transfer to Debt Service Account .................... 18 ARTICLE V ESTABLISHMENT OF FUNDS AND ACCOUNTS DEPOSIT AND APPLICATION OF BOND PROCEEDS Section 501. Creation of Funds and Accounts .................................................... .............................18 Section 502. Deposit of Bond Proceeds .............................................................. .............................19 Section 503. Application of Moneys in the Improvement Fund ......................... .............................19 Section 504. Substitution of Improvements; Reallocation of Proceeds .............. .............................19 Section 505. Application of Moneys in Debt Service Account ........................... .............................19 Section 506. Application of Moneys in the Rebate Fund .................................... .............................20 Section 507. Deposits and Investment of Moneys .............................................. .............................20 ARTICLE VI DEFAULT AND REMEDIES Section601. Remedies ........................................................................................ .............................21 Section 602. Limitation on Rights of Owners ..................................................... .............................21 1 Section 603. Remedies Cumulative ..................................................................... .............................21 ARTICLE VII DEFEASANCE Section 701. Defeasance ...................................................................................... .............................22 ARTICLE VIII TAX COVENANTS Section 801. General Covenants ......................................................................... .............................22 Section 802. Survival of Covenants .................................................................... .............................22 ARTICLE IX CONTINUING DISCLOSURE REQUIREMENTS Section 901. Disclosure Requirements ................................................................ .............................23 Section 902. 23 Section 903. Failure to Comply with Continuing Disclosure Requirements ...... .............................23 ARTICLE X MISCELLANEOUS PROVISIONS Section1001. Annual Audit .................................................................................. .............................23 Section1002. Amendments ................................................................................... .............................23 Section 1003. Notices, Consents and Other Instruments by Owners .................... .............................24 Section1004. Notices ............................................................................................ .............................25 Section 1005. Electronic Transactions .................................................................. .............................25 Section 1006. Further Authority ............................................................................ .............................25 Section1007. Severability ..................................................................................... .............................25 Section1008. Governing Law ............................................................................... .............................25 Section 1009. Effective Date ................................................................................. .............................25 EXHIBITA — FORM OF BONDS ................................................................................. ............................A -1 [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 11 RESOLUTION NO. 13 -7020 A RESOLUTION PRESCRIBING THE FORM AND DETAILS OF AND AUTHORIZING AND DIRECTING THE SALE AND DELIVERY OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2013 -B, OF THE CITY OF SALINA, KANSAS, PREVIOUSLY AUTHORIZED BY ORDINANCE NO. 13 -10701 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. WHEREAS, the Issuer has heretofore passed 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. Definitions of Words and Terms. 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. "Act" means the Constitution and statutes of the State including K.S.A. 10 -101 to 10 -125, inclusive, K.S.A. 10 -620 et seq., K.S.A. 12 -6a01 et seq., K.S.A. 12 -685 et seq. and K.S.A. 12 -1736 et seq. all 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 firm 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 office 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 Bonds, Series 2013 -B, 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 and/or 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 July 15, 2013. "Debt Service Account" means the Debt Service Account for General Obligation Internal Improvement Bonds, Series 2013 -B created within the Bond and Interest Fund 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) 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) such obligations are rated in a rating category by Moody's or Standard & Poor's that is no lower than the rating category then assigned by the Rating Agency to United States Government Obligations. "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 Undertaking" means the Issuer's Omnibus Continuing Disclosure Undertaking relating to certain obligations contained in the SEC Rule. "DTC" means The Depository Trust Company, a limited- purpose trust company organized 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 book -entry 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: (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; (b) Payment of any installment of interest on any of the Bonds shall not be made when the same shall become due; or 3 (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 Undertaking) on the part of the Issuer to be performed, and such default shall continue for thirty (30) days after written notice specifying 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 31. "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 Bonds, Series 2013 -B created pursuant to Section 501 hereof. "Improvements" means the improvements referred to in the preamble to the Ordinance and any Substitute Improvements. "Independent Accountant" means an independent certified public accountant or firm of independent certified public accountants at the time employed by the Issuer for the purpose of carrying out the duties imposed on the Independent Accountant by this Bond Resolution. "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, 2014. "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 and/or elected Vice Mayor or Acting Mayor of the Issuer. "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 4 liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer. "Notice Address" means with respect to the following entities: (a) To the Issuer at: City of Salina, Kansas Attn: City Clerk 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: Robert W. Baird & Co. 380 Knollwood St. Winston - Salem, North Carolina 27103 (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 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. (d) With respect to any Rating Agency, any Vice President thereof. "Official Statement" means Issuer's Official Statement relating to the Bonds. "Ordinance" means Ordinance No. 13 -10701 of the Issuer authorizing the issuance of the Bonds, as amended from time to time. 5 "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) Bonds in exchange for or in lieu of which other Bonds have been authenticated and delivered hereunder. "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" shall mean the investments hereinafter 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- 1677a, 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 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, federal home loan mortgage corporation or government national mortgage association; (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 (f); 0) 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 -1101 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 (0, all as may be further restricted or modified by amendments to applicable State law. "Person" means any natural person, corporation, 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 bid premium of $105,217.87. 0 "Purchaser" means Robert W. Baird & Co., Winston - Salem, North Carolina the original purchaser of the Bonds, and any successor and assigns. "Rating Agency" means any company, agency or entity that provides, pursuant to request of the Issuer, financial ratings for the Bonds. "Rebate Fund" means the Rebate Fund for General Obligation Internal Improvement Bonds, Series 2013 -B created pursuant to Section 501 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 each Interest Payment Date. "Redemption Date" means, when used with respect to any Bond to be redeemed, the date fixed for the redemption of such Bond pursuant to the terms of this Bond Resolution. "Redemption Price" means, when used with respect to any Bond to be redeemed, 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 Notes" means the Series 2012 -1 Notes maturing on August 1, 2013, in the aggregate principal amount of $1,485,000. "Refunded Notes Paying Agent" means the paying agent for the Refunded Notes as designated in the Refunded Notes Resolution, and any successor or successors at the time acting as paying agent of the Refunded Notes. "Refunded Notes Redemption Date" means August 1, 2013. "Refunded Notes Resolution" means the resolution which authorized the Refunded Notes. "Replacement Bonds" means Bonds issued to the Beneficial Owners of the Bonds in accordance with Section 210 hereof. "SEC Rule" means Rule 15c2 -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. "Series 2012 -1 Notes" means the Issuer's General Obligation Temporary Notes, Series 2012 -1, dated July 15, 2012. "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 McGraw Hill Financial Inc., a corporation organized and existing under the laws of the State of New York, 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 nationally 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 2033. "Treasurer" means the duly appointed and/or elected Treasurer of the Issuer 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 full 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 II 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 $4,330,000, for the purpose of providing funds to: (a) pay a portion of the costs of the Improvements; (b) pay Costs of Issuance; and (c) retire the Refunded Notes. 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 III hereof, and shall bear interest at the rates per annum as follows: 0 01.7 V:1 : lzmi Stated Maturity Principal Annual Rate Stated Maturity Principal Annual Rate October 1 Amount of Interest October 1 Amount of Interest 2014 $205,000 3.00% 2022 $270,000 3.00% 2015 235,000 3.00 2023 275,000 3.00 2016 235,000 3.00 2024 285,000 3.00 2017 240,000 3.00 2025 290,000 3.50 2018 245,000 3.00 2026 300,000 3.50 2019 250,000 3.00 2027 310,000 3.50 2020 260,000 3.00 2028 315,000 3.50 2021 265,000 3.00 TERM BOND Stated Maturity Principal Annual Rate October 1 Amount of Interest 2033 $350,000 4.00% 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, shall 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 EXHIBIT A or as may be required by the Attorney General pursuant 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. Section 203. 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 performing 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. 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 fixed as hereinafter specified in this paragraph. The Issuer shall notify 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, Transfer 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. 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 10 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 § 3406, such amount 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 State Treasurer, which registration shall be evidenced by the manual or facsimile signature of the State Treasurer with the seal of the State Treasurer affixed 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 11 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 EXHIBIT A 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 & 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 12 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 from 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 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)(1) 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 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 an Authorized Denominations and form as provided herein. 13 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. The Preliminary Official Statement dated June 10, 2013, is hereby ratified and approved. The Official Statement is hereby authorized to be prepared by supplementing, amending and completing the Preliminary Official Statement, with such changes and additions thereto as are necessary to conform to and describe the transaction. The Mayor and 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. 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. ARTICLE III REDEMPTION OF BONDS Section 301. Redemption by Issuer. Optional Redemption. At the option of the Issuer, Bonds maturing on October 1 in the years 2022, and thereafter, will be subject to redemption and payment prior to their Stated Maturity on October 1, 2021, 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 Redemption Date. 14 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 Section 402 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 Year $65,000 2029 65,000 2030 70,000 2031 70,000 2032 80,000 2033* *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 from 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 any option granted by the provisions of clauses (1), (2) or (3) above, the Issuer will, on or before the 45th day next preceding each mandatory Redemption Date, furnish the Paying Agent a written certificate indicating to what extent the provisions of said clauses (1), (2) and (3) are to be complied with, with respect to such mandatory redemption payment. Section 302. 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 a minimum Authorized Denomination of principal amount 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 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 15 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). Section 303. Notice and Effect of Call for Redemption. 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 specifying the principal amount, Stated Maturities, Redemption Date and Redemption Prices of the Bonds to be called for redemption. 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. 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 Bond Registrar, 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 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. 16 For so long as the Securities Depository is effecting book -entry 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 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 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 from 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 Undertaking. 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 further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if 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 CUSIP 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 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 funds issued for the payment of the Redemption Price of Bonds being redeemed shall bear or have enclosed the CUSIP 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. 17 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 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 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; Transfer to Debt Service Account. 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 from all other funds of the Issuer shall thereafter be transferred to 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 funds of the Issuer and to reimburse said general funds for money so expended when said taxes are collected. 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 Bonds, Series 2013 -B; (b) Debt Service Account for General Obligation Internal Improvement Bonds, Series 2013 - B (within the Bond and Interest Fund); and (c) Rebate Fund for General Obligation Internal Improvement Bonds, Series 2013 -B. 18 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. Section 502. 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 plus premium in the amount of $7,009.30 shall be deposited in the Debt Service Account. (b) The remaining balance of the proceeds derived from the sale of the Bonds shall be deposited in the Improvement Fund. - Section 503. 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 the Bonds during construction of the Improvements; (c) paying Costs of Issuance; (d) retiring the Refunded Notes; and (e) transferring any amounts to the Rebate Fund required by Section 506 hereof. Upon completion of the Improvements, any surplus in the Improvement Fund shall be deposited in the Debt Service Account. Section 504. Substitution of Improvements; Reallocation of Proceeds. (a) 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 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 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 19 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 Bonds shall be transferred and paid into the Bond and Interest Fund. Section 506. 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 § 148(f) in accordance with the Federal Tax Certificate, and the Issuer shall make payments to the United States of 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) Notwithstanding any other provision of this Bond Resolution, including in particular Article VII 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. Section 507. 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 (b) 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 Issuer 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 commingling with any other funds of the Issuer. Moneys held in any Fund or Account 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 earnings on any investments held in any Fund or Account shall accrue to and become a part of such Fund or Account; provided that, during the period of construction of the Improvements, earnings on the investment of such funds may, at the discretion of the Issuer, be credited to the Debt Service Account. OR 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: (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. Section 603. 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. 21 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 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 and/or 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 303 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, Finance Director 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 future 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. Section 802. Survival of Covenants. The covenants contained in this Article and in the Federal Tax Certificate shall remain in full 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. ON ARTICLE IX CONTINUING DISCLOSURE REQUIREMENTS Section 901. Disclosure Requirements. 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 Undertaking, the provisions of which are incorporated herein by reference. Such covenant shall be for the benefit of and enforceable by the Purchaser and the Beneficial Owners. Section 903. . 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. Notwithstanding any other provision of this Bond Resolution, failure of the Issuer to comply with its covenants contained in the preceding section shall not be considered an Event of Default under this Bond Resolution. 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 after 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; 23 (b) 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. 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 confer 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 24 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 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 from 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. All 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 from and after its adoption by the governing body of the Issuer. 25 ADOPTED by the governing body of the Issuer on July 8, 2013. (SEAL) ATTEST: �, Mayor Clerk [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] (Signature Page to Bond Resolution — Series 2013 -B) EXHIBIT A (FORM OF BONDS) REGISTERED NUMBER REGISTERED Unless this certificate is presented by an authorized representative of The Depository Trust 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 STATE OF KANSAS COUNTY OF SALINE CITY OF SALINA GENERAL OBLIGATION INTERNAL IMPROVEMENT BOND SERIES 2013 -B Interest Maturity Dated CUSIP: Rate: Date: Date: July 15, 2013 REGISTERED OWNER: PRINCIPAL AMOUNT: 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 from 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), from the Dated Date shown above, or from 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, 2014 (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 Registrar "). 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 A -1 the Record Date(s) for such interest, 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 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 Bonds, Series 2013 -B," aggregating the principal amount of $4,330,000 (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 (collectively, the "Bond 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 K.S.A. 12 -6a01 et seq., K.S.A. 12 -685 et seq. and K.S.A. 12 -1736 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 from 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 territorial limits of the Issuer, the balance being 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 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 in the years 2022, and thereafter, will be subject to redemption and payment prior to maturity on October 1, 2021, 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. Each of the Bonds maturing on October 1, 2033, shall also be subject to mandatory redemption and payment prior to maturity 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, the Purchaser of the Bonds and to the Bond Registrar in accordance with the Bond Resolution. The Issuer shall cause the Bond Registrar to notify 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 book -entry 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 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. 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. Transfer 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) By: (facsimile) Mayor ATTEST: By: (facsimile Clerk A -4 CERTIFICATE OF AUTHENTICATION AND REGISTRATION This Bond is one of a series of General Obligation Internal Improvement Bonds, Series 2013 -B, of the City of Salina, Kansas, described in the within - mentioned Bond Resolution. Registration Date Registration Number Office of the State Treasurer, Topeka, Kansas, as Bond Registrar and Paying Agent LM CERTIFICATE OF CLERK STATE OF KANSAS ) ) SS. COUNTY OF SALINE ) The undersigned, Clerk of the City of Salina, Kansas, does hereby certify that the within Bond has been duly registered in my office according to law as of July 15, 2013. WITNESS my hand and official seal. (Facsimile Seal) By: (facsimile) Clerk CERTIFICATE OF STATE TREASURER OFFICE OF THE TREASURER, STATE OF KANSAS RON ESTES, 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. (Seal) A -5 Treasurer of the State of Kansas 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 $ , 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: 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 64108 (PRINTED LEGAL OPINION) A -6 TRANSCRIPT CERTIFICATE $4,330,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 The undersigned Mayor and Clerk of the City of Salina, Kansas (the "Issuer "), do hereby 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 do hereby certify as of July 8, 2013, 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 Bond 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: Name Title Term of Office Barbara Shirley Mayor April 15, 2013 to Present Norman M. Jennings Mayor April 19, 2012 to April 15, 2013 Samantha Angell Mayor April 18, 2011 to April 19, 2012 Aaron Peck Mayor April 19, 2010 to April 18, 2011 Luci Larson Mayor April 13, 2009 to April 19, 2010 John K. Vanier, II Mayor April 14, 2008 to April 13, 2009 Debbie Divine Mayor April 19, 2005 to April 17, 2006 Kristin M. Seaton Mayor April 16, 2001 to April 14, 2003 Kaye Crawford Commissioner April 18, 2011 to Present Jon Blanchard Commissioner April 15, 2013 to Present Randall Hardy Commissioner April 15, 2013 to Present Barbara Shirley Commissioner April 18, 2011 to Present Aaron Householter Commissioner April 18, 2011 to Present Samantha Angell Commissioner April 13, 2009 to April 15, 2013 Norman M. Jennings Commissioner April 13, 2009 to April 15 2013 Luci Larson Commissioner April 16, 2007 to April 18, 2011 Aaorn Peck Commissioner April 16, 2007 to April 18, 2011 Tom Arpke Commissioner April 13, 2009 to April 18, 2011 John K. Vanier, II Commissioner April 19, 2005 to April 18, 2011 R. Abner Perney Commissioner April 19, 2005 to April 13, 2009 Alan Jilka Commissioner April 16, 2001 to April 13, 2009 Donnie Marrs Commissioner April 14, 2003 to April 16, 2007 Debbie Divine Commissioner April 16, 2001 to April 16, 2007 Monte Shadwick Commissioner April 16, 2001 to April 18, 2005 Don Heath Commissioner January 14, 2002 to April 14, 2003 Lieu Ann Elsey Clerk 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; 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 office 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. 13- 10701 and Resolution No. 13 -7020 (collectively, the "Bond Resolution ") of the Issuer for the purpose of: (a) paying a portion of the costs of certain public improvements (the "Improvements ") authorized by the governing body of the Issuer pursuant to K.S.A. 12 -6a01 et seq., K.S.A. 12 -685 et seq. and K.S.A. 12 -1736 et seq. as amended, and all other applicable provisions of the laws of the State of Kansas; and (b) retiring on August 1, 2013 the following temporary notes of the Issuer, issued to temporarily finance the Improvements (the "Refunded Notes "): Description Series Dated Date Maturity Date Amount General Obligation Temporary Notes 2012 -1 July 15, 2012 August 1, 2013 $1,485,000 The total principal amount of the Bonds does not exceed the cost of the Improvements for which the Bonds are issued. 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. 2 10. Valuation. The total assessed valuation of the taxable tangible property within the Issuer for the year 2012 is as follows: Equalized Assessed Valuation of Taxable Tangible Property ............................... ............................... $403,850,282 Tangible Valuation of Motor Vehicles ................... ............................... 47,553,744 Equalized Assessed Tangible Valuation for Computation of Bonded Debt Limitations . ............................... $451,404,026 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] (SEAL) WITNESS our true and genuine manual signatures and the seal of the Issuer. 04,* )" Mayor Clerk (Signature Page to Transcript Certificate — Series 2013 -B Bonds) EXHIBITA SCHEDULE OF OUTSTANDING GENERAL OBLIGATION INDEBTEDNESS (as of July 25, 2013) General Obligation Bonds: Date Amount Final Amount Issued Series Purpose of Issue Maturity Outstandine 07 -15 -03 2003 -A Internal Improvements $ 4,350,000 10 -01 -13 $ 320,000 05 -01 -04 2004 -A Refunding 5,585,000 08 -01 -15 760,000 07 -15 -05 2005 -A Internal Improvements 4,210,000 10 -01 -13 330,000 03 -15 -06 2006 -A Internal Improvements 2,200,000 10 -01 -26 1,540,000 07 -15 -06 2006 -B Internal Improvements 885,000 10 -01 -21 465,000 06 -15 -07 2007 -A Internal Improvements 6,545,000 10 -01 -27 4,725,000 07 -15 -08 2008 -A Internal Improvements 3,720,000 10 -01 -23 2,750,000 12 -15 -08 2008 -B Internal Improvements 3,525,000 07 -01 -28 3,165,000 07 -15 -09 2009 -A Internal Improvements 23,695,000 10 -01 -29 18,960,000 05 -01 -10 2010 -A Refunding & Improvement 6,875,000 10 -01 -25 5,235,000 10 -15 -10 2010 -B Refunding 7,860,000 10 -01 -23 6,510,000 07 -15 -11 2011 -A Internal Improvements 6,565,000 10 -01 -31 6,315,000 07 -15 -12 2012 -A Internal Improvements 2,365,000 10 -01 -27 2,365,000 07 -15 -12 2012 -B Refunding 3,785,000 10 -01 -20 3,785,000 02 -15 -13 2013 -A Taxable Improvements 1,360,000 10 -01 -28 1,360,000 07 -15 -13 2013 -B Improvements 5,350,000 10 -01 -33 4,330,000 $62,915,000 Temporary Notes: Final Original Date Maturity Note Amount Project Series Issued Date Amount Outstanding Street, Water, and Sewer 2012 -1 07 -15 -12 08 -01 -13 $1,485,000 $ 0 Street 2013 -1 07 -15 -13 08 -01 -14 3,150,000 3,800,000 $3,800,000 +Entire amount outstanding ($1,485,000) to be retired with proceeds from the sale of the Bonds. A -1 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 ) SS. COUNTY OF SALINE ) I, the undersigned, Barbara Shirley, 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. 644, N Barbara Shirley Subscribed and sworn to before me as of July 8, 2013. LIEU ANN ELSEY Notary Public in and for said County and State > Notary Publi St to of Kansas �' y (SEAL) My Appt. Expires My commission expires: �. RE CFIVED 3UL 15 2013 KRIS V. -KGB 5'T lw 7m o CE aF "wsiaWAV-Y OF STA OFTH9Sz= OlrX&NOAS STATE OITRA.N"SAS ) ss . .corn+rrx oar ski } J- the I d=lgied Um A-nn BfsoY, being duly sworn, on 01& .Wo that I• am the duly q'.1j ed City oftlx al Salina. Kaosas,andidttrohycer(ily6'3t hesiguatur --9 '� Zbol v, stiolnac . gnatnre of Me Und=igned, and I fle hmwidt flux c� P�s�wt to tIu3 prlDVhADJ= af�.S.A. 75-4061 tb 7S�4M. kausivG Iaeu+4nn'�LSey Cidyazbftlaezof • KM= Subscribed auct stivxfni fa liofora= i ZE dayuf.Apr9, 2004: 1�FiILRY' �Y u�i�uasc- • � I�%taiyPobiia' a� Ears : — .._.". A6sr z r-�caf— • (M County a I State My'�oAwmissiqua�rs: ��-1�� -REC TVig -APR 2 1 m i�TAW OF STATO REGISTERED NUMBER R -1 Unless this certificate is presented by an authorized Depository Trust Company, a New York Corporation ( "DT agent for registration of transfer, exchange or payment, and registered in the name of Cede & Co. or in such other nan authorized representative of DTC (and any payAre such other entity as is requested by an authoriTRANSFER, PLEDGE OR OTHER USE OTHERWISE BY OR TO ANY PERSON IS registered owner hereof, Cede & Co., has an inter UNITED STATES PFANEMCA STATE O N A COUNT O S L CITY F S GENERAL OBLIGATI Interest Maturity Rate: 3.00% Date:Octo REGISTERED OWNER: DE PRINCIPAL AMOUNT: KNOW P Saline, State of K sas promises to pay to e F and in the h e above, unl s called o Rate per a um wn ; the Dated at s n provided fo payable sei "Interest Pay ent Dates 1, N1 REGISTERED $205,000.00 representative of The to the Issuer or its a y rtificate issued is e is equested by an to Ce & Co. or to snta ' of TC), ANY FO V UE OR FUL.inasmuc as the :1,1 CUSIP: 2013 794743 4C5 FIVE THOUSAND DOLLARS B7oid NTS: That the City of Salina, in the County of " )ived, hereby acknowledges itself to be indebted and O ove, or registered assigns, but solely from the source Cl, Amount shown above on the Maturity Date shown 1 pturity Date, and to pay interest thereon at the Interest a pis of a 360 -day year of twelve 30 -day months), from from the most recent date to which interest has been paid or duly n April 1 and October 1 of each year, commencing April 1, 2014 (the incipal Amount has been paid. Method and a of ayment. The principal or redemption price of this Bond shall be paid at maturity or upon ea Qfup ion to the person in whose name this Bond is registered at the maturity or redemption date thpresentation and surrender of this Bond at the principal office of the Treasurer of the Stas, Topeka, Kansas (the "Paying Agent" and "Bond Registrar "). 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 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 princi or redemption price of and interest on the Bonds shall be payable in any coin or currency that, on t e r ective dates of payment thereof, is legal tender for the payment of public and private debts. tere no unctually paid will be paid in the manner established in the within defined Bond Resolution Definitions. Capitalized terms used herein and not ;T ete definZkher n shall have the meanings assigned to such terms in the hereinafter defined Bo Resol t n. \ Authorization of Bonds. This Bond is one of aX au th se 'es nds Of the Issuer designated "General Obligation Internal Improvement n s, eri 2013 ,' a ga ' the principal amount of $4,330,000 (the "Bonds ") issued for the rpos t forth i th rdi ce of the Issuer authorizing the issuance of the Bonds and the Resol do of the ss er pr sc ' in a orm and details of the Bonds (collectively, the "Bond Resolution "). h n ar is ued the a ority of and in full compliance with the provisions, restrictions and imitate o he o titution d laws of the State of Kansas, including K.S.A. 12 -6a01 et seq., K.S 6 e q. d S. . 12- 36 et seq., as amended, and all other provisions of the laws of the St e o sas p a the to General Obligations. The Bo tute`g�e eral igat �f the Issuer payable as to both principal and interest in part from sme i s lev up the property benefited by the construction of certain Improvement (as s 'd t 's de c ' ed e Bond Resolution) and, if not so paid, from ad valorem taxes whi ay e le ed wi out i it n as to rate or amount upon all the taxable tangible property, real d e ona within h rrit ' limits of the Issuer, the balance being payable from ad valorem tax which ay b levi wi t h itation as to rate or amount upon all the taxable tangible property, r 1 and p son , wi in t e to 'to al limits of the Issuer. The full faith, credit and resources of the Issuer re h e e ed the p yment of the principal of and interest on this Bond and the issue of Vicki 's a as e me respectively become due. to AAturil�. /TheVonds are subject to redemption prior to maturity, as follows: Op oval pti7n. At the o tion f the Issuer, Bonds maturing on October 1 in the years 2022, and hereafte wil e sub' ct to red tion and payment prior to maturity on October 1, 2021, and thereafter, as a ho in art selection of maturities and the amount of Bonds of each maturity to be redeemed be termine the suer in such equitable manner as it may determine) at any time, at the redemption 'ce of 100% (e sse as a percentage of the principal amount), plus accrued interest to the date of redem 'on. 11 Mandatory Yedemptiol. Each of the Bonds maturing on October 1, 2033, shall also be subject to mandatory redempti and pa)hnent prior to maturity pursuant to the redemption schedule set forth in the Bond Resolution at th mption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. 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. 2 Notice of Redemption. Notice of redemption, unless waived, shall be given by the Issuer to the State Treasurer of Kansas, the Purchaser of the Bonds and to the Bond Registrar in accordance with the Bond Resolution. The Issuer shall cause the Bond Registrar to notify each Registered Owner at the address maintained on the Bond Register, such notice to be given by ailing an official notice of redemption by first class mail at least 30 days prior to the redemption dat . tice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redee ed all, n the redemption date, become due and payable at the redemption price therein specified, d m nd fter such date (unless the Issuer defaults in the payment of the redemption price), such B ds or p ns f Bonds shall cease to bear interest. Book -Entry System. The Bonds are being i physical distribution of bond certificates to be made Bond certificate with respect to each date on which the form of Bonds, registered in the nominee name of the to be deposited with the Securities Depository and will evidence positions held in the Bonds by th ownership of the Bonds in authorized denomma 'on s Transfers of ownership shall be effected on t r cor pursuant to rules and procedures established y t e e and the Bond Registrar will recognize the Se riti this Bond, as the owner of this Bo 0 1 u redemption premium, if any, and inte st on, tlu Qnd interest and any redemption premiu payments o of principal, interest and any r e ptio p ium participants of the Securities D os' o wi 1 be the s of such beneficial owners. T e Issu nd e Bo d transfers of payments or or mai aim g, s ery si Securities Depository, the cunt' s e o Tory i participants. While th a 'ties epos' o nomin provision hereinabov conta' payme s o ncip this Bond shall be eepo ade i acc nce it exi ing and the Securities 'to )y mea o b -entry s tern with no as pr i in he o Reso ution. One re s d to a re wi spect to each fS eposito , is� ing ' sued and required obiliz its c sto y. e ook -entry system Ci ritie5 pos ry's p icipants, beneficial be' ev�enc d ' the recor s of such participants. o e can 'e Depo tory and its participants cu ' ies e it a d 'ts participants. The Issuer po ry no ee, ile the Registered Owner of rs , i din ayments of principal of, and ii not an (iii) voting. Transfer of principal, is a is o t Securities Depository, and transfer ay n to beneficial owners of the Bonds by sibs 't f such participants and other nominees R 1 tra will not be responsible or liable for such ng or eviewing the records maintained by the nee its participants or persons acting through such ee s the owner of this Bond, notwithstanding the of, redemption premium, if any, and interest on arrangements among the Issuer, the Bond Registrar Tr sfer Ex&hang CE AS OTHERWISE PROVIDED IN THE BOND RESOLU ION, T IS LOB BO AY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, O LY O NOMINEE OF THE SECURITIES DEPOSITORY OR TO A SUCCES R C S EPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURIT S DEPOSITO 's Bond may be transferred or exchanged, as provided in the Bond Resolution, o on t nd e i er kept for that purpose at the principal office of the Bond Registrar, upon surrender o is o d, t et er with a written instrument of transfer or authorization for exchange satisfactory to the B d Regist r duly executed by the Registered Owner or the Registered Owner's duly authorized agent, a thereu n a new Bond or Bonds in any Authorized Denomination of the same maturity and in the sa egate 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 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 altacts, \Nh s, and things required to be done and to exist precedent to and in the issuance of this n properly done and performed and do exist in due and regular form and manner as req stitution and laws of the State of Kansas, and that the total indebtedness of the Issuer, e of bonds, does not exceed any constitutional or statutory limitation. IN WITNESS WHEREOF, the Issuer has cause this Bo d ex c Obe manual or facsimile signature of its Mayor and attested by the manu o acsi i si a e it ,and its seal to be affixed hereto or imprinted hereon. aft o� A711 UIR 4 CERTIFICATE OF AUTHENTICATION AND REGISTRATION This Bond is one of a series of General Obligation Internal Improve ent Bonds, Series 2013 -B, of the City of Salina, Kansas, described in the within- mentioned Bond Res ti Registration Date Registration Number 0322 - 085- 071513 -850 STATE OF KANSAS } ) SS. COUNTY OF SALINE ) The undersigned, Clerk o th C has been duly registered in my o ice c WITNESS my hand nd offi al SM OFFICE O TE� RON STES, Treasu proceedings lea ' o e is that this Bond was regi d in (Seal) WITNESS mNhand ark Office of the Stat Topeka, Kans , as Bond Rep= and Salina ans oe hereby certify that the within Bond to la" a f Jul 1 , 2013. Y"4-1) -, Clerk ZTAFIC TE F STATE TREASURER TATE OF KANSAS of e State of Kansas, does hereby certify that a transcript of the e of this Bond has been filed in the office of the State Treasurer, and uch office according to law on official seal. 5 LM Treasurer of the State of Kansas BOND ASSIGNMENT FOR VALUE RECEIVED, the undersigned do(es) hereby sell, (Name and Address) (Social Security or Taxpayer the Bond to which this assignment is affixed in the standing in the name of the undersigned on the bo k hereby irrevocably constitute and appoint books of said Bond Registrar with full power of ubstit Dated TAT.. to a unt f $ , dersigned doles) to tran er said Bond on the LEGAL OPINION The following is a true and correct copy of the approving legal Bond Counsel, which was dated and issued as of the date of original issu GILMORE & BELL, P.C. Attorneys at Law 2405 Grand Boulevar Suite 1100 Kansas City, Missouri 6410E Governing Body City of Salina, Kansas Robert W. Baird & Co. Winston - Salem, North Carolina Re: $4,330,000 General the City of Salina, E of Gilmore & Bell, P.C., delivery of such Bonds: Series 2013 -B, of We have acted as Bo Cou s 1 in onne tion w%h th issuance by the City of Salina, Kansas (the "Issuer "), of the above- aptione b ds e " nd ").\ this capacity, we have examined the law and the certified proceedin , cert' is %eed r do uments that we deem necessary to render this opinion. Capitalized to n t of ise herein hall have the meanings ascribed thereto in the resolution adopted by e go ng body suer 07scribing the details of the Bonds. Regarding quest' n off at�l to 0 opinion, we have relied on the certified proceedings and other certificati s o u lic f 'als and of ers furnished to us without undertaking to verify them by independ in ti atio . we are of the opinion, under existing law, as follows: 1. \The Bonds =the y authorized, executed and delivered by the Issuer and are valid and legally b' ing gen�l Issuer. 2. The WnZfs are kayable as to both principal and interest in part from special assessments levied upon the pro rty benef ed by the construction of certain improvements and, if not so paid, from ad valorem taxes whit ay levied without limitation as to rate or amount upon all the taxable tangible property, real and persona, 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. 7 3. The interest on the Bonds is: (a) excludable from gross income for federal income tax purposes; and (b) 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 t e Issuer complies with all requirements of the Internal Revenue Code of 1986, as amended (the ` o ") that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, r c tinue to be, excludable from gross income for federal income tax purposes. The Issuer ha c en to o comply with all of these requirements. Failure to comply with certain of these require m nts ma se erest on the Bonds to be included in gross income for federal income tax purposes r r a tive to t at f issuance of the Bonds. The Bonds are "qualified tax - exempt obligations" with' the ing of Code ction 265(b)(3). We express no opinion regarding other federal tax consequen s arisin wi reset to the onds. 4. The interest on the Bonds is exempt We express no opinion regarding the accura , co I eness or en of the Official Statement or other offering material relating to t e o ds exc to t extent, any, stated in the Official Statement). Further, we express no op' on re in tax o sequences rising with respect to the Bonds other than as expressly set forth in this iniop. The rights of the owners of the aonds a t erifor e bili Thereof may be limited by bankruptcy, insolvency, reorganizatiZhe t ium\a of Sim' a ws affecting creditors' rights generally and by equitable principles, th er tc der l la o in uity. This opinion is given as of is da e,fl we opinion to reflect any facts or i c n tan s that may occur after the date of th' opini . igation to revise or supplement this attention or any changes in law that GILMO)RE & BELL, P.C. H., AGREEMENT BETWEEN ISSUER AND AGENT $4,330,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 THIS AGREEMENT, dated as of July 15, 2013, between the City of Salina, Kansas, a municipality (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: Wl9 all QN1tU`V1 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. H. 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(s) for each Security. B. Agent shall manually authenticate the originally issued Securities upon the written order of one or more authorized officers of Issuer. Thereafter, Agent shall manually authenticate all Securities resulting from transfer or exchange of Securities. C. 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. D. Agent may rely upon any document believed by it to be genuine and to have been signed or presented 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. E. 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 $5,000, This amount will be due at the time of registration unless such fee is to be paid from 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. IV. 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 maturity 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 SECURITIES 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, fractions of a cent equaling or exceeding five mills shall be regarded as one cent; fractions 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 transfers or exchanges of the certificates. Issuer shall be responsible for the payment of the printing or other expenses for such certificates. Issuer shall be responsible for obtaining appropriate "CUSIP" number(s) and shall notify Agent of each number(s) prior to the issuance of the applicable Securities. 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 2 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 -111. E. TRANSFERS 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 "Bond 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 Bond Resolution authorizing the Securities. F. REGISTRATION DATES AND FUNDS FOR PAYMENTS Date of Registration shall be affixed on the initial Securities. Subsequent transfers or exchanges shall bear a Date of Registration as of the date that all the required documentation is received at the Agent's official place of business. Issuer will provide funds 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. C e; �( 7aI�l� CN�[�7��1CIT�C�7i1C7);ii�I►faC9 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 Agent and 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 from 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. 3 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 thirty (30) days written notice to Agent. Mandatory Redemption. If any Securities are subject to mandatory redemption in accordance with their terms of the Bond Resolution, 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 L 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 (15) 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 Bond Resolution, 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 Bond Resolution authorizing the issuance of the Securities. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] rd CITY OF SALINA, KANSAS By &W Ilk (SEAL) Mayor ATTEST: By Clerk OFFICE OF THE TREASURER OF THE STATE OF KANSAS (SEAL) By �cL DIRECTOR BOND SERVICES (Signature Page to Agreement Between Issuer & Agent — Series 2013 -B Bonds) ATTACHMENT "A" SAMPLE $5,000.00000 ........................ Bond Unit x .06875 . ....................... Interest Rate 343.750000 Rounded to six decimal places / 360 ........................ Days per year .954861 Rounded to six decimal places x 180 ........................ Day in interest period 171.874980 (Rounded to second decimal = $171.87) Unit interest is then multiplied by the number of units in the maturity. A -1 APPENDIX I NOTICE OF CALL FOR MANDATORY REDEMPTION TO THE OWNERS OF CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B, DATED JULY 15, 2013 Notice is hereby given that pursuant to the provisions of Article Ili 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, (the "Called Bonds "), have been called for mandatory redemption and payment on October 1, (the "Redemption Date "), at the principal office of the Treasurer of the State of Kansas (the "Bond Registrar and Paying Agent "). Maturity Date Principal Interest CUSIP Nos. (October 1) Amount Rate Number 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 Uz I -1 Treasurer of the State of Kansas, Topeka, Kansas s 19 Blanket Issuer Letter of Representations [TD be Completed by ftwerl CITY OF SAI.-U&, SABSAS [game o(tswerl May 30,.1946 Gate) Attention: Underwriting Department — Eligibility The Depository Trust Company 55 Water Street; 50th Floor New York, NY 10041 -0099 Ladies and Gentlemen: This letter sets forth our understanding with respect to all issues (the "Securities ") that Issuer shall request be made eligible for deposit.by The Depository Trust Company ( "DTC"). To induce DTC to accept the securities as elid ble for deposit at DTC, and to act in accor&. ce udth DTC's Rules mzth respect to the Securities, Issuer represents to DTC that issuer will comply with the requirements stated in DTCS Operational Arrangements, as they may be amended from time to tune. Note: Schedule A contains statements that DTC believes atnuatcly dem-be DTC. the method of e£f tg, book - entry uardfers of securities distributed throughh DM and certain related matters. Received and Accepted THE DEPOSITORY TRUST COMP Very truly yours, City of Salina, (issuer) . (� oriaed iiiceriSignature) . Evelyn Maxwell, Mayor (Type vrtte !came & Tdo 300 Y. Ash Street (strut pddreu) Salina SS 67402 -0736 (City) (Sate) (rrp) 913 - 826 -7240 (Pboae Number) SCHEDULE A (To Blanket Issuer Letter of Representations) SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK - ENTRY -ONLY ISSUANCE (Prepared by WC—bracketed mataiat may be apptimbie only to certain issues) L. 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 fiiliy- 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.] 2. 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 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 3.5 million issues of U.S. 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 whong Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ( "DTCC'). DTCC 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 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 informatibn about DTC can be found at ww ,,v.dtcc.com and www.dtc.org. 3. 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 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 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. 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 03/25108 SCHEDULE A (To Blanket Issuer Letter of Representations) 5. 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. [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.] '[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 Iv MI 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 eiay 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 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 [Tender/Remarketing) Agent, and shall effect delivery of such Securities.by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to [Tender/Remarketing] 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 ou DTC's records and followed by a book -entry credit of tendered Securities to [Tender/Remarketing] 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 11. 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. BtOR 0325/08 UNDERWRITING SAFEKEEPING AGREEMENT BY AND BETWEEN DEPOSITORY TRUST COMPANY AND THE CITY OF SALINA, KANSAS AND THE OFFICE OF THE KANSAS STATE TREASURER $4,330,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 In order to induce the Depository Trust Company (the "DTC ") to accept delivery of the above captioned bonds (the "Bonds ") for safekeeping prior to the delivery of the Bonds on July 25, 2013 (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 Robert W. Baird & Co., Winston - Salem, North Carolina, as the Underwriter (the "Underwriter ") in distributing the Bonds. By executing this agreement in the appropriate place DTC acknowledges upon 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 Ann 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 furnished by the Underwriter. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] CITY OF SALINA, KANSAS By: Clerk Dated: July 8, 2013 ? v k (Signature Page to Safekeeping Agreement — Series 2013 -B) OFFICE OF TEE TREASURER OF THE STATE OF KANSAS, As Agent Dated: I /3 By: Title: ES THE DEPOSITORY TRUST COMPANY By: e MOOD ]Investors Service July 12, 2013 Mr. Rodney Franz City of Salina 300 W. Ash City Hall Salina, KS 67402 Dear Mr. Franz: Henrietta Chang Vice President Sr. Credit Officer 100 N. Riverside Plaza Suite 2220 Chicago, IL 60606 312.706.9960 tel 312.706.9999 fax henrietra.chang@moodys.com www.moodys.com We wish to inform you that on June 30, 2013, Moody's Investors Service reviewed and assigned a rating of MIG 1 to SALINA (CITY OF) KS, General Obligation Temporary Notes, Series 2013 -1 and Aa3 General Obligation Internal Improvement Bonds, Series 2013 -B. In assigning such rating, Moody's has relied upon the truth, accuracy and completeness of the information supplied by you or on your behalf to Moody's, Moody's expects that you will, on an ongoing basis, continue to provide Moody's with updated information necessary for the purposes of monitoring the rating, including 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 future. 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. In accordance with our usual policy, assigned ratings are subject to revision or withdrawal by Moody's at any time, without notice, in the sole discretion of Moody's. For the most current rating, please visit www.moodys.com. This letter is strictly confidential and you may not disclose it to any other person except: (i) to your legal counsel acting in their capacity as such; (ii) to your other authorized agents, acting in their capacity as such; (iii) as required by the law or regulation; or (iv) with the prior written consent of Moody's, in which case Moody's reserves the right to impose conditions upon such consent such as requiring that you only disclose this letter in its entirety and /or requiring any third party to sign a confidentiality and /or non - reliance agreement. Should you have any questions regarding the above, please do not hesitate to contact me or the analyst assigned to this transaction, Thomas Aaron at 312 - 706 -9967. Sincerely, -4*-q 6 Henrietta Chang CC: Mr. David Arteberry George K. Baum & Co. MOODY'S INVESTORS SERVICE New Issue: Moody's downgrades Salina's (KS) GO to Aa3; Assigns Aa3 to GO Bonds Bonds, Series 2013 -B and MIG 1 to GO Temporary Notes, Series 2013 -1 Global Credit Research - 30 Jun 2013 Aa3 rating applies to $62.9 million of post -sale long -term general obligation debt outstanding SALINA (CITY OF) KS Cities (including Towns, Villages and Townships) KS MoocVs Rating ISSUE RATING General Obligation Internal Improvement Bonds, Series 2013 -B Aa3 Sale Amount Expected Sale Date Rating Description $4,330,000 07/05/13 General Obligation General Obligation Temporary Notes, Series 2013 -1 MIG 1 Sale Amount $3,800,000 Expected Sale Date Rating Description Moody's Outlook NOO Opinion 07/05/13 Note: Bond Anticipation NEW YORK, June 30, 2013 -- Moody's Investors Service has downgraded to Aa3 from Aa2 the rating on the City of Salina's (KS) outstanding long -term general obligation debt. Concurrently, Moody's has assigned a Aa3 rating to the city's $4.3 million General Obligation Internal Improvement Bonds, Series 2013 -B and a MIG 1 rating to the city' s$3.8 million General Obligation Temporary Notes, Series 2013 -1. Post -sale, the city will have $62.9 million of long -term general obligation debt outstanding. SUMMARY RATINGS RATIONALE Both the long -term bonds and short -term notes are secured by the city's general obligation unlimited tax pledge. Proceeds of the Series 2013 -B bonds will provide long -term takeout financing for the city's General Obligation Temporary Series 2012 -1 Notes, which mature on August 1, 2013. The Series 2013 -B bonds will finance a number of street projects and downtown street lighting. The downgrade of the city's long -term general obligation rating primarily reflects the city's financial profile, which has stabilized following consecutive reserve declines, but with reserves expected to remain at a level that better aligns with the Aa3 rating over the long -term. The Aa3 rating also incorporates the city's moderately -sized tax base and manageable, although above average, debt burden. The MIG 1 rating is based on expected market access for the takeout financing, as well as the long -term credit fundamentals inherent in the city's Aa3 rating. STRENGTHS -Lack of levy limits provides significant revenue raising flexibility -Focus by management on maintaining and rebuilding General Fund reserves CHALLENGES -Multi -year trend of operating shortfalls led to reduced reserve and liquidity levels - Dependence on an economically sensitive sales tax revenues for General Fund operations DETAILED CREDIT DISCUSSION EXPECTED MARKET ACCESS FOR REFINANCING The city's demonstrated ability to access the market includes multiple issues of bonds and notes borrowing in the last several years. The city expects to either repay the notes with an issuance of long -term bonds or roll over the notes for another year. City management is expected to make adequate provisions to address potential market disruptions at the time of the takeout financing, by planning to take out debt well in advance of final maturity and considering alternate back up plans if necessary. MODERATELY SIZED TAX BASE SERVES AS REGIONAL ECONOMIC CENTER We believe that due to its position as a regional retail hub, Salina should continue to enjoy relative economic stability. Located in Saline County 95 miles north of Wichita (GO rated Aa1 /stable outlook), the City of Salina's $2.9 billion tax base has experienced declines in recent years associated with the broader economic downturn, as well as the state's exemption of machinery and new equipment from valuations. Despite the declines, the full value has remained relatively flat over the past five years, with an average annual increase of 0.3% from 2007 to 2012. Located at the intersection of 1 -70 and 1 -135, the city serves as a regional retail, commercial, industrial, and medical hub for the largely agricultural communities of north central Kansas (long -term rated Aa1 /negative outlook). Residential income indices track slightly below state and national benchmarks, with 2006 - 2010 median family income at 87.3% and 86.5% of state and national levels for the same time period, respectively. At 5.2% in April 2013, the city's unemployment rate tracked at the state rate (5.3 %) but below the national rate (7.1 %) for the same time period. STABILIZED FINANCIAL OPERATIONS FOLLOWING RESERVE DECLINES The city's restoration of positive operations in fiscal 2011 and balanced (not yet audited) operating results for fiscal 2012 points to the continuation of stable financial operations. The city's General Fund balance declined steadily from fiscal 2007 to fiscal 2010 due to budgetary pressures in a variety of areas, including increased fuel costs, increased salary and benefit costs, and declines in economically sensitive sales tax revenues in fiscal 2010. Another factor in the General Fund balance decline was reduced property tax revenues due to state legislation that increased property tax exemptions for new machinery and equipment. From $7.3 million in fiscal 2007, the city's General Fund reserves fell to $3.6 million at the end of fiscal 2010. Favorably, as a result of a multi -year implementation of cost reductions such as a reduction in positions, changes to overtime policies and increased service fees, the city achieved a modest $63,000 operating surplus in fiscal 2011. The increase, combined with a fund balance restatement, increased reserves to $3.8 million, or a satisfactory 10.8% of revenues. Included in the positive fiscal 2011 results, the city executed a purchase of eight police vehicles due to available cost savings. As a result, the city did not need to purchase additional police vehicles in fiscal 2012 or in fiscal 2013. While audited results are not yet available, a draft version of the city's audit shows that fiscal 2012 ended with balanced operations. While the city had targeted additional improvement to reserve levels, sales tax revenues did not increase at the level expected. However, management reports that expenditure controls put in place prevented the city from drawing down reserves. The city has implemented additional cost savings measure such as contracting out the operations of its Bicentennial Center arena in an effort to reduce the facility's reliance on General Fund support. The city has identified a General Fund reserve target of $5.0 million, approximately $1.2 million above current reserve levels. For the current fiscal year 2013, city management expects to achieve an approximate $600,000 General Fund surplus, moving the city toward its reserve.goal. Typical of Kansas cities, sales tax receipts represent the city's primary operating revenue source, comprising 33% of fiscal 2011 General Fund revenues. Several different sales taxes are collected, including a 1% Countywide Local Option Sales Tax and a 0.5% Citywide Local Option Sales Tax, which do not sunset. In addition, the city passed a 0.4% local sales tax effective April 1, 2009 that replaced an expiring .25% local sales tax. This sales tax sunsets in 2019. Like all Kansas cities, Salina also benefits from the revenue raising flexibility due to the lack of levy limits. Future credit reviews will continue to focus on the city's financial operations as a key credit factor. We believe that the Aa3 rating appropriately reflects not only recent trends, but the city's stated goal of increasing General Fund reserves incrementally over the next several years to approximately $5 million. ABOVE AVERAGE DEBT BURDEN EXPECTED TO REMAIN MANAGEABLE The city's debt burden is expected to remain manageable given average principal amortization and moderate future borrowing plans. At 2.3% of full value (4.4% overall), the city's direct debt burden is somewhat above average. Principal amortization is average, with 77.2% of general obligation debt retired in ten years. The city generally issues long term and short term debt once or twice per year to fund projects outlined in its Capital Improvement Plan. Looking further ahead, the city expects to continue to issue debt annually to finance its capital plan, as well as revenue debt associated with the replacement of its wastewater treatment plant in approximately five years and the city's portion of a contamination cleanup that will be financed by revenues of the city's water enterprise. All of the city's debt is fixed rate, and the city is not a party to any interest rate swap agreements. The city participates in two statewide cost - sharing plans, and also has a small single employer public safety pension plan that is closed. Budgetary pressure generated by Salina's exposure to two statewide cost - sharing pension plans, the Kansas Public Employees Retirement System (KPERS) and Kansas Police and Firemen's Retirement System (KP &F), is expected to increase, although remain manageable in the near term. Both plans are administered under KPERS, and the city has consistently made its required contributions to both plans in accordance with statutory requirements. Total city pension contributions in fiscal 2011 amounted to $2.8 million, and contributions to KPERS are expected to increase by at least 0.6% of payroll and up to 1.2% of payroll annually through fiscal 2017. Approximately 90% of the city's pension contributions are related to the General Fund, with its enterprise funds covering approximately 10% of pension expenses. Fiscal 2011 General Fund pension contributions represented approximately 6.0% of operating revenues, inclusive of the General Fund and Debt Service fund. Moody's adjusted net pension liability (ANPL) for the city, under our methodology for adjusting reported pension data, is $69 million, or 1.67 times operating revenues, including the General Fund and Debt Service fund, compared to approximately 1.0 times on average for local governments. Moody's ANPL reflects certain adjustments we make to improve comparability of reported pension liabilities. The adjustments are not intended to replace Salina's reported pension information, but to improve comparability with other rated entities. We determined the city's share of liability for the cost - sharing plans administered under KPERS in proportion to its contributions to the plan. We expect that the city will adequately incorporate rising pension costs into its budget, although we note that these increased costs represent an additional challenge for the city in attaining its stated goal to increase reserves. WHAT COULD CHANGE THE RATING - UP - Substantial growth in the city's tax base and residential income indices - Substantial improvement in General Fund reserves and liquidity to levels more consistent with higher rating categories WHAT COULD CHANGE THE RATING - DOWN - Further reductions to reserve levels due to operating deficits - Erosion of the city's tax base KEY STATISTICS 2010 Population: 47,707 (4.4% increase since 2000) 2012 Full value: $2.9 billion 2006 - 2010 Per capita income: 89.8% of state / 85.1 % of nation 2006 - 2010 Median family income: 87.3% of state / 86.5% of nation City of Salina unemployment rate (April 2013): 5.2% Fiscal 2011 General Fund balance: $3.8 million (10.8% of General Fund revenues) Fiscal 2012 General Fund balance (draft audit): $3.8 million (10.6% of General Fund revenues Direct debt burden: 2.3% (4.4% overall) Payout (10 Years): 77.2% Moody's Adjusted Net Pension Liability (ANPL): $69.0 million (1.67x operating revenues, including General Fund and Debt Service Fund) Post -sale long term general obligation debt outstanding: $62.9 million Post -sale short-term general obligation debt outstanding: $3.8 million PRINCIPAL METHODOLOGY The principal methodology used in the long term rating was General Obligation Bonds Issued by US Local Governments published in April 2013. 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MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail clients. It would be dangerous for retail clients to make any investment decision based on MOODY'S credit rating. If in doubt you should contact your financial or other professional adviser. CLOSING CERTIFICATE $4,330,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 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 July 25, 2013 (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 instance 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 July 8, 2013 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. 12 -6a01 et seq., K.S.A. 12 -685 et seq. and K.S.A. 12 -1736 et seq. as amended, Ordinance No. 13 -10701 and Resolution No. 13 -7020 of the Issuer duly adopted by the governing body of the Issuer on July 8, 2013 (collectively, the "Bond Resolution "). 4. Purpose of the Bonds. The Bonds are being issued pursuant to the Bond Resolution for the purpose of: (a) paying a portion of the costs of certain public improvements (the "Improvements "); and (b) retiring on August 1, 2013 the following temporary notes of the Issuer, issued to temporarily finance the Improvements (the "Refunded Notes "): Description Series Dated Date Maturity Date Amount General Obligation Temporary Notes 2012 -1 July 15, 2012 August 1, 2013 $1,485,000 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 Sale dated June 10, 2013 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 Official Statement relating to the Bonds. To the best of our knowledge, the Official Statement, other than the sections entitled "The Depository Trust Company," "Ratings," "Legal Matters," "Tax Matters," and Appendices B,C and D, 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 Official 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 Undertaking. The Issuer has heretofore adopted its Omnibus Continuing Disclosure Undertaking (the "Disclosure Undertaking "), wherein the Issuer has covenanted to disseminate such information as is required in accordance with the provisions of the SEC Rule and the Disclosure Undertaking. In the Bond Resolution, the Issuer has covenanted to apply the provisions of the Disclosure Undertaking to the Bonds. A copy of the Disclosure Undertaking is contained in the Transcript. 9. Non - Litigation. There is 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. Signature Official Title q� y' Mayor Clerk (Signature Page to Closing Certificate — Series 2013 -B Bonds) FEDERAL TAX CERTIFICATE Dated as of July 25, 2013 OF THE CITY OF SALINA, KANSAS $4,330,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B FEDERAL TAX CERTIFICATE TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1.01 Definitions of Words and Terms ..................................................... ............................... l ARTICLE II GENERAL REPRESENTATIONS AND COVENANTS Section 2.01 Representations and Covenants of the Issuer .................................. ..............................6 Section 2.02 Continuing Application of Representations and Covenants ........... .............................11 ARTICLE III ARBITRAGE CERTIFICATIONS AND COVENANTS Section3.01 General ........................................................................................... .............................11 Section 3.02 Reasonable Expectations ................................................................ .............................11 Section3.03 Purpose of Financing .................................................................... ............................... 11 Section 3.04 Funds and Accounts ........................................................................ .............................11 Section 3.05 Amount and Use of Bond Proceeds and Other Money ................. ............................... 11 Section3.06 No Advance Refunding .................................................................. .............................12 Section3.07 Current Refunding .......................................................................... .............................12 Section 3.08 Completion of Financed Improvements; New Money Portion ...... .............................12 Section3.09 Sinking Funds ................................................................................. .............................12 Section 3.10 Reserve, Replacement and Pledged Funds ..................................... .............................12 Section 3.11 Purpose Investment Yield ............................................................... .............................13 Section 3.12 Offering Prices and Yield on Bonds ............................................... .............................13 Section 3.13 Miscellaneous Arbitrage Matters ................................................... .............................13 Section3.14 Conclusion ...................................................................................... .............................13 ARTICLE IV TAX COMPLIANCE POLICIES AND PROCEDURES Section4.01 General ........................................................................................... .............................14 Section 4.02 Record Keeping; Use of Bond Proceeds and Use of Financed Improvements . .......... 14 Section 4.03 Restrictions on Investment Yield ................................................... .............................15 Section 4.04 Procedures for Establishing Fair Market Value of Investments ..... .............................15 Section 4.05 Certain Gross Proceeds Exempt from the Rebate Requirement ..... .............................18 Section 4.06 Computation and Payment of Arbitrage Rebate ............................. .............................20 ARTICLE V MISCELLANEOUS PROVISIONS Section 5.01 Term of Tax Certificate .................................................................. .............................21 Section5.02 Amendments ................................................................................... .............................21 Section 5.03 Opinion of Bond Counsel ............................................................... .............................21 Section5.04 Reliance .......................................................................................... .............................21 Section5.05 Severability ..................................................................................... .............................22 Section 5.06 Benefit of Certificate ...................................................................... .............................22 Section 5.07 Default, Breach and Enforcement .................................................. .............................22 Section5.08 Governing Law ............................................................................... .............................22 Section 5.09 Electronic Transactions .................................................................. .............................22 LIST OF EXHIBITS TO FEDERAL TAX CERTIFICATE A. IRS FORM 8038 -G Evidence of filing B. RECEIPT FOR PURCHASE PRICE C. RECEIPT AND REPRESENTATION D. DESCRIPTION OF PROPERTY COMPRISING THE FINANCED IMPROVEMENTS AND LIST OF REIMBURSEMENT EXPENDITURES E. SAMPLE ANNUAL COMPLIANCE CHECKLIST F. SAMPLE FINAL WRITTEN ALLOCATION Schedule 1 Debt Service Schedule and Proof of Yield ii FEDERAL TAX CERTIFICATE THIS FEDERAL TAX CERTIFICATE (the "Tax Certificate "), is executed as of July 25, 2013 (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 $4,330,000 principal amount of General Obligation Internal Improvement Bonds, Series 2013 -B (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 tax 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 § 148(f). 4. The Issuer adopted a Tax Compliance Procedure (as defined below) for the purpose of setting out general procedures for the Issuer to continuously monitor and comply with the federal income tax requirements set out in the Code and the Regulations. 5. This Tax Certificate is entered into as required by the Tax Compliance Procedure to set out specific tax compliance procedures applicable to the Bonds. 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 §§ 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 Bonds 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. "Annual Compliance Checklist" means a checklist for each of the Financed Improvements designed to measure compliance with the requirements of this Tax Certificate and the Tax Compliance Procedure after the Issue Date as further described in Section 4.02 and substantially in the form attached as Exhibit E. "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, 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 Improvement 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 Compliance Officer" means the Issuer's Director of Finance or other person named in the Tax Compliance Procedure. "Bond Counsel" means Gilmore & Bell, P.C., or other firm of nationally recognized bond counsel acceptable to the Issuer. "Bond Resolution" means Ordinance No. 13 -10701 and Resolution No. 13 -7020 of the Issuer duly adopted by the governing body of the Issuer on July 8, 2013, 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 2 (c) The date the last Bond is discharged is the final Computation Date. The Issuer selects October 1, 2017 as the first Computation Date but reserves the right to select a different date consistent with the Regulations. "Final Written Allocation" means the Final Written Allocation of expenditures prepared by the Bond Compliance Officer in accordance with the Tax Compliance Procedure and Section 4.02(b) of this Tax Certificate. "Financed Improvements" means the portion of the Improvements financed or refinanced with the proceeds of the Bonds as described in the Bond Resolution and by the Original Obligations, all as described on Exhibit D. "Gross Proceeds" means (a) sale proceeds (any amounts actually or constructively received by the Issuer from 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 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) Debt Service Account; and (3) 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). "Improvements" means all of the property acquired, developed, constructed, renovated, and equipped by the Issuer using proceeds of the Bonds or the Original Obligations and other money contributed by the Issuer, as described on Exhibit D. "Investment" means any security, obligation, annuity contract or other investment -type property that is purchased directly with, or otherwise allocated to, Gross Proceeds. This term does not include a tax- exempt bond, except for "specified private activity bonds" as defined in Code § 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 July 25, 2013. "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 § 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, Measurement Period means 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 useful life of the property. "Minor Portion" means the lesser of $100,000 or 5% of the sale proceeds of the Bonds. "Net Proceeds" means, when used in reference to the Bonds or the New Money Portion, the sale proceeds of the Bonds (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. "New Money Portion" means the portion of the Bonds described in Section 3.06. "Non - 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 § 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 § 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 Bond Counsel to the effect that the proposed action or the failure to act will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes. "Original Obligations" means the Issuer's Series 2012 -1 Notes, which was the initial issue of tax- exempt governmental obligations that financed or refinanced a portion of the Financed Improvements. "Output Contract" is defined in Regulations § 1.141 -7 and generally includes any contract with a Non - Qualified User that provides for the purchase of the output of Financed Improvements. A similar contract with a Qualified User is not an Output Contract. "Post- Issuance Tax Requirements" means those requirements related to the use of proceeds of the Bonds, the use of the Financed Improvements and the investment of Gross Proceeds after the Issue Date of the Bonds. "Preliminary Expenditures" means: (a) costs incurred for architectural, engineering, surveying, soil testing, costs of issuance, and similar costs prior to commencement of acquisition, construction, or rehabilitation of the Financed Improvements, other than land acquisition, site preparation, and similar costs incident to commencement of construction of the Financed Improvements up to an amount not in 4 excess of 20 percent of the issue price of the Bonds; and (b) costs incurred in an amount not in excess of the lesser of $100,000 or 5% of the sale proceeds of the Bonds with respect to the New Money Portion or of the Original Obligations with respect to the Refunding Portion. "Proposed Regulations" means the proposed arbitrage regulations REG 106143 -07 (published at 72 Fed. Reg. 54606 (Sept. 26, 2007)). "Purchaser" means Robert W. Baird & Co., Winston - Salem, North Carolina 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 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 arrangement may have a right of first refusal 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 sale 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 Notes" means the Series 2012 -1 Notes. "Refunding Portion" means the sale proceeds of the Bonds identified in Section 3.06 together with the 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 §§ 103 and 141 through 150 and applicable to the Bonds. "Series 2012 -1 Notes" means the Issuer's General Obligation Temporary Notes, Series 2012 -1, issued July 15, 2012. "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. "Tax Compliance Procedure" means the Issuer's Tax and Securities Compliance Policy and Procedure, dated June 11, 2012, as amended and supplemented in accordance with the terms of the Tax Compliance Procedure. "Tax- Exempt Bond File" means documents and records for the Bonds, maintained by the Bond Compliance Officer pursuant to the Tax Compliance Procedure. "Transcript" means the Transcript of Proceedings relating to the authorization and issuance of the Bonds. "Yield" means yield on the Bonds, computed under Regulations § 1.148 -4, and yield on an Investment, computed under Regulations § 1.148 -5. ARTICLE II GENERAL REPRESENTATIONS AND COVENANTS Section 2.01 Representations and Covenants of the Issuer. The Issuer represents and covenants as follows: (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, (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. 6 (b) Tax- Exempt Status of Bonds — General Covenant. The Issuer (to the extent within its power or direction) will not use any money on deposit in any fund or account maintained in connection with the Bonds, whether or not such money was derived from the proceeds of the sale of the Bonds or from any other source, in a manner that would cause the Bonds to be "arbitrage bonds," within the meaning of Code § 148, and will not (to the extent within its power or direction) otherwise use or permit the use of any Bond proceeds or any other funds of the Issuer, directly or indirectly, in any manner, or take or permit to be taken any other action or actions, that would cause interest on the Bonds to be included in gross income for federal income tax purposes. (c) Governmental Obligations —Use of Proceeds. Throughout the Measurement Period: (1) all of the Financed Improvements are expected to be owned by the Issuer or another Qualified User; (2) no portion of the Financed Improvements are expected to be used in a Non - Qualified Use; and (3) the Issuer will not permit any Non - Qualified Use of the Financed Improvements without first obtaining an Opinion of Bond Counsel. The Issuer will monitor the usage of all portions of the Financed Improvements during the Measurement Period. If the Non - Qualified Use of the Financed Improvements exceeds 10% of the total use over the Measurement Period, then the Issuer will take "remedial action" in accordance with Regulations § 1.141 -12, as specified in an Opinion of Bond Counsel, as necessary to maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes. The Issuer understands that remedial action could include redemption or defeasance of all or a portion of the Bonds. (d) Governmental 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 and the payment of principal of and interest on the Refunded Obligations has not been (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 from 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 forgoing, 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 Net Proceeds of the Bonds will be loaned directly or indirectly to any Non - Qualified User. The payment of principal and interest on the Bonds will be funded, and the payment of principal of and interest on the Refunded Obligations was 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 Original Obligations is not treated as a loan of the Original Obligations 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; and (4) the tax is imposed to pay for an essential governmental function. (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 7 renew any Management Agreement with any Non - Qualified User without first 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 maturity" of the Bonds, as computed by Bond Counsel, does not exceed 120% of the average reasonably expected economic life of the Financed Improvements. The "average reasonably expected economic life" of the Financed Improvements was determined as follows: the average economic life of the Financed Improvements as of the issue date of the Original Obligations was first multiplied by 120 %, then reduced by the number of years elapsed from the issue date of the Original Obligations to the Issue Date. 0) Expenditure of Bond Proceeds. (1) Reimbursement of Expenditures; Official Intent. (A) New Money Portion. The governing body of the Issuer adopted a resolution(s) 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 New Money Portion of the Financed Improvements prior to the issuance of those bonds. The resolutions are contained in the Transcript of the Bonds. 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, except for Preliminary Expenditures. The Issuer will evidence each allocation of the proceeds of the New Money Portion to an expenditure in writing. In addition, except for $96,762.00 of expenditures incurred with respect to the North Ohio Grade Separation project (as shown on Exhibit D), such expenditures meeting the requirements of the "de minimis" exception of Regulations § 1.150- 2(f)(1), (i) no reimbursement allocation will be made more than 18 months following the later of (a) the date of the expenditure or (b) the date the Financed Improvements was placed in service and (ii) no reimbursement allocation will be made for an expenditure made more than 3 years before the date of the reimbursement allocation. As shown on Exhibit D, the total amount of Net Proceeds used to reimburse the Issuer is $1,004,330.00. (B) Refunding Portion. The governing body of the Issuer adopted a resolution(s) declaring the intent of the Issuer to finance the Financed Improvements with tax- exempt bonds and to reimburse the Issuer for expenditures made for the Financed Improvements prior to the issuance of the Original Obligations. No portion of the Net Proceeds of the Original Obligations were used to reimburse an expenditure paid by the Issuer more than 60 days prior to the date the respective resolution was adopted, except for Preliminary Expenditures or as otherwise described in the federal tax certificate of similar document for the Original Obligations. The Issuer evidenced each allocation of the proceeds of the Original Obligations to an expenditure in writing. (2) Final Allocation of Bond Proceeds to Expenditures. (A) New Money Portion. The Issuer understands that, under Regulations § 1.148 -6(d), the Issuer is required to account for the allocation of Bond proceeds to Improvement expenditures (including expenditures made before and after the Issue Date) within 18 months after the later of (i) the date the expenditure is made, or (ii) the date the Improvements are placed in service, and in any event not later than the date that is 60 days after the fifth anniversary of the Issue Date, or the date the Bonds are retired, if earlier (a "Final Allocation "). The Issuer will maintain accurate records of all expenditures made for the Improvements, including the amount, the date paid, a description of the purpose, and the source of funds (whether Bond proceeds or other money) initially allocated to each Improvement expenditure. Not later than the time limit set forth above, the Issuer will prepare a Final Allocation, showing the allocation of Bond proceeds and other money to all Improvement costs and identifying the Financed Improvement, and will maintain the Final Allocation in its books and records in accordance with Section 4.02 hereof. The Issuer reserves the right to make modifications to the expected allocation of Bond proceeds and other money for purposes of compliance with the limitations on Non - Qualified Use following completion of the Financed Improvement in accordance with, and within the time limits prescribed in, the Regulations. In the absence of such subsequent allocation, the Bond proceeds will be deemed allocated as shown on Exhibit D. (B) Refunding Portion. The Improvements have not yet been placed in service. The Issuer will make a final allocation of proceeds of the Original Obligations to Improvement expenditures within 18 months after the later of (i) the date the expenditure was made, or (ii) the date the Improvements are placed in service (the "Final Allocation "). In the absence of the Final Allocation, the Bond proceeds will be deemed allocated to expenditures as shown on Exhibit D. The Issuer reserves the right to make modifications to the expected allocation of Bond proceeds and other money for purposes of compliance with the limitations on Non - Qualified Use following completion of the Financed Improvements in accordance with, and within the time limits prescribed in, the Regulations. The Issuer will maintain the Final Allocation and accurate supporting records of all expenditures made for the Improvements, including the amount, the date paid, a description of the purpose, and the source of funds (whether Bond proceeds or other money) allocated to each Improvement expenditure, in accordance with Section 4.02 of this Tax Certificate. (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 § 149(a). (1) Bonds Not Federally 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 § 149(b). (m) IRS Form 8038 -G. Bond Counsel will prepare IRS Form 8038 -G (Information Return for Tax - Exempt Governmental Obligations) based on the representations and covenants of the Issuer contained in this Tax Certificate or otherwise provided by the Issuer. Bond Counsel will sign the return as a paid preparer following completion and will then deliver copies to the Issuer for execution and for the Issuer's records. The Issuer agrees to timely execute and return to Bond Counsel the execution copy of Form 8038 -G filing with the IRS. A copy of the IRS Form 8038 -G as filed with the IRS with proof of filing will be included in Exhibit A of Tax Certificate. (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 sale proceeds (the sale proceeds of the Original Obligations less any sale proceeds invested in a reserve fund) 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 4 years or more. (o) Single Issue; No Other Issues. The Bonds constitute a single "issue" under Regulations § 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). (p) 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. (q) 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 4.04(d) hereof if it decides to enter into a Guaranteed Investment Contract at a later date. (r) Bank Qualified Tax - Exempt Obligations. The Issuer designates the Bonds as "qualified tax- exempt obligations" under Code § 265(b)(3), and with respect to this designation certifies as follows: (1) the Issuer reasonably anticipates that the amount of tax- exempt obligations (other than (A) private activity bonds that are not qualified 501(c)(3) bonds and (B) current refunding bonds to the extent not exceeding the refunded 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, will not exceed $10,000,000; and (2) the Issuer (including all subordinate entities of the Issuer) will not issue tax - exempt obligations (other than (A) private activity bonds that are not qualified 501(c)(3) bonds and (B) current refunding bonds to the extent not exceeding the refunded bonds) during the calendar year that the Bonds are issued, including the Bonds, in an aggregate principal amount or aggregate issue price 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. 10 Section 2.02 Continuing Application 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 III ARBITRAGE CERTIFICATIONS AND COVENANTS Section 3.01 General. The purpose of this Article is to certify, under Regulations § 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 pay: (a) a portion of the costs of the Financed Improvements; (b) a portion of the costs of refunding the Refunded Obligations; and (c) Costs of Issuance. The purpose of the refunding 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 Funds and Accounts. The following funds and accounts have been established under the Bond Resolution: (a) Improvement Fund; (b) Debt Service Account; and (c) 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 from the sale of the Bonds are as evidenced in Exhibit B attached to this Tax Certificate. (b) Use of Bond Proceeds. The Bond proceeds are expected to be allocated to expenditures as follows: (1) Accrued interest in the amount of $3,874.30, plus Bond proceeds in the amount of $7,009.30, will be deposited in the Debt Service Account and allocated to pay interest on the Bonds. I1 (2) The remaining Bond proceeds (in the amount of $4,444,200.20) will be deposited in the Improvement Fund, of which $2,886,910.20 will be used to pay costs of the Financed Improvements, $1,500,510.00 will be used to refund the Refunded Obligations and $56,780.00 will be used to pay costs of issuing the Bonds. The Issuer will be reimbursed for costs of the Financed Improvements paid before the Issue Date, in the amount(s) set forth on Exhibit D and the balance will be used to pay costs of the Financed Improvements. (c) Use of Other Moneys. Amounts held by the Issuer in accounts established for the Refunded Obligations and other money contributed by the Issuer is expected to be allocated to expenditures as follows: (1) In addition to proceeds of the Bonds, the Issuer will allocate available moneys representing special assessments paid in cash for the Financed Improvements in an amount of $16,000.00 to pay a portion of the costs of the Financed Improvements. Section 3.06 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 3.07 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. Section 3.08 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 party 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. Section 3.09 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 3.10 Reserve, Replacement and Pledged Funds. (a) No Reserve Fund. No reserve fund has been or will be established for the Bonds. 12 (b) No Replacement or Pledged Funds. 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 or refund the Refunded Obligations, 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. Section 3.11 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 3.12 Offering Prices and Yield on Bonds. (a) Offering Prices. 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 $4,485,073.25, plus accrued interest. (b) Bond Yield. Based on the Offering Prices, the Yield on the Bonds is 2.8540288 %, as computed by Bond Counsel and shown on Schedule I attached to this Certificate. 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, 2022, October 1, 2025 and October 1, 2026 are subject to the special rules of Regulations § 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 1/4% 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 maturities were 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, 202 1) that produces the lowest Yield for the Bonds. Section 3.13 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. (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 3.14 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 § 148 and the Regulations. 13 ARTICLE IV TAX COMPLIANCE POLICIES AND PROCEDURES Section 4.01 General. (a) Purpose of Article. The purpose of this Article is to supplement the Tax Compliance Procedure and to set out specific policies and procedures governing compliance with the federal income tax requirements that apply after the Bonds are issued. The Issuer recognizes that interest on the Bonds will remain excludable from gross income only if the Post - Issuance Tax Requirements are followed after the Issue Date. The Issuer further acknowledges that written evidence substantiating compliance with the Post - Issuance Tax Requirements must be retained in order to permit the Bonds to be refinanced with tax - exempt obligations and substantiate the position that interest on the Bonds is exempt from gross income in the event of an audit of the Bonds by the IRS. (b) Written Policies and Procedures of the Issuer. The Issuer intends for the Tax Compliance Procedure, as supplemented by this Tax Certificate, to be its primary written policies and procedures for monitoring compliance with the Post - Issuance Tax Requirements for the Bonds and to supplement any other formal policies and procedures related to the Post - Issuance Tax Requirements that the Issuer has established or establishes in the future. The provisions of this Tax Certificate are intended to be consistent with the Tax Compliance Procedure. In the event of any inconsistency between the Tax Compliance Procedure and this Tax Certificate, the terms of this Tax Certificate will govern. (c) Bond Compliance Officer. The Issuer, when necessary to fulfill the Post - Issuance Tax Requirements, will, through its Bond Compliance Officer, sign Form 8038 -T in connection with the payment of arbitrage rebate or yield reduction payments, participate in any federal income tax audit of the Bonds or related proceedings under a voluntary compliance agreement procedures (VCAP) or undertake a remedial action procedure pursuant to Regulations §§ 1.141 -12 and 1.145 -2. In each case, all costs and expenses incurred by the Issuer shall be treated as a reasonable cost of administering the Bonds and the Issuer shall be entitled to reimbursement and recovery of its costs to the same extent as provided in the Bond Resolution or State law. Section 4.02 Record Keeping; Use of Bond Proceeds and Use of Financed Improvements. (a) Record Keeping. The Bond Compliance Officer will maintain the Tax- Exempt Bond File for the Bonds in accordance with the Tax Compliance Procedure. Unless otherwise specifically instructed in a written Opinion of Bond Counsel or to the extent otherwise provided in this Tax Certificate, the Bond Compliance Officer shall retain records related to the Post - Issuance Tax Requirements until 3 years following the final maturity of (1) the Bonds or (2) any obligation issued to refund the Bonds. Any records maintained electronically must comply with Section 4.01 of Revenue Procedure 97 -22, which generally provides that an electronic storage system must (A) ensure an accurate and complete transfer of the hardcopy records which indexes, stores, preserves, retrieves and reproduces the electronic records, (B) include reasonable controls to ensure integrity, accuracy and reliability of the electronic storage system and to prevent unauthorized alteration or deterioration of electronic records, (C) exhibit a high degree of legibility and readability both electronically and in hardcopy, (D) provide support for other books and records of the Issuer and (5) not be subject to any agreement that would limit the ability of the IRS to access and use the electronic storage system on the Issuer's premises. (b) Accounting and Allocation of Bond Proceeds to Expenditures. The Bond Compliance Officer will account for the investment and expenditure of Bond proceeds in the level of detail required 14 by the Tax Compliance Procedure. The Bond Compliance Officer will supplement the expected allocation of Bond proceeds to expenditures with a Final Written Allocation as required by the Tax Compliance Procedure. A sample form of Final Written Allocation is attached as Exhibit F. (c) Annual Compliance Checklist. Attached as Exhibit E is a sample Annual Compliance Checklist for the Bonds. The Bond Compliance Officer will prepare and complete an Annual Compliance Checklist for the Financed Improvements at least annually in accordance with the Tax Compliance Procedure. In the event the Annual Compliance Checklist identifies a deficiency in compliance with the requirements of this Tax Certificate, the Bond Compliance Officer will take the actions identified in an Opinion of Bond Counsel or Section 4.4 of the Tax Compliance Procedure to correct any deficiency. (d) Opinions of Bond Counsel. The Bond Compliance Officer is responsible for obtaining and delivering to the Issuer any Opinion of Bond Counsel required under the provisions of this Tax Certificate or the Annual Compliance Checklist. Section 4.03 Restrictions on Investment Yield. 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 allocable to the New Money Portion 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 § 1.148 -5(c). These payments are required whether or not the Bonds are exempt from the arbitrage rebate requirements of Code § 148. (b) Debt Service Account. To the extent that the Debt Service Account qualifies as a Bona 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 1 year after the date of receipt of such earnings. (c) Proceeds Allocable to Current Refunding. Bond proceeds allocable to a current refunding of the Refunded Obligations (see Section 3.07) may be invested without Yield restriction for up to 90 days after the Issue Date. (d) Rebate Fund. Money other than sale proceeds or Investment proceeds of the Bonds on deposit in the Rebate Fund may be invested without Yield restriction. (e) Minor Portion. In addition to the amounts described above, Gross Proceeds not exceeding the Minor Portion may be invested without Yield restriction. Section 4.04 Procedures for Establishing Fair Market Value of Investments. (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 § 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 15 securities market (within the meaning of Code § 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 Yield- restricted defeasance escrow must be determined in a bona fide solicitation for bids that complies with Regulations § 1.148 -5. (c) Certificates of Deposit. 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 Regulations § 1.148 - 5(d)(6)(iii)(A) as amended by the Proposed Regulations (relating to electronic bidding of Guaranteed Investment Contracts) to the Bonds. 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 satisfying 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 16 may be given an opportunity to review other bids that is not equally given to all potential providers (that is no exclusive "last look "). (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 by the Issuer must meet all of the following requirements: (A) The Issuer receives at least 3 bids 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. (B) At least 1 of the 3 bids received is from a reasonably competitive provider, as defined above. (C) If the Issuer uses an agent or broker 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 (determined 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 by the Issuer 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 the Guaranteed Investment Contract deviated from 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: 17 (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 4.05 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 4.03. Unless specifically noted, the obligation to compute, and if necessary, to pay rebate as set forth in Section 4.06 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 4.06. The Issuer may defer the final rebate Computation Date and the payment of rebate for the Bonds to the extent permitted by Regulations §§ 1.148- 7(b)(1) 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. (2) The following optional rebate spending exceptions can apply separately to the Refunding Portion and the New Money Portion: New Money Portion: (A) 6 -month spending exception (Code § 148(f)(4)(B) and Regulations § 1.148- 7(c)). (B) 18 -month spending exception (Regulations § 1.148- 7(d)). (C) 2 -year spending exception (Code § 148(f)(4)(C) and Regulations § 1.148- 7(e)). Refunding Portion: 6 -month spending exception (Code § 148(f)(4)(B) and Regulations § 1.148- 7(c)). (3) The Issuer expects to earn approximately $1,000 in Investment earnings on Bond proceeds in the Improvement Fund. (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 therein cannot be taken into account in computing arbitrage rebate: (1) with respect to such portion that meets the 6- month, 18 -month or 2 -year spending exception; or (2) for a given Bond Year, if the gross earnings on the Debt Service Account for such Bond Year are less than $100,000. If the average annual debt service on the Bonds does not exceed $2,500,000, the $100,000 earnings test may be treated as satisfied in every Bond Year. 18 (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 exceptions has been satisfied, and the extent to which the Issuer must continue to comply with Section 4.06. (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 6 -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 6 -month period, so long as this amount is spent within 1 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: Time Period After the Issue Date 6 months 12 months 18 months (Final) Minimum Percentage of Adjusted Gross Proceeds Spent 15% 60% 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 Spent 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 Improvement 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 19 spent within 30 months after the Issue Date in the case of the 18 -month exception or 3 years after the Issue Date in the case of the 2 -year spending exception. (7) Spending exceptions may be applied separately to the New Money Portion and the Refunding Portion of the Bonds. Section 4.06 Computation and Payment of Arbitrage Rebate. (a) Rebate Fund. The Issuer will keep the Rebate Fund separate from all other funds 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 10 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) frequency 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 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 (d) Successor Rebate Analyst. If 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 firm then serving as the Rebate Analyst and any other party to this Tax Certificate, will name 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. 20 (e) 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. (f) Survival after Defeasance. Notwithstanding anything in the Bond Resolution to the contrary, the obligation to pay arbitrage rebate to the United States will survive the payment or defeasance of the Bonds. ARTICLE V MISCELLANEOUS PROVISIONS Section 5.01 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 IV of 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 in Section 4.02 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 Issuer without notice to or the consent of any of the Bondowners, 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 and the Bond Resolution, such amendment will not cause any Bond to be an arbitrage bond under Code § 148 or otherwise cause interest on any Bond to be included in gross income for federal income tax purposes. No amendment will become effective until the Issuer receives an Opinion of Bond Counsel, addressed to the Issuer that the amendment will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes. 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 further agrees to 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. Section 5.04 Reliance. In delivering this Tax Certificate the Issuer is making only those certifications, representations and agreements as are specifically attributed to them 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 Issuer understands 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. 21 Section 5.05 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. Section 5.06 Benefit of Certificate. This Tax Certificate is binding upon the Issuer, its respective successors and assigns, and inures to the benefit of the Issuer and the owners of the Bonds. Nothing in this Tax Certificate, the Bond Resolution or the Bonds, express or implied, gives to any person, other than the Issuer, its 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 of a party contained herein or any breach of a covenant or agreement contained in this Tax Certificate may be pursued by the owners 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 Governing Law. This Tax Certificate will be governed by and construed in accordance with the laws of the State. Section 5.09 Electronic Transactions. The transactions described in this Tax Certificate may be conducted, and related documents may be stored, by electronic means. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 22 THE UNDERSIGNED, Mayor, Clerk 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. CITY OF SALINA, KANSAS By: A16 J`r Mayor By. Clerk (Signature Page to Federal Tax Certificate - Bonds) EXHIBITA IRS FORM 8038 -G A -1 816 - 221 -1000 MAIN 816 - 221 -1018 FAX GILMOREBELL.COM VIA FEDERAL EXPRESS Internal Revenue Service Center Ogden, Utah 84201 GILMOkEBELL GILMORE & BELL PC 2405 GRAND BOULEVARD, SUITE 1100 KANSAS CITY, MISSOURI 64108 -2521 September 24, 2013 Ref. Dep: ST. LOUIS WICHITA OMAHA I LINCOLN Date: 24Sep13 SHIPPING. 9.48 W9t: 1.00 LBS SPECIAL 0.90 HANDLING- 0.00 DV: 0.00 TOTAL: 10.38 Svcs: ** 2DAY ** TRCK: 5729 2129 7210 Re: $4,330,000 General Obligation Internal Improvement Bonds, Series 2013 -B of the City of Salina, Kansas 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. Very truly yours, Gina M. Riekhof GMR.jac Enclosure r,g , _�� , September 26,2013 Dear Customer: The following is the proof -of- delivery for tracking number 572921297210. Delivery Information: Status: Signed for by: Service type: Special Handling: Delivered B.ALLEN FedEx May Deliver Weekday Delivered to: Delivery location: Delivery date: Shipping /Receiving OGDEN, UT Sep 25, 2013 09:33 Signature image is available. In order to view image and detailed information, the shipper or payor account number of the shipment must be provided. Shipping Information: Tracking number: 572921297210 Ship date: Sep 24, 2013 Weight: 0.5 Ibs /0.2 kg Recipient: Shipper: OGDEN, UT US Kansas City, MO US Thank you for choosing FedEx. Farm 8038 -G Information Return for Tax - Exempt Governmental Obligations (Rev. September 2011) ► Under Internal Revenue Code section 149(e) 01 See separate instructions. OMB No. 1545 -0720 Department of the Treasury Caution: If the issue rice is under $1 oo, o00, use Form 8038 -GC. _MMW Internal Revenue Service A NACAM rtepurting Authority If Amended Return rhark haro s M issuer's name 2 Issuer's employer identification number (EIN) City of Salina, Kansas 48- 6017288 3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions) 3b Telephone number of other person shown on 3a Gina M. Riekhof, Gilmore & Bell, P.C., Bond Counsel 816 - 221 -1000 4 Number and street (or P.O. box if mail is not delivered to street address) Room /suite 5 Report number (For IRS Use Only) 2405 Grand Boulevard 1100 3 - 6 City, town, or post office, state, and ZIP code 7 Date of issue Kansas City, MO 64108 07/25/2013 8 Name of issue 9 CUSIP number General Obligation Internal Improvement Bonds, Series 2013 -B 794743 4X9 10a Name and title of officer or other employee of the issuer whom the IRS may call for more information (see lob Telephone number of officer or other instructions) employee shown on t 0a Rodney Franz, Finance Director 19 20 If obligations are TANs or RANs, check only box 19a . . . . . . . . . . . . If obligations are BANS, check only box 19b If obligations are in the form of a lease or installment sale, check box . . . . . . . . 785- 309 -5735 11 12 13 14 15 16 17 18 "If - — --- t-nwr uic raluc Nr rccf. Oee Me Insirucuons and altacn schedule. Education . . . . . . . . L Health and hospital . . . . . . . . . . . . . . . . . . . . . . . . Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . Public safety . . . . . . . . . . . . . . . . . . . Environment (including sewage bonds) . . . . . . . . . . . . . . . . . . Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . Utilities . . . . . . . . . . . . . . . _ . . . . . . . Other. Describe ► streets, sewer system, public buildings, other public improvements . . . . . . . 11 (a) Final maturity date 12 (c) Stated redemption price at maturity 13 (e) Yield 14 15 average maturity 16 T 17 9.35T pam 2.8540 o/ 18 4,485,073 25 19 20 If obligations are TANs or RANs, check only box 19a . . . . . . . . . . . . If obligations are BANS, check only box 19b If obligations are in the form of a lease or installment sale, check box . . . . . . . . ► El ❑ ► ❑ i= - - LjQj J1 Description of Obligations. Complete for the entire issue for which this form is being #fled. (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted (e) Yield average maturity 21 10/01/2033 $ 4,485,073.25 4,330,000.00 9.35T pam 2.8540 o/ 11MRTA Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . . . . 3,874 30 23 Issue price of entire issue (enter amount from line 21, column (b)) . . . . 25 24 Proceeds used for bond issuance costs (including underwriters' discount) . 24 106,643 75 T234�,485,073 25 Proceeds used for credit enhancement . . . . . . . . 25 0 00 26 Proceeds allocated to reasonably required reserve or replacement fund 26 0 0o 27 Proceeds used to currently refund prior issues . . . . . . . . . 27 1,500,510 001 28 Proceeds used to advance refund prior issues . . . . . . . . . 28 0 00 " 29 Total (add lines 24 throu h 28) g . . . . 29 1,607,153 50 30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) 30 2,876,919 75 Description of Refunded Bonds. Complete this part only for refunding bonds. 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . . ► 0.017 years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . . . ► nla years 33 Enter the last date on which the refunded bonds will be called (MM /DD/yyyy) . . . . . . ► 08/01/2013 34 Enter the date(s) the refunded bonds were issued 1 (mm /DD/YYYY) 07/15/2012 For Paperwork Reduction Act Notice, see separate instructions. Cat No_ 637735 Form 8038 -G (Rev. 9 -2011) Form 8038 -G (Rev. 9 -2011) Page 2 Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) 35 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC) (see instructions) . . . . . . . . . . . . . . . . 36a b Enter the final maturity date of the GIC ► c Enter the name of the GIC provider ►= 37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units . . . . . . . . . . 37 38a If this issue is a loan made from the proceeds of another tax - exempt issue, check box 10, El and enter the following information. b Enter the date of the master pool obligation ► c Enter the EIN of the issuer of the master pool obligation ► d Enter the name of the issuer of the master pool obligation IN- 39 If the issuer has designated the issue under section 265(b)(3)(13)()(III) (small issuer exception), check box . . . . ► Q 40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . . . . ► ❑ 41a If the issuer has identified a hedge, check here ► ❑ and enter the following information: b Name of hedge provider► c Type of hedge ► d Term of hedge ► 42 If the issuer has superintegrated the hedge, check box . . . . . . . . . . . . . . . . . . . . . ► ❑ 43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see instructions), check box . . . . . . _ . ► 2] 44 If the issuer has established written procedures to monitor the requirements of section 148, check box . . . ► 0 45a If some portion of the proceeds was used to reimburse expenditures, check here ► P(l and enter the amount of reimbursement . . . . . . . . . ► $1.004,330 b Enter the date the official intent was adopted ► multiple; earliest 01/09/2006 Under penalties of penury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge Signature and belie they e, correct, and complete. I further declare that I consent to the IRS's disclosure of the issuer's return information, as necessary to and process s retu , the person t ave authorized above. Consent (L Rodney Franz, Finance Director Sig ature o issuer's aut rued repr se alive Date , Type or print name and title Paid Print /rype preparer's nar Preparer's signa a Date PTIN Check ❑ if Preparer <^ / a 4 � 1$-71- 2af3 self - employed 1'(� (2 t S'7, 16 Use Only Firm's name ► Gilmor Bell, P.C. Frrm'SEIN 01 43- 1611738 Firm's address ► 2405 Grand Boulevard, Suite 1100, Kansas City, M064108 Phone no. 816 - 221 -1000 Form 8038 -Ca (Rev. 9 -2011) EXHIBIT B RECEIPT FOR PURCHASE PRICE $4,330,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 The undersigned Finance Director of the City of Salina, Kansas, this day received from Robert W. Baird & Co., Winston- Salem, North Carolina, 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 .... ............................... Plus Accrued Interest ............................. Original Issue Premium ......................... Underwriting Discount .......................... Total Purchase Price .................. Good Faith Deposit.. Net Amount Received ............... DATED: July 25, 2013. $4,330,000.00 3,874.30 155,073.25 (49,863.75) $4,439,083.80 (86,600.00) $4,352,483.80 CITY OF SALINA, KANSAS By EXHIBIT C RECEIPT AND REPRESENTATION $4,330,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 This certificate is being delivered by Robert W. Baird & Co., Winston - Salem, North Carolina (the "Purchaser ") in connection with the issuance of the above - described 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 acknowledges receipt by the Depository Trust Company on behalf of the Purchaser on the Issue Date consisting of fully 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 from federal gross income of the interest on the Bonds under the Code. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] C -1 Dated: July 25, 2013. Robert W. Baird & Co. Winston - Salem, North Caroli By: _ "L Title: M t<&tIrS(It (Signature Page to Purchaser's Receipt) SCHEDULE I S -1 Maturity Maturity Type of Bond Coupon Yield Value Price Dollar Price 10/01/2014 Serial Coupon 3.000% 0.400% 205,000.00 103.065% 211,283.25 10/01/2015 Serial Coupon 3.000% 0.700% 235,000.00 104.974% 246,688.90 10/01/2016 Serial Coupon 3.000% 1.000% 235,000.00 106.250% 249,687.50 10/01/2017 Serial Coupon 3.000% 1.200% 240,000.00 107.321% 257,570.40 10/01/2018 Serial Coupon 3.000% 1500% 245,000.00 107.452% 263,257.40 10/01/2019 Serial Coupon 3.000% 1.800% 250,000.00 106.990% 267,475.00 10/01/2020 Serial Coupon 3.000% 2.050% 260,000.00 106.313% 276,413.80 10/01/2021 Serial Coupon 3.000% 2.350% 265,000.00 104.811% 277,749.15 10/01/2022 Serial Coupon 3.000% 2.550% 270,000.00 103.302% c 278,915.40 10/01/2023 Serial Coupon 3.000% 2.750% 275,000.00 101.818% c 279,999.50 10/01/2024 Serial Coupon 3.000% 2.875% 285,000.00 100.903% c 287,573.55 10/01/2025 Serial Coupon 3.500% 3.000% 290,000.00 103.601% c 300,442.90 10/01/2026 Serial Coupon 3.500% 3.150% 300,000.00 102.504% c 307,512.00 10/01/2027 Serial Coupon 3.500% 3.300% 310,000.00 101.420% c 314,402.00 10/01/2028 Serial Coupon 3.500% 3.450% 315,000.00 100.350% c 316,102.50 10/01/2033 Term 1 Coupon 4.000% 4.000% 350,000.00 100.000% 350,000.00 Total - - - $4,330,000.00 - - $4,485,073.25 S -1 EXHIBIT D DESCRIPTION OF PROPERTY COMPRISING THE FINANCED IMPROVEMENTS AND LIST OF REIMBURSEMENT EXPENDITURES $4,330,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 Y 'C w w d � O 7 U o rn° " E o L O U h al �F 'O oc v i O . W � W i d d � a 8 O A Y � d Y d o d > ea wa L O a 0 �o O M O 0 0 °o 00 C 3 M a, N 0 ti O � b Z p C G c � � w N Q Q W � m E. O 0 O M 0 o 7 0 °o W 0 0 0 °o 00 s i y w w F c � i i4 d1 V � c O L L i a+ U ' d F o rn O o n n O n J oo O -I- D M O M C O of l- Vn N.N-.^ O .-. J O J . O J vl v ro'cOOo J O rn 0 0 O N O O O N 7 O 1 V 00 'O O N orn °o °O° O N O O O- v lh O vi 1O V C4 N. O O N U U N i 3 3 C � C ;msm'S u �1 V7 M M M P, O Oi O V V M M 7 M O v M M O O O O O n M N M N c O > a w ti C ❑ o ? o b O .� 000 ❑ ,� N >u:wwzU 0 m V1 a\ n 0 Cl O ' ( O o OIOo O+ ol O rNIA 00 N N 0 0 0 of o °o 10 10 1 O M M 7 7 ,1: 00 N M 0 O ` W � t CU � P O or- a) .a i 'S oK R g W o C oq U x y to R a O a� o V V c* e V N ° z ¢= i I Q M N i U w C 'w 4 9 K Itl d C O d W W W V o � C O ma" d Wa e N M O O O C .-. � N O w •c C ra L O W W cU_ O 0 d W O b ? N U cth F j cR c ra O N U bq O O O O N ozco 3 on W Cq 7 Oq G o 0 fy u N V i N N N to b0 N G ° ti y N z 0= 4 x r A N h Q o rn O o n n O n J oo O -I- D M O M C O of l- Vn N.N-.^ O .-. J O J . O J vl v ro'cOOo J O rn 0 0 O N O O O N 7 O 1 V 00 'O O N orn °o °O° O N O O O- v lh O vi 1O V C4 N. O O N U U N i 3 3 C � C ;msm'S u �1 V7 M M M P, O Oi O V V M M 7 M O v M M O O O O O n M N M N c O > a w ti C ❑ o ? o b O .� 000 ❑ ,� N >u:wwzU 0 m V1 a\ n 0 Cl O ' ( O o OIOo O+ ol O rNIA 00 N N 0 0 0 of o °o 10 10 1 O M M 7 7 ,1: 00 N M 0 O ` W � t CU � P O or- a) .a i 'S oK R g W o C oq U x y to R a O a� o V V c* e V N ° z ¢= i I Q M N i U w C 'w 4 9 K Itl kj \\ � 77} °4 §#§ %)) � ( w \ ) ) 2 / ) $ ) / EXPENSES TO BE REIMBURSED CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATE PAYEE NOTES AMOUNT PROJECT 6/26/2013 Clark, Mize, Linville ROW/Relocation Litigation $ 754.00 North Ohio Grade Separation 6/19/2013 Orrik & Associates, LLP ROW/Relocation Litigation $ 2,788.00 North Ohio Grade Separation 4/24/2013 Clark, Mize, Linville ROW/Relocation Litigation $ 174.00 North Ohio Grade Separation 8/15/2012 Clark, Mize, Linville ROW/Relocation Litigation $ 102.00 North Ohio Grade Separation 2/22/2012 Clark, Mize, Linville ROW/Relocation Litigation $ 7300 North Ohio Grade Separation 1/18/2012 Orrik & Associates, LLP ROW/Relocation Litigation $ 1,366.00 North Ohio Grade Separation 1/12/2012 Clark, Mize, Linville ROW /Relocation Litigation $ 165.00 North Ohio Grade Separation 12/14/2011 Clark, Mize, Linville ROW/Relocation Litigation $ 247.00 North Ohio Grade Separation 10/26/2011 Clark, Mize, Linville ROW/Relocation Litigation $ 232.00 North Ohio Grade Separation 10/12/2011 Orrik & Associates, LLP ROW/Relocation Litigation $ 6,347.00 North Ohio Grade Separation 9/19/2011 Orrik & Associates, LLP ROW/Relocation Litigation $ 2,255.00 North Ohio Grade Separation 8/24/2011 Clark, Mize, Linville ROW/Relocation Litigation $ 131.00 North Ohio Grade Separation 2/28/2011 Orrik & Associates, LLP ROW /Relocation Litigation $ 8,180.00 North Ohio Grade Separation 2/16/2011 Orrik & Associates, LLP ROW /Relocation Litigation $ 1,529.00 North Ohio Grade Separation 2/2/2011 Orrik & Associates, LLP ROW/Relocation Litigation $ 2,134.00 North Ohio Grade Separation 1/19/2011 Clark, Mize, Linville ROW /Relocation Litigation $ 42.00 North Ohio Grade Separation 12/14/2010 Clark, Mize, Linville ROW/Relocation Litigation $ 154.00 North Ohio Grade Separation 12/1/2010 Clark, Mize, Linville ROW/Relocation Litigation $ 112.00 North Ohio Grade Separation 10/27/2010 Orrik & Associates, LLP ROW/Relocation Litigation $ 468.00 North Ohio Grade Separation 10/27/2010 Orrik & Associates, LLP ROW/Relocation Litigation $ 204.00 North Ohio Grade Separation 10/27/2010 Clark, Mize, Linville ROW/Relocation Litigation $ 168.00 North Ohio Grade Separation 9/14/2010 Case Brothers Construction Inc Construction Expense $ 4,862.00 North Ohio Grade Separation 9/14/2010 Case Brothers Construction Inc Construction Expense $ 2,381.00 North Ohio Grade Separation 8/25/2010 Clark, Mize, Linville ROW/Relocation Litigation $ 630.00 North Ohio Grade Separation 8/18/2010 Kaw Valley Engineering Inc Engineering Expense $ 149.00 North Ohio Grade Separation 7/14/2010 Clark, Mize, Linville ROW/Relocation Litigation $ 14.00 North Ohio Grade Separation 6/30/2010 Clark, Mize, Linville ROW/Relocation Litigation $ 28.00 North Ohio Grade Separation 4/14/2010 Clark, Mize, Linville ROW/Relocation Litigation $ 724.00 North Ohio Grade Separation 3/25/2010 Orrik & Associates, LLP ROW /Relocation Litigation $ 3,443.00 North Ohio Grade Separation 3/24/2010 Orrik & Associates, LLP ROW /Relocation Litigation $ 7,316.00 North Ohio Grade Separation 3/17/2010 Clark, Mize, Linville ROW/Relocation Litigation $ 434.00 North Ohio Grade Separation 2/24/2010 Clark, Mize, Linville ROW/Relocation Litigation $ 84.00 North Ohio Grade Separation 1/20/2010 Clark, Mize, Linville ROW/Relocation Litigation $ 1,070.00 North Ohio Grade Separation 12/31/2009 Orrik & Associates, LLP ROW/Relocation Litigation $ 3,533.00 North Ohio Grade Separation 12/16/2009 Orrik & Associates, LLP ROW/Relocation Litigation $ 18,743.00 North Ohio Grade Separation 12/9/2009 Clark, Mize, Linville ROW/Relocation Litigation $ 938.00 North Ohio Grade Separation 11/18/2009 Clark, Mize, Linville ROW/Relocation Litigation $ 1,013.00 North Ohio Grade Separation 10/14/2009 Clark, Mize, Linville ROW/Relocation Litigation $ 126.00 North Ohio Grade Separation 9/23/2009 Clark, Mize, Linville ROW/Relocation Litigation $ 350.00 North Ohio Grade Separation 8/26/2009 Clark, Mize, Linville ROW/Relocation Litigation $ 28.00 North Ohio Grade Separation 7/14/2009 Clark, Mize, Linville ROW/Relocation Litigation $ 742.00 North Ohio Grade Separation 6/24/2009 Clark, Mize, Linville ROW/Relocation Litigation $ 42.00 North Ohio Grade Separation 5/13/2009 Waters Hardware ROW/Relocation Litigation $ 3,990.00 North Ohio Grade Separation 4/1/2009 CTL Group Engineering Expense $ 12,460.00 North Ohio Grade Separation 3/11/2009 Clark, Mize, Linville ROW /Relocation Litigation $ 28.00 North Ohio Grade Separation 2/18/2009 Clark, Mize, Linville ROW/Relocation Litigation $ 28.00 North Ohio Grade Separation 1/14/2009 Clark, Mize, Linville ROW/Relocation Litigation $ 378.00 North Ohio Grade Separation 12/24/2008 Foth & Orrick, LLP ROW/Relocation Litigation $ 518.00 North Ohio Grade Separation 12/24/2008 Foth & Orrick, LLP ROW/Relocation Litigation $ 7,891.00 North Ohio Grade Separation 12/10/2008 Clark, Mize, Linville ROW/Relocation Litigation $ 41.00 North Ohio Grade Separation 11/19/2008 Clark, Mize, Linville ROW/Relocation Litigation, Note: $ 1,044.00 North Ohio Grade Separation 7/2/2013 Smoky Hill, LLC Construction Expense $ 1,47200 East Magnolia Road Replacement 7/2/2013 Smoky Hill, LLC Construction Expense $ 2,366.00 East Magnolia Road Replacement 7/2/2013 Smoky Hill, LLC Construction Expense $ 17,665.00 East Magnolia Road Replacement 7/2/2013 Kansas Register Publication - bidding $ 119.00 East Magnolia Road Replacement 7/2/2013 Smoky Hill, LLC Construction Expense $ 377.00 East Magnolia Road Replacement 5/22/2013 Smoky Hill, LLC Construction Expense $ 174,097.00 East Magnolia Road Replacement 5/22/2013 Smoky Hill, LLC Construction Expense $ 98,583.00 East Magnolia Road Replacement 5/22/2013 Smoky Hill, LLC Construction Expense $ 11,712.00 East Magnolia Road Replacement 5/22/2013 Wilson & Company Engineering Expense $ 26000 East Magnolia Road Replacement 110] 5/13/2013 Westar Energy Streetlight removal $ 1,170.00 East Magnolia Road Replacement 5/7/2013 Kaw Valley Engineering Inc. Engineering Expense $ 45.00 East Magnolia Road Replacement 4/25/2013 Smoky Hill, LLC Construction Expense $ 162,677.00 East Magnolia Road Replacement 4/25/2103 Smoky Hill, LLC Construction Expense $ 136,826.00 East Magnolia Road Replacement 4/9/2013 Kaw Valley Engineering Inc. Engineering Expense $ 149.00 East Magnolia Road Replacement 3/27/2013 Wilson & Company Engineering Expense $ 7,270.00 East Magnolia Road Replacement 3/27/2013 Wilson & Company Engineering Expense $ 3,23300 East Magnolia Road Replacement 3/5/2013 Kansas Department of Health & Environm Water EG Permit Fee $ 60.00 East Magnolia Road Replacement 2/27/2013 Smoky Hill, LLC Construction Expense $ 187,585.00 East Magnolia Road Replacement 2/19/2013 Total Turfcare Sprinkler System $ 1,502.00 East Magnolia Road Replacement 1/30/2013 Smoky Hill, LLC Construction Expense; Note: total $ 96,509.00 East Magnolia Road Replacement Total to be Reimbursed = $ 1,004,330.00 *Shaded cells are being reimbursed under Regulations Section 1.150- 2(f)(1) "De Minirms" Exception D -4 EXHIBIT E FORM OF ANNUAL COMPLIANCE CHECKLIST $4,330,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 ISSUE DATE: JULY 25, 2013 The Bond Compliance Officer is the person that the Issuer has identified in the Tax Compliance Procedure who is primarily responsible for working with other Issuer officials, departments and administrators and for consulting with Bond Counsel, other legal counsel and outside experts to the extent necessary to carry out the Post - Issuance Tax Requirements for the Bonds. On the Issue Date, the Issuer identified certain assets financed in whole or in part by the Bonds (the "Financed Improvements "), as evidenced on Exhibit D to the Federal Tax Certificate. Please complete this checklist within 90 days after the conclusion of the Issuer's Fiscal Year. Should you have questions or need assistance in completing the checklist, please contact Bond Counsel at the address below. A completed copy of this annual checklist should be placed in the Tax - Exempt Bond File and retained in the Issuer's permanent records for at least 3 years after the final maturity of (1) the Bonds or (2) anv obligation issued to refund the Bonds. Bond Compliance Officer Name: [ 1 Bond Compliance Officer Signature: [ Date of Report: [ 1 Annual Period Covered by Report: [ 1 * *If the answers to any of the following questions identify any compliance deficiencies, the Bond Compliance Officer should immediately contact Bond Counsel and take actions required in the Tax Compliance Procedure. ** Item Question Response 1 Were all of the Financed Improvements owned by the Issuer during the ❑ Yes Ownership entire Annual Period? ❑ No If answer above was "No," was an Opinion of Bond Counsel obtained ❑ Yes prior to the transfer? ❑ No If Yes, include a copy of the Opinion in the Tax- Exempt Bond File. If No, contact Bond Counsel and include description of resolution in the Tax-Exempt Bond File. E -1 Item Question Response 2 During the Annual Period, was any part of the Financed Improvements ❑ Yes Leases & leased at any time pursuant to a lease or similar agreement for more than ❑ No Other Rights 50 days? ❑ Yes to Possession If answer above was "Yes," was an Opinion of Bond Counsel obtained ❑ Yes If answer above was "Yes," was an Opinion of Bond Counsel obtained ❑ Yes prior to entering into the lease or other arrangement? ❑ No If Yes, include a copy of the Opinion in the Tax- Exempt Bond File. If No, contact Bond Counsel and include description of resolution in the ❑ Yes Tax-Exempt Bond File. ❑ No 3 During the Annual Period, has the management of all or any part of the ❑ Yes Management operations of the Financed Improvements (e.g., cafeteria, gift shop, etc.) ❑ No or Service been assumed by or transferred to another entity? ❑ No Agreements If Yes, include a copy of the Opinion in the Tax - Exempt Bond File. ❑ Yes If answer above was "Yes," was an Opinion of Bond Counsel obtained ❑ Yes prior to entering into the management agreement? ❑ No If Yes, include a copy of the Opinion in the Tax- Exempt Bond File. ❑ No If No, contact Bond Counsel and include description of resolution in the Tax-Exempt Bond File. ❑ Yes 4 Other Use Was any other agreement entered into with an individual or entity that grants special legal rights to the Financed Improvements? ❑ Yes ❑ No Proceeds & If answer above was "Yes," was an Opinion of Bond Counsel obtained ❑ Yes Investments prior to entering into the agreement? ❑ No If Yes, include a copy of the Opinion in the Tax - Exempt Bond File. ❑ Yes If No, contact Bond Counsel and include description of resolution in the ❑ No Tax-Exempt Bond File. ❑ Yes 5 Have any Gross Proceeds of the Bonds been invested in a Guaranteed ❑ Yes Proceeds & Investment Contract? ❑ No Investments Has the Issuer entered into an Interest Rate Swap Agreement with ❑ Yes respect to the Bonds? ❑ No Has any sinking or reserve fund for the payment of the Bonds been ❑ Yes established (other than funds and accounts created in the Bond ❑ No Resolution)? Have any of the Bonds been redeemed or refunded in advance of their ❑ Yes scheduled maturities? ❑ No If answer to any of the above questions was "Yes," notify Bond Counsel with such information and place a copy of documentation in the Tax- Exempt Bond File. E -2 Item Question Response 6 Have all rebate and yield reduction calculations mandated in the Federal ❑ Yes Arbitrage Tax Certificate or Compliance Agreement been prepared for the current ❑ No & Rebate ear? If No, contact Rebate Analyst and incorporate report or include descri tion of resolution in the Tax-Exempt Bond File. Bond Counsel: Gilmore & Bell, P.C. 2405 Grand Blvd., Suite 1100 Kansas City, Missouri 64108 Phone: (816) 221 -1000 Fax: (816) 221 -1018 Attn: [ ] Email: [ ] E -3 EXHIBIT F FORM OF FINAL WRITTEN ALLOCATION $4,330,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 ISSUE DATE: JULY 25, 2013 The Bond Compliance Officer is the person that the Issuer has identified in the Tax Compliance Procedure who is primarily responsible for the Post - Issuance Tax Requirements for the Bonds. On the Issue Date, the Issuer identified certain categories of assets financed in whole or in part by the Bonds (the "Financed Improvements "), as evidenced on Exhibit D to the Federal Tax Certificate. The Tax Compliance Procedure requires the Bond Compliance Officer to complete a Final Written Allocation of the proceeds of the Bonds, in substantially the following form, when all proceeds (including Investment earnings on proceeds) are expended, but not later than 18 months after the Financed Improvements are placed in service. A completed copy of this Final Written Allocation should be placed in the Tax - Exempt Bond File and retained in the Issuer's permanent records for at least 3 years after the final maturity of (1) the Bonds or (2) any obligation issued to refund the Bonds. The undersigned is the Bond Compliance Officer of the City of Salina, Kansas (the "Issuer ") and in that capacity is authorized to execute federal income tax returns required to be fled by the Issuer and to make appropriate elections and designations regarding federal income tax matters on behalf of the Issuer. This allocation of the proceeds of the bond issue referenced above (the "Bonds ") is necessary for the Issuer to satisfy ongoing reporting and compliance requirements under federal income tax laws. Purpose. This document, together with the schedules and records referred to below, is intended to memorialize allocations of Bond proceeds to expenditures for purposes of §§ 141 and 148 of the Internal Revenue Code (the "Code "). All allocations are or were previously made no later than 18 months following the date the expenditure was made by the Issuer or, if later, the date the "Financed Improvements" were "placed in service" (both as defined below), and no later than 60 days following the 5th anniversary of the issue date of the Bonds. Definitions. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Federal Tax Certificate, relating to the Bonds, dated July 25, 2013 (the "Issue Date "). Background The Bonds were issued pursuant to the Bond Resolution in order to provide funds needed to finance the Financed Improvements and refund the Refunded Obligations. Proceeds of the Bonds were deposited into the Funds and Accounts as described in the Federal Tax Certificate. Sources Used to Fund Improvements and Allocation of Proceeds to Costs of Financed Improvements. The costs of the Improvements were paid from sale proceeds of the Bonds, earnings from the investment of Bond sale proceeds and from other money of the Issuer as shown on Schedule 1 to this Final Written Allocation. Identification of Financed Improvements. The Financed Improvements are listed on Schedule 2 to this Final Written Allocation. F -1 Identification and Timing of Expenditures for Arbitrage Purposes. For purposes of complying with the arbitrage rules, the Issuer allocates the proceeds of the Bonds to the various expenditures described in the invoices, requisitions or other substantiation attached as Schedule 2 to this Final Written Allocation. In each case, the cost requisitioned was either paid directly to a third party or reimbursed the Issuer for an amount it had previously paid or incurred. Amounts received from the sale of the Bonds and retained as underwriters discount are allocated to that purpose and spent on the Issue Date. Amounts allocated to interest expense are treated as paid on the Interest Payment Dates for the Bonds. Placed In Service. The Financed Improvements were "placed in service" on the date(s) set out on Schedule 2 to this Final Written Allocation. For this purpose, the assets are considered to be "placed in service" as of the date on which, based on all the facts and circumstances: (a) the constructing and equipping of the asset has reached a degree of completion which would permit its operation at substantially its design level; and (b) the asset is, in fact, in operation at that level. This allocation has been prepared based on statutes and regulations existing as of this date. The Issuer reserves the right to amend this allocation to the extent permitted by future Treasury Regulations or similar authorities. Date: CITY OF SALINA, KANSAS 0 This Final Written Allocation has been prepared in the manner required by the Tax Compliance Procedure: [Issuer Counsel/Bond Counsel] Date of review: F -2 Bond Compliance Officer SCHEDULE 1 TO FINAL WRITTEN ALLOCATION ALLOCATION OF SOURCES AND USES Sources of Funds: Principal Amount of Bonds Original Issue Premium Accrued Interest Investment Earnings Prepaid Assessments Total Sources Uses of Funds: Deposit to Improvement Fund - Project Costs* Deposit to Improvement Fund - Refund 2012 -I Notes Additional Project Costs Deposit to Debt Service Fund - Capitalized Interest ** Additional Capitalized Interest Underwriter's Discount Costs of Issuance Excess Proceeds Estimated At Closing Actual $ 4,330,000.00 $ 4,330,000.00 155,073.25 155,073.25 3,874.30 3,874.30 1,000.00 16,000.00 16,000.00 $ 4,505,947.55 $ $ 2,871,910.20 $ 1,500,510.00 1,500,510.00 16,000.00 10,883.60 10,883.60 0.00 49,863.75 49,863.75 56,780.00 0.00 Total Uses $ 4,505,947.55 $ *Includes approximately $26,910.20 of bid premium expected to be used for project costs or capitalized interest * *Accrued Interest plus Bid Premium allocable to Magnolia Hills 5 -1 -1 SCHEDULE 2 TO FINAL WRITTEN ALLOCATION IDENTIFICATION OF FINANCED ASSETS Description Actual Date Placed in Service Estimated Useful Life Actual Total Cost Actual Amount Financed From Bonds Magnolia Hills Subdivision [month/ ear] ] ears $[ ] $[ ] Fire Station #I East Magnolia Road Bicentennial Center North Ohio Grade Separation [Other] *note: exclude land costs DETAILED LISTING OF EXPENDITURES* Item No. Date Paid Amount Paid Category Payee Description Reference * or attach General Ledger or Project Ledger] S -2 -1 SCHEDULE I DEBT SERVICE SCHEDULE AND PROOF OF YIELD S -1 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2013 -B Debt Service Schedule Part 1 of 2 Date Principal Coupon Interest Total P +I Fiscal Total 07/25/2013 - - 04/01/2014 - - 99,182.22 99,182.22 - 10/01/2014 205,000.00 3.000% 69,737.50 274,737.50 373,919.72 04/01/2015 - - 66,662.50 66,662.50 - 10/01/2015 235,000.00 3.000% 66,662.50 301,662.50 368,325.00 04/01/2016 - - 63,137.50 63,137.50 - 10/01/2016 235,000.00 3.000% 63,137.50 298,137.50 361,275.00 04/01/2017 - - 59,612.50 59,612.50 - 10/01/2017 240,000.00 3.000% 59,612.50 299,612.50 359,225.00 04/01/2018 - - 56,012.50 56,012.50 - 10/01/2018 245,000.00 3.000% 56,012.50 301,012.50 357,025.00 04/01/2019 - - 52,337.50 52,337.50 - 10/01/2019 250,000.00 3.000% 52,337.50 302,337.50 354,675.00 04/01/2020 - - 48,587.50 48,587.50 - 10/01/2020 260,000.00 3.000% 48,587.50 308,587.50 357,175.00 04/01/2021 - - 44,687.50 44,687.50 - 10/01/2021 265,000.00 3.000% 44,687.50 309,687.50 354,375.00 04/01/2022 - - 40,712.50 40,712.50 - 10/01/2022 270,000.00 3.000% 40,712.50 310,712.50 351,425.00 04/01/2023 - - 36,662.50 36,662.50 - 10/01/2023 275,000.00 3.000% 36,662.50 311,662.50 348,325.00 04/01/2024 - - 32,537.50 32,537.50 - 10/01/2024 285,000.00 3.000% 32,537.50 317,537.50 350,075.00 04/01/2025 - - 28,262.50 28,262.50 - 10/01/2025 290,000.00 3.500% 28,262.50 318,262.50 346,525.00 04/01/2026 - - 23,187.50 23,187.50 - 10/01/2026 300,000.00 3.500% 23,187.50 323,187.50 346,375.00 04/01/2027 - - 17,937.50 17,937.50 - 10/01/2027 310,000.00 3.500% 17,937.50 327,937.50 345,875.00 04/01/2028 - - 12,512.50 12,512.50 - 10/01/2028 315,000.00 3.500% 12,512.50 327,512.50 340,025.00 04/01/2029 - - 7,000.00 7,000.00 - 10/01/2029 65,000.00 4.000% 7,000.00 72,000.00 79,000.00 04/01/2030 - - 5,700.00 5,700.00 - 10/01/2030 65,000.00 4.000% 5,700.00 70,700.00 76,400.00 04/01/2031 - - 4,400.00 4,400.00 - 10/01/2031 70,000.00 4.000% 4,400.00 74,400.00 78,800.00 04/01/2032 - - 3,000.00 3,000.00 - 10/01/2032 70,000.00 4.000% 3,000.00 73,000.00 76,000.00 04/01/2033 - - 1,600.00 1,600.00 - 10/01/2033 80,000.00 4.000% 1,600.00 81,600.00 83,200.00 Total $4,330,000.00 - $1,378,019.72 $5,708,019.72 - 2013 -B GO Bonds I Issue Summary 1 7/10/2013 1 3.58 PM of Salina, Kansas General Obligation Internal Improvement Bonds Series 2013 -B Pricing Summary Total - - - $4,330,000.00 - - $4,485,073.25 Bid Information Par Amount of Bonds $4,330,000.00 Reoffering Premium or (Discount) 155,073.25 Gross Production $4,485,073.25 Total Underwriter's Discount (1.152 %) $(49,863.75) Bid (102.430 %) 4,435,209.50 Accrued Interest from 07/15/2013 to 07/25/2013 3,874.30 Total Purchase Price $4,439,083.80 Bond Year Dollars $40,893.83 Average Life 9.444 Years Average Coupon 3.3697494% Net Interest Cost (NIC) 3.1124747% True Interest Cost (TIC) 3.0319961% 2013 -B GO Bonds I Issue Summary 1 7/10/2013 1 3:58 PM Maturity Maturity Type of Bond Coupon Yield Value Price Dollar Price 10/01/2014 Serial Coupon 3.000% 0.400% 205,000.00 103.065% 211,283.25 10/01/2015 Serial Coupon 3.000% 0.700% 235,000.00 104.974% 246,688.90 10/01/2016 Serial Coupon 3.000% 1.000% 235,000.00 106.250% 249,687.50 10/01/2017 Serial Coupon 3.000% 1.200% 240,000.00 107.321% 257,570.40 10/01/2018 Serial Coupon 3.000% 1.500% 245,000.00 107.452% 263,257.40 10/01/2019 Serial Coupon 3.000% 1.800% 250,000.00 106.990% 267,475.00 10/01/2020 Serial Coupon 3.000% 2.050% 260,000.00 106.313% 276,413.80 10/01/2021 Serial Coupon 3.000% 2.350% 265,000.00 104.811% 277,749.15 10/01/2022 Serial Coupon 3.000% 2.550% 270,000.00 103.302% c 278,915.40 10/01/2023 Serial Coupon 3.000% 2.750% 275,000.00 101.818% c 279,999.50 10/01/2024 Serial Coupon 3.000% 2.875% 285,000.00 100.903% c 287,573.55 10/01/2025 Serial Coupon 3.500% 3.000% 290,000.00 103.601% c 300,442.90 10/01/2026 Serial Coupon 3.500% 3.150% 300,000.00 102.504% c 307,512.00 10/01/2027 Serial Coupon 3.500% 3.300% 310,000.00 101.420% c 314,402.00 10/01/2028 Serial Coupon 3.500% 3.450% 315,000.00 100.350% c 316,102.50 10101/2033 Term 1 Coupon 4.000% 4.000% 350,000.00 100.000% 350,000.00 Total - - - $4,330,000.00 - - $4,485,073.25 Bid Information Par Amount of Bonds $4,330,000.00 Reoffering Premium or (Discount) 155,073.25 Gross Production $4,485,073.25 Total Underwriter's Discount (1.152 %) $(49,863.75) Bid (102.430 %) 4,435,209.50 Accrued Interest from 07/15/2013 to 07/25/2013 3,874.30 Total Purchase Price $4,439,083.80 Bond Year Dollars $40,893.83 Average Life 9.444 Years Average Coupon 3.3697494% Net Interest Cost (NIC) 3.1124747% True Interest Cost (TIC) 3.0319961% 2013 -B GO Bonds I Issue Summary 1 7/10/2013 1 3:58 PM of Salina, Kansas General Obligation Internal Improvement Bonds Series 2013 -B Proof of D/S for Arbitrage Purposes Date Principal Interest Total 07/25/2013 - - - 04/01 /2014 - 99,182.22 99,182.22 10/01/2014 205,000.00 69,737.50 274,737.50 04/01/2015 - 66,662.50 66,662.50 10/01/2015 235,000.00 66,662.50 301,662.50 04/01 /2016 - 63,137.50 63,137.50 10/01/2016 235,000.00 63,137.50 298,137.50 04/01/2017 - 59,612.50 59,612.50 10/01/2017 240,000.00 59,612.50 299,612.50 04/01/2018 - 56,012.50 56,012.50 10/01/2018 245,000.00 56,012.50 301,012.50 04/01/2019 - 52,337.50 52,337.50 10/01/2019 250,000.00 52,337.50 302,337.50 04/01/2020 - 48,587.50 48,587.50 10/01/2020 260,000.00 48,587.50 308,587.50 04/01/2021 - 44,687.50 44,687.50 10/01/2021 1,125,000.00 44,687.50 1,169,687.50 04/01 /2022 26,337.50 26,337.50 10/01/2022 26,337.50 26,337.50 04/01/2023 - 26,337.50 26,337.50 10/01/2023 275,000.00 26,337.50 301,337.50 04/01/2024 - 22,212.50 22,212.50 10/01/2024 285,000.00 22,212.50 307,212.50 04/01/2025 - 17,937.50 17,937.50 10/01/2025 17,937.50 17,937.50 04/01/2026 17,937.50 17,937.50 10/01/2026 17,937.50 17,937.50 04/01/2027 - 17,937.50 17,937.50 10/01/2027 310,000.00 17,937.50 327,937.50 04/01/2028 - 12,512.50 12,512.50 10/01/2028 315,000.00 12,512.50 327,512.50 04/01/2029 - 7,000.00 7,000.00 10/01/2029 65,000.00 7,000.00 72,000.00 04/01/2030 - 5,700.00 5,700.00 10/01/2030 65,000.00 5,700.00 70,700.00 04/01/2031 - 4,400.00 4,400.00 10/01/2031 70,000.00 4,400.00 74,400.00 04/01/2032 - 3,000.00 3,000.00 10/01/2032 70,000.00 3,000.00 73,000.00 04/01/2033 - 1,600.00 1,600.00 10/01/2033 80,000.00 1,600.00 81,600.00 Total $4,330,000.00 $1,276,819.72 $5,606,819.72 2013 -B GO Bonds I Issue Summary 1 7/10/2013 1 3.58 PM of Salina. Kansas General Obligation Internal Improvement Bonds Series 2013 -B Proof Of Bond Yield @ 2.8540288% Part 1 of 2 Cumulative Date Cashflow PV Factor Present Value PV 07/25/2013 - 1.000000ox - - 04/01/2014 99,182.22 0.9808216x 97,280.06 97,280.06 10/01/2014 274,737.50 0.9670221x 265,677.22 362,957.29 04/01/2015 66,662.50 0.9534167x 63,557.14 426,514.43 10/01/2015 301,662.50 0.9400027x 283,563.56 710,077.99 04/01/2016 63,137.50 0.9267774x 58,514.41 768,592.40 10/01/2016 298,137.50 0.9137383x 272,419.64 1,041,012.04 04/01/2017 59,612.50 0.9008825x 53,703.86 1,094,715.90 10/01/2017 299,612.50 0.8882077x 266,118.13 1,360,834.03 04/01/2018 56,012.50 0.8757112x 49,050.77 1,409,884.80 10/01/2018 301,012.50 0.8633905x 259,891.32 1,669,776.12 04/01/2019 52,337.50 0.8512431x 44,551.94 1,714,328.06 10/01/2019 302,337.50 0.8392666x 253,741.78 1,968,069.83 04/01/2020 48,587.50 0.8274587x 40,204.15 2,008,273.98 10/01/2020 308,587.50 0.8158169x 251,750.89 2,260,024.87 04/01/2021 44,687.50 0.8043388x 35,943.89 2,295,968.76 10/01/2021 1,169,687.50 0.7930223x 927,588.26 3,223,557.02 04/01/2022 26,337.50 0.7818650x 20,592.37 3,244,149.39 10/01/2022 26,337.50 0.7708646x 20,302.65 3,264,452.04 04/01/2023 26,337.50 0.7600190x 20,017.00 3,284,469.04 10/01/2023 301,337.50 0.7493260x 225,800.04 3,510,269.07 04/01/2024 22,212.50 0.7387835x 16,410.23 3,526,679.30 10/01/2024 307,212.50 0.7283893x 223,770.29 3,750,449.59 04/01/2025 17,937.50 0.7181413x 12,881.66 3,763,331.25 10/01/2025 17,937.50 0.7080375x 12,700.42 3,776,031.67 04/01/2026 17,937.50 0.6980759x 12,521.74 3,788,553.41 10/01/2026 17,937.50 0.6882544x 12,345.56 3,800,898.97 04/01/2027 17,937.50 0.6785711 x 12,171.87 3,813,070.84 10/01/2027 327,937.50 0.6690240x 219,398.05 4,032,468.90 04/01/2028 12,512.50 0.6596112x 8,253.39 4,040,722.28 10/01/2028 327,512.50 0.6503309x 212,991.51 4,253,713.79 04/01/2029 7,000.00 0.6411812x 4,488.27 4,258,202.06 10/01/2029 72,000.00 0.6321602x 45,515.53 4,303,717.59 04/01/2030 5,700.00 0.6232661 x 3,552.62 4,307,270.21 10/01/2030 70,700.00 0.6144971 x 43,444.95 4,350,715.15 04/01/2031 4,400.00 0.6058515x 2,665.75 4,353,380.90 10/01/2031 74,400.00 0.5973276x 44,441.17 4,397,822.07 04/01/2032 3,000.00 0.5889235x 1,766.77 4,399,588.84 10/01/2032 73,000.00 0.5806378x 42,386.56 4,441,975.40 04/01/2033 1,600.00 0.5724685x 915.95 4,442,891.35 10/01/2033 81,600.00 0.5644143x 46,056.20 4,488,947.55 Total $5,606,819.72 - $4,488,947.55 - 2013 -B GO Bonds I Issue Summary 1 7/10/2013 1 3.58 PM of Salina, Kansas General Obligation Internal Improvement Bonds Series 2013 -B Derivation Of Form 8038 Yield Statistics IRS Form 8038 Weighted Average Maturity = Bond Years /Issue Price 9.351 Years Total Interest from Debt Service 1,378,019.72 Accrued Interest from 07/15/2013 to 07/25/2013 (3,874.30) Reoffering (Premium) or Discount (155,073.25) Total Interest 1,219,072.17 NIC = Interest / (Issue Price * Average Maturity) 2.9067763% Bond Yield for Arbitrage Purposes 2.8540288% 2013 -B GO Bonds I Issue Summary 1 7/10/2013 1 3 58 PM Issuance Issuance Maturity Value Price Price Exponent Bond Years 07/25/2013 - - - - 10/01/2014 205,000.00 103.065% 211,283.25 1.1833333x 250,018.51 10/01/2015 235,000.00 104.974% 246,688.90 2.1833333x 538,604.10 10/01/2016 235,000.00 106.250% 249,687.50 3.1833333x 794,838.54 10/01/2017 240,000.00 107.321% 257,570.40 4.1833333x 1,077,502.84 10/01/2018 245,000.00 107.452% 263,257.40 5.1833333x 1,364,550.86 10/01/2019 250,000.00 106.990% 267,475.00 6.1833333x 1,653,887.08 10/01/2020 260,000.00 106.313% 276,413.80 7.1833333x 1,985,572.46 10/01/2021 265,000.00 104.811% 277,749.15 8.1833333x 2,272,913.88 10/01/2022 270,000.00 103.302% 278,915.40 9.1833333x 2,561,373.09 10/01/2023 275,000.00 101.818% 279,999.50 10.1833333x 2,851,328.24 10/01/2024 285,000.00 100.903% 287,573.55 11.1833333x 3,216,030.87 10/01/2025 290,000.00 103.601% 300,442.90 12.1833333x 3,660,396.00 10/01/2026 300,000.00 102.504% 307,512.00 13.1833333x 4,054,033.20 10/01/2027 310,000.00 101.420% 314,402.00 14.1833333x 4,459,268.37 10/01/2028 315,000.00 100.350% 316,102.50 15.1833333x 4,799,489.63 10/01/2029 65,000.00 100.000% 65,000.00 16.1833333x 1,051,916.67 10/01/2030 65,000.00 100.000% 65,000.00 17.1833333x 1,116,916.67 10/01/2031 70,000.00 100.000% 70,000.00 18.1833333x 1,272,833.33 10/01/2032 70,000.00 100.000% 70,000.00 19.1833333x 1,342,833.33 10/01/2033 80,000.00 100.000% 80,000.00 20.1833333x 1,614,666.67 Total $4,330,000.00 - $4,485,073.25 - $41,938,974.33 IRS Form 8038 Weighted Average Maturity = Bond Years /Issue Price 9.351 Years Total Interest from Debt Service 1,378,019.72 Accrued Interest from 07/15/2013 to 07/25/2013 (3,874.30) Reoffering (Premium) or Discount (155,073.25) Total Interest 1,219,072.17 NIC = Interest / (Issue Price * Average Maturity) 2.9067763% Bond Yield for Arbitrage Purposes 2.8540288% 2013 -B GO Bonds I Issue Summary 1 7/10/2013 1 3 58 PM CERTIFICATE OF FINANCIAL ADVISOR CITY OF SALINA, KANSAS $3,800,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2013 -1 $4,330,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B DATED JULY 15, 2013 George K. Baum & Company, Kansas City, Missouri, is employed as financial advisor to the City of Salina, Kansas (the "Issuer ") with respect to the above captioned notes and bonds (the "Obligations "). 1. Duties. The Financial Advisor rendered certain professional services to the Issuer, including advising the Issuer with respect to the sale of the Obligations, and assisting the Issuer with the preparation of the Preliminary Official Statement dated June 10, 2013 and the Official Statement dated July 8, 2013, (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 and financial information contained in the Official 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 Official Statement (except for Appendices B, C and D 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 Official 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: July 25, 2013. GEORGE K. BAUM & COMPANY KANSAS CITY, MISSOURI t!n 816- 221 -1000 MAIN 816 - 221 -1018 FAX GILMOREBELL.COM Governing Body City of Salina, Kansas Robert W. Baird & Co. Winston - Salem, North Carolina GILMOkEBELL GILMORE & BELL PC 2405 GRAND BOULEVARD, SUITE 1100 KANSAS CITY, MISSOURI 64108 -2521 July 25, 2013 ST. LOUIS WICHITA OMAHA I LINCOLN Re: $4,330,000 General Obligation Internal Improvement Bonds, Series 2013 -B, of the City of Salina, Kansas, Dated July 15, 2013 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: 1. The Bonds have been duly authorized, executed and delivered by the Issuer and are valid and legally binding general 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, 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 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: (a) excludable from gross income for federal income tax purposes; and (b) 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 complies 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 that interest thereon be, or continue to be, excludable 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 Code Section 265(b)(3). We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 4. The interest on the Bonds is exempt from income taxation by the State of Kansas. We express no opinion regarding the accuracy, completeness or sufficiency 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. Very truly yours, �>tc � &UIl!C. ORNEY ELF i P Q � � N y OF STATE OF KANSAS OFFICE OF THE ATTORNEY GENERAL DEREK SCHMIDT MEMORIAL HALL ATTORNEY GENERAL July 24, 2013 120 SW 10TH AVE , 2ND FLOOR TOPEKA, KS 66612-1597 (785) 296 -2215 • FAX (785) 296 -6296 WWW AG KS GOV The Honorable Ron Estes State Treasurer Landon State Office Building, Room 201 N Topeka, KS 66612 Dear Mr. Estes: Pursuant to K.S.A. 10 -108, basic or supplemental transcript material is hereby approved and you may register the following: Municipality: City of Salina, Kansas Description: General Obligation Internal Improvement Bond Series: 2013 -B Numbered: Registered Dated: July 15, 2013 Aggregate Amount: $4,330,000 Date of First Payment: April 1, 2014 Fiscal Agent: Kansas State Treasurer Sincerely, OFFICE OF THE ATTORNEY GENERAL DEREK SCHMIDT t2ant/, ttorney General RDS:sb cc: Lieu Ann Elsey, City Clerk ,,Gilmore & Bell, Kansas City George K. Baum & Company 1tip: ESTNI E.A'T 14ANKERS 8 3i{ F. 18 °8 July 18, 2013 MEMORANDUM TO: SEE DISTRIBUTION LIST FROM: DAVID ARTEBERRY TODD BURRUS RE: BOND ISSUE CLOSING ARRANGEMENTS NAME OF ISSUER: City of Salina, Kansas AMOUNT, NAME AND DATE OF ISSUE: $4,330,000 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2013 -B Dated July 15, 2013 TIME AND DATE OF CLOSING: 10:00 a.m. Thursday, July 25, 2013 Via telephone SETTLEMENT NUMBERS: Par Amount of Bonds $4,330,000.00 Plus Accrued Interest (July 15 to July 25) 3,874.30 Plus Bid Premium 105,209.50 Less Good Faith Deposit (86.600.00) Net Amount Due at Closing $4,352,483.80 METHOD OF FUNDS TRANSFER: Wire Transfer of Federal Funds 4801 Main Street • Suite 500 • Kansas City, Missouri 64112 • 816.474.1100 TRANSFER INSTRUCTIONS: (R. W. Baird) On Thursday, July 25, 2013 R.W. Baird will wire transfer an amount of $4,352,483.80 to Sunflower Bank, ABA #1011 - 0062 -1, AC #10218 7275 for credit to the City of Salina, Attn: Dennis Zimmerman. DISPOSITION OF BOND PROCEEDS: (City) Upon receipt of $4,352,483.80 from R.W. Baird, plus the good faith deposit on hand in the amount of $86,600.00 ($4,439,083.80 total), the City will deposit the funds as follows: $4,428,200.20 into the Improvement Fund 10,883.60 into the Debt Service Account $4,439,083.80 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, George K. Baum & Company, and R.W. Baird. Original signed legal opinions and transcripts 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 2013 -1 and GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2013 -B ISSUER City /County Building 300 West Ash Salina, Kansas 67402 -0736 785 - 309 -5735 785 - 309 -5738 (fax) Jason Gage, City Manager jason.gage @salina.org Mike Schrage mike.schrage @salina.org Rod Franz, Finance Director rod.franz @salina.org Lieu Ann Elsey, City Clerk lieuann.elsey @salina.org CITY ATTORNEY Clark, Mize & Linville Chartered 129 South 8th — Box 380 Salina, Kansas 67402 -0380 785- 823 -1868 (fax) Greg Bengtson 785 - 823 -6325 gabengtson@cml-law.com BOND COUNSEL Gilmore & Bell, P.C. 2405 Grand Boulevard - Suite 1100 Kansas City, Missouri 64108 -2521 816 - 221 -1018 (fax) Gina Riekhof 816 - 218 -7536 griekhof @gilmorebell.com Michael Nouri 816 - 218 -7537 mnouri @gilmorebell.com DISTRIBUTION LIST CITY'S BANK Sunflower Bank, N.A. 2090 S. Ohio Salina, Kansas 67402 785 - 826 -2240 (fax) Dennis Zimmerman 785 - 827 -5564 dennisz@sunflowerbank.com PAYING AGENT Office of the Kansas State Treasurer Landon State Office Building 900 S. W. Jackson - Room 201N Topeka, Kansas 66612 -1235 785 - 296 -7950 (fax) J. Stan Jones, Dir. of Bond Services 785 - 296 -4148 stan@treasurer.ks.gov RATING AGENCY Moody's Investors Service 100 North Riverside Plaza — Suite 2220 Chicago, Illinois 60606 312 - 706 -9999 (fax) Thomas Aaron 312 - 706 -9967 thomas.aaron @moodys.com BONDS UNDERWRITER Robert W. Baird & Co. 380 Knollwood Street — Suite 440 Winston - Salem, North Carolina 27103 336 - 631 -5850 (fax) Richard AL Hasel 336 - 631 -5800 rhasel @rwbaird.com NOTES UNDERWRITER Jefferies LLC 520 Madison Avenue — 8 I Floor New York, New York 10022 646 - 786 -5700 (fax) Jarad Bohan 212 - 336 -7161 jbohan @jefferies.com FINANCIAL ADVISOR George K. Baum & Company 4801 Main Street — Suite 500 Kansas City, Missouri 64112 816 - 283 -5326 (fax) David Arteberry 816 - 283 -5137 arteberry @gkbaum.com Todd Burrus 816 - 283 -5138 burrus @gkbaum.com Cassmeyer, Julie (G &B) From: webmaster @treasurer.ks.gov Sent: Thursday, July 11, 2013 1:52 PM To: Cassmeyer, Julie (G &B) Cc: bonds @treasurer.ks.gov Subject: Updated Bond Registration: SALINA July 11, 2013, 13:53:05 This bond issue has been updated in the KST Bond Registration System. Below is the updated information: Registration #: 0322 - 085 - 071513 -850 Municipality: SALINA Bond Counsel: GILMORE BELL JULIE C Paying Agent: STATE Purpose & Series: GO INT IMP BIDS SR 2013 -B Principal: $4,330,000.00 Closing Date: July 25, 2013 The issue was updated by JILL SCHELL.